Administrated tyranny, a national extortion: healthcare costs!

Burns: We need a health care revolution now

Scott Burns,  Dallas Morning News

30 October 2015 

Fidelity Investments’ most recent study of lifetime health care costs made me shudder. It is now almost impossible for working people to educate their children and accumulate enough money to retire. You can’t get there from here.

How do I see such a global conclusion in a report on health care costs? Follow the numbers with me.

The headline number in the report is that a 65-year-old couple can expect to spend $245,000 on health care before they both die. That’s up $25,000 from last year, an increase of 11 percent.

Yes, you read that right. Up 11 percent in a period of low to no inflation. Up 11 percent when retirees will get no cost-of-living increase from Social Security.

The same report tells us that a single man can expect to spend $110,000. A single woman will spend $130,000. Those are intimidating sums. So let’s see what they do and don’t include.

The total expenditure includes Medicare premiums (parts B and D), copays, deductibles and out-of-pocket prescription costs. It doesn’t include dental expenses or long-term care. In each case, the figures assume you have the full sum on hand at age 65.

These figures, by the way, aren’t the kind of bogus claims we get from presidential candidates on the magical power of tax cuts. They’re legitimate research. The Employee Benefit Research Institute reports similar figures. So does the Center for Retirement Research at Boston College.

The numbers vary somewhat, but they converge on one central fact: They are all astronomical relative to the income and net worth of most retirees.

Cutting into net worth

You can see how big a problem this is by checking the net worth of those who are 65 and older. The most authoritative source for this is the Survey of Consumer Finance. The Federal Reserve did the most recent survey in 2013. The health care liability for women is greater than the net worth of 44 percent of women 60 to 65. It is greater than the net worth of 41 percent of men of the same age.

Here’s another way to get a sense of proportion: Use the average monthly Social Security check, $1,291, as a yardstick.

A man with that benefit would pay 85 months — more than seven years — of benefits for medical expenses over his remaining lifetime. For a woman with the same benefit, her higher medical costs would absorb 100 months of benefits. That works out to eight years and four months of benefit checks spent on medical expenses.

It would be ungrateful to complain about some of these increased costs. A portion of the cost increase is due to the ongoing increase in our life expectancies. According to the Fidelity report, the life expectancy of a 65-year-old man has increased from 82 to 85. So the typical retirement would last 20 years.

The life expectancy of a 65-year-old woman has increased from 85 to 87, a 22-year retirement. Added years mean more health care costs.

Eating up benefits

Now let’s combine life expectancy and lifetime health care costs. Health care costs are expected to absorb 85 of 240 months of Social Security benefits for men and 100 of 264 months for women. Change that to a percentage figure and it is 35 percent of benefits for men and 38 percent of benefits for women.

Health care costs are increasing faster than Social Security benefits. That means health care is crowding out the most important source of retirement income for most Americans.

Health care is no longer the large but reassuring elephant in the room. It is the monster in the room, feared by all.

Financial services firms use numbers like this to urge us to save more money. That allows them to appear caring and paternalistic as they push to gather ever more assets. But they miss the point.

Administered tyranny

Our politicians and the vast majority of people in health care miss the point, too.

There is a limit here, and we have reached it. The cost of health care has become an administrated tyranny, a national extortion. It threatens our ability to lead a normal life. People live in fear of any kind of health event, in fear of changes in insurance policies, in fear of cancellation of policies.

People live in fear of health care itself.

It’s time for change. Big change.

Scott Burns is a syndicated columnist and a principal of the Plano-based investment firm AssetBuilder Inc. Email questions to scott@scottburns.com.

Twitter: @assetbuilder

scott@scottburns.com

Patients and surgeons select implants blind to effectiveness, safety and cost.

DMN reporter got his knees replaced — but was the stiff price a good deal?

By JIM LANDERS 

jlanders@dallasnews.com

Staff Writer

16 July 2015 

Getting your knees replaced can be an education in much of what’s wrong with health care — as I learned last year from personal experience.

My insurer offered guidance on which hospitals were in network, and how much they’d be reimbursed. My doctor referred me to a surgery group that practiced at only one of those hospitals.

I didn’t know which companies make artificial knee joints, or which ones are best.

Luckily, I came out of it with mechanical knees that greatly improve my quality of life. I remember the times I couldn’t run across the street before the light turned red because running meant bone-on-bone pain. I remember the photos my wife took where I was as bow-legged as a cowboy cliche — my knee cartilage was so far gone.

But the choices I made with limited information about surgeons, hospitals and medical devices probably wound up hitting my employer, The Dallas Morning News, with $10,000 in extra insurance charges.

It was a surprise, though, when one of the nation’s top orthopedic surgeons told me he is almost equally in the dark as he tries to determine where to go to replace one of his own knees.

“There should be a process where I can seek information about quality, outcomes and cost,” said Dr. Kevin Bozic, chairman of surgery at the University of Texas at Austin’s Dell Medical Center. “If you’re in D.C. or Dallas and you’re trying to figure out where you can get that, it’s a joke.”

Market peculiarities

Bozic recently came to Austin from San Francisco, where he was part of an orthopedic surgical team and was on the faculty of the University of California at San Francisco. He has a master’s degree in business administration to go along with his medical credentials.

He’s studied and written about the peculiarities of the joint replacement market for several years.

