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NEW YORK: Digitizing health records. A good idea say most experts, but it will take a feat of policy, technology and education to ensure your records don’t get into the wrong hands.It all starts with one basic question: Who actually owns your health records?”Right now, hospitals assume the liability, but the model has to shift to one where the patient controls the data and whether it is put online,” said Dr. David Brailer, chairman of Health Evolution Partners and former health tech czar under President Bush. “The people who hold your data control your data.”Controlling the dissemination of patient data is becoming more of a hot-button issue as the push to go digital heats up. The Obama administration is spending 20 billion on incentives to hospitals and physician offices to ensure that a national digital health network is formed by 2014. What are your rights? The current health information privacy laws were enacted in 1996 and appear outdated when it comes to Obama’s digital plan. The Health Insurance Portability and Accountability Act (HIPAA) gives you the right to find out how your information may be used, and the ability to obtain a copy of your records and request corrections. But patients don’t own their records, so they don’t have a say in how they are actually used or who sees them.”HIPAA is yesterday’s solution, as it was set up to protect privacy in a paper world, not for one that’s electronic and streaming,” said Brailer. “And HIPAA delegates policy to states, making it nightmarish for different people to come together. It’s a big regulatory gap.”He suggested Congress pass an updated bill that gives patients the ability to opt in to allow information sharing. Similar to when Web sites ask whether or not you would like your contact information shared, patients would have to click a box to give doctors permission to disseminate their information. They could also choose whether their data get shared anonymously.An opt-in system’s benefits extend beyond just privacy — it could give patients more freedom to switch doctors, Brailer argued. A patient who is treated by Dr. X and wants to be treated by Dr. Y could simply give permission to share his or her information with Dr. Y, rather than requesting that Dr. X fax the files over.”Portability and privacy are two sides of the same coin,” said Brailer. “We want to make patient shopping easy, rather than the weeks-long riggamarol to get a doctor to see your records.”Securing your records. In the absence of new privacy laws, the burden lies with secure networks and solid physician training on the technology, say experts. But that may be a tall order…at least in the near-term.”Today, information gets converted from paper to digital and back to paper,” said Sean Hogan, vice president of IBM’s healthcare delivery systems. “It’s incredibly convoluted and information is very exposed due to a lack of good processes.”IBM (IBM, Fortune 500) offers IT, hardware and maintenance services for about a dozen hospital networks that use electronic health records. Hogan said many hospitals have different logins and passwords for each terminal. And rather than memorizing each login, many nursing stations and doctors offices have Post-its on the computer monitors with the username and password — not exactly air-tight security.IBM and other vendors are combating that lax security by creating unique logins for each user rather than for each terminal. It’s a two-fold fix, said Hogan. First, it hopefully eliminates the Post-its and second, it restricts patients’ records from being viewed by hospital personnel that don’t have proper clearance to view that data.In one more security measure, IBM trains doctors and other hospital personnel in how to properly use the technology to avoid slip-ups, said Hogan.Still, no matter how secure the network is and how well-trained the hospitals’ staff are, there is no fool-proof system.Hogan said technology can be designed to anticipate and counter ways the “bad guys” will attempt to gain access to records. But government policy and hospital structure need to help support that technology.”When we go in a direction that is more fine and robust in terms of policy and process, we can develop the technology that addresses the exposures,” he said.

