More adults continue to use alternative medicine

That this trend exists does not surprise me. According to a Feb. 3, 2006 NY Times article cited by KaiserNetwork.org, "an estimated 48% of U.S. adults used at least one alternative or complementary treatment in 2004, compared with 42% in 1994, and health care experts maintain that the rate continues to increase."

What's interesting to me is the why behind the steady growth despite negative media attention in the last few years on the dangers and inefficacies of "alternative medicines" (Ephedra & Vitamin E, among them). " According to the KaiserNetwork report, the reasons are many.

[F]or reasons that have as much to do with increasing distrust of mainstream medicine and the psychological appeal of nontraditional approaches as with the therapeutic properties of herbs or other supplements."

The lack of good science does not deter Americans.

U.S. residents "do not appear to care that there is little, if any, evidence that many of the therapies work"; that "alternative therapy practitioners do not have a fraction of the training mainstream doctors do"; or that vitamin and dietary supplement manufacturers "are as profit-driven" as pharmaceutical manufacturers, the Times reports.

It seems to me a sense that science is imperfect and all to dehumanizing, and that a sense of people & companies abusing their power over medical knowledge at the expense of the common man are compelling people out of conventional medicine more than any force is pulling people into CAM.

U.S. residents who use alternative or complementary treatments often have a "sense of disappointment" or "betrayal" related to a "misdiagnosis, an intolerable drug, failed surgery, a dismissive doctor" or "haggles with insurance providers, conflicting findings from medical studies and news reports of drug makers' covering up product side effects," according to the Times. "Whatever the benefits and risks of its many concoctions and methods, alternative medicine offers them at least the promise of affectionate care, unhurried service, freedom from prescription drug side effects and the potential for feeling not just better but also spiritually charged," the Times reports.

None of this is to say CAM doesn't work. Much of it does, as studies for herbs like St. John's Wort (in Europe), for yoga & meditation, and for accupuncture show. But a skeptical eye is still needed on alternative medicine as much as it is needed on conventional medicine.

And more importantly, it seems like conventional medicine, which has inarguably done much good in restoring people's quality of life and even saved many thousands if not millions of lives, is currently experience a crisis of faith.

Top 10 Reasons for Soaring Health-Care Costs, according to yahoo's featured economist

The Naked Economist
by Charles Wheelan, Ph.D.
http://finance.yahoo.com/columnist/article/economist/2760?p=1

The Top 10 Reasons for Soaring Health-Care Costs
by Charles Wheelan

What's the most intractable public policy problem the U.S. faces? Health care. I don't think any other issue even comes close. Health care has all the ideological fireworks of social issues like abortion or gay marriage (e.g. is health care a right or a privilege?). Yet the system itself -- the process of providing care and allocating those costs -- is also stunningly complex.

Health care is increasingly expensive because of powerful, perhaps inexorable economic forces that make medical care different than all other goods and services in a modern economy. Here are my top 10 reasons for why health care is so expensive -- and likely to get even more expensive in the future, regardless of what patches we put on the system.

1. Nobody shops for value.

When was the last time you heard someone say something like this: "You're having chest pains, Al? Sorry to hear that. You should see Dr. Smith. He's not as fancy as those cardiologists at the Cleveland Clinic, but you can't beat his prices! In fact, I think he's having a Presidents' Day special on angioplasty right now." There's no medical equivalent of Wal-Mart. Everyone wants Neiman Marcus.

2. Medical innovations are usually more expensive, not less.

Economic progress tends to come in two forms: Learning to do old things better and cheaper, or learning to do new things. Medical progress tends to involve the latter. A bone-marrow transplant may provide new hope for many cancer patients, but it's not necessarily cheaper than the old alternative.

In the case of pharmaceuticals, we've explicitly designed the system so that new drugs will be expensive. We grant patent protection -- a legal monopoly -- to pharmaceutical companies for breakthrough medication. The more impressive the drug, the more the company can charge, regardless of the actual cost of producing the pill. Yes, those prices are high, and the profits can be huge -- which is exactly what creates the incentive to discover such drugs in the first place.

3. Health care is a "luxury good".

Wait. Before you start sending me angry e-mails, please let me clarify. I'm not saying that health care is a luxury. I'm saying that health care is a "luxury good," which is a technical term in economics. It refers to any good that wealthy people demand in disproportionately greater amounts than less wealthy people.

The opposite is an "inferior good", which is something that people actually consume less of as they get richer. Ramen noodles, for example, are likely to be an inferior good. I'm certain that my graduate students eat far more of them than Donald Trump does, his capacity to afford huge quantities notwithstanding.

Richer societies, and richer people within a society, have higher expectations for health care than less wealthy people. We increasingly demand medical fixes -- and have the technological capacity to provide them -- for problems that our grandparents would have just tolerated. Think hip replacement, stomach stapling, Lasik eye surgery, and so on. Our spending a rising share of our GDP on health care as we grow richer as a nation is not inherently a bad thing.

4. We don't pay for what we consume.

Health care is unique in that neither the service provider nor the patient gets the bill. For most people, the tab gets sent somewhere else. So nobody directly involved in the transaction has any incentive to control costs.

Imagine if you could buy a television that way. You would walk into a retailer and discuss your needs with the salesperson (working on commission), knowing that the bill for your eventual purchase would get sent to Aetna. Would anyone walk out of the store with less than a 60-inch flat screen with surround sound?

The insurance company will try to contain costs, albeit without the benefit of being in the office with the doctor and patient. So that may mean somewhat arbitrary limits on care or time-consuming hurdles for more expensive procedures -- which is why everyone hates their HMO and doctors complain, rightfully I'm sure, about the staggering paperwork and bureaucracy associated with nearly all insurance plans.

Even then, it's easy to game the system. Imagine the expert salesperson at the shop writing a letter to your insurance company explaining that you need a giant, high-definition screen because of your poor eyesight.

5. Baumol's disease.

This is not something you should fear testing positive for at your next check up. Rather, it's an important insight made by economist William Baumol: As societies become richer, labor-intensive endeavors, such as health care, become increasingly expensive relative to goods and services that can be produced using less labor.

Why? Because there are none of the cost savings that usually come from rising productivity. Compare farming to brain surgery, for example. A typical farmer today may grow 20 times as much corn as a farmer could 100 years ago. Thus, it's possible for a farmer to be 20 times as wealthy without any increase in the price of corn. A brain surgeon, on the other hand, cannot see 20 times as many patients. (I don't know if there were brain surgeons 100 years ago, but you get the point). Baumol's famous example was that a string quartet will always require four musicians.

So, for brain surgeons' income to rise at the same pace as the rest of society (a necessity if smart people are to be induced to enter the field), then the price of brain surgery must go up relative to less labor-intensive goods and services (like corn). In short, as long as the doctor-patient relationship remains relatively unchanged, health-care costs will rise faster than prices in general. (Baumol's observation was described as a "disease" because it afflicts certain sectors of the economy, such as health care and higher education.)

