HOSPITALS | Outlook Is Worrisome

Good Luck to You I just read the following article posted by Dr. David Posnett today and I am re-posting by permission. At the end I have some brief comments.  – John Tepper Marlin, CityEconomist Short Hospital Stocks! by D. Posnett MD   East Hampton, N.Y., October 10, 2017– I have been waiting for this. Wall street charts show that investors are jittery about hospital stocks.  Here is why:

(1) Investors are approaching hospital stocks cautiously. Les Masterson said earlier today:

Some unfavorable financial trends and an air of uncertainty for healthcare’s future has led to an environment not particularly friendly for major investment… as hospitals continue to struggle with fewer inpatient admissions, lower reimbursements and potential increases in uncompensated care, investors are growing wary.

The current environment caused disappointing second quarters and lower earnings projections for major for-profit systems like HCA, Community Health Systems (CHS) and Tenet Healthcare…. The results led stock prices to tumble.

I would go further and add two more disturbing facts:

(2) Hospital Sector Slides. The Financial Times notes that US hospital operators' stock prices are sliding down  following a report that President Donald Trump will sign an executive order this week to withdraw some insurance requirements laid out under Obamacare. Tenet Healthcare, Community Health Systems, Surgery Partners, HCA Healthcare, DaVita shares tumbled lost up to 10% in stock prices.

(3) Some are suggesting "Checking in on the Canadian Healthcare Stocks".

My Comment (CityEconomist)

It's not just the stock market. If hospitals are heading into lean times, then one of the engines of job growth since 2009 will be knocked out. 

Even during the recession before that, the health care industry was growing jobs steadily. When this juggernaut goes into reverse... watch out, America.

OBAMACARE | Probable Impact of Repeal

Senate and House Minority Leaders, Chuck Schumer
and Nancy Pelosi, challenge Obamacare repeal.

The following was just posted by David Posnett, MD. I repost with his permission:

[O]ne cannot repeal Obamacare and [at the same time] preserve coverage for kids until they are 26 years old under their parent’s policy, as well as the rule that forbids insurances from denying coverage for pre-existing conditions, etc. 

The math just doesn’t work. 

So far the insurance companies [have] benefited from (a) government subsidies for Obamacare policies, and (b) government pressure on individuals and businesses to increase the pool of insurance premiums.   

Imagine up to 20-30 million insurance policies disappearing with full repeal: Either insurance companies will go broke, or premiums will skyrocket, or deductibles will be huge, or the lifetime caps on benefits will return.

Dr. Posnett is a Democrat. To balance his views on the impact of a putative repeal of Obamacare, I consulted the Pulitzer-Prizewinning truth-checking site PolitiFact, which says, commenting on the probable impact of the repeal of Obamacare:

Today, roughly 28 million Americans are uninsured, down from 41.3 million in 2013, due in large part to the Affordable Care Act, with its expansion of Medicaid, the creation of online health insurance marketplaces, the ability of young people to stay on their parents’ coverage through age 26, and the mandates that everyone purchase a health insurance plan. 

In 2015, the Congressional Budget Office -- the nonpartisan number-crunching arm of Congress -- said that the number of additional Americans who would lose coverage or be unable to get it for the first time would start at 19 million in the first year and increase incrementally before leveling off to 24 million within a couple of years. (The incremental increases would stem from lags in when insurance options lapse as well as increases in the population from young people becoming old enough to secure insurance of their own.)

These statements are in sync. Repeal is going to be politically difficult. I am told by a knowledgable insider is that the states where government programs and private insurers are most ready to step in if Obamacare is scaled back are the blue states. So the biggest hit that repealing Obamacare will make is on the coverage of people in the red states that elected Donald Trump.

DRUG BIZ | Danger–FDA Deregulation Ahead (by D. Posnett)

(Ill. by Patrick George)

The FDA's ability to ensure safe drugs has been
curtailed in the name of reducing costs and getting
more drugs to market. Caveat emptor! 

The following Guest Post was sent to me as a draft letter to the editor by an MD friend, David Posnett. He describes a worrisome price that the GOP-controlled Congress has exacted to get funding restored to the NIH for medical research. I asked Dr. Posnett if I could post this today and he kindly gave his permission.

The 21st Century Cures Act passed Congress Dec. 7 and was signed into law Dec. 13 by President Obama. This is a huge bill with something in it for everyone, and lots to criticize. As a retired researcher who spent nearly 40 years of my life writing research grants mostly to the National Institutes of Health (NIH), I applaud the long-overdue increase in funding of the NIH. In fact funding had steadily decreased in an alarming fashion since sequestration in 2013—inflation-adjusted funding for the NIH fell 22 percent in 2013-15.

Now there is a chance to catch up on these losses, in part because of The 21st Century Cures Act. It is well documented that reduced federal funding leads to fewer grants, fewer new discoveries and a loss of talented scientists. I have seen this first hand. Research scientists and patient advocate groups welcome the prospect of more funding.

However, there is an ugly underbelly to the 21st Century Cures Act. Perhaps not so well appreciated is further erosion of the power of the FDA in keeping us safe from drugs that can be harmful, or that are just ineffectual.

Remember the Thalidomide Babies?

It took lots of courage for a young FDA scientist in 1960 to stand up to the powerful drug industry trying to promote a poorly researched drug named Thalidomide.  Frances Oldham Kelsey was the FDA scientist who kept Thalidomide off the U.S. market and blocked approval for 19 months, thus saving thousands of babies from being born with severe deformities in the US. In other countries, without a strong FDA, sales and marketing for pregnancy-associated nausea remained unchecked and tens of thousands of severely deformed babies were born resulting in untold suffering across the globe.

In the name of accelerating drug development the FDA’s authority and the lengthy process of FDA approval have been steadily been eroded over the last few decades and the 21st Century Cures Act could be a fatal blow, specially with a new government bent on deregulating. Lobbyists from the pharmaceutical and medical device industries, and allied patient advocacy organizations, are touting predicted miracle breakthroughs based on the law’s aim to weaken regulations and promote rapid drug development. 

Most egregious is the use of anecdotal clinical experience as evidence that drugs are safe and effective; allowing antibiotics on the market based on pre-clinical evidence, that is, laboratory or animal studies, with little testing in humans; weakening the already limited evidence needed to approve medical devices (for example a stent for a coronary artery), even allowing companies to farm out the certification of safety of modified devices to third parties, circumventing the FDA altogether.  Similar concerns have been voiced in several leading medical and science publications (New England Journal of Medicine, JAMA, Science and Nature).

"Giveaway" to the Drug Biz 

As stated by Michael Carome (Director, Health Research Group, at Public Citizen) in the LA Times, “If universal praise for a measure makes your B.S. detectors twitch, you’re on the right track. The 21st Century Cures Act is a huge deregulatory giveaway to the pharmaceutical and medical device industry, papered over by new funding for those research initiatives.” 

Nothing in this act addresses the main problem the public sees with the drug industry: unaffordable prices. Elizabeth Warren says: “When American voters say Congress is owned by big companies, this bill is exactly what they are talking about.”   

Consider Merck’s Vioxx, a painkiller and arthritis drug the FDA approved in 1999. Vioxx was pulled off the market in 2004 after it was shown to raise the risk of heart attacks. By then, according to research published in the Lancet (a premier British medical journal), 88,000 Americans had heart attacks from taking Vioxx, 38,000 of them fatal.

Personally, I will be a lot more reluctant to take a new medication that has not stood the test of time!  This position is what I would recommend to my patients.

David Posnett MD

Springs, East Hampton, N.Y.