healthcare costs

Aetna profits up on member, premium increases

Anne Zieger — Thu, 31 Jul 2008 12:26:32 -0400

Aetna has announced that its second-quarter profits have gone up 6.4 percent for its second quarter, courtesy of both rising membership numbers and a raise in premiums. The company earned $480.5 million during its second quarter, compared with profit of $451.3 million during the same period the previous year. The profit increase was fueled by a growth in revenue, which rose 15 percent to $7.83 billion from $6.79 billion.

So, how did it pull off these results? Clearly, one factor was its respectable medical benefit ratio, i.e. the percentage of each dollar of premium it spends on healthcare costs. The ratio was 81.9 percent this quarter, compared with 81.5 percent in the same quarter last year. Meanwhile, medical membership rose 0.2 percent from the first quarter to 17.5 million.

According to the Wall Street Journal, many analysts see Aetna as the best-positioned player in the managed care business. Unlike its peers, Aetna hasn't had to cut earnings forecasts, and it expects further membership growth.

To learn more about Aetna's performance:
- read this Associated Press piece
- read this Wall Street Journal article (sub. req.)

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Trend: On-site company clinics keep winning fans

Anne Zieger — Thu, 31 Jul 2008 09:45:10 -0400

Just yesterday, we told you that the expansion of the retail clinic market may be slowing down a notch. Fortunately for clinic operators, however, demand seems to be growing for another type of convenient clinic. With no relief in site from staggering healthcare costs, on-site clinics run by employers are becoming steadily more popular. Employers say the clinics help lower health costs by encouraging workers to seek primary care before they need more-costly emergency services or hospitalization, and nudging them to use cheaper medications. Meanwhile, the clinics are also seen as a benefit by employees, who appreciate not having to scramble to get to an off-site appointment when they're sick. Employers are encouraging this thinking by cutting co-pays for workers who use the clinics.

Companies bringing clinics on-site include the North American unit of Toyota and Nissan, Harrah's Entertainment and Walt Disney Parks & Resorts. And this could just be the tip of the iceberg. According to benefits-consulting firm Watson Wyatt Worldwide, 32 percent of employers with more than 1,000 workers either have an on-site clinic in place or expect to build one by 2009.

One of the firms getting a foothold in this business is Walgreens, whose Take Care Health division already operates almost 200 clinics in retail settings. Take Care, which runs Toyota's on-site clinic, contends that employers get back $3 to $5 for every dollar invested in setting them up. Where do these savings come from? Take Care Employer Solutions, the company's on-site clinic division, says that clinic management companies under its wing refer 40 percent fewer patients to specialists compared with traditional primary care doctors, and that emergency department visits are down 72 percent at companies where Take Care runs clinics.

To learn more about this trend:
- read this Business Week piece

Related Articles:
Retail clinic market growth slowing
Toyota creates full-service on-site clinic
Employer clinics get results
Employer clinics save time, money

Study: Wellness programs common despite lack of savings

Thu, 05 Jun 2008 06:59:54 -0400

According to a new study, health and wellness initiatives seem to be a matter of faith among big employers. According to research by the Center for Studying Health System Change, many employers are adopting such programs, despite the fact that there's currently little evidence such programs actually save money. The researchers, who studied 12 nationally-representative metropolitan communities, concluded that large employers are looking for long-term strategies to address their rising healthcare costs. The large employers also see wellness programs as a means of giving their employees more responsibility for their health care decisions and costs.

For more information:
- read this Kaiser Daily Health Policy Report brief

Cleveland Clinic will pay tuition for med school students

Thu, 15 May 2008 06:59:56 -0400

Following a practice that is growing increasingly common, the Cleveland Clinic says that it plans to pay the entire tuition bill for the 32 students entering its medical education program later this year. The program, the Lerner College of Medicine, is offered at Case Western Reserve University. The new policy has boosted applications to what already was a competitive program; more than 1,400 students applied for the 32 slots. Leaders with Cleveland Clinic said that they're establishing the scholarships to make sure students feel free to go into academic and research-oriented medicine rather than opting for the highest-paying specialties possible.

In taking this step, the Clinic is following in the footsteps of other institutions, including Mayo Clinic, which lets about 60 percent of students attend tuition-free, and the University of Central Florida, whose new med school will start out in 2009 with students getting not only free tuition, but also their living expenses paid. Also, Harvard University recently announced that it would eliminate the $12,500 per year family contribution expected for med students in families with incomes of $120,000 a year or less.

To learn more about this trend:
- read this Cleveland Plain Dealer article

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Harvard Med offers tuition discount
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Trend: Medical prices set to jump again

Tue, 22 Apr 2008 06:59:57 -0400

While medical prices fell for the fourth consecutive year in 2007, observers say that health costs likely will shoot up again, soon. According to an article in the journal Health Affairs by author Paul Ginsburg of the Center for Studying Health System Change, there are several factors contributing to the coming jump in prices, including a hospital's need to cover the cost of their tremendous recent investments in new buildings; the growth in physician ownership of ambulatory surgery centers and specialty clinics, which Ginsburg says has historically driven up prices; and a shift in the overall U.S. economic cycle. Such price increases could drastically hike health insurance premiums. Even with health cost increases having been moderate over the last few years, health insurance premiums still have risen 78 percent since 2001.