“If you look this up online,” he said, “you’re going to get a bunch of advertisements saying this one uses robots, or this one has the latest technology, and then you’ll find information on Yelp about the surgeon’s bedside manner, and that’s important.

“But the things you really care about — will it improve my health, reduce my pain, will I have a quality outcome — you’re going to find nothing.

“That needs to change,” Bozic said. “The consumer wants the best outcome at the lowest cost.”

He hopes a more rational way of doing business is on the horizon.

The hope, which is beginning to emerge in Dallas and elsewhere, is that medical devices will have a searchable track record of success — or failure.

It’s a hope that consumers can learn which hospitals and surgeons do the best work — and which surgeons are paid huge sums by the device makers. It’s a hope that patients will be out of bed and able to start physical therapy within a day of surgery, rather than two or three or even four days later.

And it’s a hope that insurers will someday pay one bundled price for joint replacements — and hospitals, surgeons, anesthesiologists, physical therapists and medical device makers will have to work within that budget.

Some device manufacturers are taking cost out of their products. Prices have fallen between 8 percent and 13 percent over the last year for key knee and hip replacement components.

The 4-year-old American Joint Replacement Registry (Bozic is its vice chairman) has data on nearly 300,000 joint replacements. The group is watching to see how long the replacements last, which surgery techniques and technologies work best, and which ones don’t.

This month, Medicare announced a bundled payment initiative for joint replacements. And for two years, it has released data on medical device and pharmaceutical company payments to physicians and hospitals.

The big remaining question is: Value for whom? The consumer, or the hospital? In Dallas, at least, the hospitals are the ones coming out ahead.

Oblivious to cost

The way it’s worked until now is pretty strange.

Most orthopedic surgeons are oblivious to the cost of medical devices. They choose what they’ll use based on a buddy system with a sales representative. Many surgeons get consulting fees or design royalties from those device makers.

Hospitals that want the surgeon’s business buy the joint replacements the surgeon wants. They are contractually forbidden from telling the surgeons or anyone else what price they pay. The hospitals bill patients for the device (often including a big, hidden markup), for the operating room and for their care during a typical two-night stay.

“In most places, physicians are not employees of hospitals and don’t care what things cost, and that shifts a lot of power to the manufacturers,” said Pete Allen, executive vice president for sales and marketing with Novation, an Irving-based company that buys supplies for more than 1,500 hospitals across the country.

The sales reps stick with their surgeons. They go to all the surgeon’s operations with suitcases full of tools and parts for artificial joints. They use laser pointers to tell nurses and other members of the operating team what to use.

Sometimes they upsell, Allen said, recommending a new component to the surgeon while the patient is on the operating table.

When a patient has multiple fractures, the operating room can get crowded. “A trauma case may have four or five reps in the operating room,” Allen said. “That’s a lot of expense, and it’s not free.”

Artificial knees are made of cobalt, stainless steel or titanium that covers the ends of the thigh and shin bones. A hard plastic disc absorbs the friction between the metal pieces. A sliding button on the back of the knee cap keeps it moving.

Hips are made from similar materials and ceramics, with a long stem embedded in the femur and a ball-and-socket placed into the pelvis.

Hospitals pay anywhere from $3,300 to nearly $11,000 for the parts in one standard artificial hip or knee, according to the ECRI Institute, a Pennsylvania group that tracks medical supply pricing for hospitals.

U.S. surgeons are expected to replace more than 1.3 million hips and knees this year. By 2020, the number is expected to hit 2 million, with 3 million by 2030.

In 2012, Truven Health Analytics determined that medical devices were the single-biggest driver of hospital inflation between 2001 and 2006.

Medical device prices doubled between 1997 and 2008, and the number of joint replacements grew even faster. Hospitals complained that they were getting squeezed between what Medicare was prepared to reimburse and what device makers were demanding as payment.

A bill was unsuccessfully introduced in Congress to compel device manufacturers to reveal their selling prices.

The gross margins on joint replacement sales are as much as three times greater than the costs of manufacturing. Relatively little of those margins are invested in research and development. Most of it goes back to the sales reps, who account for 40 percent to 45 percent of the price of a joint replacement.

Steve Lichtenthal, vice president of business development with the Orthopaedic Implant Company of Reno, Nev., argues those margins are too big.

“Thirty-five years ago, orthopedic implant sales operated like any other industry. The sales rep would come around every so often with lunch for the staff and to shake the doctor’s hand,” he said. “Then every few years there’d be new technology; anatomically shaped plates, different screws, or a different material used in spacers for a vertebral fusion case, for a few examples. Hospitals couldn’t keep up with the changes, and the industry did a wonderful job embedding their sales reps to manage the entire implant supply chain for the hospital while upselling physicians in the operating room while attending surgical cases.”

“It’s going to be very, very tough to undo that,” he said. “But if you eliminate that sales rep and modify the supply chain, you halve your implant costs. The magnitude of savings is into the billions.”

Lichtenthal’s company is just getting started, and specializes in trauma plates rather than joint replacements. But another device maker is experimenting with a lower-cost, “rep-less” approach.

Smith & Nephew, Britain’s largest joint replacement maker and one of the top four sellers in the U.S. market, recently launched a line of hips and knees called Syncera using last year’s components, training software — and no sales reps. The company hasn’t said how well it’s doing, but promises more information later this month.