Source:CNN

WASHINGTON, D.C. (Fortune Small Business) — On a blustery January morning, a handful of journalists dutifully reported to a small, ornately detailed meeting room in a corner of the U.S. Capitol to cover a staple of official Washington life: the nonnews news conference. Backed by a phalanx of American flags, three senators stood to demand prompt and bipartisan health-care reform. But no new legislation was announced, and no new compromise had been brokered. It was clear, in fact, that the senators didn’t even agree on the shape of the reform they so earnestly demanded. Both Democrats present, Richard Durbin of Illinois and Sheldon Whitehouse of Rhode Island, backed a government insurance plan that would compete with private coverage. Utah Republican Orrin Hatch, luminous in a charcoal suit and rich magenta tie, insisted that reform couldn’t include expansive new government programs or insurance mandates. Although short of newsworthy, the press conference was noteworthy — not for the senators but for the four senior lobbyists who flanked them. They included the heads of two famously liberal interest groups — AARP (formerly known as the American Association of Retired Persons) and the Service Employees International Union (SEIU) — plus the leaders of the Business Roundtable and the National Federation of Independent Business (NFIB). Whitehouse described these four middle-aged white guys as “the bookends in our political debate,” and he wasn’t far off. The four lobbyists represented an improbable coalition called Divided We Fail. Its mascot is a mutant donkey-elephant. Its goal: a grand bipartisan deal to fix our dysfunctional health-care system. Like the senators, Divided We Fail’s leaders don’t agree on how to reform health care. Their alliance is based on the hopeful assumption that generating bipartisan momentum to act will lead eventually to a compromise that all sides can live with. Then-NFIB president Todd Stottlemyer spoke last, and briefly. “The status quo is unacceptable,” he said. “It will result not only in personal family bankruptcy but in a nation of bankruptcy. And that is why we have come together to work for comprehensive health-care reform.” The NFIB is a national small business lobbying organization known for the purity of its adherence to an antitax, antiunion, antiregulation ideology. The group determines its policy positions by surveying its members, who have spoken decisively against the estate tax, the Family and Medical Leave Act, and the proposals, now circulating in Washington, to cap and trade greenhouse gas emissions. The NFIB rose to prominence in 1993 when it helped derail Hillary Clinton’s health-care reform initiative, which it saw as an alarming extension of the federal government’s reach. Over the years the NFIB has peddled numerous free-market alternatives, including tort reform to reduce malpractice litigation; tax incentives that would induce individuals to purchase insurance on their own; and so-called association health plans, which would allow employers to buy cheaper coverage for their workers through national trade associations. This last idea held particular appeal for the NFIB because the plans would create large risk pools that could be managed in states with lax regulations. (Perhaps not coincidentally, the NFIB would be among the groups empowered to sell such insurance.) Once more, health-care reform is shaping up to be the most important — and controversial — domestic policy initiative of a young Democratic president’s new administration. Once more, the NFIB is in the thick of the debate. But this time the organization says it wants to play a constructive, rather than obstructive, role. For NFIB members, as for many small businesses, health insurance is rapidly becoming an unaffordable luxury. The premiums that small firms pay for family coverage have climbed 113% since 1999, according to the Kaiser Family Foundation. And the percentage of firms with fewer than 10 employees that offer health insurance to their workers fell to just 49% in 2008, down from 56% in 1999. Increasingly, small companies that do offer insurance are buying plans that provide less coverage for more money. Divided We Fail represents the NFIB’s second effort in recent months to find a bipartisan solution to the health-care crisis. Last year the organization worked with Durbin, along with Sen. Blanche Lincoln, D-Ark., and two Republicans, to craft the Small Business Health Options bill (SHOP). Like the old association health plan idea, SHOP would drive down insurance costs by creating national risk pools for small employers. From the NFIB’s perspective, the compromise is that SHOP envisages a more active role for government. In all, the past three years have marked quite a reversal for the NFIB. Indeed, last year the group even helped bring back Harry and Louise, the fictional stars of the famous ad campaign that contributed to the Clinton initiative’s rapid collapse. In last year’s TV spots, which aired in Denver and Minneapolis during the party conventions, the couple who once denounced the evils of socialized medicine had a brand new message: Reform health care now. The Divided We Fail press conference took place a week before Barack Obama’s inauguration. An air of anticipation hung over Washington, and it seemed to hold questions especially for the NFIB. How would this staunchly conservative organization, long branded as an extension of the Republican Party, conduct business in a Democratic Washington? Would its apparent flexibility on health-care reform be the exception or the rule? Ideologues vs. PragmatistsDemocrats and Republicans alike regard the NFIB as one of the most powerful lobbies in Washington, despite its declining membership — which has fallen from about 600,000 in 2001 to 350,000 today — and relatively small budget. (The NFIB spent 4.2 million on lobbying in 2008. By contrast, the Pharmaceutical Research and Manufacturers of America spent 28 million and the U.S. Chamber of Commerce spent nearly 95 million.) The group’s power flows from its ability to mobilize small business owners in nearly every congressional district. Scandalous recent headlines notwithstanding, members of Congress generally don’t love meeting lobbyists. But they do like to meet constituents, and the NFIB knows how to make those introductions — sometimes by the thousands. The NFIB “would send out polling questions to its members,” recalls Maria Freese, a former lawyer for the Democratic side of the Senate Finance Committee. “And it would come back with these printouts — you would get these stacks three inches deep that had names and addresses of every small business in your state that had signed on to whatever issue the NFIB was circulating.” While the NFIB insists that its members’ views reflect the small business community at large, opponents argue that the NFIB membership is self-selecting. “There are lots of small businessmen who are liberal Democrats — they’re not members of the NFIB,” notes Burt Carp, a lawyer and veteran Democratic lobbyist. That’s what makes the NFIB’s recent health-care moves so remarkable. By supporting Durbin’s SHOP bill and joining Divided We Fail, Stottlemyer signaled that the NFIB was now willing to do business with all parties. Would the members go along with this about-face? “There was certainly some concern that they were going further than their membership might feel comfortable with,” says John Motley, who served as an NFIB lobbyist from 1971 until 1995. The limits of compromiseA few days after that January press conference, Stottlemyer resigned from the NFIB, citing a desire to spend more time with his young family. The federation named Dan Danner, its veteran chief lobbyist, to the job. Danner, who served as a political appointee in the Reagan administration, is well regarded in D.C. and has pledged to continue along the bipartisan path that Stottlemyer cleared. But now that legislators are negotiating actual reform provisions, Divided We Fail may have run its course. The partners all agree, says Danner, 63, on the importance of measures that cut costs and limit insurers’ ability to deny coverage. Yet the liberal SEIU would not comment about Divided We Fail or about its relationship with the NFIB for this story. Maybe that’s because in many respects the NFIB’s idea of health-care reform bears little resemblance to the Democratic vision. The NFIB despises the public insurance option that President Obama and most Democratic legislators favor, seeing it as an inevitable route to the hated single-payer system. And it is dead set against a play-or-pay mandate on employers. In late April, NFIB official Denny Dennis took this message to a hearing convened by the House Ways and Means Committee, whose Republican minority had invited him to testify. As head of the NFIB Research Foundation, Dennis is responsible for the raft of information that the organization produces about small businesses, including frequent polls and monthly economic reports. He considered the hearing a valuable opportunity because, as he explained afterward, “it was the chairman sitting there himself. If you can make your point without staff filter, that really is helpful.” From the cheap seats, it didn’t look so helpful. The representatives listened impassively as each witness made an opening statement. When his turn came, Dennis attempted to steer the legislators away from mandates and toward cost-cutting. “Employer-mandated health insurance,” he said, “is bad for small business, bad for low-income people and bad for the economy.” After the last witness finished, chairman Charles Rangel, D-N.Y., thanked the panel. “We recognize that you’re not Republican and Democratic witnesses, it’s just who invited you, [and] that all of you are concerned about improving the health care of Americans,” he began. “I don’t think it’s necessary to say that, but I just want to make the record clear — as I tear into Denny Dennis, the Republican witness.” The chairman was merciless. He spoke of the uninsured, half of whom, he noted, “work every day. And if they have a serious illness in this great country of ours, they’ve got to get care. Do you agree? What do we do with these people?” Dennis was outgunned; each time he tried to speak, Rangel cut him off. “We’re going to take care of these people,” the chairman declared finally. “And if you don’t help us to do it, we may have a way to do it that you don’t like.” The next Democrat to speak, Rep. Sander Levin of Michigan, picked up where Rangel left off. “The problem is, you don’t like a mandate, you don’t like a public plan, but you have no plan,” he lectured. “I think you need to come forth with a very specific proposal that would ensure that there would no longer be 50 million uninsured in this country.” This was partly theater, of course. The NFIB does have a proposal — the SHOP bill’s regulated association health plan initiative. In an odd sign of today’s changing political landscape, it was left to a Democrat on the committee, Ron Kind of Wisconsin, to put that squarely on the record. (Kind sponsored the House version of SHOP.) But while aspects of SHOP could ultimately be incorporated into the final legislation, the bill itself isn’t really on the table. The hearing ran long; it was interrupted several times for votes on the House floor. One was on the budget resolution that, among other things, would allow the Senate to pass health-care reform by 50 votes rather than 60, so that opponents won’t be able to stop it with a filibuster. While the health-care hearing stood in recess, the House passed the resolution 233 to 193. No Republican voted for it. In the hearing room and on the House floor, Democrats made it plain: They too had reached the limits of compromise. Decision timeIn June, House Democrats circulated a draft of health-care reform legislation that, true to Rangel’s word, included both a public option and an employer play-or-pay mandate. The draft bill was light on specifics, but it seemed at least possible that both measures would eventually make it through the legislative meat grinder. The NFIB denounced the House bill as legislation that would “raise rather than lower costs, decrease rather than increase competition and eliminate rather than expand choice.” The organization also insisted that it would “remain a committed participant in the health reform debate, working to support legislation that results in lower costs, more choice and real competition for our nation’s job creators.” What does that mean, exactly? The NFIB will have a tough choice to make if something like the draft House bill ever comes to a vote. Will it support an expanded government role in health care, or at least hold its fire? Or will Danner and his comrades oppose reform with the same fury they mustered when they helped scupper the Clinton initiative back in 1993? I put this question to Danner in late June, as the NFIB geared up for the great summer health-care debate. “It’s way too early for us to get caught up in what-ifs and hypotheticals,” he answered in an e-mail, adding that “we are open to learning more” about compromise alternatives to the public option. So what happens if the NFIB’s mostly right-wing members want no part of a grand bipartisan deal on health-care reform? “Dan truly believes that the NFIB membership sets the policy of the organization, and he will represent that position without compromising it in any way,” says Motley, the former lobbyist. By July, the Divided We Fail coalition had gone quiet, though the parties were still meeting weekly. But given the alternatives on the table, Danner’s Main Street constituency may find that the health-care status quo is acceptable to them after all. In that case, Divided We Fail could turn out to be a self-fulfilling prophecy.

