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Articles by Donald E. L. Johnson

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Today is Friday, April 18, 2014


Keep health care providers out of the health insurance business

The Wall Street Journal reports that some health care systems are getting into the health insurance business.

Gosh, how history repeats itself. Back in the 80s and 90s, several so-called "integrated" health systems got burned in the health insurance business. They didn't have insurance expertise, financial resources, market clout or credibility with individuals, employers or regulators. So most failed.

Hospitals and docs created Blue Cross and Blue Shield back in the 30s to make sure that they got paid the way they wanted to be paid, patients and payers be damned. That scam worked for decades until Medicare/Medicaid and smarter employers came along and forced the Blues to work for the payers instead of the providers.

If hospital systems try to compete with national health insurers, they'll lose the price wars even if they are the providers. This is because the national insurers have the financial and political resources and the market share that will allow them to crush the providers' plans whenever they decide to do that.

Over the last 35 to 40 years, too many hospital administrators have gotten their institutions into businesses that they knew little about, and they cost those institutions millions. Or, I should say, they ran up huge losses that they recovered by over-charging insurers and self-insured patients.

Most health care administrators are too smart to get into the insurance business. But their medical staffs get frustrated with insurers and demand that the hospital systems go into the health insurance, medical supply, group purchasing or whatever business the docs think will help them become richer.

Any board of directors that lets its CEO take it into what will be a money-losing, over-regulated business such as health insurance strikes me as being either incompetent, manipulated, self serving and/or all of the above.

State and federal legislators and regulators should not only outlaw health care providers from getting into the health insurance business, they also should enact anti-trust laws that break up the big regional and national health care chains and insurers.

What does defensive medicine cost? It depends on your agenda

Democrats who depend on malpractice lawyers for huge campaign contributions do everything they can to down play the cost of defensive medicine. Republicans who don’t get money from trial lawyers do everything they can to show that the threats of malpractice suits cause physicians to increase the cost of health care by 30% to 50% by practicing defensive medicine. When physicians practice defensive medicine, they order more tests and procedures and drugs than they should in an effort to reduce their risks of being sued. Trial lawyers win. Medical supply companies and medical device companies win. Physicians and hospitals win. Patients and taxpayers lose.

A new Gallup poll of physician finds that 25% of procedures ordered by physicians are unnecessary. Jackson Healthcare uses that number to estimate that $650 billion of the $2.5 trillion spent on health services is spent on unnecessary tests and treatments. Click on the hed of this story to see links to several relevant articles.

Posted by Donald E. L. Johnson on 02/28/10 at 01:23 PM
ColoradoPPCHealthcare ProvidersHospitalsPhysiciansQualityRead More

Obama, Pelosi HMO gets new life but not there yet

President Obama, Speaker Pelosi and Senate Majority Leader Reid are doing all they can to force working Americans and their families into a Medicare for all HMO/PPO that would sharply cut payments to providers and limit patients’ access to advanced medical technology and quality care. The Wall Street Journal is the only news organization covering this scandal in depth, and it explains in an editorial what the hard left Democrats are plotting. Other media are willingly being sucked in by clever White House distractions designed to hide what’s going on in Congress.


The Public Option Comeback The secret to its budget ‘savings’? Medicare price controls. [Read comments after the editorial.]

Senators Michael Bennet, Mark Udall vote to deceive public on $900 billion health care bill

Colorado’s two Democrat Senators, Michael Bennet and Mark Udall, today voted for a slight of hand accounting measure that would have taken $247 billion in Medicare physician payments out of the Senate Finance Committee’s health bill (S 1796) and added them to the Federal government’s budget deficit. more

Medicare doctors win on pay cut vote; Medicare Advantage insurers lose $15 billion to $47 billion

The Senate voted to delay a 10% cut in payments to Medicare physicians for 18 months and to cut payments to Medicare Advantage insurers by $15 billion to $47 billion over five years, depending on whose estimate you believe.

Medicare Advantage patients will be big losers in this fight between their physicians and insurers. This is because insurers will cut Medicare Advantage benefits, raise Medicare Advantage premiums and probably both. Or they may come to their senses and stop contracting with Medicare.

The Washington Post reports on the vote here. President Bush has threatened to veto the bill, but the bill passed the Senate with a veto-proof 69 votes. So it looks like it will become law.

What does this mean for health insurers like Humana (HUM), Wellpoint (WLP), UnitedHealth Group (UNH), Cigna (CI), Aetna (AET) and Health Net (HNT)?

Their charts will tell us during the next few days and weeks. Daily charts are here. Point and figure charts are here. All of these stocks dropped today.

Talk about ugly, bearish charts!

I don’t own any of these stocks.

For educational purposes only. Investigate before you speculate.