Other device makers are watching but haven’t followed.

David Floyd, group president for orthopedics with Michigan-based Stryker Corp., was asked by analysts in May what impact Syncera was having on his firm. “None,” he replied.

Bob Marshall, a vice president with Indiana-based Zimmer Holdings, told another group that the competition was healthy.

“If we can’t prove out the value for the premium technology, those prices won’t be held,” he said. But he warned that value-based joint implants could be costly for hospitals if they lead to liability problems.

And yet, the pricing of joint replacements has dropped.

Tim Browne, ECRI Institute’s price guide director, said prices for a key knee component are down 8.3 percent from a year ago. With hips, the key component price has fallen 13.4 percent.

“Of late, hospitals have really gotten engaged with physicians, working collectively, to drive that down,” Browne said.

Some insurers are also pushing back. CalPERS, the California state employee retirement system, notified members in 2011 that their health insurance would cover a hospital’s knee replacement charges up to $30,000.

If the procedure cost more, the consumer would pay the difference.

In response, California hospitals left out by CalPERS’ reference price lowered their prices by 38 percent — from an average of $43,308 to $28,465.

Related: Calling on virtual medicine to control costs

The Blue Cross Blue Shield Association reported in January that joint replacement charges can double or even triple among hospitals within the same metro area. Between 2011 and 2013, hospitals in Dallas got as little as $16,772 and as much as $69,654 for a knee replacement.

The current average knee replacement reimbursement in Dallas, according to insurance claims sifted by the Health Care Cost Institute, is $45,436. The national average is $33,560.

Dallas hospital administrators say they’re squeezed by low Medicare reimbursements and have to recover by charging more to insured patients.

Big markups

Whether needed or not, the markups are big.

Baylor Scott & White Health System hospitals in the Dallas area performed almost 2,400 hip and knee replacements last year. The hospital chain’s supply managers and surgeons meet to discuss which devices to use. They try to limit the number of suppliers as much as they can to drive a better bargain.

A similar approach with cardiologists led to savings of between 18 percent and 20 percent on $40 million worth of stents, pacemakers and other heart surgery devices, said Pam Bryant, Baylor’s supply manager.

Bryant said the hospital chain spends about $30 million a year on knee and hip replacements. She said she pays between $3,800 and $6,900 each for artificial knees.

Related: Health care analyst wants to bring price transparency to North Texas

Insurers and patients never see those bills. Instead, their line-item hospital bills include component pricing that covers both the negotiated device price and the hospital’s markup.

David Toomey, a health care consultant with Dallas-based Compass Professional Health Services, said area insurers are paying between $7,860 and $12,800 for knee replacement components — almost twice as much as the average cost of the device.

Asked about these markups, Baylor responded with this statement: “Our charges for devices utilize a markup on the raw cost of the device, which is in line with industry standards. Baylor Scott & White Health engages a third party to conduct an annual review of our device markup formula, which is proprietary, to ensure its reasonableness and alignment with device pricing by other leading health care providers.

“Baylor is reimbursed less than 100 percent of the actual cost of treating more than half of its patients, as roughly 60 percent of the patient base we serve is uninsured or underinsured.”

My knees

For my knees, my surgeon chose standard components made by DePuy Synthes, an Indiana firm owned by health care conglomerate Johnson & Johnson.j

So far, they’re working fine. The pain is gone. I can stand a little taller these days.

The hospital where I had them replaced charged $16,097.05 for each artificial knee. My insurance paid $10,982.72 each.

When I studied the bill, I thought it meant my surgeon had used some fancier components that provide the knees with rotation.

Not so. They’re fixed, standard knees.

ECRI Institute’s Tim Browne says the current average price paid by U.S. hospitals for the components of a standard knee replacement last year (when I had my surgery) was $5,081 — half the price paid by my health insurance.

“It’s a very inefficient marketplace,” UT’s Bozic said. “Even [for] me, an orthopedic surgeon who needs a knee replaced — I have no information on value.”

http://www.dallasnews.com/business/health-care/20150716-dmn-reporter-got-his-knees-replaced--but-was-the-stiff-price-a-good-deal.ece

Texas Supreme Court: Corporate Trade Secrets Valued Over Consumer Safety?

Texas Supreme Court looks at curbing lawyers' right to share secrets

By SUE AMBROSE  @sgoetinck 

sambrose@dallasnews.com

Staff Writer

Published: 18 April 2015 11:27 PM

Updated: 21 April 2015 03:47 PM

General Motors CEO Mary Barra swore under oath to Congress that her embattled company would change and focus on the safety of its customers.

“Today’s GM,” she said, “will do the right thing.”

The promise, made a little more than a year ago, came after company officials admitted they failed to correct faulty ignition switches now linked to more than 80 deaths.

As Barra spoke, GM was asking the Texas Supreme Court to undo a decades-old legal decision that many attorneys say helps hold big companies accountable for unsafe products. That ruling allows attorneys to share company secrets with other lawyers who have similar cases.

In the David vs. Goliath legal battles against big corporations, the ruling has given more punch to attorneys pitted against the GMs of the world. Sharing information allows lawyers to cut costs and compare notes. Undoing the ruling could make suing more difficult.

