by Kevin Schulman

One of the most obscure organizations in the federal government is the U.S. Preventive Services Task Force which began in 1984. While convened by the government, the group is comprised of outside experts in medicine, health services research, and epidemiology.1 The task force’s job is to review the evidence around primary care services and to make recommendations to physicians about the quality of the evidence to support specific recommendations for what services should or should not be included as part of routine clinical practice.

The group’s efforts are very disciplined and scripted. Specific services are assessed on the basis of the risks and benefits to ascertain the potential “net benefit” to patients, with recommendations graded A through D (a grade of I means there is insignificant evidence to make a recommendation). A grade of A indicates high probability there is substantial benefit, B indicates high probability of moderate benefit or moderate probability of substantial benefit, C is a recommendation against a service with at least moderate evidence that the benefit is small, D is a recommendation against a service with a moderate or high evidence that there is no benefit or that the harms outweigh the benefits. The probability estimates in these statements are based on the quality of the evidence in the clinical literature on these topics.2

This group recently performed a periodic update of its 2002 recommendations for breast cancer screening.3 The task force conducted an evidence review to assess all of the new clinical studies on breast cancer screening since its last report, and it commissioned a decision analysis of different screening strategies for breast cancer to assess the net benefit or harm for each strategy.

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The Raleigh News & Observer recently featured Professor (and physician) Marco Huesch’s thoughts on health care reform, highlighting ways in which physicians can lead innovation.  Read his thoughts here.

As manufacturers race to test and deliver the H1N1 influenza vaccine by October, public health officials are working equally feverishly to determine how scarce doses should be allocated, and the U.S. has announced plans to donate 10 percent of its vaccine supply to the WHO.

Research from Duke and the European School of Management and Technology (ESMT) demonstrates why, in some cases, countries would be best served by giving their drug supplies to another country.

Duke Professor Peng Sun, Duke PhD student Liu Yang, and Professor  Francis deVericourt  of ESMT created a model based on game theory  to test how countries with adequate drug supplies should react to an epidemic affecting a neighboring country with little or no supply of vaccine or treatments.  Their findings indicate that countries possessing treatments are sometimes best served by donating their treatments to the first country afflicted by an epidemic, instead of using the drugs on their own citizens.  In game theory, this situation is referred to as a Nash Equilibrium, the combination of actions by different players that results in the best outcome each player can expect, given the other players’ moves.
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By Kevin Schulman, M.D.

Duke Medicine has just announced a $700 million expansion of its physical plant to add 847,000 square feet, including adding 16 operating rooms and renovating 160 beds (that’s over $800 per square foot if you’re doing the math).

This will add a new cancer hospital facility within the Duke campus, and expand the number of intensive care rooms at Duke Hospital. This is a significant investment in infrastructure for the health system, but how will this investment impact the care delivered to patients by Duke Medicine?

Duke Medicine is a fee-for-service hospital system and physician network. This is one of the oldest forms of a provider organizational structure in existence, and pre-dates the development of health insurance in the US. This model is managed to allow patients access to high-end specialty and hospital services. Within this model, hospitalization is not considered a failure, but rather a core service offering. Competition between Duke and other providers is on the basis of technology and specialty service offerings. This type of competition can lead to improvements in the performance of specialist physicians, but can also lead to a phenomena described as a “medical arms race” where hospitals “must” acquire certain technologies to remain attractive in these specific markets.

Hospitals like to point out that their high-tech facilities and services are better than those of competitors (see Robinson and Luft JAMA 1987). This type of competition has been criticized as driving to higher investment in technology, overcapacity, and higher health care costs. There’s some local evidence of this arms race concept with UNC’s investment in a similar cancer facility only nine miles from the Duke campus.

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By Kevin Schulman, M.D.

Ted Kennedy passed away this week at age 77 of glioblastoma (he was treated surgically here at Duke for his disease last year; Duke has the best program for this disease in the world, but the prognosis for people diagnosed with glioblastoma remains grim).

Kennedy spent more than 45 years in the US Senate, and during that time he championed both liberal causes and bipartisanship. Orrin Hatch, a conservative Senator from Utah, has said publicly that Senator Kennedy was the only Democrat he could work with in the Senate. That’s quite a statement.

