The Opioid Crisis Could Pit Hospitals Against Big Pharma

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Original story posted on: January 16, 2019

A look at who is paying the cost of the opioid crisis.

Merriam-Webster defines the word “crisis” as an “unstable or crucial time or state of affairs in which a decisive change is impending, especially one with the distinct possibility of a highly undesirable outcome.” Or, alternatively, it is defined as “a situation that has reached a critical phase.” 

I can’t imagine anyone disagreeing that these definitions apply to the current opioid abuse epidemic we face here in America. In fact, according to the Centers for Disease Control and Prevention (CDC), opioids can take the overwhelming credit for a reduction in the average life expectancy in America over the past three years. That’s astounding! 

There are some 320 million people in this country, and the fact that a single issue – not war, not crime, not domestic violence, but a drug – can cause an overall reduction in life expectancy is nearly beyond belief. 

The cost of this crisis is huge, in a moral, social, and financial sense. As a result, several lawsuits have emerged as of late. One with which I am familiar is being spearheaded by Don Barrett, whose claim to fame includes the Ford/Firestone MDL litigation and the big tobacco litigation. In this scenario, Barrett is driving toward a class-action lawsuit that would pit U.S. hospitals against big pharma, as well as big pharmacy. The allegation, when boiled down to its most basic point, is actually quite simple: you helped created this crisis, so you have to help pay for it. The basis for the case focuses on what the complaint refers to as alleged “falsehoods” that have been promulgated by the defendants: for example, that the risk of addiction from chronic opioid therapy is low. Or that the risk of addiction is easily identified and managed. Or that long-term opioid use improves functioning. Or even that new forms of certain opioids can successfully deter abuse.

But why hospitals? Well, there are already legal actions in play targeting other market sectors, such as patients and families of addicts. But when it comes to absorbing the brunt of the financial burden, hospitals are at the top of the list. Twenty years ago, a hospital emergency room might have seen seven to 10 overdose cases a week, or per month. Now, they see that same number every day. And in many cases, the patients are either under-insured or uninsured, placing the financial burden directly on the hospital. 

But this is easy to calculate, right? When a patient comes in with an overdose, the economics are simple: 100 percent of the cost can be attributed to the opiate in question. What about the nuance? What about a standard procedure, like a knee replacement? In a healthy patient, the cost is x dollars. In a patient with, let’s say, a comorbidity like diabetes or chronic obstructive pulmonary disease (COPD) or hemophilia, the cost can be much higher due to the complications and/or potential risk for complications, both during surgery and in the recovery period. So, what about opioid addiction or abuse? It’s not a stretch to imagine that a knee replacement patient who is addicted to opioids is likely to have a higher risk of complications than a non-addicted or non-abusing patient. 

Anesthesiologists with whom I have discussed this issue are clear that it is much more difficult to manage an opioid abuser than one who is not.

In this example, the economics get a bit more complex. First of all, do we treat opioid abuse as a comorbidity in the same way that we treat diabetes? Secondly, how much risk of complication does opioid abuse add to the equation? In essence, how much more does it cost to perform the same procedure on an addict as it does on a non-addict?

The truth is, I don’t know, but in speaking with an economist friend of mine, I am confident that it can be calculated quite accurately. And then it gets even more complex. For example, an addicted mother giving birth to an addicted baby significantly complicates the equation. First, you have the risk to the mother, and then you have the risk to the baby. For the mother, it may involve greater monitoring and a more complicated recovery. For the baby, it may mean weeks in the NICU, which is not only a huge human cost, but a huge financial cost as well. And who pays for this? Maybe private insurance. Maybe government insurance. Or maybe no insurance, which puts the burden on the hospital.

We should all be aware that this is not a new issue. In 2011, the CDC declared prescription painkiller overdoses to be at epidemic levels. That’s eight years ago! They noted that the death toll from overdoses involving prescription painkillers (not heroin) had tripled during the past decade, and that overdoses involving prescription opioids killed more Americans than heroin and cocaine combined. And if you want a gateway to heroin, prescription painkillers are the way to go. The National Institute on Drug Abuse puts the economic burden of opioid misuse alone at $78.5 billion annually, which includes healthcare costs, among others.

So, how much does this cost a hospital? I guess that would depend upon how many of their services and procedures are complicated by treating abusers and addicts. For each hospital, the cost will be different, but make no mistake, in this period of crisis, when we have seen services and procedures for opioid abusers and addicts increase by several orders of magnitude, it costs every hospital in America something – and while I am not normally a political kind of guy, I do agree with George Wilson in the 1993 movie “Dennis the Menace,” when he states that “a tragedy of this magnitude has to be somebody’s fault, Martha.” And from all the research I have done, there is plenty of blame to go around. The problem is, there isn’t plenty of money to go around to pay for it.

Hospitals, unlike other individuals or organizations, are subject to EMTALA, or the Emergency Medical Treatment and Labor Act. This is a federal law that requires an emergency department to stabilize and treat anyone presenting there,, regardless of their insurance status or their ability to pay for the services. The problem is that since it was enacted sometime in the mid-1980s, it has been an unfunded mandate. That means that the hospital must stabilize, treat, and in many cases, absorb all or some portion of the expense. First and foremost, a hospital is a business, at least in my humble opinion. So their first priority, again in my opinion, is to be profitable. Let’s face it, quality is expensive, and if you expect any healthcare provider to provide quality care, then someone, somewhere, has to pay for it – and if it’s not insurance and it’s not the patient, then ultimately, it’s the hospital. The economics are simple: spend more than you earn, and eventually you go out of business. And when a hospital goes out of business, it impacts everyone negatively: the staff, the patients, and the entire community. So I am not being cold and unfeeling when I say this; I am dealing with the reality of economics. Again, someone has to pay, and the aforementioned lawsuit theorizes that that someone should be (at least in part) those who bear some of the responsibility for creating this scenario. And today, the finger is pointed at those who manufacture, brand, market, sell, and distribute those opioids. 

In what I am discussing here, the term “abatement” comes to mind. By definition, abatement is the ending, reduction, or lessening of something. In this case, we are talking about something that lessens the economic burden to the hospitals. If you are a hospital administrator reading this, ask yourself a question: what would you do with a million dollars if it was directed toward abating the financial burden in treating, caring for, or otherwise providing healthcare services to your patients who are either addicted to or abuse opioids? This is an important question, because so often we have a hard time pointing to where the financial pain is. Imagining a solution sometimes makes it easier. Would you use this funding to offset the costs associated with those cases that involve overdose victims coming to your emergency room? Or the NICU costs incurred for caring for addicted babies? Or maybe to pay for dedicated counselors, or coders, or financial experts, all dedicated to mitigating the financial and personal risk of the crisis that appears at your door? 

It doesn’t take an economist to put a trend line together on this issue. The problem is getting worse. And that means that treating the problem is getting more expensive, and until we can get a handle on managing behavior, there is not end in sight. As such, while I don’t always agree that litigation is the best solution, in this case, particularly based on the adversarial stances involved, it seems to be the only solution. My message to hospitals: hunker down. And while, at least as of now, I have no official involvement in this class-action lawsuit, it seems prudent that it should be at least investigated as a possible solution. 

For more information, I would contact the Barrett Law Group directly at barrettlawgroup.com

And that’s the world according to Frank.

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Frank D. Cohen, MPA, MBB

Frank Cohen is the director of analytics and business Intelligence for DoctorsManagement, a Knoxville, Tenn. consulting firm. He specializes in data mining, applied statistics, practice analytics, decision support, and process improvement. He is a member of the RACmonitor editorial board and a popular contributor on Monitor Monday.

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