Democrats Should Talk About Costs, Not Fairness, to Sell Drug Pricing to Voters

https://view.newsletters.time.com/?qs=ea318fe40822a16d35fd05551e26f48182b6d89aa3b6000b896a9ff2546a39caab4656832bb3a0c5bda16bcd6517859e00eba11282e80813fd45887b2c2398c865b7cca1f30f6315a7a3fb7a1b05cde6

Democrats Should Talk About Costs, Not Fairness, to Sell Drug Pricing to  Voters | Time

Here in Washington, the conversation about politics is often framed as a spectrum, a straight line with poles at the end that are hard-wired opposites. Team Blue to the left and Team Red to the right. But in reality, the chatter might more accurately be framed as a loop, with the far ends bending back on themselves like a lasso. Eventually, the far-right voices and the far-left voices meet at the weird spot where Rand Paul supporters find common ground with The Squad.

It’s often at the knot between the two ends of that scale that we find some of the loudest voices on any given issue: foreign aid, vaccine mandates, the surveillance state. Right now, as Congress is considering a massive spending package on roads and bridges, pre-K and paid family leave, lawmakers have been debating a point on which political opponents agree: drug prices are too high.

Drug pricing is one of those rare sweet spots where it seems everyone in Washington can agree that consumers are getting a raw deal. The motives behind that sentiment differ, of course: liberals want to make medical care more accessible and to curb the power of big pharma, and conservatives see drug prices divorced from pure capitalism. But everyone can rally around the end goal. No one gets excited to tuck away pennies on the paycheck to control acid reflux or prevent migraines.

The package under consideration tries to fix drug costs by ending the ban on feds negotiating with pharmaceutical companies. In a deal hashed out among Democrats, Medicare would be allowed to negotiate directly with drug companies on the prices of the 10 most expensive drugs by 2025. That number would double to 20 drugs three years later. Only established drugs that have been on the market at least nine years in most cases would be eligible, giving pharmaceutical companies almost a decade of unrestricted profitability. (Start-up biotech companies would be exempted from the process under the guise of giving newcomer innovators a leg-up.)

For individuals on private insurance, their drug costs would be tied to inflation, meaning no spiking costs if a drug becomes popular. Seniors, meanwhile, would have a $2,000 cap on what they’d be responsible for at the pharmacy.

Democrats have been working for years to make drug companies the enemy. In the current environment of woke capitalism, they’re an easy target for lawmakers in Washington to come after. Drugs, after all, aren’t luxury goods. They’re necessary. And for the government to give them a pass in ways few other industries enjoy, that just seems wrong to the far-left wing of the Democratic Party that has flirted with elements of socialism.

It turns out, maybe that messaging isn’t working. New polling, provided exclusively to TIME from centrist think tank Third Way, suggests the way the conversation is framed matters more than you’d think. In a poll of 1,000 likely voters in September, costs were their biggest hangup about the healthcare system, regardless of political identity. Almost 40% of respondents cited healthcare costs as the biggest flaw in the system.

What didn’t seem to bother people much? Fairness. That’s right. The spot where the far-right and the far-left tines of the political fork meet is usually seen as an objection to a system rigged against the consumers. But a meager 18% of respondents to the Third Way poll say profits were what’s wrong with the system. Grievance isn’t the most grievous of problems.

And if you dig a little deeper, you find other reasons Democrats might want to reconsider how they talk about drug prices in the twin infrastructure plans parked in Congress. In fact, there’s a 12-point gap in two competing reasons to address healthcare; lowering costs draws the support of 72% of respondents while making things fair wins backing from 60%.

“This is kitchen table economics and it’s not a morality play,” says Jim Kessler, a co-founder of Third Way and its policy chief who is advising the Hill on messaging on the twin bills. “Those are winning messages, especially on healthcare. You’re going to keep the exact same system, but you’re going to get some help with costs.”

In other words, the chatter in the purple knot might feel most fulsome when talking about justice and weeding out the super-rich exploiters of capitalism. But, really, people just want to hold onto their cash. Protections against healthcare bankruptcy are super popular, suggesting the fear of losing everything to a hospital visit is real. Capitalism may well be exploitative but it’s tough to argue that a few extra bucks in the bank can make falling asleep easier at the end of the day.

So as Congress gets ready to move forward with drug prices in its infrastructure talks, lawmakers can find some comfort that the whole of the political spectrum agrees costs need to come down. And they don’t really care if it’s done in a fair way — as long as their savings doesn’t take a hit every 90 days.

The vaccines have kept older Americans out of the hospital

https://www.axios.com/medicare-covid-hospitalizations-vaccines-0a43389b-994b-4180-b300-a328ef9da2c8.html

The vaccines have kept older Americans out of the hospital

The number of COVID-19 hospitalizations among older Americans dropped significantly since the vaccine rollout at the start of the year, new federal data show.