“It’s about access to justice,” said Jim Wren, a law professor at Baylor Law School in Waco. “Anything that significantly increases the cost for attorneys makes it harder for consumers to find attorneys who are willing to take their case.”

GM says the fight is about protecting trade secrets from leaks to competitors.

The company’s lawyers declined to be interviewed. But when responding to written questions, the company said, “GM considers trade secrets valuable company assets that require, given competitive sensitivity, robust protection from disclosure.”

Others say the fight is about making it harder for regular folks to challenge companies in court. Lawyers cite last year’s revelation that GM quietly settled lawsuits related to lethal defects in ignition switches as an example of the ways companies will try to protect themselves. That scandal landed company CEO Barra in the hot seat before Congress.

The ability to share company information with other attorneys who have similar cases can strengthen cases and counteract corporate malfeasance, lawyers say. And in the case before the Supreme Court, no one disputes that the materials GM was concerned about were trade secrets.

But, “this is not about the right of a legitimate business to protect a trade secret,” said Tyler attorney Randy Roberts. “It’s about corporations using the cover of trade secrets to hide important consumer safety information. I hope the Texas Supreme Court sees the distinction and comes down on behalf of consumers.”

GM’s fight over the right to share — with the Supreme Court of Texas deciding the winner — had the potential to rewrite rules that govern lawsuits against big companies. But a month before the high court was to hear GM’s case, after The Dallas Morning News began asking questions, the lawsuit that set up the issue was settled, leaving the court nothing to rule on.

Legal experts say the issue will be back. Since 2004, the Supreme Court has agreed to consider at least three cases in which companies were unhappy with how judges were following the court’s earlier decision on sharing between attorneys. Each time, the companies and those who sued them resolved their disagreements before the high court could make a decision.

“The fact that the Texas Supreme Court has shown interest in these cases several times indicates the court would like to revisit the rule,” said Austin attorney Lisa Hobbs, representing the Bolaños family. Companies “like GM know this and this will encourage them to take the issue back up if it comes up in their cases. Right now they know they have a friendly court.”

GM’s journey to the Supreme Court started with an accident nearly five years ago on a two-lane road in a remote stretch of South Texas.

On a warm Sunday night in May 2010, Elias Bolaños and a co-worker were southbound on State Highway 16 to Zapata, where Bolaños lived, after a long day of work for an energy company.

Bolaños, 52, was in the right front passenger seat of the 2006 Chevrolet Silverado pickup, wearing his seatbelt. Traveling at 80 mph, the driver dozed off and lost control. The pickup rolled several times before it slid and stopped, wheels up.

The cab’s roof caved in so far that it was level with the hood. The driver and the witness later told authorities that they could hear Bolaños moaning from the flattened truck. A volunteer firefighter told The News Bolaños was so compressed that his chin was pushed against his chest.

An autopsy found Bolaños had no other life-threatening injuries and concluded he suffocated.

In 2012, Bolaños’ wife, Martha, son Elias Jr. and daughter Edlin sued GM and others, alleging the pickup wasn’t sturdy enough to protect those inside. Unlike in most four-door vehicles, the truck’s front and rear doors were designed to open facing each other. Without a pillar between the two doors, at that spot only the door frames support the roof.

All denied wrongdoing. The seller of a rack behind the truck’s rear window settled. The case against the employer is pending.

In the lawsuit against GM, the Bolaños family’s attorneys asked the automaker to turn over details related to the truck’s design.

But GM had conditions: The Bolañoses’ attorneys would have to return the materials when the case ended. And they couldn’t share the design data with other attorneys.

The company argued that the information was proprietary and valuable. “GM has spent millions of dollars and invested thousands of hours so they can develop this,” GM attorney Daniela Gonzales Aldape said at a court hearing. Even most GM employees don’t have access to the detailed electronic blueprint, she said. “That’s how highly guarded this information is.”

But the Bolañoses’ attorneys said they should have the right to share that material, citing a 1987 Texas Supreme Court ruling.

With the two sides unable to agree, the issue would eventually end up back before the Supreme Court. The court would have the opportunity to undo the ruling made almost 30 years earlier. That case also involved GM.

In 1985, San Antonio judge David Peeples was presiding over a lawsuit by a man burned in a rear-end collision of a 1982 GM Buick. The lawsuit alleged the fuel system was poorly designed.

David Perry, the man’s attorney, said in an interview that while preparing for the trial, GM “produced a lot of documents that we thought were going to be important” for a lot of other cases.

After Peeples forbade the sharing of the documents, the Supreme Court ruled in 1987 that he had “abused his discretion.” The court noted the benefits of sharing information:

If lawyers can compare notes, this can force companies who are sued to be honest and give the same information to every lawyer who asks. When lawyers share, attorneys don’t have to prove over and over, in similar cases, that they deserve the same information that other lawyers have already received. The courts are more efficient.

The Supreme Court also said it’s possible to protect trade secrets while allowing them to be shared. A trial court could restrict sharing to attorneys with similar cases and forbid releasing trade secrets to business competitors.

The decision set the standard for such sharing in Texas. It is also often cited by other courts across the country when they weigh whether to allow attorneys to share company information obtained during the course of a lawsuit.

That 1987 ruling set “a very important precedent,” said Dustin Benham, a law professor at Texas Tech University School of Law in Lubbock. “Those who oppose sharing would love to undo it because it would have nationwide implications.”