6. The old.

I've written before about the "baby boomers", the huge demographic "pig in a python" born just after World War II (see "Tackling the Social Security Mess" http://finance.yahoo.com/columnist/article/economist/2415). This huge cohort of Americans is getting older, and older people have greater health-care needs. So even if nothing else on this list were true, an aging population would drive up the nation's health-care spending.

7. The uninsured.

Quick quiz: Your child has a high fever and a scary cough. Do you (1) call your pediatrician or (2) take your child to the nearest emergency room? If you've got a pediatrician, you do (1). If you don't, you do (2) -- which is a very expensive use of a trauma center's highly trained staff. Or maybe you never do anything at all, in which case five years later society is paying to deal with diabetes or asthma or some other chronic condition that could have been managed far more cheaply with better primary care.

8. The fat and lazy.

Most of us, in other words. We smoke too much, eat too much, and exercise too little. Why? I have no idea. A woman from Canada once asked me if fining Americans for unhealthy lifestyles might help. My off-the-cuff answer still rings true: "If someone is behaving in a way that's going to prematurely end their life, do you think a $200 fine is going to make much difference?"

9. Because death is sometimes the low-cost option.

What happens to people who are miraculously treated for heart disease or cancer? They die of something else. Or of the same thing later. Any medical success merely begets some later medical expense, particularly if we continue to spend so much on end-of-life care.

10. Malpractice.

I almost didn't add this to the list, as it's more of a legal problem than an economic one. But then I began to anticipate all the angry e-mails from folks who are convinced (wrongly) that malpractice suits are the only reason that our health-care costs are skyrocketing. So I stuck it in.

And, in a sense, my behavior proves that it belongs on the list: By attempting to preempt angry e-mails, I'm acting like doctors who practice "defensive medicine." Doctors seeking to avoid lawsuits have an incentive to overtreat all kinds of maladies -- a rational, albeit expensive response to a highly litigious climate.

That's my top 10. A group of brainstorming economists could probably come up with 16 or 18 structural causes for rising health-care costs, but I think I've hit the big ones, including some that are not intuitive or widely discussed.

What's my solution? Thankfully I've only got space here for the diagnosis. But that should make clear that there's no single cure -- because there's no single problem. Any serious and pragmatic fix for the system will require six or eight pills, not one. And even that will be treatment, not a cure.

Crisis of trust in doctors, drug companies & the FDA

I heard this report on Marketplace Radio this evening, FDA works on transparency.

Here's the summary: "In the wake of growing conflict-of-interest criticism, the FDA today announced it will spell out how and why it grants waivers to outside experts and allows them to serve as FDA advisers. Hillary Wicai reports."

***

This is a May 20th NYT article titled "Unease on Industry's Role in Hypertension Debate:"

The dinners promoting a new definition of high blood pressure illustrate connections — among the pharmaceutical industry, academic physicians and societies that formulate opinion — that can ultimately affect patient treatment. And the dispute within the society reflects a growing unease that industry money is influencing scientific discourse in medical societies and elsewhere.

At a recent speech before another society, the American College of Cardiology, its new president, Dr. Steven E. Nissen of the Cleveland Clinic, suggested that the medical profession had become addicted to industry money just as the nation was addicted to foreign oil.

After months of controversy within the American Society of Hypertension that included accusations of industry influence, the society's president, Dr. Thomas D. Giles, said yesterday that the group's leadership would be required to disclose more details about the money they receive from industry.

Dr. Giles said the organization had always maintained a firewall between its activities and industry funding. "We don't take money that has strings attached to it," Dr. Giles said, emphasizing that its industry grants are not earmarked for any specific purpose.

The added disclosure had been sought by a board member, Jean E. Sealey, a biochemist and a longtime blood pressure researcher affiliated with Weill Medical College of Cornell University, who was among those also involved in a leadership struggle within the organization.

Dr. Alderman, a professor of medicine and epidemiology at the Albert Einstein College of Medicine in the Bronx, is one of several doctors who withdrew from a group formed by the society to write the new blood pressure definition.

He complained that the definition was derived from a hodgepodge of opinions not supported by hard science, and also questioned whether the society of 1,600 could insulate itself from the drug company donations it used to operate.

Controlling blood pressure has long been a mainstay of the pharmaceutical industry. About 65 million Americans have high blood pressure under the current definition and they help fuel a $17 billion annual market in drugs for hypertension. But another 59 million people are on the borderline, and many doctors believe the new definition of hypertension could make drugs a standard treatment for many of them, drastically expanding the potential drug market.

Dr. Giles of Louisiana State University's medical school in New Orleans was the driving force behind the new definition. The work of the group that developed it was financed by $75,000 in unrestricted drug industry grants from Merck, Novartis and Sankyo, according to Susan Rood, a spokeswoman for the Society of Hypertension. Ms. Rood also confirmed that the dinners were financed by $700,000 in grants, also unrestricted, from the same companies. The new definition that resulted was written by some of the leading experts in blood pressure medicine.

Pre-hypertension has been considered a blood pressure reading of 120/80 to 139/89, according to guidelines developed by a National Institutes of Health panel, which first identified the pre-hypertension category in 2003. Currently, pre-hypertension is generally not treated with drugs.

The new definition proposes assigning some of the people with pre-hypertension to a new category called Stage 1 hypertension. Hypertension is currently defined as blood pressure readings of 140/90 and above.

Dr. Giles estimated that the proposed definition would move half of those whose blood pressure readings are currently considered pre-hypertension to the Stage 1 hypertension category.

That determination would be based not just on their blood pressure readings, but also on other risk factors.

The proposed definition makes no specific treatment recommendations. But some specialists who have read the proposed definition say it is a short step from labeling someone with high blood pressure to prescribing pills. And they predict that if the new definition is embraced, it will expand the use of medications.

Dr. Curt D. Furberg, a professor of public health science at Wake Forest University, who was among those who withdrew from the writing group, citing concerns that its work was not evidence-based, said, "The industry wants to sell drugs and to as many people as possible."

But Dr. Giles said it was possible that the use of medication could actually contract under the new definition, with some doctors recommending lifestyle modifications rather than medication. And he said industry money or influence did not play a role in the proposed definition, which he said reflected a concern that too many people with diagnoses of pre-hypertension ended up having strokes.

"I will tell you that if you've ever sat there and watched patients in the prime of life get a stroke or a heart attack, it's heart-wrenching," Dr. Giles said last week.

The recommendations by Dr. Giles and his group are considered influential in the evolving thinking over what constitutes high blood pressure. In addition, the discussion about whose blood pressure should be treated is also being driven by a new study that concluded that a drug called Atacand by AstraZeneca could reduce the risk that people with pre-hypertension will develop hypertension.