NEW YORK: Down the drain: 1.2 trillion. That’s half of the 2.2 trillion the United States spends on health care each year, according to a recent report from accounting firm PricewaterhouseCoopers’ Health Research Institute. What counts as waste? As policymakers continue to debate the extent and timing of health care reform, CNNMoney.com spoke with members of the medical community — doctors, nurses, hospital groups and patient advocacy groups — to find out. Too many testsDefensive medicine — doctors ordering tests or procedures not based on need but concern over liability or increasing their income — is the biggest waste of health care dollars, costing the system at least 210 billion a year, according to a report. “Sometimes the motivation is to avoid malpractice suits, or to make more money because they are compensated more for doing more,” said Dr. Arthur Garson, provost of the University of Virginia and former dean of its medical school. “Many are also convinced that doing more tests is the right thing to do.”"But any money that is spent on a patient that doesn’t improve the outcome is a waste,” said Garson.Some conservatives have suggested that capping malpractice awards would help solve the problem. President Obama doesn’t agree; instead, his reform proposal encourages doctors to practice “evidence-based” guidelines as a way to scale back on unnecessary tests.Those annoying claim formsInefficient claims processing is the second-biggest area of wasteful expenditure, costing as much as 210 billion annually, the PricewaterhouseCoopers report said. “We spend a lot of time and money trying to get paid by insurers,” said Dr. Terry McGenney, a Kansas City, Mo.-based family physician. “Every insurance company has its own forms,” McGenney said. “Some practices spend 40% of their revenue filling out paperwork that has nothing to do with patient care. So much of this could be automated.”Dr. Jason Dees, a family doctor in a private practice based in New Albany, Miss., said his office often resubmits claims that have been “magically denied.” “That adds to our administrative fees, extends the payment cycle and hurts our cash flow,” he said.Dees also spends a lot of time getting “pre-certification” from insurers to approve higher-priced procedures such as MRIs. “We’re already operating on paper-thin margins and this takes times away from our patients,” he said.Susan Pisano, spokeswoman for America’s Health Insurance Plans, said “hundreds of billions” of dollars can be saved by standardizing procedures and using technology — something the White House has mentioned as a key to health care reform. “For that to happen, we need the technology,” she said. “Doctors and hospitals must adopt the technology, and we have to develop rules for exchanging of information between doctors, hospitals and health plans.” Pisano said the industry is launching a pilot program later this year that will allow physicians to communicate with all health plans using a standardized process.Using the ER as a clinicMore insured and uninsured consumers are getting their primary care in emergency rooms, wasting 14 billion every year in health care spending.”This is an inappropriate use of the ER,” said Dee Swanson, president of the American Academy of Nurse Practitioners. “You don’t go to the ER for strep throat.” Since emergency rooms are legally obligated to treat all patients, Swanson said providers ultimately find ways to pass on the cost for treating the uninsured to other patients, such as to those who pay out-of-pocket for their medical care.Dees also took issue with consumers who don’t get primary care for their diabetes or blood pressure on a timely basis, hence finding themselves in the ER. “Going to the doctor for strep throat would cost 65-70. In the ER, it’s 600 to 800,” he said.The 787 billion stimulus bill signed passed by President Obama earlier this year includes allocates 1 billion for a wellness and prevention fund, including 300 million for immunizations and 650 million for prevention programs to combat the rapid growth in chronic diseases such as obesity and diabetes.Medical “Oops”Medical errors are costing the industry 17 billion a year in wasted expenses, something that makes patient advocacy groups irate.”Do we have a good health IT system in place to prevent this?” asked Kim Bailey, senior health policy analyst with consumer advocacy group Families USA.Bailey suggested that processes such as computerized order entry for drugs and use of electronic health records (EHR) could help ensure that patients get the correct dosage of medications in hospitals.The stimulus bill calls for the government to take a leading role in developing standards by 2010 to facilitate the adoption of health information exchanges across the system, including patient electronic health records by 2014.Obama has repeatedly said that the use of technology in the health sector will help boost savings, enhance the coordination of care and reduce medical errors and unnecessary procedures.Going back to the hospitalBailey suggested that processes such as computerized order entry for drugs and use of electronic health records (EHR) could help ensure that patients get the correct dosage of medications in hospitals. (This section needs some more)Discharging patients too soon is a “huge waste of money,” said Swanson.”This happens a lot with elderly patients who are discharged prematurely because of insurance, bed unavailability or ageism,” she said. Many times, patients also don’t follow instructions for care after discharge. “So complications arise and they are readmitted in a week,” Swanson said. PricewaterhouseCoopers estimates the cost of preventable hospital readmissions at 25 billion annually.Among the reform plans, one proposal being considered is for Medicare to potentially penalize hospitals who readmit patients within 30 days of discharge.You forgot to wash your hands!Those ubiquitous dispensers of hand sanitizer are in hospitals for a reason: PricewaterhouseCoopers estimates that about 3 billion is wasted every year as a result of infections acquired during hospital stays.”The general belief is that hospitals are getting much better in managing this than they have in the past,” said Richard Clarke, CEO of Healthcare Financial Management Association, whose members include hospitals and managed care organizations.Something as simple as hand-washing often can reduce the problem.”Sometimes doctors are the most difficult people to convince to do this,” said Clarke. “The challenge here is that patients sometimes come in with infections which then spread in the hospital.”The stimulus bill signed by Obama earlier this year includes 50 million for reducing health care-associated infections

