America’s Health Care Debate

As I mentioned last week, the US health care program needs a massive overhaul and not a cosmetic one. This fact was recognized by all the presidential candidates last year when they ran for the highest office in the country. The current program only helps those who are insured and could afford to pay premium prices for their desired services, leaving behind tens of millions who are uninsured or under-insured.

The under-insured must pay exorbitant prices for their desired healthcare services – from making up the difference in hospital or medical cost, which can run into tens of thousands of dollars just for staying a night or two in a hospital to buying prescription drugs. Just to give some examples. When someone calls 911 for emergency medical assistance, the ambulatory service would take the patient to the nearest hospital unless asked otherwise. This cost of transporting the patient (usually within 5 miles) to the emergency ward may run close to a thousand dollars! Often times, even the best of the health insurance plans cover only a small fraction of such costs. The bill for a 24-hour stay in a hospital can run into several thousand dollars, depending on the type of sickness and treatment provided. Even when the attending emergency doctor could not diagnose the disease or there was not anything serious and had released the patient within few hours, the charge can run into a couple of thousand dollars. In such cases, the patient would be advised to see his/her own doctor. Most doctors would only see patients that are insured, or can pay their high bills for their services. An insured patient usually pays a co-payment every time he/she sees a doctor, which can run upwards of $15. But those who are uninsured are usually denied such services. They must pay the full amount to the attending doctor for any service, provided the latter is willing to see him/her. While any uninsured patient, once brought to an emergency ward in a hospital, cannot, in principle, be denied medical care, often times the failure of the patient for such medical services provided by the hospital are passed on to insured individuals, who now must pay a higher premium to continue their insurance policy. As a result, insurance payments and associated healthcare costs for insured individuals are always increasing while services are deteriorating.

Most medical treatments end up buying prescription drugs from pharmacies. Just a single tablet when it is categorized as a prescription drug (and no generics are available) can cost sometimes a hundred dollars. This brings into the fore the not-so-ethical or inhumane, almost viper-like, practices of the drug companies that charge such exorbitant prices for their so-called life-saving drugs. The pharmaceutical industry would tell you that it takes enormous efforts to bring a new drug into the market. It is true. In general, it takes nearly 7-12 years to bring a new drug, costing millions of dollars in research, development and regulatory compliance. The probability of success for finding the new target is too slim, thus, adding to such high prices in the discovery stage.

Unlike other process industries, the pharmaceutical and biotechnology industry is in its infantile stage in matters of implementing Six Sigma, lean manufacturing, and other quality initiatives and measures which have proven to drastically cut down cycle time, reduce wastes and develop products faster and cheaper, while granting efficacy and stability. This I say based on my own experience of working with the pharmaceutical industry. When I worked as a Director with Merck & Co., a highly reputable global drug research and manufacturing company, I was simply shocked to see the deplorable state of affairs with its quality program – from research to manufacturing and human health. Most of its processes were not streamlined, requiring too many hand-offs and unnecessarily complicating simple systems, adding to time, cost and delivery.

Interestingly, Merck’s CEO Dick Clark, just months before I joined the company, had announced to the Wall Street how the six sigma initiative would improve performance throughout the company. The initiative was made part of Merck’s Plan-to-win strategy. But the players who were put in charge of making that happen were mostly unqualified in-house employees, who moved upward through the rank, with little or no prior experience with change initiatives of the size required to make the difference to the corporate vision and bottom line. The old guards were too protective of their turf and liked to micro-manage the entire change execution. Certification requirements were a joke. For example, people were awarded Six Sigma Master Black Belt (MBB) certification after completion of one or two projects (which I later guided to change to at least 7). But these soft-MBBs, if I may qualify their poor level of skill in lean/six sigma, were the same individuals put in place to run the overall corporate and division-wide process excellence program. Too many things – not just with the “soft” certification process of belt candidates and how financial benefits were reported - simply did not seem right, almost bordering into unethical practices, adding to overall low morale of employees and utter frustration of real experts brought from outside to guide and assist with the new initiative. Many such experts have since left the company. Sadly, incompetence, mediocrity, ego and lack of long term commitment and foresightedness seemed the rule rather than exceptions. If these are the facts with a highly respectable drug maker, one can sense the overall unhealthy condition of the pharmaceutical industry that truly needs a paradigm shift as to how better to cope with the challenges of the new century where quality matters to customers.