In the politics of health care reform, there are two committees in the Senate with jurisdiction. Senator Kennedy was chairman of the Health Education Labor and Pensions Committee (HELP), which has passed a version of the health reform legislation. Democratic Senator Max Baucus is chairman of the Senate Finance Committee, which has jurisdiction over entitlement programs (including Medicare and Medicaid). The Senate Finance Committee has not passed a bill, as Senator Baucus and his committee appear to have some substantial disagreements with the House and HELP committee versions of the bill — as they work to craft a bipartisan piece of legislation.They have tentatively committed to reporting out a bill by mid-September.

I was on a panel earlier this week with a major health insurance executive. I was asked about the status of health reform. I suggested that there are three issues that need to be addressed as part of reform: 1) access to health insurance, 2) the costs of health care, and 3) the future solvency of Federal health programs.

Currently, the debate seems to be limited to access to insurance. The second and third issues are more problematic and look like they will remain despite health reform (or may even be exacerbated by the reform).

The insurance executive suggested that access was relatively easy to solve. In fact, he suggested that their trade association, AHIP, had agreed publicly with a reform plan that included market reforms including removal of underwriting from small group policies in return for a mandate for coverage (as we teach in health economics and strategy, in the absence of a large group or mandates, insurers would face adverse selection without underwriting since only the sick would be interested in an expensive insurance policy).

The executive suggested the debate was really over the public option. Here, the debate spills over from access to costs. Health insurance costs include medical loss (payments to doctors, hospitals and pharmacies), a sales charge, a “risk” premium, overhead, and margin.

United Healthcare, for example, reports a medical cost ratio of 82% for 2008. This leaves 18% for these other categories. An argument for the public plan is that Medicare’s medical cost ratio is 96-98%. Thus, a public plan would be cheaper. This is an apples-to-oranges comparison, since Medicare doesn’t have huge expenses for marketing, risk and administrative expense that a public plan would obviously have to bear.

There are other hidden costs of a public plan as well. While most seniors support Medicare, Medicare’s low payments for primary care physicians and the overpayment of specialty physicians has been acknowledged for 15 years, yet Medicare has been politically powerless to change its payment system even as physicians leave primary care in droves. A public plan could face the same risk.

Healthcare, however, is a local monopoly in many places. Hospitals or physicians that are required to be included in provider panels have the ability to set their own prices. The ability to use a public plan to set rates for providers with monopolistic market power is an attractive feature that private health insurance plans cannot match (and thus oppose).

So where does this leave us in the reform process (it’s not really a “debate” since all of the shouting means there is almost no discussion of the three core issues I raised)?

Senator’s Kennedy’s death is significant. Will it inspire a sympathy effort to have the “Kennedy reform bill” in his honor, or will his death remove the last hope for compromise in the Senate?
We’ll find out over the next few weeks.

By Kevin Schulman, M.D.

The policy goals for health care reform are so clear it should be easy: 1) improve access to health care services — defined as access to insurance; 2) improve the quality of health care services — through health IT; and 3) reduce the cost of health care — through competition or structural changes in the system, such as reform of the small group market. From a policy standpoint, we can debate the intricacies of these various issues and use data or theory to support our arguments.

What is happening now in Washington is not health policy, but health politics. Politicians are searching for policies that would gain the most political support (or looking to offer promises to specific members to make the rest of the program more palatable to them). Negotiations are not with the public over the broad agenda, but with specific political interest groups that constitute the Washington lobby core. This is the legislative process of the US at its most transparent. The populist rhetoric has been lost in the tricky business of legislation, lobbying, and politics.

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The following post was written by Kevin Schulman, M.D., Director of Duke’s Health Sector Management Program:

Imagine a country of 1.3 billion people with 100 cities of 1,000,000 or more, a per capita GDP of almost $6,000 (PPP) growing at almost double-digit rates, and an economy ranked in the world’s top 5 and you’ll have a pretty accurate image of China today. While the economic miracle has worked in most areas of the Chinese economy, healthcare has struggled in the transition from communism to capitalism.

The Chinese government has just outlined a new health reform plan. This plan includes the acknowledgement by the government of two new rights for the population: the right to basic medical services and the right to basic medical security. This effort includes an expansion of the basic health plan to rural populations (to 150 RMB per capita in 2011, approximately $22US), construction of 5,000 new grassroots hospitals, 3,000 new regional hospitals, training of 10,000 new doctors for rural areas, reform of public hospitals, and new rules for private hospitals in China. This is clearly a very ambitious agenda, the details of which will be released in 21 specific documents over the coming months. Reform will also address incentives in the public hospital system which currently spurs utilization of imaging, long lengths of stay, and prescription dispensing as a means of generating income.