PDX: Pediatrix lowers guidance on slow NICU business

Pediatrix Medical Group (PDX) lowered its earnings and revenue guidance for the three months ending June 30 and for all of 2008 in anticipation of continued slow downs in neonatal intensive care unit patient volume. The company also announced that it will buy back $100 million worth of its stock, which doesn’t seem too smart.

Meanwhile, Natus Medical (BABY) is among the market leaders. Given the news from PDX, one has to wonder about what that means for BABY. Natus makes neurodiagnostic and newborn care products. So we have a stock pickers’ dilemma.

This announcement follows the company’s warning during its recent conference call that it was seeing lower volume. I blogged on that call here.

In a news release, Pediatrix said, “Through the first six weeks of the 2008 second quarter Pediatrix’s same-unit NICU volume declined by approximately 2 percent when compared to the same period of 2007.”

As a result, PDX said, it “now expects to earn 77 cents to 80 cents for the 2008 second quarter if NICU patient volume remains at current levels for the rest of the period. In addition, at this time Pediatrix does not expect to meet its previously issued earnings guidance for the 12 months ended December 31, 2008, as a result of lower NICU patient volume during 2008 to date.”

PDX describes itself as “. . .the nation’s leading provider of neonatal, maternal-fetal and pediatric physician subspecialty services and recently expanded to include anesthesiology services.”

Daily charts for PDX and BABY are here. Click on a chart for weekly and hourly charts. PDX is down $5.73 to $49.70 and has a bearish point and figure chart price objective of $37. BABY is trading at $21.11 and has a bullish price objective of $30.50.

Full disclosure: I have no interest in PDX or BABY.

For educational purposes only. Investigate before you speculate.

Posted by Donald E. L. Johnson on 05/27/08 at 08:14 AM
Healthcare ProvidersHospitalsPhysiciansStocksStocks MedicalPermalink

PDX: Recession worries may be causing couples to delay having babies; fewer twins?

About a year ago America’s 20 and 30 somethings apparently made a collective decision that having babies was not a good idea what with a recent plunge in stock prices, falling housing prices, talk of a banking crisis and growing worries about the economy.

This means the country may be headed into another birth dearth period unless would be moms and dads suddenly turn more optimistic. Most political polls and consumer sentiment surveys are pretty dour these days. I mean, things have to be pretty tight when gas is over $3.65 and Starbucks (SBUX) is having a tough time selling $5 lattes.

That, at least, is what might be gathered from comments by the chief executive officer of Pediatrix Medical Group (PDX), which said it has seen a slower than average growth rate in births at hospitals where it manages neo native intensive care units. Pediatrix says it manages neo natal intensive care units (NICUs) that serve about 10% of the nation’s NICU patients.

“During the 2008 first quarter we did see a decline in the rate of growth in the number of births at hospitals where we practice,” CEO Roger Medel said in a conference call with securities analysts, Reuters reported. For a company profile, access to news releases and financial information about PDX, the Reuters summary page is here. A transcript of Pediatrix’s conference call is here.

The question for investors: Are other companies serving new parents such as hospital chains, formula and diaper makers, Wal-Mart (WMT), Walgreens (WAG) and Johnson & Johnson (JNJ) seeing similar trends?

The first thought that comes to my mind as the former owner of Twins‚Ñ¢ Magazine ( is that fewer twins and other multiples are being born, because multiples are more likely to be born prematurely and admitted to NICUs than singletons. The Center for Disease control reports the distribution of births by gestational age here.

Last month the CDC reported that between 2000 and 2004 the pregnancy rate for women under 25 dropped compared with the rate for 1990. “Nearly 38 percent of pregnancies in 2004 were to women under age 25, down from nearly 43 percent in 1990. The proportion of pregnancies among teens under age 20 dropped from 15 percent in 1990 to 12 percent in 2004,” the report said.

Full disclosure: I have no interest in PDX or the other stocks mentioned here.

For educational purposes only. Investigate before you speculate.

Posted by Donald E. L. Johnson on 05/09/08 at 07:04 AM
Healthcare ProvidersHospitalsPhysiciansStocksStocks MedicalPermalink

Ethics:  Assn. of American Medical Colleges calls for no more gifts to docs

Pharmaceutical and medical device manufacturers should stop trying using gifts to physicians and students to sell their products and services, according to the Association of American Medical Colleges.

Impact graphs from the NY Times:


Posted by Donald E. L. Johnson on 04/27/08 at 09:34 PM
EthicsHealthcare ProvidersHospitalsPhysiciansRead More

Price controls, cuts, cause docs to turn away Medicare patients

Price controls in the form of payment cuts for physicians are making it difficult for Medicare beneficiaries to find new physicians who will take care of them.


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