As I mentioned earlier, prescription drugs costs too much in America, and are unaffordable for most patients, esp. when they don’t have adequate health insurance plans for covering prescription drugs. Most co-payment for prescription drugs can cost minimum of $20 per 15-30 day supply of tablets per item. While longer, inefficient and non-streamlined processes for marketing drug from inception as it goes through all the phases and trials contribute significantly to such drug costs paid by patients, one should not be oblivious of the higher salaries of all those working in the bio-tech and pharmaceutical industry. [For instance, Abbott Laboratories Inc. Chairman and Chief Executive Miles White's compensation was $25.3 million in 2008. Merck & Co.'s chief executive, Richard Clark, received a $17.3 million compensation package for 2008.] All individuals with ranks of vice president and above within Merck were provided with round the clock limousine service for commuting to and from work. That is, they did not have to drive to work. The president would use the helicopter. In departmental or most meetings, three to four times food would be supplied than actually required, only to be later wasted. It is no-brainer that all such unjustifiable work force practices, high salaries and wasteful activities end up costing the patient more in buying drugs.

So it goes without saying that a comprehensive overhaul of the entire healthcare program – from drug makers, distributors/marketers/pharmacies to insurance companies, doctors and hospitals – is needed to get out of the current quagmire. President Obama’s push for healthcare reform is trying to address issues surrounding each player in this game by reining in costs, constraining insurance companies and expanding coverage to 46 million uninsured Americans. There are many who oppose any reform within the healthcare sector. Many are opposed to putting a cap on salaries of top level executives. Last Friday, August 21, billionaire Mayor Michael Bloomberg of New York defended multi-billion-dollar pharmaceutical companies and their chief executives declaring that they "don't make a lot of money" and shouldn't be scapegoats in the health care debate. In spite of such condescending voices opposing change, it is fair to say that the salaries made by anyone related to the healthcare industry need to be regulated, bringing it at par with other industries. The current economic downturn should also provide enough justification for curtailing unbelievable paychecks and bonuses offered to the C-level executives in every industry, and not just limited to the pharmaceutical industry.

As it stands today, Obama’s courtship with the Republicans has failed to persuade them to approve his government-run insurance plan. To ensure approval Obama needs 218 votes (out of 435) in the House, where Democrats have 256 seats, and 60 votes in the Senate, where Democrats and their allies have exactly 60 seats -- enough to break any Republican effort to block the legislation through procedural tactics. However, as opined by many experts who are observing the debate closely, to reach the magic number in the House, he must walk a tightrope between more than 50 conservative "Blue Dog" Democrats, many from Republican-leaning districts, and more than 80 liberal members, most from safe Democratic seats where they rarely face a re-election challenge. Liberals within his party have demanded inclusion of a government-run insurance option and threatened to withhold support without it. Many Democratic conservatives on the other hand have voiced concern about the cost, the public plan and the impact on small businesses.
Three House committees have passed a health care measure that includes a strong public option, which according to a recent Congressional Budget Office report estimated would attract 10 million to 11 million people by 2019. Many critics say that the government-run insurance plan, designed to bolster competition and choice in the market would amount to a government takeover of health care. While they are against government programs, they have failed to offer anything substantial to alleviate the current problem with 46 million uninsured Americans.
Only the coming weeks would show how effective the White House was in getting the necessary support from the elected representatives within President’s own party to passing the health care bill. Obviously, getting a bi-partisan approval would be even better and go a long way to show Obama’s leadership skill to make deals that are critical to the public.

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