Why it matters: The vaccines have worked extremely well for one of the most vulnerable demographics. Roughly 97% of people 65 and older have at least one vaccine dose, and more than 85% of that age group is fully vaccinated, according to the CDC.

Yes, but: Certain portions of the Medicare population continue to be more susceptible to severe COVID-19 and hospitalization than others.

  • People who are covered by both Medicare and Medicaid — the poorest demographic, who often are in nursing homes — are 2.5 times more likely to be hospitalized, according to federal data.
  • Medicare enrollees who have kidney failure and compromised immune systems also are significantly more likely to be hospitalized from COVID-19 than old or disabled Medicare enrollees.

The future of hospitals will be outside of hospitals

https://www.axios.com/the-future-of-hospitals-will-be-outside-of-hospitals-b3074182-a3cb-466e-89cb-66d2a0a27a72.html

Illustration of a medical red cross with beams of light cast from one side

Hospitals in the future will look far more tech-enabled and consumer-focused — when patients are actually even getting care in a hospital building itself.

Why it matters: Hospitals were already pushing more care outside their four walls before the pandemic. COVID accelerated that shift, forcing hospitals to reimagine what’s possible to deliver in patients’ homes, experts say.

The big picture: One way to picture what hospitals of the future will look like is to look at two brand new hospital buildings opened this fall by competing Pennsylvania health systems.

  • The buildings, by Penn Medicine and Highmark Health both offer hotel-like amenities such as better food, streaming services, and better-positioned outlets for cell phone charging. They’ve also made medical records more accessible to patients, executives say.
  • But they were also designed with the belief that, in the future, only the most complex care might be delivered in them.

State of play: Every medical room in Penn Medicine’s new $1.6 billion health pavilion can be turned into an ICU-capable room when needed.

  • It added 7% in costs to the project, but made sense considering the ICU demands of the pandemic and “not knowing what the future will be,” CEO Kevin Mahoney told Axios.
  • The hospital also offers patients bedside tablets that allow patients to control the light and temperature of the room, and to activate frosted privacy glass on the doors of their rooms.
  • The benefits are two-fold: patients really like it and it can help free up staff to focus on more critical tasks, Mahoney said.

“The pandemic was an amplifier for natural trends that were already starting to develop,” Highmark CEO David Holmberg told Axios. “The complexity of medical procedures [in hospitals] is going to be significantly higher.”

The bottom line: Tech advances will change the entire hospital experience no matter where the care is delivered.

  • Wearables will provide digital biomarkers to allow better patient monitoring from the home. “Smart” infrastructure will help patients find parking and navigate massive hospital campuses when they need to go into the hospital.
  • And 5G will allow doctors to pull up massive amounts of personalized data on a wireless screen in seconds, Hon Pak, chief medical officer at Samsung Electronics told Axios.
  • “The perspective we want to bring to the smart hospital is it’s not just about caring for the condition or the disease, but it’s about caring for the whole,” Pak said.

Deal to Lower Prescription Drug Prices

Schumer announces deal to lower prescription drug prices

Texas Drug Prices Reduced By New Bill To Lower Prescription Prices

Democratic lawmakers have reached a deal on legislation to lower prescription drug prices to be included in President Biden‘s social spending package, Senate Majority Leader Charles Schumer (D-N.Y.) announced Tuesday.  

The agreement is less far-reaching than earlier Democratic proposals, but still represents progress on an issue the party has campaigned on for years.  

The agreement would allow Medicare to negotiate drug prices in limited instances, prevent drug companies from raising prices faster than inflation and cap out-of-pocket costs for seniors on Medicare at $2,000 per year.

Democrats scaled back their earlier sweeping measure because of concerns from a handful of moderates that it would have harmed innovation from drug companies to develop new treatments. Sen. Kyrsten Sinema (D-Ariz.), as well as Reps. Scott Peters (D-Calif.) and Kurt Schrader (D-Ore.) were among those moderates and helped lead negotiations with leadership over the compromise measure.

“It’s not everything we all wanted, many of us would have wanted to go much further, but it’s a big step in helping the American people deal with the price of drugs,” Schumer told reporters.

Sinema said in a statement that she supported the agreement. “The Senator welcomes a new agreement on a historic, transformative Medicare drug negotiation plan that will reduce out-of-pocket costs for seniors – ensuring drug prices cannot rise faster than inflation – save taxpayer dollars, and protect innovation to ensure Arizonans and Americans continue to have access to life-saving medications, and new cures and therapeutics,” Sinema’s office said.

One of the key compromises leading to a deal was limiting the scope of Medicare’s ability to negotiate lower drug prices, which has long been a signature Democratic proposal. Lawmakers agreed to limit Medicare’s ability to negotiate to older drugs that no longer have “exclusivity,” meaning the period when they are protected from competition. Earlier versions of Democrats’ bills would have allowed negotiation for newer drugs too.

