Health maintenance organizations and managed care have had a dramatic impact on healthcare, according to one industry veteran.
Alan Hoops, the former PacifiCare Health Systems chief executive who now is running CareMore Health Plan in Cerritos, said he believes HMOs and other managed care programs have created something called “evidence-based healthcare,” which covers treatments based on their track record.
Managed care programs have prompted insurers to look at how patients are treated and not just the risk they represent, he said.
Instead, HMOs and other forms of managed care have led insurers to view healthcare as a set of medical conditions and personal situations, Hoops said.
Such conditions and situations are “many times driven by age and sex,” he said.
This has “forced a merging of the actuarial management of risk with the application of clinical programs designed to deal with populations that have specific conditions,” he said.
In other words, insurers are paying more attention to doctors, the conditions they are treating and the services they are providing, as well as other medical data, and tailoring policies to information.
HMOs were the first to bring consumerism,making people more aware of and accountable for their health costs,Hoops said. They did so more with insurers rather than doctors and hospitals, he said.
“When I was starting my career and before that time in the ’70s, health insurance was not subject to very much consumer sovereignty and consumerism,” Hoops said. “Insurance was provided. Healthcare, health services, were purchased, but not health insurance.”
Today, the idea of choice has been ingrained in people, Hoops said. Workers in the past 25 to 30 years have been trained to look for and demand choices in how their healthcare is paid for, he said.
Hoops also talked about the HMO backlash era, which cropped up in the late 1990s amid reports of claim denials and fat paychecks for executives. The backlash led to patient protection laws passed by Congress and several states.
The backlash “didn’t happen suddenly,” Hoops said. “Consumer and regulatory backlash against managed care grew, really, starting in the mid-1990s.”
The backlash came because HMOs,as opposed to more liberal preferred provider organizations,were taking over the market, he said.
In the early part of the 1990s, HMOs were capturing market share at “a pretty alarming rate,” Hoops said.
“And one of the side effects of that was people feeling like they don’t have choice. And that, I think, as much as anything else was the root cause of the backlash,” he said.
Edwards Reaffirms
Edwards Lifesciences Corp., the Irvine heart valve maker, is looking for double-digit earnings growth for 2007, driven by higher gross margins and new product sales.
Edwards said it expects its 2007 sales to come in at $1.08 billion to $1.13 billion, a wider range than what Wall Street had expected. The company said its 2007 gross profit margin could improve by 150 basis points, resulting in earnings growth of 12% to 14%, excluding charges.
Edwards’ heart valve and critical care businesses “provide a strong foundation for continued growth,” Chief Executive Michael Mussallem said in a release.
On average, analysts were expecting Edwards to earn $132.6 million. Sales were expected to come in at $1.11 billion in 2007.
The company reaffirmed its 2006 forecasts of $117.5 million to $118.7 million in profit. Wall Street is looking for a profit of $118.1 million. The device maker also said it reaffirmed 2006 sales of $1.04 billion to $1.06 billion. Analysts expect $1.04 billion this year.
Edwards’ revised forecast came a few days after it said it was cutting 70 jobs and taking a $16 million charge in the fourth quarter because of reorganization and discontinuing a product.
Edwards is dropping its Optiwave 980 cardiac laser ablation system, which is used to treat abnormal heart rhythm. It plans to use its resources for programs with greater growth opportunities, including its mainstay heart valve business.
Affordable in Vietnam
Affordable Quality Pharmaceuticals Inc., a private company based in Garden Grove, has received a three-year contract with the U.S. Centers for Disease Control to make, store and distribute medications in Vietnam.
Affordable and its Vietnamese affiliates hold licenses to make basic medicines such as aspirin, calamine lotion and simethicone, a medication to control abdominal pain.
Affordable is owned by Tracy Nguyen, who emigrated from Vietnam 27 years ago. The company buys drugs in bulk directly from manufacturers, reduces them to dosage sizes typically prescribed by doctors, and repacks them in bottles and bubble packs.
The company then sells those to independent pharmacies and drug buying groups.
Bits and Pieces:
Intercare Insurance Solutions, a San Diego-based provider of employee benefits consulting and services, opened a regional office in Irvine and said it was expanding its operations to Orange and Los Angeles counties. Rich Roge, a newly appointed senior vice president, runs the office. Roge’s career includes serving as a senior vice president for PacifiCare Health Systems Patient Care Technology Systems in Mission Viejo said it and Portsmouth, N.H.-based Exavera Technologies Inc. installed an Internet browser-based system to track products at the Harmon Medical and Rehabilitation Hospital in Las Vegas. Patient Care also said it placed its Amelior Tracker software at Christiana Hospital and Wilmington Hospital, two facilities that have 1,071 beds between them and are owned by Christiana Care Health System of Wilmington, Del. It also sold its Amelior ORTracker software to New York-Presbyterian Hospital.