Treating pre-hypertension was among the topics at a meeting this week of the society at the New York Hilton. The meeting ends today.

The debate is in some ways similar to questions about changing thresholds for defining high cholesterol, diabetes and obesity — areas where accusations have been leveled in the past that the pharmaceutical industry has tried to exert influence.

"All of this has got the ring of seeming to be of great benefit to the pharmaceutical industry without clear evidence that it's going to be the same benefit to the public," Dr. Alderman said recently

In statements, spokeswomen for Merck and Novartis confirmed that their companies had helped finance the society's work, but said that they had no influence over the outcome of the new definition or the content of the dinner briefings held last fall in seven cities.

Sankyo did not return calls seeking comment.

Of the seven doctors who wrote the proposed new definition, six have said that they served as consultants and speakers for pharmaceutical companies that make blood pressure medications. The seventh is a consultant and stockholder in a company that markets a diagnostic method to measure damage to blood vessels.

Such industry affiliations are not unusual among prominent doctors at academic research centers. And for years, the American Society of Hypertension, known as ASH, has operated with industry support.

But some members of ASH have become vocal critics of the influence wielded by the drug industry, including the person who was next in line to become the society's president, Dr. Sealey, who has been embroiled in a longstanding dispute with the organization's current leadership over that and other issues.

"The truth of the matter is that we have many members who are leaders in our society who are making well into the six figures from their pharmaceutical-company-supported activities," Dr. Sealey, a research biochemist and physiologist, said in an interview two weeks ago.

But many members of the society have taken umbrage at suggestions that their work for drug makers affects their scientific independence.

"There are those who accuse us of being nothing more than shills of industry; a lot of us take pretty great offense at that," said Dr. Joseph L. Izzo, a professor of medicine at the University of Buffalo who was part of the group that developed the new definition. "We've basically devoted our careers to researching this disease and how to treat it."

Dr. Sealey's assertions had fueled dissension within the society and were among the reasons that a vote to block her presidency had been expected at yesterday's business meeting of the society.

Instead, an agreement was forged under which Dr. Sealey gave up her term as president and, according to written statements circulated among those attending the meeting, the organization's leadership agreed that its board would soon submit detailed financial disclosure forms, which Dr. Giles said had been in development for more than a year.

Dr. Giles said those disclosures would go beyond the affiliations that were currently disclosed and would require leaders of the group to state how much they received, in broad categories.

***

Finally, from the AARP:
FDA Woes

The FDA's job is to protect the public from unsafe drugs, faulty medical devices and contaminated food. But many doctors, consumer groups and lawmakers worry that the FDA is becoming less effective.

Last September an advisory panel voted 8-1 to recommend that the Food and Drug Administration approve a new drug for diabetes even though the risk of heart attack and stroke doubled among patients in clinical trials. The only cardiovascular expert on the committee didn't attend the panel's meeting because he had performed work for the drug manufacturer. But then, so had the committee's chairman, who did attend and in fact ran the meeting.

Some of the nation's leading cardiologists were upset by the recommendation. Writing in the Journal of the American Medical Association a few weeks later, they called on the FDA to reject muraglitazar because Bristol-Myers Squibb and Merck, its manufacturers, had failed to provide an accurate measure of the medication's risk.

"I'm increasingly concerned that these panels have become unbalanced," says Steven Nissen, M.D., of Ohio's Cleveland Clinic, a co-author of the JAMA article and former chair of the FDA's cardiovascular drugs advisory panel. "We have to make certain we have a balance of experts, [including] people who deal with the complications and side effects."

"There's too much bias toward bringing new treatments to market," adds Art Levin, director of the Center for Medical Consumers in New York and the consumer representative on the FDA Drug Safety and Risk Management Advisory Committee.

The FDA regulates companies that account for 25 percent of the U.S. economy. Its job is to protect the public from unsafe drugs, faulty medical devices and contaminated food. But 100 years after the birth of this federal agency, many doctors, consumer groups and lawmakers worry that the FDA is becoming less effective in carrying out its mission.

The hazy relationship between the FDA's advisory committees, such as the one for the diabetes drug, and the companies the agency regulates is just one issue raising concerns about the effectiveness of the FDA, which is still considered the gold standard among food and drug regulators around the world. Two other issues are a reported backlog of more than 800 generics awaiting approval and what the FDA acknowledges is the lax monitoring of drugs after they are approved and on the market.

"A lot of people are nervous about what's in their medicine cabinet, and for good reason," says Sen. Chuck Grassley, R-Iowa, a leading agency critic on Capitol Hill. "[The FDA] has become too cozy with the industry it regulates ... That's not a recipe for full trust and faith among consumers."

Acting FDA Commissioner Andrew von Eschenbach, M.D., the director of the National Cancer Institute who has been nominated to head the FDA permanently, insists the agency is working to protect the public. "We are making a tremendous commitment to the whole area of drug safety," he told Congress in March.

Serious questions about conflicts of interest at the FDA arose in 2004 when the painkiller Vioxx was taken off the market because it increased the risk of heart attack and stroke. Concerned that similar drugs might pose the same risk, the FDA convened a special advisory committee to evaluate the evidence. The agency almost always follows the advice of advisory panels, whose members are usually drawn from prominent medical institutions outside the FDA. Critics say most of the outside advisory panels include scientists with ties to the firms whose products are under agency review.

Should This Drug Be Kept on the Market?
The FDA’s drug safety and arthritis drugs advisory committees met to consider whether Vioxx and two other drugs in its class were safe. At least 10 of 32 voting members had received fees, research funds or other benefits from Merck and Pfizer, the drugs’ manufacturers. Here’s the vote:
Vote of Full Committee Vote When Members With Conflicts of Interest Were Excluded
Vioxx 17 YES 15 NO 8 YES 14 NO
Bextra 17 YES 13 NO 8 YES 12 NO
Celebrex 31 YES 1 NO 21 YES 1 NO
Source: Gardiner Harris and Alex Berenson, “10 Voters on Panel Backing Pain Pills Had Industry Ties,” New York Times, Feb. 25, 2005.

The panel that analyzed Vioxx, Celebrex and Bextra voted in February 2005 to keep them on the market, even though Vioxx had already been pulled. Only later did the media report that nearly a third of panel members had ties to makers of the drugs. Had their votes been excluded, the drugs would not have gotten a positive vote.

An FDA spokesman says advisory panelists are screened to "carefully weigh any potential financial interest with the need for essential scientific expertise" to protect public health.

"One of the conundrums," says Carl Peck, former director of the FDA's Center for Drug Evaluation who now heads the Center for Drug Development Science in Washington, is that the scientists "who are capable of making an informed decision are the very ones who typically are called on by drug companies and FDA to advise." He argues that limiting advisers to those who've never had research or consulting agreements with drugmakers could reduce the pool of qualified experts.