When GM went back to the Supreme Court over sharing in the Bolaños case, the company’s argument hinged on the notion that the electronic blueprints are trade secrets and thus proprietary. GM argued that sharing in the age of the Internet has made the danger of spreading proprietary business information bigger than ever.

“Modern technology allows for the anonymous, immediate, global and irretrievable sharing of data,” GM wrote in a brief to the Texas Supreme Court. When the court allowed sharing in 1987, the court “did not contemplate a situation where trade secrets could be irreversibly disclosed with the click of a mouse.”

Asked to cite examples in which a trade secret had leaked during a lawsuit where lawyers had been granted the right to share the trade secret with other lawyers, GM offered The News six examples. The News again asked, specifically, whether the leaks occurred because lawyers had exercised their right to share the trade secrets with other lawyers. GM told The News to do its own research.

The News obtained court opinions, original documents and other summaries of the cases. None matched the scenario GM told the court it was concerned about.

The Bolañoses’ attorneys did not question GM’s assertion that the computer data represented trade secrets. But engineers say the computer blueprint of the pickup model isn’t as secret as GM claims. For example, automakers and parts manufacturers can reverse engineer a competitor’s vehicle by taking it apart and inspecting it.

Although it’s not cheap, it is possible for a competitor to create the type of computer blueprint GM wanted to protect. And in the Bolaños case, the Chevrolet Silverado model had already been out of production for five years when the suit was filed.

“If the competitors had wanted it, they would have already created” a blueprint, said Keith Friedman, a vehicle safety engineer and expert witness with offices in Austin and California.

A GM employee even hedged the issue in a sworn affidavit filed early in the case. The data “may” contain information “which cannot be obtained by reverse engineering,” she said.

The News asked GM about that choice of words. GM responded that their data “typically” contain that type of information.

GM also argued that another Supreme Court ruling needed to be considered. In 1998, the court ruled that a tire company didn’t have to turn over a secret rubber formula because the opposing lawyers hadn’t shown they needed it to prove their case.

GM reasoned that if the Supreme Court said then that lawyers should only get information they needed to prove their case, they should not be able to share that information with other lawyers to prove other cases.

Hobbs, Bolaños family’s attorney, argued that the 1998 ruling didn’t apply. When the Texas Supreme Court sided with the tire company, Hobbs noted, it didn’t say it was overturning the earlier ruling that allowed sharing. If it had intended to, it would have said so, she wrote.

Lawyers who take them on say the big companies aren’t really worried about the leaking of trade secrets. They say the companies are trying to make suing more difficult.

“It’s not about trade secrets, it’s about avoiding liability,” said Daniel DeFeo, a Missouri attorney who has tried cases in Texas. “All they’re trying to do is hamstring a plaintiff who has limited resources to not being able to sue on the same level. They’re just being bullies.”

GM disputed that notion, saying the “attorneys’ speculation is simply that — speculation,” the company wrote to The News.

Lawyers who have sued automakers over alleged defects say they need vehicle design data to expose when a company could have made a vehicle safer.

“Once an attorney like myself has their … engineering files, we can simulate the actual crash conditions with and without an alternative design and prove the case,” said Dallas attorney Lee Brown.

Jaime Gonzalez Jr., the attorney for the Bolaños family from the beginning of the case, told The News that without the ability to share that kind of information “then the only thing we can do is simply take it on faith that General Motors has truly produced everything that they were ordered to produce.”

After the Bolaños case was originally filed, GM did give the computer blueprint to the family’s attorneys. When the Supreme Court became involved, a temporary order was issued forbidding any sharing with other attorneys. As part of the settlement, the Bolañoses’ attorneys agreed to return the materials.

The 1987 ruling that allowed lawyers to share was made at a time when the state’s Supreme Court was dominated by Democrats.

Because the court is now dominated by conservative Republicans, many lawyers think the time remains ripe for another push to limit sharing.

“They’re taking it up to a Supreme Court that’s got a track record for protecting corporations and giving them what they ask for,” said Houston attorney Erin Copeland.

If the court gets a similar case again, lawyers see several options:

The court could completely deny a company’s request to restrict sharing, and reaffirm the 30-year-old ruling. Legal experts say this is the least likely outcome.

The court could instruct judges to decide the issue on a case-by-case basis, giving them guidelines for deciding whether trade secrets can be shared.

The court could now say it’s wrong for judges to ever allow attorneys to share trade secrets.

Restricting sharing would make pursuing lawsuits more costly “because each lawyer has to go through the process, essentially reinventing the wheel each time,” said Wren, the Baylor law professor. Attorneys could be more reluctant to sue.

Lawyers predict companies would also try to designate more types of information as secret.

“You’re going to shift the battle to whether or not something is trade secret,” said Hobbs, the Bolaños attorney. Those suing will have to spend more time and money fighting those claims.

As the Supreme Court was to hear the GM case, it had gained national attention from groups that represent the interests of companies who are frequent targets of product liability lawsuits.

Two national groups that represent some of the biggest companies in the world — including makers of automobiles, oil, tobacco, tires and pharmaceuticals — voiced their support for GM’s point of view.

The Product Liability Advisory Council and the Alliance of Automobile Manufacturers both wrote lengthy legal arguments and sent them to the court. Wallace Jefferson, former chief justice of the Texas Supreme Court, authored the brief for the automobile manufacturers.