NEW YORK: A lot was supposed to happen on health reform before Congress went on summer vacation. Turns out, a lot didn’t. End result: The heavy lifting on health reform legislation has been pushed to the fall.A bipartisan group of six senators from the Senate Finance Committee was supposed to unveil its health reform bill — or at least an outline. But the group couldn’t resolve some outstanding issues such as how to make sure the health insurance structures they’re proposing end up being affordable.It’s also unclear whether the group will release a draft before the start of the Senate summer recess next Friday. That means the full committee, to say nothing of the full Senate, won’t begin to debate the proposal until the leaves start turning a lovely autumn orange.Meanwhile, House leaders had been promising a full floor vote on health reform before the congressional recess, which begins on Saturday. But that idea was tabled once it became clear that the last of the three committees — the Energy and Commerce Committee — wouldn’t report the bill out of committee until the 11th hour.That means the full House won’t take up a health reform bill before fall.So, with the finish line still far away, it’s too soon to tell the final shape that health reform would take. CNN’s Ed Henry put it best during his radio show: “It’s like covering Jello.”Until then, here’s an update on where things stand on some important questions: Will there be a public option? Who will pay for reform? When would it take effect?What’s the chance for a public option?Those who want a public insurance plan want it fiercely, saying it’s the only thing that can force private insurers to reduce costs and be more competitive. Those who oppose it are equally fierce, saying it would result in a government takeover of the heath care system.Truth is, there’s still not enough information in any of the proposals for either side to say definitively what the realities of a public option would be.Two major bills that lawmakers will consider — the tricommittee bill from the House and the bill put out by the Senate Health committee — propose a public health insurance option. That public plan would compete with private insurers on a health insurance exchange — or insurance supermarket — that the bills also propose.Among Democrats in the House, there is support for a public plan in theory. But progressive Democrats and fiscally conservative Democrats have different ideas as to what such a plan should look like. Republicans in the House, meanwhile, are almost universally opposed.In the Senate, meanwhile, a public option doesn’t appear to have sufficient support. So the bipartisan group on Senate Finance is expected to propose state and regional nonprofit health cooperatives to serve as a competitor to private insurers.The cooperatives would be owned and governed by the consumers who join them. But they would receive seed money from the federal government. It’s not clear whether the co-ops would hire doctors full-time to serve members or whether they would establish a network of doctors from which members could choose.Nonprofit co-ops aren’t a new idea, and some already exist today. But in order to be truly competitive in a market dominated by United Healthcare and the group of Blue Cross/BlueShield insurers, they need to attract a substantial number of people.Sen. Kent Conrad, D-S.D., who proposed the co-op idea, has said actuaries estimate that co-ops could attract 12 million members — potentially enough to make them competitive. But without any details on the proposal, it’s impossible to independently verify that kind of estimate.Who’s going to pay for this?That’s the 1 trillion question tripping up everyone. Much of the cost would stem from subsidies to help make health coverage more affordable for low- and middle-income families, including the uninsured.The House bill proposes to pay for reform in part by implementing various cost-saving measures in Medicare and Medicaid. It would also impose a surtax on the highest income Americans, affecting up to 1.2% of households. A surtax is a tax on top of a person’s ordinary income tax.The surtax has support among many although not all House Democrats. House Republicans oppose it.The surtax is not expected to get much love in the Senate, where the Senate Finance bipartisan group is seen as the arbiter of what will fly as a pay-for and what won’t. The Senate group is expected to propose a slew of savings in Medicare and Medicaid. On the revenue side, it has been considering a tax on insurers for very expensive health plans — those whose cost well exceeds the average cost of a policy for individuals and for families.Opponents of the insurer tax — including unions — say the tax is likely to be passed on to consumers in the way of higher costs.Another way lawmakers want to alleviate the cost of reform is through “pay or play” mandates on employers to provide coverage or pay a penalty that would help subsidize those who buy insurance. The Senate Finance Committee is not expected to propose an employer mandate but is expected to provide what have been referred to as employer incentives to provide coverage.When would health reform take effect?Not right away. In fact, health reform is going to be a long-term process no matter whose ideas end up dominating the day. Why? Because in essence it’s a restructuring of one of the biggest and most complex parts of the economy.The proposed health insurance exchange in the House bill, for instance, wouldn’t be up and running before 2013, and many of the insurance reform measures wouldn’t be fully in effect until 2018.Plus a number of measures in all the reform proposals will take time – in some cases 5 to 10 years, in some cases longer – the achieve the promises of greater efficiencies, better care and cost savings.- CNN’s Dana Bash, Ted Barrett and Deirdre Walsh contributed to this report.