A draft measure that circulated to lobbyists in recent days would allow negotiation for 10 drugs starting in 2025 and 30 drugs starting in 2028. Full details of the final measure have not yet been released.

UPMC CFO Edward Karlovich advises peers to ‘look beyond the challenges of today’

David B. Yoffie Quote: “The first rule demands that CEOs and entrepreneurs look  beyond the immediate

Edward Karlovich serves as the executive vice president and CFO for UPMC, a $23 billion provider and insurer based in Pittsburgh. 

Since joining UPMC in 1990, Mr. Karlovich has served in several financial leadership roles. Most recently, he was vice president, CFO and chief of staff for UPMC’s Health Services Division. He became CFO of the entire integrated system with 40 hospitals in October 2020, after serving on an interim basis for about a year. 

Here, Mr. Karlovich shares with Becker’s the skills he thinks CFOs need to succeed today, some key capital projects in the works at UPMC and his organization’s top financial priorities. 

Editor’s note: Responses were lightly edited for length and clarity. 

Question: What is the most pressing issue facing hospital CFOs due to COVID-19?

Edward Karlovich: I would say the most pressing issue for me is disruption. COVID-19 has done many things to disrupt the way we think about our organization and business. Some disruptions we faced in the last year include staffing and supply chain challenges. UPMC did a great job weathering through the supply disruptions and labor challenges. We always had adequate personal protective equipment for our folks here. We also really made a conscientious decision last year to keep our workforce intact; we didn’t lay off workers, and we took care of people who needed time off because of COVID-19. We also made sure employees knew they had the support of our executive leadership team. In summary, COVID-19 has created a disruption, and we must think about how things are different now coming out of the disruption. 

Q: What are some things you are doing to work through the change/disruption?

EK: From an organizational perspective, we embarked on what we call the “UPMC experience” a few years ago. We looked at the way we are doing things to understand the experience of our employees and patients. This prepared us to be more creative in our thinking as to how we address challenges and disruption. We also learned through this the importance of interdependencies. Our business, both provider and insurance side, discussed a need to tackle the disruptions in an integrated way and discussed a need to communicate changes effectively. This year, we provided about 40 news conferences to get the standard message out across all of our regions. We also have a 90,000-plus employee organization which allows you to move around resources to deal with some challenges and disruptions. 

Q: What are UPMC’s top financial priorities for 2022?

EK: From a financial perspective, we want to maintain a positive margin to support our capital investments and employees. To do this, we are focused on a few things. First, supporting our operating employees to ensure they can perform to the best of their ability. They are the ones who make the difference each and every day. Second, we want to make sure we, as a finance team, can provide the things that the organization needs to be successful. This includes, but is not limited to, making sure supply chain folks can get all needed supplies and ensuring we have the cash collections needed to fund our organization. Another priority is making sure we provide the advice and guidance needed to invest our dollars effectively so we can prepare for the next challenge.

Q: What are a few key capital projects UPMC has in the works?

EK: UPMC is a premier provider in our community, and we operate a number of specialty hospitals in the area. We are the primary pediatric, psychiatric, women’s health and oncology provider in the region. Over the past couple of years, we’ve embarked on a journey to provide new facilities in western Pennsylvania for these major programs. We are also investing heavily in a vision and rehabilitation institute, which is a $500 million project that will put our clinicians, researchers and other providers together to drive breakthroughs in vision care and rehabilitation.  

We also are going to embark on a new tower for UPMC Presbyterian Oakland Campus [in Pittsburgh]. It is going to be the largest capital project we’ve embarked on since I’ve been here. This project will be more than $1 billion and is so important to the community. 

The third thing we are looking at is enhancing our oncology services and product at UPMC Shadyside [in Pittsburgh]. What we’ve recognized is that we are the provider and insurer of choice in western Pennsylvania, and we have to invest in this community for the next 50 to 100 years. 

Q: What skills are essential for hospital and health system CFOs to thrive in today’s healthcare landscape?

EK: The technical skills are given as CFO. To get in that leadership position, you have to be able to perform the necessary tasks. However, to make your organization better, I could boil it down to four things. First, you have to be a partner to your other senior leaders. Finance doesn’t exist in a vacuum. You have to be in the room with those folks, helping them manage and drive the business. The second thing is flexibility. If you think about what we experienced as an industry over the last two years, if you weren’t flexible, you were going to be seriously challenged.  Flexibility is such an important attribute because the pace of change is going to accelerate in our industry. Third, I’d say talent recognition is a key skill. It is important to be able to find talent as well as mentor and develop them as employees who can provide a great service to the organization. Fourth, you have to embody integrity. There is no doubt in my mind that integrity is a core value that is essential to everything you do as a finance leader. You have to maintain your integrity at all times. Those are essential skills. If you’re going to be a successful CFO now, you have to have those skills outside of the technical.