The Texas Association of Defense Counsel — a group of lawyers who defend their clients against lawsuits — also supported GM.

Merely having the issue pending in front of the high court has affected other lawsuits.

Other car companies have also been seeking court orders to prevent lawyers from sharing certain information with other lawyers. Attorneys who take on big companies sometimes agree to such arrangements despite the 1987 precedent because “Texas is not the place where you want that issue to go to the Supreme Court,” said Chip Martens, a Corpus Christi attorney.

Houston attorney Jeffrey Raizner said that while the GM case was pending, an insurance company tried to use it to get its way in a Dallas courtroom.

Raizner was suing the company, and it didn’t want him to be able to share guidelines on how insurance claims were handled. The insurance company said the guidelines were trade secrets.

“Let me ask you something,” Dallas Judge Ken Molberg said at a hearing. “It is very, very common that information is shared in other cases and even cases like this in other jurisdictions. Why is this any different?”

Attorney Charles Frazier, who works for the same firm as Jefferson, told the judge about the GM case. If Molberg approved the sharing of the insurance guidelines, a higher court might eventually overturn the judge’s decision.

Molberg allowed Raizner more time to investigate why the guidelines wouldn’t qualify as trade secrets. But he also issued a temporary court order forbidding Raizner from sharing them. The case is ongoing.

TIMELINE: Texas Supreme Court looks at curbing lawyers’ right to share secrets

For years, companies have been trying to keep attorneys from sharing their trade secrets with other attorneys handling similar cases. The Texas Supreme Court decided in favor of such sharing in the 1980s. The justices have since accepted cases that would have allowed the court to reverse that ruling, but each case was resolved before it could make a decision.

April 15, 1983: Manuel Garcia Sr., wife Debra and son Manuel Jr. and Richard Garza are riding in a 1982 GM Buick when the car is struck in the rear and bursts into flames. Only Manuel Garcia Sr. survives.

Jan. 21, 1985: Garcia sues GM in a San Antonio court, saying the Buick’s fuel system was defective and unreasonably dangerous.

Nov. 26, 1985: Judge David Peeples signs an order that prevents Garcia’s lawyers from sharing information they obtain from GM with other lawyers. Garcia’s lawyers later protest.

July 1987: The case ends up at the all-Democrat Texas Supreme Court, where the justices’ campaigns have been funded heavily by trial lawyers, who represent people in lawsuits against big companies. The court rules 8-1 that Peeples erred when he signed the order. The ruling said it is possible to allow lawyers to share information obtained from companies while still protecting trade secrets. The ruling set a precedent in Texas that lawyers for victims say makes filing lawsuits easier because lawyers can share strategy and cut costs.

November 1988: Three Republicans are elected to the Texas Supreme Court, marking the start of the court’s swing to the right. They are backed by corporate, medical and insurance interests. By 1999, all nine justices are Republican.

Dec. 2, 2004: The Supreme Court agrees to consider the first of three challenges to its 1987 ruling that allowed lawyers to share information obtained from companies. They accept similar cases in 2010 and 2012, but all three cases are resolved before the Supreme Court can rule.

May 16, 2010: Elias Bolaños Sr. dies on State Highway 16 near Zapata, Texas, after the GM Chevrolet Silverado pickup he is riding in rolls over, crushing the roof.

April 12, 2012: The Bolaños family sues GM, saying the truck’s design was defective and allowed the roof to cave in.

July 10, 2013: Over GM’s objections, a Zapata County judge allows the Bolañoses’ lawyers to share company information with lawyers who have similar cases. GM protests, and the case heads toward the Texas Supreme Court.

Aug. 22, 2014: The court schedules arguments in the case for Nov. 6, 2014.

Oct. 3: The Bolaños family settles with GM. The Supreme Court will not hear the case. Many believe a corporation defending itself in a lawsuit will bring the issue before the high court again soon.

SOURCE: Dallas Morning News research

http://www.dallasnews.com/news/metro/20150418-experts-expect-attempt-to-curb-trade-secret-sharing-in-suits.ece

If my knees were a car, my mechanic would choose my next automobile!

Landers: Knee replacements make for strange healthcare economics

Jim Landers

jlanders@dallasnews.com

Published: 12 May 2014 09:15 PM

Updated: 12 May 2014 09:44 PM  FiDA highlight

WASHINGTON — This winter, I had my knees replaced. I used a surgeon and a hospital in my neighborhood of Alexandria, Va., not far from where I work. The surgery and rehab are going fine. The lessons in health care economics are becoming strange.

For each knee, the bills (hospital, surgeon, anesthesiologist) came to roughly $32,000. Michael Toomey, president of Compass Care Engineering in Dallas, says the average in the Dallas area is between $42,000 and $43,000.

My new mechanical knees were the most expensive items in the bills. The hospital wanted $16,097.05 for each of them. My insurance agreed to pay $10,982.72 apiece.

These are Sigma System knees, size 5, made by DePuy Orthopaedics of Warsaw, Ind. DePuy is part of Johnson & Johnson.

The knees are made of cobalt, chrome and polyethylene. There’s a buckle-like piece that fits over the knee tip of my thigh bone. There’s a piece that looks like a peg with a circle on it drilled into my shin bone. Between them is a plastic disc. On the back of the knee cap, there’s a metal dome.