NEW YORK: Creating an electronic health record for every American by 2014 is a big part of Obama’s agenda but it may be easier said than done.For one, the cost can be prohibitive – easily running into the tens of millions of dollars. Getting physicians on board can be challenging. And the sheer magnitude of implementing the technology can be overwhelmingly cumbersome – translation: try creating a system for a hospital that serves 600,000 patients.But that’s not stopping some hospitals and health care networks from answering the call, especially when the government is pouring about 20 billion into the effort.Adoption. Large hospitals, small hospitals and giant health care networks face unique issues.St. Elizabeth Healthcare in Northern Kentucky, for example, plans to integrate EHR across three hospitals and 43 ambulatory care offices that include 1,000 physicians and serve roughly 600,000 patients. With such tremendous size, implementation has been a slow process. “There are still a lot of paper processes and protocols that are not on a digital platform, so the true trick is getting all of those standards of care into the computer,” said Alex Rodriguez, chief information officer at St. Elizabeth. “We’ve been exchanging data with area hospitals for 10 years, but this takes it to the next level. This is a fundamental shift in how our hospital conducts business.”Large hospital networks also have to perform a lot of wheeling and dealing before EHR can go live.The Western North Carolina Health Network comprises 16 community-based hospitals in western North Carolina. Getting all of them to agree on how EHR would be used wasn’t easy: Who gets access to the records? What kind of audits should be done to ensure that there’s no abuse of the system? How will the data be displayed?After four years of drafting legal agreements, the hospitals agreed that the patient data would live in the patient’s home hospital, not in a central data warehouse, and would only be pulled on an as-needed basis.If you think smaller hospitals have it easier, think again. Many of those smaller, independent facilities are located in rural areas. While they may be able to get an EHR system up and running quickly, getting local physicians to change old habits is a bigger challenge.Memorial Hospital in Sweetwater County, Wyo., is a rural, county-owned hospital with just 99 beds. Because of its size, Memorial opted to go with a “big bang” approach, choosing to go live across the hospital in one fell swoop. Most larger hospitals roll out EHR in sections.The vast majority of Memorial’s staff had never worked at another hospital or used EHR before. Many had difficulty understanding the new processes in the first few months of implementation, making them resistant to change. Eventually, that did change.Cost. Hospitals that set up EHR systems that comply to some basic standards by October 2010 are eligible for Medicare and Medicaid incentives from the Recovery Act. But the up front costs are the hospital’s responsibility. That’s not a cheap proposition.For example, it will take a total of three years and cost 80 million for St. Elizabeth to complete its EHR process. About 40 million went to Epic for the software and 1.5 million went to IBM (IBM, Fortune 500) for the hardware (and about 225,000 per year to IBM to service the network). The rest went to replacing old machines with new ones that worked with Epic’s software. Although St. Elizabeth started its EHR process before the stimulus plan’s incentives were announced, it is a typical example of what types of costs big hospitals will face going forward. Foresight proved to be cost beneficial for Western North Carolina, which went live with EHR in February 2006.Implementation cost WNC just 3.5 million up front for MedSeek’s software, with 400,000 per year for IBM’s software licenses, hosting services and maintenance fees. “We were very fortunate that we got it in early,” said Gary Bowers, former executive director of WNC and current chief operating officer of Care Partners, a network of outpatient facilities within the larger WNC network. “IBM and MedSeek were both anxious to implement EHR for demo sites.”But even a price like that just wasn’t a possibility at Memorial. The need was there, but money was tight. That’s why the hospital’s management opted for Medsphere’s OpenVista software, an open source, commercialized version of the Veteran’s Association EHR software. For roughly 2 million, and 150,000 in annual service fees, it took 1-1/2 years to implement, going live Feb. 1, 2008.”Being small, a lot of systems were out of our reach,” said Linda Simmons, vice president of operations and chief nursing officer at Memorial. “Open source became a very viable and attractive solution for us.”National plan. Despite the various challenges, all three hospitals said a national plan faces the same hurdles, but on a much grander scale.”It’s still difficult to set this up regionally, so it gets even more difficult when it goes nationally,” said Dr. Bob Flowers, a physician at St. Elizabeth. “We still have to solve a lot of issues.”EHR at Memorial is about 60% compliant with orders, and management continues to build quick order sets for routine physician requests. But money and time are still major obstacles.”It will be difficult to go across the nation in five years and get an electronic record everywhere you need it to be,” said Simmons. “Rural hospitals will need more infrastructure in IT.”WNC believes it has already met the goals for the stimulus bill’s October 2010 implementation deadline for Medicaid incentives, but they still need to connect their physician offices, which is where the most patient information lives.”Technology is the easy part; the hard part is working with independent providers,” said Bowers. “If we have issues between 16 hospitals that have a good working relationship, on a national level, my gosh, they’re going to have a lot of struggles.”

Source:CNN

NEW YORK: Fears about what President Obama’s health care reform plan may do to the earnings of drugmakers has caused many Big Pharma stocks to come down with the sickness this year. Pfizer’s (PFE, Fortune 500) stock has fallen 10%, making it one of the more notable laggards in the Dow. Eli Lilly (LLY, Fortune 500) and Abbott Laboratories (ABT, Fortune 500) have both fallen more than 15%. But biotech stocks have been a different story. The NYSE Arca Biotechnology Index is up nearly 30% for 2009. And health care reform seems to be one reason why the sector has been on fire.Drug giants are desperate for growth and worried about the future, so they have been tripping over themselves to buy biotechs with decent profit potential — and bidding up the share prices of the whole group in the process.The latest big deal was announced Wednesday evening when Bristol-Myers Squibb (BMY, Fortune 500) said it would purchase Medarex, a biotech that uses antibodies to develop drugs for treating cancer and other diseases. Bristol-Myers Squibb agreed to pay 2.1 billion, or 16 a share for Medarex (MEDX), a whopping 90% premium to where Medarex’s stock closed Wednesday. This takeover follows a slew of other notable Big Pharma-biotech marriages as of late. In May, Johnson & Johnson (JNJ, Fortune 500) acquired Cougar Biotechnology. J&J also recently purchased an 18% stake in Elan (ELN), an Irish biotech that has a joint venture with Biogen Idec (BIIB) to market the multiple sclerosis treatment Tysabri and also has a pipeline of Alzheimer drugs. Earlier this year, Swiss drug titan Roche bought the remainder of Genentech that it didn’t already own. And late last year, Eli Lilly acquired ImClone Systems, the biotech most well-known for helping to land Martha Stewart in the slammer.Talkback: How would you fix the nation’s health care system? Leave your comments at the bottom of this story. The flurry of deals makes sense and probably won’t stop anytime soon — especially because Big Pharma is contending with a dearth of potential new blockbuster drugs in their pipelines. With that in mind, some analysts are busy trying to figure out who the next takeover candidates might be. In a note to clients Thursday morning, Needham & Co. biotech analysts Mark Monane and Alan Carr suggested that Regeneron Pharmaceuticals (REGN) and Seattle Genetics (SGEN), two biotechs with strong oncology franchises, could be attractive to larger drug firms.Meanwhile, Cowen & Co. analyst Ian Sanderson wrote in a report Thursday that shares of several speciatly pharmaceutical and biotech companies he follows were boosted by takeover speculation in the first half of this year. He expects that to continue for the remainder of the year. Sanderson cited Allergan (AGN), which makes the skin treatment Botox, British biotech Shire (SHPGY) and drug delivery developer Nektar Therapeutics (NKTR) as three potential targets.0:00
/2:07Health reform and youBut investors need to be a little cautious. Biotech stocks are notoriously volatile, especially those of companies still in the early stages of developing drugs. The shares often trade more on news about clinical trials and less on sales and profits. (Many smaller biotechs aren’t even making money.)Of course, volatility can be good. Witness what happened with Human Genome Sciences (HGSI) earlier this week. On Monday, the biotech reported surprisingly promising test results for its injectable lupus drug Benlysta and the stock nearly quadrupled, soaring 277%. But when trials go awry, stocks often plunge. Hard.Another reason investors need to be a tad wary is that not every biotech is going to get bought for a big, fat juicy premium. So some stocks may be well ahead of themselves. What’s more, publicly traded biotechs aren’t the only game in town for Big Pharma either. Waston Pharmaceuticals (WPI) announced a deal to buy privately held Arrrow Group, a company working on generic versions of drugs produced by biotechs, earlier this year. Venture capitalists have also wised up to the fact that Big Pharma has a lust for all things biotech. According to figures released by PricewaterhouseCoopers LLP and the National Venture Capital Association earlier this week, VC investments in biotechs surged 54% in the second quarter from the first quarter. Three of the biggest VC investments during the quarter were in biotech firms. So for investors that still might be intrigued by biotech’s growth potential, it may make more sense to play it a little safer and look at exchange-traded funds (ETF) that track a group of biotechs. The SPDR S&P Biotech (XBI), Biotech HOLDRs (BBH) and First Trust NYSE Arca Biotechnology Index (FBT) ETFs are among a few of the more actively traded funds focusing on the group.Talkback: How would you fix the nation’s health care system?