But Eric Topol, M.D., of Ohio's Case Western Reserve University disagrees. He says it's "essential for the 'jurors' to have no conflicts. There are many people who would qualify who have absolutely no ties to industry."

After the Vioxx decision, the FDA pledged to tighten its review process by creating an internal Drug Safety Oversight Board. The group has come under fire for meeting in secret, but the FDA says information from the companies involved is confidential. Peter Gross, M.D., outgoing head of the FDA's drug safety advisory committee, has urged more transparency, with "public representatives" named to the board.

The FDA gets more than 20 percent of its $2 billion annual budget from industry user fees, which are paid by companies seeking the FDA's OK to market new products. The fees, which account for nearly half of the new-drug office's budget, were mandated by law in 1992 to speed up the approval process by enabling the FDA to hire more reviewers.

"That's the problem," says Nissen of the Cleveland Clinic. "It would be smarter if we funded the FDA through public dollars. In terms of our national budget, it's trivial."

"I understand the importance of bringing new medications to market," he says. "But I just want to make sure we've appropriately balanced risk with benefit."

Meanwhile, just under 3 percent of agency funds is devoted to monitoring drug side effects. The FDA recently reported that drugmakers failed to begin two-thirds of post-approval studies it had requested. The agency has hired a consulting firm to assess the problem.

"The greatest flaw in our post-marketing system," Peck says, "is that it's voluntary by physicians and patients. This needs to be fixed."

He adds, "Everything needs improving, all the time."

Merrill Goozner, author of The $800 Million Pill, directs the Integrity in Science Project at the Center for Science in the Public Interest, an advocacy group in Washington. Bulletin staff contributed to this report.

Forget about WebMD...

The WSJ reports in "Prognosis Positive: Web Health Ventures" from May 25, 2006 how vast sums of venture capital are being poured into health-related websites.

During the technology boom, medical-related Internet ventures were promoted as one answer to health care's woes, promising great efficiencies for the industry and creating better-informed patients, But with few exceptions, like WebMD Health Corp., those efforts largely failed.

Now, a growing number of Internet health-care ventures are finding new support from technology investors. Venture firms like Battery Ventures, Bessemer Venture Partners, Trinity Ventures, VantagePoint Venture Partners and others are backing Internet-based companies targeted at the health-care industry.

"This is the hottest space in the Internet," said West Shell, chairman and chief executive of Healthline Networks Inc., which runs health-care search engine healthline.com. The San Francisco company raised $14 million in financing this year from VantagePoint and others.

Another company attracting investors is Healthia Inc., a "comparison-shopping" company for health-care products and services...

Healthia, for example, has built a database of physicians, hospitals, insurance plans and other health-care vendors. The site's intent is to allow users to compare prices, service and quality, and then use the site to connect with the company or physician providing the best deal. It may collect a fee when a match is made between customer and vendor...

"What we are about is comparison shopping," said co-founder and Chief Executive Chini Krishnan. "We want to bring the whole notion of marketplace dynamics, including transparency, to the process of health purchases."

I'm really interested in Healthia since I'm currently working on a comparison-shopping project. And whether or not the doomsday predictions of a depression or deep recession comes true, there are enough people who will use the net to find the very best deals on all kinds of things.

Shifting gears, let's consider what's behind this obscene investment of real money in websites that have potential profits: the shift toward consumer-based healthcare.

But he and other venture-capital investors say the Internet-business model is more mature than it was during the late 1990s. Further, they see the evolution of health care into a business in which consumers will be required to make more decisions -- and ultimately pick up more expense -- giving Web-based companies more opportunity to crack the health-care market.

Health care is one of the more-searched topics on the Internet. People seeking health-care information may begin their search with general-interest sites like Google and Yahoo. Investors say the opportunity for sites devoted to health care is in providing depth.

Another interesting site is LifeMed, which currently focuses on diabetes:

In August, Battery Ventures and other investors pumped $6.2 million into LifeMed Media Inc., which offers several multimedia products aimed at diabetics, including a Web site, a weekly television show and regular radio segments. The company earns revenue through advertising, and expects to break even this year, according to Chief Executive Howard Steinberg. He also says the company is investigating gaining a second revenue stream from marketing products and services to its 120,000 "members."

One site I'm not excited about is Healthline. Why? Because it's a search engine, and the big players like Google & Yahoo have this company beat with its health search features and by the fact that millions more people use those sites on a daily basis than Healthline. (And eyes are the prize on the Internet.)

Healthline similarly is counting on advertising to generate revenue. The company, which was founded in 1999 as yourdoctor.com, generates revenue through Google's Adsense program. The ads on Healthline, which appear along the top of search results, are tailored to the search query. For example, a search for "ear infection" produces eight advertisements with links, including Web sites for information about ear infection and a spa in New Jersey that provides ear cleaning.

Medical tourism... in Africa

According to the May 24, 2006 WSJ article "Europe's Low-Cost Neighbors Pose New Competitive Challenge," continential europeans are flying abroad to find cheaper health & cosmetic care, like many Britons and Canadians have reportedly been doing for heart surgery and other medical procedures thanks to cheaper wages, cheaper travel and the prescence of Western-based medical practioners outside the West.

The 40-year-old Frenchwoman came to the northern tip of Africa and paid €1,800 for a touch of cosmetic surgery, half what it would cost back home in Paris. "I also got a week in a five-star hotel," Ms. Blachère says, her face covered in blood and bandages after the surgery.

The EU can do nothing to prevent market forces from playing out.

What's more, this type of competition can't be countered by the tariffs and quotas the European Union has imposed to stem the flow of goods from China and elsewhere.

...

Yet the EU's effort also underscores the market forces encouraging change. For example, doctors and other health professionals were exempted from rules devised to make it easier for an EU business to set up shop in any of the 25 member states, even as European patients increasingly head to places like Tunisia, India and South Africa for affordable health care. And while most health care will remain the province of domestic medical providers, the growing popularity of people heading abroad for elective procedures hints at the long-term futility of protectionist measures.

More on plastic surgery in Europe, outrage among European surgeons & the free market below.

Plastic surgery is one of several businesses finding a profitable niche in developing countries -- and it embodies many of the debates growing around services that might involve a personal or financial risk to the customer. It is easy to advertise, and people who can afford breast enlargements and other procedures can afford the travel.

Medical procedures outside Europe are also much less expensive as a rule. Wages in Tunisia, for example, are one-fifth to one-third those in Britain and other rich EU members. A surgeon in Tunisia makes about €50,000 a year -- about a quarter to half the amount a European can earn.

And plastic surgeons are finding a booming market among Europeans. European plastic surgeons are outraged at the trend, and warn it could be dangerous. "Europeans should be able to count on quality medical care, and when you travel overseas, you're not sure to get it," says Jean-Luc Roffe, president of the French Union of Plastic Surgeons, which has launched a campaign of interviews with French newspapers and television stations to dissuade EU citizens from traveling to Tunisia.