My surgeon chose these knees. The hospital bought them. Insurance (and my out-of-pocket max of $3,000) paid for them.

So, let’s see, if my knees were a car, my mechanic would choose my next automobile. A garage would buy it, and add its own markup. My employer (which is where I get health insurance) would pay for most of it, using an insurance administrator to bargain over the price.

Survey of surgeons

This is standard practice in the medical world. Device manufacturers will pitch their products to surgeons, but the surgeons are often in the dark or heedless of the cost. A survey cited in the January issue of Health Affairs found that 81 percent of orthopedic surgeons could not accurately guess the cost of these devices. And American surgeons replace about 720,000 knees a year.

Baylor Scott & White Health is using a different approach. The surgeons and the supply people meet to talk openly about prices and quality. They agree on a price the hospital system will pay. Medical device makers are then invited to meet or beat that price.

“Everybody can play, but you have to meet this capitated [maximum] price,” said Pam Bryant, Baylor Scott & White’s senior vice president for supply chain services.

Surgeons can choose among four or five key types, Bryant said.

Texas Health Resources also negotiates as a chain for its joint replacements. But here, the surgeons can choose what they like.

“While there is a great deal of similarity between devices, surgeons have definite preferences based upon training and their individual style of surgery — as well as the individual patient needs, including age, activity and other factors,” said John Gaida, THR’s senior vice president for supply chain management.

“Texas Health strives to make virtually all brands of hip and knee implants available to our surgeons so that the patient needs are always the primary consideration,” he said.

Across the country, surgeons are not clued in on the cost of medical devices often because the hospital can’t share that information. They typically sign a contract with the medical device company that forbids disclosure.

Doctors order

I know little about mechanical knees. My surgeon implants them all the time, so it makes sense to follow his guidance on what would suit me best and last longest.

But we didn’t go over a list of knees and manufacturers. My surgeon asked about my lifestyle, looked at my age and weight, and chose for me.

The hospital did the negotiating with DePuy. Did they get a good deal?

A 2012 Government Accountability Office report covering a small sample of hospitals found that one paid $5,200 for a knee replacement while another paid $9,500 for the same device.

There are several types of knees on the market. There’s a standard, fixed-bearing knee; a rotational knee that can handle more twists and turns; and a rotational/full flexion knee that allows for deep squats.

Prices seem to run between $2,000 and $16,000 for the device. So it turns out that my new knees (rotational) are pretty high-end. I hope they last a long time.

Follow Jim Landers on Twitter at @landersjim.

Costs vary wildly for knee replacements! Patients and doctors are in the dark.

A personal encounter with the cost of health care

Jim Landers

jlanders@dallasnews.com

Published: 27 January 2014 09:37 PM

Dallas Morning News

WASHINGTON — I often write about the cost of health care, guided by the perception that Americans pay too much and get too little in return.

On Wednesday, it gets personal.

I am about to have knee replacement surgery at a hospital in Alexandria, Va., just across the Potomac River.

Both knees are shot. I played too much football, had two surgeries for torn cartilage and ran for too many years on unforgiving concrete sidewalks. An orthopedist told me in 2004 that I could keep on running and soon face knee replacements or quit running and postpone the inevitable.

Nine years later, it’s hard to dance or even walk the supermarket aisles with my wife. Running is out of the question. At my last physical, I explained this to Dr. Bilal Desai, my physician. She gave me a referral to an orthopedic group.

“You need total knee replacements — both knees,” said Dr. Daniel Weingold, the surgeon who explained my X-rays to me.

We discussed alternatives — Ibuprofen, weight loss, intense exercise — but none of those would repair the damage. Weingold said he could do the surgery at Inova Alexandria Hospital.

More expensive

Inova owns several hospitals in Northern Virginia, as well as the outpatient clinic where Dr. Desai practices.

I remembered reading that a knee replacement at Inova Alexandria Hospital would cost as much as $5,000 more than at Inova Mount Vernon Hospital, a few miles away.

I asked Weingold. He doubted there could be such a difference between two Inova hospitals. Well, what are the charges, I asked. He did not know. None of the surgeons in his group practices at Mount Vernon, he said, but if I wanted to go there, we could stop now and I could go to another orthopedic group.

I said I wanted to talk with my insurance company.

I emailed BlueCross BlueShield of Texas, which administers our health plan here at The Dallas Morning News. I asked: Do you have any information about which hospital does a better job? What the costs are? Does it make a difference to you if one is cheaper than the other?

High-deductible plan

I was told that both hospitals are in our health plan’s PPO, or preferred provider network, as is Dr. Weingold. Since the hospitals are in Virginia rather than Dallas, I was told, BlueCross Blue-Shield of Texas doesn’t have much information to go on in terms of a recommendation.

Like a lot of people working for Dallas companies, we have a high-deductible health plan designed to make employees better health care shoppers. My deductible is $1,500, and my out-of-pocket maximum is $3,000. I knew I would blow through that, regardless of which hospital I chose.

I’m not eligible for Medicare, but I looked at the Medicare charge information for 3,000-plus hospitals in the country. In 2011, Inova Alexandria Hospital charged $32,051 for a total knee replacement. Inova Mount Vernon Hospital charged $27,549.