To learn more about this trend:
- read this article from The Oregonian

Related Articles:
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Case study: In metro Boston, the return of the house call

Tue, 15 Apr 2008 06:59:55 -0400

A non-profit primary care practice serving the Boston metro area has seen improved outcomes in caring for the frail elderly by re-instituting the age old practice of making house calls. Urban Medical of Jamaica Plain, MA provides house call service to 500 elderly, disabled and chronically ill persons enrolled in a special program. These patients are seen by a primary care professional--sometimes a physician, and sometimes a nurse practitioner--who typically come bearing an Internet-capable computer to give them added resources. On the one hand, the house calls cost about $150, or twice as much as typical office visit. On the other hand, a recent study of 90 frail elderly Urban Medical patients found that their total healthcare costs were 40 percent lower than the cost of care for similar patients not receiving house calls, largely due to lower hospitalization rates and fewer nursing home placements.

To learn more about this project:
- read this article in The Boston Globe

Related Articles:
Doctors making house calls--online
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SPOTLIGHT: Pfizer, GSK hike prices to boost sales

Wed, 26 Mar 2008 07:59:52 -0400

Pfizer and GlaxoSmithKline boosted wholesale drug prices by about 9 percent on their 10 best-sellers last year. These price increases come as both companies brace for generic competition for blockbuster meds. But the strategy could easily backfire; ye olde supply and demand theory says higher prices leads to lower demand. And as we've seen, payers fed up with ever-rising healthcare costs are likely to push back against sticker shock. Article

Case study: Hospital takes lessons from Toyota

Tue, 18 Mar 2008 07:59:54 -0400

Among a certain breed of progressive hospitals, it's becoming increasingly in vogue to lift efficiency lessons directly from leaders in industrial manufacturing. One such case is Seattle's Virginia Mason Hospital and Medical Center, which began rethinking its processes in 2000 when leaders noticed that the hospital was built around staff, not patients. After searching for better options, execs discovered the Toyota Production system, known best as "lean manufacturing." In 2002, Virginia Mason's managers traveled to Japan to visit Toyota and Yamaha plants and get a sense of why they were turning out great results. Since then, nearly 200 employees have had such tours.

Studying lean manufacturing has led to a host of changes at Virginia Mason, some small and some very significant. For example, the hospital now uses a system that puts a reminder card at the bottom of a set of supplies, allowing workers to re-order just when those supplies are needed. Execs created standardized instrument trays for surgeries and procedures, saving hundreds of dollars by making sure only needed instruments are opened (which avoids having to discard of opened but uninsured ones). Yet another changes borrowed from manufacturing is the patient safety alert system. As on the manufacturing floor, if an error is found, the whole process is stopped and the problem fixed immediately--while most hospitals typically fix problems after the fact, when they've occurred multiple times.

These, and dozens of other changes, have led to many tangible benefits, including an 85 percent reduction in how long patients wait to get lab results back, plus lowering costs by $1 million. They've also redesigned facilities to make patient and staff workflow more productive, reducing overtime and temp labor expenses by $500,000 in one year and increasing productivity by 93 percent.

To learn more about Virginia Mason's process redesigns:
- read this Seattle Post-Intelligencer article

Related Articles:
BIDMC uses lean production approach. Report
Memorial Hospital-South Bend - Hospital innovators 2007. Report

Trend: Hospitals spending to care for obese

Mon, 10 Mar 2008 07:59:57 -0400

Here's another story bringing home an issue which we've covered in the past here in FierceHealthcare. With growing numbers of Americans--15 million at last count--now carrying at least 100 extra pounds, hospitals are finding that they need to acquire special equipment to accommodate these patients. The accommodations begin in waiting rooms, and have expanded to the point where hospitals utilize everything from special chairs designed to fit a morbidly obese frame to special stretchers carrying up to 750 pounds and lifts helping nurses move patients up to 1,000 pounds. Hospitals are buying MRI machines big enough to hold 550 pounds, and replacing wall-mounted toilets good only up to 325 pounds. They're also getting bigger beds and walkers for such patients. Small wonder that medical supply maker Stryker estimates that the U.S. bariatric market is already $100 million a year, with 20 percent annual growth.

These accommodations are expensive, unfortunately. For example, bariatric furniture can cost 20 percent to 50 percent extra, boosting the cost of a hospital bed from $6,000 to $8,000, to more like $10,000 to $12,000. Stretchers that hold 700 pounds cost more than $3,000, where others cost more like $2,400. And overhead lifts can cost $12,000. Meanwhile, insurance companies don't pay extra when hospitals care for bariatric patients.

To learn more about this trend:
- read this Philadelphia Inquirer piece

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Building momentum for health facilities

Fri, 22 Feb 2008 06:59:57 -0500

A new report suggests that the hospital and health facility building boom will continue at least through 2010, when it's likely to exceed $60 billion. That's a big number, even by the industry's current standards. In fact, it's double the amount the industry spent in 2004, according to the study backed by the Healthcare Financial Management Association and GE Healthcare Financial Services. Several factors are continuing to drive the boom, including rehab and construction costs for next-gen hospitals, the shift to delivering care in ambulatory settings and patient volume increases due to Baby Boomer demand. Construction also is being driven by hospitals' "green" projects, including designing facilities to be more energy-efficient and environmentally friendly.

Of course, given bond market problems, nobody's sure exactly how facilities will finance these projects, but revenue bonds, physician-hospital joint ventures, public-private projects and work with third-party developers all are options, the report noted. Apparently, researchers didn't think the ongoing stresses on the financial system would be enough to turn this ship around--since healthcare organizations pretty much have to find a way to finance these deals if they want to stay competitive. Still, it looks like a lot of these projects were launched prior to when the financial markets were hit by the subprime mess. A new construction-industry report has found that hospital and clinic construction starts actually are down this year.

To learn more about this research:
- read this Healthcare Finance News article

Related Articles:
Hospital construction costs skyrocket. Report
Focus on private rooms in new construction. Report
Hospital building boom leaves inner cities behind. Report
N.C. 'Triangle' area sees $1.5B hospital building boom. Report
Hospital, clinic construction starts down. Report