To many economists, though, these complaints "seem like vested-interest lobbying," said Alec van Gelder, a research fellow at the International Policy Network, a London think tank that promotes free markets in the developing world as a way of balancing global inequality. "There may be added risks with purchasing medical care in a country like Tunisia, but the consumer should be free to choose."

Taking the guesswork out of medicine

This excellent Businessweek article is about Dr. Eddy, a surgeon & mathematician (or economist, as the writer calls him) who developed algorithms encased within a computer program named Archimedes that simulates decade-long clinical trials in mere hours, and also about how IT and modeling can help medicine become more "evidence-based" and less guesswork.

Already the results from one run of Archimedes for preventing stroke & heart attacks in diabetics (which were that the cheaper combination of generic ACE inhibitors, statins, and aspirin prevented more CVAs & MIs than conventional hypoglycemics-based therapy) is saving Kaiser Permenante lots of money.

So what struck me is how computer science is being used here to both save money and improve people's lives. Up until now, it was hazy in my mind how IT was going to make healthcare better on a very large scale (besides the use of electronic medical records, which I see in the hospitals I work at). This recreation of clinical trials to answer basic questions about therapies -- and quickly -- is really novel.

Medical Guesswork

From heart surgery to prostate care, the health industry knows little about which common treatments really work

The signs at the meeting were not propitious. Half the board members of Kaiser Permanente's Care Management Institute left before Dr. David Eddy finally got the 10 minutes he had pleaded for. But the message Eddy delivered was riveting. With a groundbreaking computer simulation, Eddy showed that the conventional approach to treating diabetes did little to prevent the heart attacks and strokes that are complications of the disease. In contrast, a simple regimen of aspirin and generic drugs to lower blood pressure and cholesterol sent the rate of such incidents plunging. The payoff: healthier lives and hundreds of millions in savings. "I told them: 'This is as good as it gets to improve care and lower costs, which doesn't happen often in medicine,"' Eddy recalls. "'If you don't implement this,' I said, 'you might as well close up shop."'

The message got through. Three years later, Kaiser is in the midst of a major initiative to change the treatment of the diabetics in its care. "We're trying to put nearly a million people on these drugs," says Dr. Paul Wallace, senior adviser to the Care Management Institute. The early results: The strategy is indeed improving care and cutting costs, just as Eddy's model predicted.

For Eddy, this is one small step toward solving the thorniest riddle in medicine -- a dark secret he has spent his career exposing. "The problem is that we don't know what we are doing," he says. Even today, with a high-tech health-care system that costs the nation $2 trillion a year, there is little or no evidence that many widely used treatments and procedures actually work better than various cheaper alternatives.

This judgment pertains to a shocking number of conditions or diseases, from cardiovascular woes to back pain to prostate cancer. During his long and controversial career proving that the practice of medicine is more guesswork than science, Eddy has repeatedly punctured cherished physician myths. He showed, for instance, that the annual chest X-ray was worthless, over the objections of doctors who made money off the regular visit. He proved that doctors had little clue about the success rate of procedures such as surgery for enlarged prostates. He traced one common practice -- preventing women from giving birth vaginally if they had previously had a cesarean -- to the recommendation of one lone doctor. Indeed, when he began taking on medicine's sacred cows, Eddy liked to cite a figure that only 15% of what doctors did was backed by hard evidence.

A great many doctors and health-care quality experts have come to endorse Eddy's critique. And while there has been progress in recent years, most of these physicians say the portion of medicine that has been proven effective is still outrageously low -- in the range of 20% to 25%. "We don't have the evidence [that treatments work], and we are not investing very much in getting the evidence," says Dr. Stephen C. Schoenbaum, executive vice-president of the Commonwealth Fund and former president of Harvard Pilgrim Health Care Inc. "Clearly, there is a lot in medicine we don't have definitive answers to," adds Dr. I. Steven Udvarhelyi, senior vice-president and chief medical officer at Pennsylvania's Independence Blue Cross.

What's required is a revolution called "evidence-based medicine," says Eddy, a heart surgeon turned mathematician and health-care economist. Tall, lean, and fit at 64, Eddy has the athletic stride and catlike reflexes of the ace rock climber he still is. He also exhibits the competitive drive of someone who once obsessively recorded his time on every training run, and who still likes to be first on a brisk walk up a hill near his home in Aspen, Colo. In his career, he has never been afraid to take a difficult path or an unpopular stand. "Evidence-based" is a term he coined in the early 1980s, and it has since become a rallying cry among medical reformers. The goal of this movement is to pierce the fog that envelops the practice of medicine -- a state of ignorance for which doctors cannot really be blamed. "The limitation is the human mind," Eddy says. Without extensive information on the outcomes of treatments, it's fiendishly difficult to know the best approach for care.

The human brain, Eddy explains, needs help to make sense of patients who have combinations of diseases, and of the complex probabilities involved in each. To provide that assistance, Eddy has spent the past 10 years leading a team to develop the computer model that helped him crack the diabetes puzzle. Dubbed Archimedes, this program seeks to mimic in equations the actual biology of the body, and make treatment recommendations as well as figure out what each approach costs. It is at least 10 times "better than the model we use now, which is called thinking," says Dr. Richard Kahn, chief scientific officer at the American Diabetes Assn.

WASTED RESOURCES
Can one computer program offset all the ill-advised treatment options for a whole range of different diseases? The milestones in Eddy's long personal crusade highlight the looming challenges, and may offer a sliver of hope. Coming from a family of four generations of doctors, Eddy went to medical school "because I didn't know what else to do," he confesses. As a resident at Stanford Medical Center in the 1970s, he picked cardiac surgery because "it was the biggest hill -- the glamour field."

But he soon became troubled. He began to ask if there was actual evidence to support what doctors were doing. The answer, he was surprised to hear, was no. Doctors decided whether or not to put a patient in intensive care or use a combination of drugs based on their best judgment and on rules and traditions handed down over the years, as opposed to real scientific proof. These rules and judgments weren't necessarily right. "I concluded that medicine was making decisions with an entirely different method from what we would call rational," says Eddy.

About the same time, the young resident discovered the beauty of mathematics, and its promise of answering medical questions. In just a couple of days, he devoured a calculus textbook (now framed on a shelf in his beautifully appointed home and office), then blasted through the books for a two-year math course in a couple of months. Next, he persuaded Stanford to accept him in a mathematically intense PhD program in the Engineering-Economics Systems Dept. "Dave came in -- just this amazing guy," recalls Richard Smallwood, then a Stanford professor. "He had decided he wanted to spend the rest of his life bringing logic and rationality to the medical system, but said he didn't have the math. I said: 'Why not just take it?' So he went out and aced all those math courses."