NEW YORK: It’s time for your 2015 annual physical. But your family doctor already knows all your vital readings from the self-tests you administered. If she sees any problems, she’ll send your electronic records to a specialist and coordinate the way you’re treated. And the two of them will send periodic e-mail reminders of what you need to do to stay healthy.This health care concept, called “patient-centered medical homes,” could improve the overall quality of care, and save consumers time and money. But skeptics maintain that the financial savings aspect still has to be proven. The model is already being tested in 44 states — with such big health insurers as UnitedHealthcare, Aetna and Medicaid taking part — and utilizes key components of President Obama’s reform effortIn medical homes, the family physician is like a personal health coach, responsible for managing all aspects of the patient’s health care needs, explained Paul Keckley, executive director of Deloitte Center for Health Solutions, a unit of consulting firm Deloitte LLP.The doctor also leads a team of coaches — including nurses, pharmacists, nutritionists and other medical professionals — with the aim of providing a more “holistic” approach to health care. Round-the-clock access, electronic health records, use of e-mail and phone communication, patient feedback, fee for service and fee for performance are all central to this concept.The concept is about meaningfully changing the daily habits in a “population of chronic diseases,” Keckley said, and “to do that you have to coach people and constantly manage and track their care through text message reminders, counselors and support groups.” Eventually, a healthier population would reduce the number of medical procedures and costly hospital admissions, potentially lowering consumers’ insurance premiums.Interest grows: Enthusiasm about medical homes is picking up, but only gradually. There are 27 medical home demonstration programs — collaborations between purchasers, providers and payers — underway around the country, according to the Patient Centered Primary Care Collaborative (PCPCC), a trade group that’s spearheading the medical home movement. Medicaid has pilot programs in 31 states while Medicare is gearing up to launch eight demonstration programs, said Edwina Rogers, executive director of the PCPCC, Rogers said major corporate purchasers of health insurance, which account for about 60% of total U.S. health care spending, are driving insurers to participate in pilot programs in the search for lower-cost alternatives.One of those companies, IBM (IBM, Fortune 500), has been working with UnitedHealthcare on a medical home initiative in Arizona. “We like to say that we have 458,000 reasons why we like medical homes,” said Dr. Paul Grundy, IBM’s director of health care, technology, and strategic initiatives, referring to the company’s total workforce, retirees and dependents receiving benefits. The nation’s fourth-largest U.S. private sector employer spends about 1.3 billion annually in health care-related costs.”We can buy an amputation for a diabetic, but we can’t buy care that prevents that situation,” Grundy said. “Corporations are half the (health care) spend. We have to rally together to change that model. We have seen in pilots that if we focus on prevention, we really begin to see results.” He cited the Geisinger Medical Home Initiative in Pennsylvania that tested a medical home pilot in 2006 — and found a nearly 8% reduction in hospital admissions among Medicare patients assigned a medical home and a 4% reduction in medical costs in the first year. Skepticism remains: Dr. Howard McMahan, a primary care physician based in Ocilla, Ga., is on the fence about transforming his practice into a patient-centered medical home.”I do absolutely think that this is the future model of health care. But it’s viable only if payment reform happens in the system,” McMahan said.Right now, doctors are not reimbursed for things such as e-mail or phone communication with patients, and there’s no incentive based on quality of care provided. “I don’t learn as quickly as I used to,” said McMahan, who has practiced for 26 years. “I think the medical home model is doable, but you have to provide physicians the necessary cash flow, training, and IT and ancillary services to make it a success.”Deloitte’s Keckley also said there’s a costly initial investment tied to technology adoption. And he said most physicians are trained to work independently and not necessarily as part of a team, so there’s additional training required for doctors to act as coordinators and managers.Politics could stymie the progress as turf wars erupt. “The fear of specialists is that primary care physicians will become too powerful,” Keckley said. Hospitals have also largely been silent on medical homes. “This is the yin and the yang of the model,” said IBM’s Grundy. “Hospitals are paid to get their beds filled.”Experts also said the shortage of primary care providers could delay adoption of the medical home. “And the return on investment on this model is not three to four years but 10 to 15 years,” said Keckley. “But the long-term savings it offers are exactly the discussions we’re having around health care reform right now.”Insurers on board: The insurance industry says it backs medical homes.”In essence, this model is what we’ve always supported,” said Susan Pisano, spokeswoman for America’s Health Insurance Plans, the trade group representing private insurers. “Individual patients do better with an ongoing relationship with their physician.”However, Pisano said insurers “need to make sure that we’re not looking at a one-size-fits-all model of medical homes but that we look at a number of different approaches for payment and reimbursement.”If reform doesn’t pass, Dr. Robert Berenson, a health care expert with public policy group Urban Institute, still believes that small changes to care delivery will happen, but the medical home model “will be a long way off from becoming the dominant model.”"The concept makes a lot of sense but we can’t get through with just marginal and incremental changes,” Berenson said. “Health reform will produce a major commitment to test a number of approaches to medical homes so that in five years we could get a major expansion of this model.”

