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Teaching Hospital Update - February 27-March 2, 2012


Email Alert

March 2, 2012

By Sarah Kitchell*

Healthcare CEO Turnover Higher Than Other Industries

2012 is shaping up to be the "musical chairs" year, full of multiple chief executive officer (CEO) turnovers, particularly in healthcare. For example, Prime Healthcare Services last week announced its CEO and president resigned.

In healthcare specifically, twenty-five CEOs last month jumped ship, retired, or were forced out, compared with only nine year-over-year.

If the January data is any indication of turnover and mimics last year's numbers, healthcare could once again see the highest CEO turnover rates out of all sectors. Healthcare organizations saw the heaviest CEO turnover among all industries in 2011, according to Challenger, Gray & Christmas; 187 CEOs left their posts at an average of sixteen per month.

The cause of the recent executive job changes could be the challenges, not to mention the stress, of new government regulations. Hospital executives also are moving into contract consulting gigs as a result.

Karen M. Cheung, Healthcare CEO Turnover Higher Than Other Industries, FierceHealthcare (Feb. 28, 2012).

Coverage Denials Draw Ire of Emergency Doctors

Medicaid officials in some states are denying coverage for emergency department visits based on final diagnosis codes rather than the symptoms that brought the patient in, according to the American College of Emergency Physicians (ACEP).

ACEP said cash-strapped Medicaid officials are increasingly implementing plans to deny payment for emergency department services if the patient is ultimately determined to have a non-urgent condition.

For instance, a patient who comes to the hospital complaining of chest pain may be discharged with a diagnosis of heartburn. Medicaid could deny payment to the hospital for treatment of that patient based on the non-urgent diagnosis, even though a physician wouldn't know the chest pain is heartburn and not something more serious, such as heart attack, when he or she first sees the patient, ACEP said in a press release.

According to ACEP, the state Medicaid office in Washington state, for instance, has developed a list of more than 500 diagnoses deemed non-urgent for Medicaid emergency patients, including urinary tract infection, bronchitis, and sprains, for which the state will not reimburse hospitals.

The healthcare authority's controversial plan to not pay for more than three emergency department visits for Medicaid patients was overturned in November by a Washington state court on procedural grounds. The authority's current plan to curb emergency room spending calls for implementing the new "medically necessary" payment method on April 1.

Emily P. Walker, Coverage Denials Draw Ire of Emergency Docs, MedPage Today (Feb. 29, 2012).

Parkinson's Drug May Help With Brain Injuries, Report Finds

Daily doses of a drug used to treat Parkinson's disease significantly improved function in severely brain-injured people thought to be beyond the reach of treatment, scientists reported on February 29, providing the first rigorous evidence to date that any therapy reliably helps such patients.

The improvements were modest, experts said, and hardly amounted to a cure, or a quick means of "waking up" someone who has long been unresponsive. But the progress was meaningful, experts said, and, if replicated, would give rehabilitation doctors something they have never had: a standard treatment for injuries that are not at all standard or predictable in the ways they affect the brain.

Some 50,000 to 100,000 Americans live in states of partial consciousness, and perhaps 15,000 in an unresponsive "vegetative" condition. According to the U.S. Department of Defense, more than 6,000 veterans have had severe brain injuries since 2000 and would potentially benefit from this therapy. The new report, appearing in The New England Journal of Medicine, gives doctors a solid basis to address such injuries, if not yet a predictable outcome.

Having a standard therapy may give family members, doctors, and policymakers leverage to get treatment covered by insurers. Many thousands of people with such severe injuries lie trapped in partial states of consciousness, in nursing homes and living rooms, with no access to rehabilitation.

Benedict Carey, Parkinson's Drug May Help With Brain Injuries, Report Finds, NY Times (Feb. 29, 2012).

Study: Joseph Giacino et al., Placebo-Controlled Trial of Amantadine for Severe Traumatic Brain Injury, 366 New Eng. J. Med. 819-826 (2012).

Latest Monkey Death Casts Spotlight on Controversial Research

The death on February 26 of a cotton-top tamarin monkey at a Harvard Medical School facility has cast an intense spotlight on a controversial area of biomedical research that has contributed to major advances but also aroused suspicion because of the secrecy that generally surrounds the operations of primate research facilities.

It was the fourth monkey death at the New England Primate Research Center in less than two years, and animal rights groups condemned the apparent carelessness that led to it. An elderly monkey was euthanized after being found in poor condition and lacking a water bottle in its cage. The groups called on federal regulators to take decisive and severe enforcement actions.

People for the Ethical Treatment of Animals sent a letter this week to the National Institutes of Health, the federal funder of biomedical research, asking for an investigation into whether federal grant money was used to support research that was not in compliance with animal welfare regulations.

The dean of Harvard Medical School took the unusual step February 28 of disclosing the latest monkey death, even as the investigation is unfolding.

Carolyn Y. Johnson, Latest Monkey Death Casts Spotlight on Controversial Research, Boston Globe (Feb. 29, 2012).

Generic Drug Use Has Slowed Growth of U.S. Drug Spending, GAO Report Says

Generic drug use has slowed the growth of drug spending in the United States, according to a letter report released March 1 by the Government Accountability Office (GAO).

Until the early 2000s, drug spending was one of the fastest growing components of healthcare spending, the report, Research on Savings from Generic Drug Use (GAO-12-371R), said. However, since that time, the rate of increase has generally declined each year, due in part to the greater use of generic drugs. The report added that prescription drug spending in the United States reached $307 billion in 2010, an increase of $135 billion from 2001.

The report said increased use of generic drugs can partly be attributed to the regulatory framework that was established in the Drug Price Competition and Patent Term Restoration Act of 1984, commonly referred to as the Hatch-Waxman Act. The Hatch-Waxman Act facilitated earlier and less costly market entry of generic drugs.

When the law was enacted in 1984, the generic utilization rate (the share of all drugs dispensed that are generic) was about 19%, the report said.

Other factors also influence whether providers and consumers use generics, the report said. These factors include third-party payors, such as private health insurance plans and public programs like Medicare, that use tiered copayments to encourage the use of less expensive drugs within a therapeutic class, which are often generics. Perceptions of the safety and efficacy of generics drugs also may affect their use, the report said.

Generic Drug Use Has Slowed Growth of U.S. Drug Spending, GAO Report Says, BNA Health Care Daily Rep. (March 2, 2012) (note: registration is required to access this article).

Report: U.S. Government Accountability Office, GAO-12-371R, Research on Savings from Generic Drug Use.

*We would like to thank Sarah Kitchell, Esquire (McDermott Will & Emery LLP, Boston, MA), for providing this week's update.

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