To augment his wife's earnings while getting his PhD, Eddy landed a job at Xerox Corp.'s (XRX ) legendary Palo Alto Research Center. "They hired weird people," he says. "Here was a heart surgeon doing math. That was weird enough."

Eddy used his newfound math skills to model cancer screening. His Stanford PhD thesis made front-page news in 1980 by overturning the guidelines of the time. It showed that annual chest X-rays and yearly Pap smears for women at low risk of cervical cancer were a waste of resources, and it won the most prestigious award in the field of operations research, the Frederick W. Lanchester prize. Based on his results, the American Cancer Society changed its guidelines. "He's smart as hell, with a towering clarity of thought," says Stanford health economist Allan Enthoven.

Dr. William H. Herman, director of the Michigan Diabetes Research & Training Center, has a competing computer model that clashes with Eddy's. Nonetheless, he says, "Dr. Eddy is one of my heroes. He's sort of the father of health economics -- and he might be right."

Appointed a full professor at Stanford, then recruited as chairman of the Center for Health Policy Research & Education at Duke University, Eddy proved again and again that the emperor had no clothes. In one study, he ferreted out decades of research evaluating treatment of high pressure in the eyeball, a condition that can lead to glaucoma and blindness. He found about a dozen studies that looked at outcomes with pressure-lowering medications used on millions of people. The studies actually suggested that the 100-year-old treatment was harmful, causing more cases of blindness, not fewer.

Eddy submitted a paper to the Journal of the American Medical Assn. (JAMA), whose editors sent it out to specialists for review. "It was amazing," Eddy recalls. "The tom-toms sounded among all the ophthalmologists," who marshaled a counterattack. "I felt like Salman Rushdie." Stanford ophthalmologist Kuldev Singh says: "Dr. Eddy challenged the community to prove that we actually had evidence. He did a service by stimulating clinical trials," which showed that the treatment does slow the disease in a minority of patients.

By 1985, Eddy was "burned out" by the administrative side of academia, he says. Lured by a poster of the Tetons, he gave up his prestigious post. He moved to Jackson, Wyo., so he could climb in his spare time. He and a friend even made a first ascent of a new route on the Grand Teton, now named after them. Meanwhile, he carved out a niche showing doctors at specialty society meetings that their cherished beliefs were dubious. "At each meeting I would do the same exercise," he says. He would ask doctors to think of a typical patient and typical treatment, then write down the results of that treatment. For urologists, for instance, what were the chances that a man with an enlarged prostate could urinate normally after having corrective surgery? Eddy then asked the society's president to read the predictions.

The results were startling. The predictions of success invariably ranged from 0% to 100%, with no clear pattern. "All the doctors were trying to estimate the same thing -- and they all gave different numbers," he says. "I've spent 25 years proving that what we lovingly call clinical judgment is woefully outmatched by the complexities of medicine." Think about the implications for helping patients make decisions, Eddy adds. "Go to one doctor, and get one answer. Go to another, and get a different one." Or think about expert testimony. "You don't have to hire an expert to lie. You can just find one who truly believes the number you want."

More important, the lack of evidence creates a costly clash. Americans and their doctors want access to any new treatment, and many doctors fervently believe such care is warranted. On the other hand, those beliefs can be flat wrong. As a consultant on Blue Cross's insurance coverage decisions, Eddy testified on the insurer's behalf in high-profile court cases, such as bone marrow transplants for breast cancer. Women and doctors demanded the treatment, even though there was no evidence it saved lives. Insurers who refused coverage usually lost in court. "I was the bad guy," Eddy recalls. When clinical trials were actually done, they showed that the treatment, costing from $50,000 to $150,000, didn't work. The doctors who pushed the painful, risky procedure on women "owe this country an apology," Eddy says.

Is medicine doing any better today? In recognizing the problem, yes. But in solving it, unfortunately, no. Take prostate cancer. Doctors now routinely test for levels of prostate-specific antigen (PSA) to try to diagnose the disease. But there's no evidence that using the test improves survival. Some experts believe that as many cancers would be detected through random biopsies. Then, once cancer is spotted, there's no way to know who needs treatment and who doesn't. Plus, there is a plethora of treatment choices -- four kinds of surgery, various types of implantable radioactive seeds, and competing external radiation regimens, notes Dr. Eric Klein, head of urologic oncology at the Cleveland Clinic. "How is a poor patient supposed to decide among those?" he asks. Most of the time, patients don't even know the options.

VESTED INTERESTS
"Because there are no definitive answers, you are at the whim of where you are and who you talk to," says Dr. Gary M. Kirsh at the Urology Group in Cincinnati. Kirsh does many brachytherapies -- implanting radioactive seeds. But "if you drive one and a half hours down the road to Indianapolis, there is almost no brachytherapy," he says. Head to Loma Linda, Calif., where the first proton-beam therapy machine was installed, in 1990, and the rates of proton-beam treatment are far higher than in most other parts of the country. Go to a surgeon, and he'll probably recommend surgery. Go to a radiologist, and the chances are high of getting radiation instead. "Doctors often assume that they know what a patient wants, leading them to recommend the treatment they know best," says Dr. David E. Wennberg, president of Health Dialog Analytic Solutions.

More troubling, many doctors hold not just a professional interest in which treatment to offer, but a financial one as well. "There is no question that the economic interests of the physician enter into the decision," says Kirsh. The bottom line: The conventional wisdom in prostate cancer -- that surgery is the gold standard and the best chance for a cure -- is unsustainable. Strangely enough, however, the choice may not matter very much. "There really isn't good evidence to suggest that one treatment is better than another," says Klein.

Compared with the skepticism Eddy faced in the 1990s, many physicians now concur that traditional treatments for serious illnesses often aren't best. Yet this message can be hard for Americans to believe. "When there is more than one medical option, people mistakenly think that the more aggressive procedure is the best," says Annette M. Cormier O'Connor, senior scientist in clinical epidemiology at the Ottawa Health Research Institute. The message flies in the face of America's infatuation with the latest advances. "As a nation, we always want the best, the most recent technology," explains Dr. Joe Thompson, health adviser to Arkansas Governor Mike Huckabee. "We spend a huge amount developing it, and we get a big increase in supply." New radiation machines for cancer or operating rooms for heart surgery are profit centers for hospitals, for instance (see BW Online, 07/18/05, "Is Heart Surgery Worth It?"). Once a hospital installs a shiny new catheter lab, it has a powerful incentive to refer more patients for the procedure. It's a classic case of increased supply driving demand, instead of the other way around. "Combine that with Americans' demand to be treated immediately, and it is a cauldron for overuse and inappropriate use," says Thompson.