Source:CNN

NEW YORK: Lawmakers are still far from consensus on how to fix the health care system. So it’s too soon to know exactly what reform would mean for individual Americans.But a picture has started to emerge from two key bills put out by Democrats in the House and Senate. A third bill is expected soon from the Senate Finance Committee.The first two bills propose:a national insurance exchange on which insurers would compete for consumers’ business; a public health plan that would compete with private insurers on that exchange; and subsidies for financially strapped Americans eligible to buy health insurance on the exchange.Both bills would also set minimum standards for health insurance policies and require insurers to guarantee coverage for those with pre-existing conditions.Considered in broad terms, here’s how those bills are likely to affect three groups of Americans: those who are currently insured through their employer; those who buy insurance on their own; and the 49 million Americans who are expected to go uninsured next year. You get coverage at workUnlikely to see much change: The more than 160 million Americans with employer-sponsored insurance today wouldn’t see much change, said Congressional Budget Office Director Douglas Elmendorf after doing a preliminary analysis of the two bills.That would accomplish one of lawmakers’ goals for health reform — to preserve the employer-based health insurance system. But it doesn’t prevent companies from changing workers’ plans if they decide to change the benefits menu or switch policy providers.At the same time, workers with insurance through their employers are not likely to see lower premiums, Elmendorf told lawmakers last week. In fact, at least initially, their premiums may continue to increase apace as they have for years.And if workers don’t like the health options provided by their employers, they may not have the option of buying insurance on the exchange. That’s because the bills include “firewalls” that would prevent them from doing so. Under the House bill, for instance, only workers who today pay more than 11% of their income for employment-based coverage would be allowed to purchase a policy on the exchange and would qualify for a subsidy.In all, the CBO estimates that the House bill might allow about 3 million workers with employer-based coverage to qualify to buy subsidized insurance on the exchange. The added advantage for them is that they wouldn’t have to change insurance policies bought on the exchange if they changed jobs.May have to pay a new tax: The most controversial debate over health reform is how to cover the cost. Roughly half is likely to be paid for with new tax revenue.The House bill calls for a surtax on high-income earners — starting at 280,000 for singles and 350,000 for married couples. The surtax would run as high as 5.4% on income over 1 million.But on Monday, House Speaker Nancy Pelosi let it be known that she may push to increase those thresholds so the surtax would only affect individuals making at least 500,000 and couples making 1 million or more.”It narrows the number of people who would be affected. I think it probably goes a long way in protecting the small businesses we were concerned about and it puts more pressure on our House colleagues who are writing the bill to identify more in savings.” Rep. Gerry Connolly, D-Va., told CNN.The Senate Finance Committee had been heavily focused on taxing a portion of the health benefits that workers currently receive as tax-free income from their employers. But that idea has run into political headwinds.Whether a benefits tax of some kind ends up in the final package is still anyone’s guess. If it does, however, not everyone would have to pay it. That’s because a benefits tax can be set up so that it only targets a certain group of people — for example, those with very expensive health insurance plans, or high earners with expensive plans.It’s also possible a benefits tax would not be included at all. Another idea reportedly under consideration is a tax on insurers and employers that offer expensive or “Cadillac” plans. Of course, if that happens, it is possible the cost of the tax would be passed along to workers in the form of higher premiums.You get it on your ownLikely to see lower costs: The people most likely to see a decrease in what they pay for health insurance are those who currently buy policies on their own, Elmendorf said.That group could see their costs go down for three reasons: the creation of an insurance exchange; the additional competition from a public plan; and guarantees that insurers could not refuse coverage to anyone with a pre-existing condition, he noted.If their income qualifies them for a federal subsidy, consumers who currently buy insurance on their own could see their costs go down considerably from where they are today. Under the House bill a family of three making up to 73,240 this year could qualify for some subsidy.May get help from an employer: The CBO estimates that under the House bill roughly 3 million people could be added to the rolls of those with employer-sponsored insurance. That’s because the bill would require companies either provide workers with coverage or pay into the health insurance exchange to subsidize the cost of their policies.You have no insurance0:00
/2:12Uninsured get free health careMay get help from the government: Those who are uninsured may get a subsidy from Uncle Sam if their income qualifies. Or they may qualify for Medicaid since both the House and Senate bills would expand eligibility for the program — under the proposals, eligibility would be extended to those with income up to 150% of poverty level in the Senate health committee bill and up to 133% in the House bill.Will be required to have insurance: Both bills would mandate that most individuals be insured or pay a penalty. The CBO estimates the House bill would reduce the number of uninsured by more than 68% within 10 years.- CNN’s Dana Bash and Deirdre Walsh contributed to this report

Source:CNN

(Fortune Small Business) — Talk about patient money. It took The Female Health Company, a Chicago-based maker of female condoms, almost 20 years to turn a profit.O.B. Parrish, the company’s 75-year old CEO, is nothing if not persistent. He retired from his position as head of G.D. Searle’s global pharmaceutical business in 1985, when Searle’s then-president, Donald Rumsfeld, helped engineer the company’s sale to Monsanto (MON, Fortune 500). With two other big pharma veterans, Mary Ann Leeper and William Gargiulo, Parrish began looking for health care companies to invest in. He found a tiny Wisconsin firm that had licensed the right to make a female condom, using designs created by a Danish physician. Parrish felt the device — not yet off the drawing board — could be marketed as a contraceptive, and later, as prevention against HIV/AIDS. They bought a portion of the company and started developing the first-generation female condom, the FC1. (Eventually they would buy the entire business and change its name.)But the very notion of a female condom had a rough road ahead. To sell one would mean building a global market for it.Bidia Deperthes is an HIV/AIDS technical advisor for the U.N Population Fund who has worked with 56 countries on their condom policies. The hurdles were — and to some extent, still are — huge. As she puts it: “It is a woman issue, and our policy makers all over the world are mainly men.”Moreover, manufacturing an effective female condom at a reasonable price was an uphill battle. Investor Stephen Dearholt, who owns about 17% of the company, says it took years to develop equipment that could manufacture high-quality devices quickly. In early days, he says, “We were making them by hand.” In the first versions, welds in the thin polyurethane could hurt the woman. Clearly, that flaw was unacceptable.But as the understated Parrish says, “We aren’t easily dissuaded.”Profits weren’t the only motive. “One of the reasons we stuck with it and believe in it is, this product saves lives,” he says.Gaining acceptanceAnd so they kept at it. The team recruited Mike Pope, a British engineer, who developed a mass-production method, and the FDA approved the FC1 in 1993. Slowly, the company started selling to nongovernmental organizations (NGOs), which distributed the condoms to women in developing countries.But the first-generation condom had many problems, including slipperiness and noise during sex. In 2007, the New York Times quoted former Female Health (FHCO) staffer Mitchell Warren as saying it had a significant “yuck factor.” The price was extraordinarily high — at one point, up to 1.20 a piece, in contrast to male condoms, which sell for pennies.And there are more daunting problems. Without programs to teach women how to use them and to negotiate for their use with unwilling male partners, women don’t adopt female condoms, says Bidia Deperthe. In African countries, when a woman suggests condom use — either version, for the female or the male — her husband often assumes she’s being promiscuous. “For us to be successful, you have to put the money into programming,” Deperthe says.But Parrish and his partners kept steadily chipping away at the obstacles under their control, starting with the product’s quality and price. Casting about for a cheaper material, they settled on a soft synthetic latex and developed a new manufacturing process that could spit out millions of the devices every year. That breakthrough led to condoms that cost about two-thirds of the original price and give Female Health a substantially higher margin.In 2006, the World Health Organization approved FC2, allowing U.N. agencies to buy it in bulk for distribution overseas. That year, Female Health finally turned its first profit.But without FDA approval, Female Health couldn’t sell FC2 to U.S. groups like the U.S. Agency for International Development (USAID), one of the largest global organizations working to prevent HIV/AIDS. (In the meantime, USAID was distributing small quantities of the FC1.)This March, the FDA approved the FC2. The UNFPA’s Deperthe is overjoyed. With all public health organizations — especially USAID — now able to buy the same condom, volume will rise, meaning prices could drop as low as 30 cents each. Deperthe hopes that public donors will be able to distribute 50 million female condoms this year.Political forces, too, are going their way. In 2008, President Bush authorized 48 billion in AIDS prevention and treatment funding assistance over five years. And U.S. public health programs have discovered the female condom — most notably, the New York City health department, which distributed 2 million female condoms last year.All of this added up to a great 2008 for Female Health. It distributed 34.7 million units, up 34% from 2007, in 93 countries. Revenues jumped 33% to 25.6 million, while net income grew 215% to 4.8 million.This year looks good as well. With the only FDA-approved condoms on the market, the company has no significant competition — yet. Notably, a Seattle nonprofit called PATH, backed by the Bill Gates Foundation, has developed a new product, but has not yet run it through the expensive clinical trials needed for FDA approval.This year, Female Health will plow a few million dollars into expanding its manufacturing plant in Malaysia. Still, the company expects to have such significant cash flow that it’s a “cash cow,” says hedge fund manager David Sandberg of Red Oak Partners, one of Female Health’s investors.Despite its newfound success, Female Health has only made tiny inroads into the market. In 2007, more than 11 billion male condoms were delivered around the world, in contrast to 27 million female ones.”This is an imbalance that has to change, because the population is one man, one woman. And women are disproportionately affected by HIV,” says Deperthes. To her, that imbalance is an outrage. To Parrish, it is that as well — and an incredible market opportunity.”We have almost unlimited need for the prevention of AIDS,” he says. And so Parrish and his colleagues will keep on moving forward, one persistent step at a time.