China is clearly under-spending in the health sector. Currently, healthcare is around 4% of GDP of which only 50% is public spending. If China moves toward the levels of healthcare spending of Japan or the EU, there will be a huge increase in health spending in the Chinese market. Adopting Western IP laws will also force changes in the pharmaceutical industry – which currently is a generic market rather than a research-based product market – and possibly the medical supply market as well. Increases in spending could also drive demand for private health insurance within China. Read the rest of this entry »

The following post was written by Kevin Schulman, M.D., Director of Duke’s Health Sector Management Program:

As Director of Fuqua’s HSM Program, I hereby nominate the physicians and hospital managers of McAllen, Texas, for a special joint Nobel Prize in Medicine and Economics for their brilliant experiment demonstrating, beyond a shadow of a doubt, that PHYSICIANS DO RESPOND TO ECONOMIC INCENTIVES. In recognition of this work, all physicians and hospitals in McAllen should receive a bonus payment equal to their 2009 Medicare billings, and then should be permanently excluded from the program (the public system responds to few incentives beyond those of special interests, but when you’re the subject of a must-read report at the White House, you’re out of luck).

So if you’re one of the few people who has yet to find time to read Atul Gawande’s piece in the New Yorker (and it is must-read material). Here are the major highlights:

For over 40 years, Jack Wennberg and his group at Dartmouth (now including Elliott Fisher and Jonathan Skinner) have shown there is significant variation in medical practice — more variation in “discretionary” services like imaging vs. essential services like appendectomy. This group has also created a database called the Dartmouth Atlas of Medical Practice, which reports variations in medical care according to hospital referral regions in the United States. From this database, a region that was identified as one of the highest utilizing sites was McAllen, Texas. Gawandi of the New Yorker visited to try to gain a better understanding the case and uncover reasons for the high utilization.

Less developed in Gawande’s article is the idea that the Medicare program has known about this practice for years. Annually $1 billion dollars is spent on a national program of Quality Improvement Organizations. These spends are allocated for the review of medical practices within the Medicare program. State Medicare medical directors, contracted health plan managers, and Office of the Inspector General at HHS are all involved in the review. All seemed powerless to take action in the case. (In terms of the public-private plan debate, it seems the private plans in the market had the same incentives and observed the same results in McAllen, so private plans aren’t the automatic fix to this practice pattern issue).

So what are the implications of this study? Read the rest of this entry »

The new issue of Insights, the research newsletter of Duke’s Health Sector Management program, focuses on conflicts of interest in medical research.

Take a look at the newsletter to learn more about Professor Kevin Weinfurt’s findings on disclosure practices in medical literature.  Also featured are HSM Director Kevin Schulman and alumnus Matthew Kirchner, Director of Marketing at Medtronic, who provided reactions to the research.

New research by Duke Health Sector Management Director Kevin Schulman and Fuqua alumnus Seth Glickman was featured in this week’s New England Journal of Medicine, and also covered by the Wall Street Journal and New York Times.

DURHAM, N.C. – Top-tier U.S.-based pharmaceutical companies are moving their clinical trials overseas at warp speed, raising questions about ethics, quality control, and even the scientific value of their findings for people back in the U.S.

Many of the trials are taking place in developing countries in Eastern Europe and Asia where study participants are often poorer and less educated than are study participants in the U.S., according to researchers at Duke Clinical Research Institute (DCRI).

“The FDA is supposed to provide oversight for such trials, but it simply wasn’t designed to handle this kind of situation,” says Kevin Schulman, M.D., the senior author of the report appearing in the New England Journal of Medicine. Schulman says the number of Food and Drug Administration investigators based outside the U.S. has grown by 15 percent every year since 2002, while the number of U.S.-based investigators has fallen just over 5 percent during the same period.

Schulman and a research team led by Seth Glickman, M.D., a senior scholar at Duke’s Fuqua School of Business, used the clinicaltrials.gov registry to examine recruitment patterns in industry-sponsored Phase 3 trials in 2007. Phase 3 trials are typically the largest and most meaningful trials, often involving thousands of patients. They found that about a third of the trials (157 of 509) were being solely conducted outside the U.S. They also discovered that over half the study sites (13,521 of 24,206) lay outside U.S. borders. Read the rest of this entry »