The consequences for the U.S. are disturbing. This nation spends 2 1/2 times as much as any other country per person on health care. Yet middle-aged Americans are in far worse health than their British counterparts, who spend less than half as much and practice less intensive medicine, according to a new study. "The investment in health care in the U.S. is just not paying off," argues Gerard Anderson, director of the Center for Hospital Finance & Management at Johns Hopkins' Bloomberg School of Public Health. Speaking not for attribution, the head of health care at one of America's largest corporations puts it more bluntly: "There is a massive amount of spending on things that really don't help patients, and even put them at greater risk. Everyone that's informed on the topic knows it, but it is such a scary thing to discuss that people are not willing to talk about it openly."

Of course, there are plenty of areas of medicine, from antibiotics and vaccines to early detection of certain tumors, where the benefits are huge and incontrovertible. But if these effective treatments are black and white, much of the rest of medicine is a dark shade of gray. "A lot of things we absolutely believe at the moment based on our intuition are ultimately absolutely wrong," says Dr. Paul Wallace, of the Care Management Institute.

The best way to go from intuition to evidence is the randomized clinical trial. Patients with a particular condition are randomly assigned to competing treatments or, if appropriate, to a placebo. By monitoring the patients for months or years, doctors learn the relative risks and benefits of the treatment being studied.

But such trials take years and cost many millions of dollars. By the time the results come in, science and medicine may have moved on, making the findings less relevant. Moreover, patients in a clinical trial usually aren't representative of real people, who tend to have complex combinations of diseases and medical problems. And patients often don't stick with the program.

Such difficulties are highlighted by an eight-year study of low-fat diets that cost upward of $400 million. Most subjects failed to stick to the low-fat regimen, making it tough to draw conclusions. In addition, the study failed to take stock of different kinds of fats, some of which are now known to have beneficial effects. Many trials fall into similar traps. So it's no surprise that up to one-third of clinical studies lead to conclusions that are later overturned, according to a recent paper in JAMA.

Even when common treatments are proved to be dubious, physicians don't rush to change their practice. They may still firmly believe in the treatment -- or in the dollars it brings in. And doctors whose oxen get gored sometimes fight back. In 1993, the federal government's Agency for Health Care Policy & Research convened a panel to develop guidelines for back surgery. Fearing that the recommendations would cast doubt on what the doctors were doing, a prominent back surgeon protested to Congress, and lawmakers slashed funding for the agency. "Congress forced out the research," says Floyd J. Fowler Jr., president of the Foundation for Informed Medical Decision Making. "It was a national tragedy," he says -- and not an isolated incident. The agency's budget is often targeted "by special interest groups who had their specialty threatened," says Arkansas' Dr. Thompson.

With proof about medical outcomes lacking, one possible solution is educating patients about the uncertainties. "The popular version of evidence-based medicine is about proving things," says Kaiser's Wallace, "but it is really about transparency -- being clear about what we know and don't know." The Foundation for Informed Medical Decision Making produces booklets, videotapes, and other material to put the full picture in the hands of patients. Health Dialog markets the information to providers and companies, addressing back pain, breast cancer, uterine fibroids and bleeding, coronary heart disease, depression, osteoarthritis, and other conditions.

In studies where one group of patients hears the full story while other patients simply receive their doctors' instructions, a key difference emerges. The well-informed patients opt for more invasive, aggressive approaches 23% less often, on average, than the other group. In some cases, the drop is much bigger -- 50% to 60%. "Patients typically don't understand that they have options, and even if they do, they often wildly exaggerate the benefits of surgery and wildly minimize the chances of harm," says Ottawa's O'Connor, a leader in this field of so-called decision aids.

Eddy's computer simulation could help more patients attain appropriate care. His approach is to create a SimCity-like world in silicon, where virtual doctors conduct trials of virtual patients and figure out what treatments work. After getting funding from Kaiser Permanente in 1991, Eddy hired a particle physicist, Len Schlessinger, who knew how to write equations describing the complex interactions in biology. The pair selected diabetes as a test case. In their virtual world, each simulated person has a heart, liver, kidneys, blood, and other organs. As in real people, cells in the pancreas make insulin, which regulates the uptake of glucose in other cells. And as in the real disease, key cells can fail to respond to the insulin, causing high blood-sugar levels and a cascade of biological effects. The virtual patients come down with high blood pressure, heart disease, and poor circulation, which can lead to foot ulcers and amputations, blindness, and other ills. The model also assesses the costs of treating the complications.

Eddy dubbed the model Archimedes and tested it by comparing it with two dozen real trials. One clinical study compared cholesterol-lowering statin drugs to a placebo in diabetics. After 4 1/2 years, the drugs reduced heart attacks by 35%. The exact same thing happened in Eddy's simulated patients. "The Archimedes model is just fabulous in the validation studies," says the University of Michigan's Herman.

STANDARD OF CARE
The team then put Archimedes to work on a tough, real problem: how best to treat diabetes in people who have additional aliments. "One thing not yet adequately embraced by evidence-based medicine is what to do for someone with diabetes, hypertension, heart disease, and depression," explains Kaiser's Wallace. Doctors now typically try to treat the most pressing problems. "But we fail to pick the right ones consistently, so we have misdirected utilization and a great deal of waste," he says. Kaiser Permanente's Dr. Jim Dudl had a counterintuitive suggestion. With diabetics, doctors assume that keeping blood sugar levels low and consistent is the best way to ward off problems such as heart disease. But Dudl wondered what would happen if he flipped it around, aiming treatment at the downstream problems. The idea is to give patients a trio of generic medicines: aspirin, a cholesterol-lowering statin, and drugs called ACE inhibitors.

Using Archimedes and thousands of virtual patients, Eddy and Schlessinger compared the traditional approach with the drug combination. The model took about a half-hour to simulate a 30-year trial, and showed that the three-drug combination was "cost- and life-saving," says Kaiser's Wallace. The benefits far surpassed "what can be achieved with aggressive glucose control." Kaiser Permanente docs switched their standard of care for diabetes, adding these drugs to other interventions. It is too early to declare a victory, but the experience with patients seems to be mimicking Eddy's computer model. "It goes against our mental picture of the disease," says Wallace. But it also makes sense, he adds. "Cardiovascular disease is the worst complication of diabetes -- and what people die of."

Eddy readily concedes that this example is a small beginning. In its current state of development, Archimedes is like "the Wright brothers' plane. We're off the sand and flying to Raleigh." But it won't be long, he says, "before we're offering transcontinental flights, with movies."

The modeling approach allows each of us, in essence, to have an imaginary twin. We can use our twin to predict what our lives and state of health are likely to be with different lifestyles and approaches to care. Companies could create virtual clones of each employee, predicting what will occur with current care or with added prevention or treatment programs. "They can see what happens to such things as the complications suffered by diabetics, the lost time from work, the amount of angina or the rate of heart attacks, the number of deaths, and the cost of new employees if one dies," Eddy explains. "Our mission is that in 10 years, no one will make an important decision in health care without first asking: `What does Archimedes say?"'