I looked at the charges for Dallas hospitals. Medical City Dallas charged $117,616. Baylor University Medical Center charged $43,852. Texas Health Presbyterian charged $58,854.

None of the hospitals in Dallas charged less than $32,938, which was nearly $900 more than the Alexandria hospital.

‘Medicine in America’

I went back to Dr. Desai and told her she’d referred me to an orthopedic practice and hospital where the charges were $5,000 more.

“That’s a lot of money,” she said. “Go to Mount Vernon.”

“But I don’t know a surgeon at Mount Vernon. I went where you referred me,” I said.

“I can write you a blank referral and you can find a surgeon and fill it in,” she suggested.

“Well, why don’t you know about the difference in these hospital charges?” I asked.

“We don’t know about that,” she said. “That’s just medicine in America.”

I’m having the surgery on my right knee at Inova Alexandria. I’ll see how it goes but expect Mount Vernon Hospital will get my left knee.

Patient harm escalates: patient safety is elusive.

16 Dallas-area hospitals slip, 9 rise in group's safety ratings

By JIM LANDERS

Washington Bureau

jlanders@dallasnews.com

Published: 22 October 2013 08:14 PM

Updated: 23 October 2013 12:47 AM

Parkland Memorial Hospital, which has a new facility under construction, saw its grade drop in the most recent Leapfrog safety ratings from A to C.

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WASHINGTON — Sixteen of 41 Dallas-area hospitals slipped in safety ratings issued Wednesday by the nation’s largest self-insured employers.

Parkland Memorial Hospital and Baylor Medical Center at Carrollton fell two marks from A to C grades, while Texas Regional Medical Center in Sunnyvale fell from a B to a D.

Medical Center of Plano, meanwhile, went from a C to an A.

The grades, compiled by the Washington-based Leapfrog Group, are summations of 28 safety indicators and correspond to the letter grades most kids get in school.

Nine hospitals including Medical Center of Plano improved their grades from May’s evaluation. Another 16 hospitals stayed the same.

The middling showing for Dallas-area hospitals was reflected nationwide among 2,539 hospitals that were judged on the incidence of medical and medication errors, infections and injuries.

Two new types of hospital-acquired infections — for colon surgeries and urinary-tract catheters — were added to the latest report card. But a review of the data did not show they were responsible for the lower scores at some hospitals.

John T. James, a Houston toxicologist and head of an advocacy group called Patient Safety America, estimates that as many as 440,000 Americans die each year as a result of preventable harm while hospitalized.

The Leapfrog Group is made up of hundreds of large companies and includes the Dallas-Fort Worth Business Group on Health. It cited James’ findings in its latest report.

“We are burying a population the size of Miami every year from medical errors that can be prevented. A number of hospitals have improved by one or even two grades, indicating hospitals are taking steps toward safer practices, but these efforts aren’t enough,” said Leah Binder, president and CEO of the Leapfrog Group.

Parkland’s slump was “a disappointment,” said interim senior vice president Mike Malaise. The hospital had pulled itself up from a C to an A in Leapfrog’s May evaluation.

“We remain focused on sustaining the many improvements we have recently made. There is no question that Parkland is a much better health care provider than it was two years ago, but we must remain focused on continual improvement,” Malaise said in a statement.

No surprise

Medical Center of Plano’s jump from a C to an A was no surprise, said chief nursing officer Sandy Haire.

“We embrace public reporting of quality and safety data, and we work hard every day to improve the care we deliver. We fully anticipated our most recent score would accurately reflect our ongoing commitment to provide the highest level of quality patient care,” she said.

Baylor Health Care System saw grades fall at five of its nine Dallas-area hospitals, while one — Baylor Medical Center at Irving — improved from a B to an A.

Baylor chief quality officer Dr. Donald Kennerly said the hospital group supports Leapfrog and other evaluators, but he said it has improved by its own measures.

“Since there is no nationally accepted yardstick to judge patient safety, we use a variety of measures to evaluate our performance monthly, many of which are not available to Leapfrog,” he said.

“By constantly measuring and working to improve patient safety at all of our facilities, we have seen a more than 40 percent reduction in preventable adverse events over the past five years,” Kennerly said.

Texas Regional Medical Center and Dallas Medical Center (formerly Texas Hospital for Advanced Medicine) were the only area hospitals to get a D grade.

Texas Regional argued it would do better once more recent results become available.

First few years

“Much of the data Leapfrog used for this year’s assessment is based on the hospital’s first few years of business. Since Texas Regional Medical Center at Sunnyvale opened in September 2009, we are always improving,” said Dani Morales, the hospital’s director of quality.

Even though this is the second report card issued in 2013, Leapfrog officials said they were basing their latest results largely on data submitted a year or two ago by the hospitals to the federal government.

Hospitals are required to report information on medication errors, surgical site infections, bedsores, falls and other maladies that occur while patients are hospitalized. The information is summarized for consumers at medicare.gov/hospitalcompare.

Those results plus information on electronic health records, staffing and training are sifted by Leapfrog analysts and reviewed by a panel of hospital safety experts.

Leapfrog analysts say they work with the latest data and invite hospitals to update information as it becomes available.

The Leapfrog grades are available at www.hospitalsafetyscore.org.

Follow Jim Landers on Twitter at @landersjim.