Q: What is one piece of advice you would offer to another healthcare CFO, and why?

EK: I’d say, look beyond the challenges of today. It’s not just about what you can actually see and envision in front of you. Try to look at the implications that are not necessarily top of mind. What the future holds is uncertain for all of us in healthcare now. You need to be thinking about what things might be coming down the road that will change our business and commitment to our communities dramatically. Try to brainstorm around that. Trying to think forward and speculate about what might happen is very valuable.

Moody’s: Rising costs will slow hospitals rebuilding margins to pre-COVID-19 levels

https://www.healthcarefinancenews.com/news/rising-costs-will-make-it-difficult-hospitals-rebuild-margins-pre-covid-levels-moodys-says

Operating cash flow margins for nonprofit hospitals fell to a median 7% in 2020.

A shortage of nurses and other workers will continue to erode hospital financial performance into 2022, according to a new Healthcare Quarterly report from Moody’s.

A rise in COVID-19 cases in various regions of the United States has contributed to a wave of nurses, often burned out, resigning to take care of family, to work in less acute healthcare settings such as ambulatory care or to pursue higher-paying contract opportunities, such as becoming a travel nurse.

Hospitals are also having difficulty finding other types of healthcare workers, such as respiratory therapists and imaging technicians, as well as nonclinical workers in areas such as dietary, housekeeping and environmental services.

WHY THIS MATTERS

The report holds no surprises for hospital executives, who already know the financial affect labor shortages are having on revenue. But Moody’s confirms projections that rising costs will make it difficult for hospitals to rebuild margins to pre-COVID-19 levels. 

Labor shortages are driving up costs and also may be limiting the number of lucrative elective procedures, resulting in lost revenue. Not-for-profit hospitals saw operating cash flow margins fall to a median 7% in 2020, from 8.3% in the three prior years, according to Moody’s median data.

Hospitals using contract nurses report that hourly wages are very high, in some cases higher now with the Delta variant than during earlier COVID-19 surges. Many hospitals and health systems have also increased minimum wages for nonclinical workers and are finding they must compete with other service sectors, such as the food industry, to attract nonclinical staff.

Given their substantial reliance on government reimbursement from Medicare and Medicaid, most healthcare providers maintain limited pricing flexibility to offset the costs of higher wages. While there are opportunities for more lucrative commercial insurance contracts, rates are the subject of intense negotiations, limiting providers’ pricing power, Moody’s said. 

Providers with strong liquidity and diversified cash flow will remain better positioned to manage stress from cost constraints. Hospitals are taking steps to retain nurses, including developing “float pools” of nurses who can work in multiple departments, increasing retention and merit pay, and expanding healthcare benefits such as mental health and child care services. 

LifeBridge Health, a not-for-profit health system operating in Baltimore and Carroll County, Maryland, paid its nursing staff retention bonuses in December 2020 as the labor market tightened. To recruit nurses, many systems are offering signing bonuses in exchange for multi-year work commitments as well as scholarship and loan forgiveness programs with local nursing schools.

While these strategies will ease the effect of labor shortages over the long term, they will cause hospitals’ costs to increase in 2022 as salaries and benefits typically represent at least half of a hospital’s expenses. Labor shortages will also likely spark an increase in unionization efforts or lead to more difficult negotiations between unions and providers, potentially increasing costs via new contracts.

THE LARGER TREND

The quarterly report focused on the impact of labor shortages and cost pressures for various sectors, including hospitals, insurers, pharmaceuticals, healthcare services such as staffing firms and health insurers.

Health insurers are less affected by labor shortages, wage pressure and potentially burgeoning inflation than many other healthcare sectors, Moody’s said. Insurers reset premiums each year, which helps them to offset inflation. But if the government does not keep up with payment, providers will look to insurers to make up the shortfall. 

Large physician staffing companies, such as Envision Healthcare Corporation and Team Health Holdings, will experience pressure on their profitability as it becomes harder and more expensive to fill open positions as burnout and retirements decrease the number of doctors available to work.

Travel nurse staffing has higher profit margin resilience compared to physician staffing, the report said. 

For real estate investment trusts, worker shortages are slowing net operating income growth for REITs to invest in senior housing and skilled nursing facilities.

Growth in salaries and benefits has exceeded hospitals’ expense growth, a trend likely to continue for the remainder of 2021 and into 2022, Moody’s said in an earlier October report.

In one bright spot in the earlier report, Moody’s noted recent rises in nursing school enrollment indicating a more robust long-term staffing pipeline. However, the aging population, combined with a healthcare workforce that may be retiring from their jobs or quitting due to burnout, represent long-term healthcare staffing challenges nationwide.