Source:CNN

NEW YORK: It is one of the touchiest issues in the health care debate: Would a government-run health plan upend the employer-based health insurance system used by 160 million Americans?Senate Democrats behind a key proposal say the answer is no.Sens. Edward Kennedy, D-Mass., and Chris Dodd, D-Conn., say their plan would preserve employer-sponsored insurance coverage and create an affordable public option for those who need it.”The … bill virtually eliminates the dropping of currently covered employees from employer-sponsored health plans,” Kennedy and Dodd said in a letter Thursday to members of the Health Committee, one of two Senate groups working on health reform.The proposal is a central part of Washington efforts to rewrite the rules of health care. Congress returns Monday for a month-long session before breaking for the summer. The Health Committee bill includes a “pay or play” provision that would require employers to provide adequate coverage for their workers or subsidize a system that will.”Pay or play” would require companies to pay the government 750 per full-time worker per year (375 for part-timers) if they don’t offer health coverage, or if they offer “qualified” coverage but pay less than 60% of workers’ premiums. Small businesses that employ fewer than 25 workers would be exempt.The Congressional Budget Office, which analyzed the legislation, estimated that by 2019 the same number of workers would be covered by employer-based plans as would otherwise be the case under the current system. “It tracks what we’re seeing in Massachusetts,” a senior Democratic aide on the Senate Health Committee said on a conference call with reporters.Massachusetts requires companies to pay up to 295 per worker per year if they don’t provide employees with insurance or don’t pay enough for the insurance they do provide.So far, employers haven’t been dropping coverage in Massachusetts.Paul Fronstin, director of the health research program at the Employee Benefit Research Institute, is skeptical that 750 is enough to keep employers from dropping their plans or bumping up what their workers pay for coverage.As Fronstin sees it, the fee would penalize employers already providing insurance but paying less than 60% of premiums.Those employers, Fronstin said, would do one of four things under the Senate Health Committee proposal:pay the 750 per-worker penalty and keep everything as is;pay more than 60% of the premium to avoid the 750 fee.pay the 750, keep the company plan but reduce how much they subsidize an employee’s coverage by 750;or pay the 750 and drop their plan.One goal of the 750 fee is to keep employers in the health-insurance game, to keep their coverage instead of dropping their plans and sending workers to the public plan.”But they’re already in the game,” Fronstin said. “They’re already paying 85% of premiums. Does this 750 stop them from dropping coverage? It doesn’t.”A survey by the Kaiser Family Foundation found that in 2008 employers paid an average of 3,983 per employee for single workers’ coverage and 9,325 per employee with family coverage.Fronstin also doesn’t think the Massachusetts example would apply nationally. For one thing, the state’s fee is not the most onerous provision for companies. Employers must also assume part of the cost of the uncompensated care for workers who can’t afford their health bill. Given how quickly a hospital stay can add up, that may be the strongest incentive for businesses to keep their coverage intact, Fronstin notes.Another reason, he said, is that companies that operate in many states often try to provide uniform coverage for their workforce. So they’re unlikely to drop coverage in just one state. If the fee applies nationally the story may be different.Lastly, Fronstin noted, the Massachusetts system is relatively new and companies typically don’t change benefit policies on a dime.In the case of a 750 employer fee assessed nationally, “The most cost-effective thing may be to drop coverage,” Fronstin said.Keith Ashmus, chair of the National Small Business Association, concurred. “My firm pays a whole lot more than 750 for its employees … in tough times it might be tempting to just say, ‘I’ll pay the 750 dollars.’ “For large employers, the story may be different.Most companies with more than 200 employees voluntarily offer coverage and the majority of them pay more than 60% of workers’ premiums, said Mike Langan, principal of the employer benefit consulting group Towers Perrin. If cost were the only factor, those companies would already have dropped coverage.”It’s part of a compensation, wage and benefit package. Employers see a connection between workplace productivity and health benefits,” Langan said.Still, over time, the cost-benefit analysis is likely to hold sway if Congress passes an employer mandate.”A lot of the decision making will ultimately come down to cost considerations as a voluntary benefit program becomes a mandatory one,” according to a June statement on Towers Perrin’s Web site.Of course, it ain’t over till it’s over. What’s not clear yet is whether the 750 fee — which would be adjusted for medical inflation annually — would be the only cost employers would have to pay if they don’t provide adequate coverage.”I would be surprised if it was just that,” said Helen Darling, president of the National Business Group on Health, which represents large employers’ perspective on national health policy issues And every cost lever adjusted will factor into companies’ decisions about whether to keep or drop the coverage they currently provide.– CNN’s Ted Barrett and CNN Radio’s Lisa Desjardins contributed to this report.

Source:CNN