By John Carey (MAY 29, 2006)

Will the iPod model influence healthcare product design?

This WSJ article isn't about healthcare, it's about consumer goods. Namely, it's about the iPod and how it has reestablished the "end-to-end" model as what consumers want over the "component" model championed by Wintel. Will this idea -- where a consumer product isn't a hodge-podge of hardware & software from different companies but rather fully integrated by one maker -- catch on in consumer healthcare?

The article:
In Our Post-PC Era, Apple's Device Model Beats the PC Way
May 11, 2006 By WALTER S. MOSSBERG

For many years, there have been two models of how to make computers and other digital devices. One is the component model, championed by Microsoft. The other is the end-to-end model, championed by Apple.

In the component model, many companies make hardware and software that run on a standard platform, creating inexpensive commodity devices that don't always work perfectly together, but get the job done. In the end-to-end model, one company designs both the hardware and software, which work smoothly together, but the products cost more and limit choice.

In the first war between these models, the war for dominance of the personal-computer market, Microsoft's approach won decisively. Aided by efficient assemblers like Dell, and by corporate IT departments employed to integrate the components, Microsoft's component-based Windows platform crushed Apple's end-to-end Macintosh platform.

Walt Mossberg says Apple's end-to-end business model is better than Microsoft's component platform. But in the post-PC era we're in today, where the focus is on things like music players, game consoles and cellphones, the end-to-end model is the early winner. Tightly linking hardware, software and Web services propelled Apple to a huge success with its iPod. Microsoft, meanwhile, has struggled to make its component model work on these devices and, in a telling sign, is using the Apple end-to-end model itself in its Xbox game-console business. Now, Apple is working on other projects built on the same end-to-end model as the iPod: a media-playing cellphone and a home-media hub.

The jury is still out on whether the end-to-end model will prevail in the long term. Many at Microsoft, and some outside analysts as well, believe the new devices will eventually succumb to the component model, and that Apple's success with the iPod will fade, just as its early dominance of the PC market did. Apple officials say history won't repeat itself if the company continues to make great products and avoid the business blunders committed by its past management.

I think the end-to-end model can prevail this time, both for Apple and other companies. Consumers want choice and low prices. But they also crave the kind of simplicity and integration that the end-to-end model delivers best.

Sure, you can get more variety in music players and in online music services if you opt for the Microsoft-based music instead of the iPod system. But the iPod, Apple's iTunes software, and the iTunes Music Store work so well together that users can just relax and enjoy the music. By contrast, the hodgepodge of players, software and online music stores on the Microsoft side frequently have trouble synchronizing between computers and players. Apple sells as many or more songs than the many stores that use Microsoft software.

Critics attack the iPod and iTunes as "closed" and "proprietary," because the songs Apple sells at its iTunes Music Store play only on iPods, and iPods can't play songs purchased from other music stores. But both the iPod and iTunes handle the two most common open audio formats, MP3 and WAV, and the most common open video format, MP4. They work well even if you never buy a song from Apple. And iTunes and the iPod work on Windows computers, not just Macs. So how is that closed?

Even the Mac isn't as closed as its critics charge. It's still designed to work with Apple's own operating system and software. But it can handle all the common files Windows uses, can network with Windows machines, and can use all of the common Windows printers, scanners, keyboards and mice. The Mac gives you the same access to the Internet as Windows. Heck, the newest Macs can even run Windows itself.

You do get a choice of more software with Windows. And that's great for hard-core gamers and users of corporate, or niche, software. But for mainstream users doing typical tasks, the Windows choice advantage is illusory. Mac users can choose among thousands of third-party programs, including multiple Web browsers, word processors and email programs. They can run Mac versions of popular software like Microsoft Office and the Firefox browser. How much more choice do you need?

Microsoft is hedging its bets. It has, in effect, created a little Apple inside Microsoft with the Xbox group. The Xbox team shunned Windows and wrote its own operating system and user interface, and built its own hardware. (The new Xbox was even developed using Macintosh computers.)

Some Microsoft officials dismiss this anomaly by claiming that the game-console business is a special case. But now, Microsoft has assigned the Xbox team to create a portable music player it hopes can knock off the iPod. Why? Because the company is frustrated that the component model, which separates hardware and software, has failed in the music market. It's looking for more integration.

Still, the end-to-end model isn't a lock. If Apple can't keep churning out cool products at reasonable prices, it could crash and burn. Unlike Microsoft, it doesn't have much help from other companies to succeed. But the iPod experience has shown that the PC model may not be best for all digital devices.

Finding convenience & alternative medicine at drugstores

An insightful & succinct essay from Dan Pink on how two trends happening today at drugstores are meeting the demand for both convenience and "transcendant healing," things not offered by "conventional medicine." (I've written already on "minute clinics," but the part about finding yoga and an herbalist at your drugstore is new.) Here's the full essay at Yahoo.

A New Rx for Drugstores -- and Your Investments
by Daniel H. Pink
Wednesday, May 17, 2006

I live in a household with five people, three of whom are under age 10. As a result, Mrs. Trend Desk and I spend a lot of time in drugstores -- trying to keep up with the endless cycle of teeth brushed, knees scraped, and hair shampooed. But recently I've detected two interesting trends in drugstores -- trends that speak volumes about the future of health care and about investing more broadly.

The first is embodied in an outfit with the unlikely name of Elephant Pharmacy. It's a drugstore with a twist. It sells the sorts of things you'd buy at a typical Walgreen's store. But it fills herbal prescriptions, too. And it boasts "an unprecedented selection of alternative remedies, natural body care and cosmetics, natural foods and wines, high-quality vitamins and supplements, yoga and Pilates gear," and so on. It calls itself "the drugstore that prescribes yoga." Elephant, as well as a similar venture called Pharmaca, is another sign of how products and services that were once considered exotic and counter-culture have migrated to the mainstream.

It makes sense, actually. Many of the offerings in traditional drugstores have become commodities. Consumers can find dozens of inexpensive products that can keep their teeth white and their bodies fragrant. That means that drugstores are looking for the antidote to commodification, new ways to boost sales and increase margins. Alternative and complementary medicines fill that gap.

And this directly addresses the demands of the 800-pound gorilla of the health-care marketplace: The tens of millions of health-conscious, meaning-seeking Baby Boomers. No wonder CVS, the nation's second-largest pharmacy chain, has invested in this venture. If you can't beat the elephants, join them.

The second trend in drugstores is the emergence of freestanding health clinics that provide routine medical care -- administering flu shots, diagnosing ear infections, prescribing antibiotics -- at a very low price, often under $50. These days you can find Minute Clinics inside CVS stores, Redi-Clinics at your local Walgreens, and Take Care Health Clinics at Rite-Aid.

Why are these clinics flourishing? They save consumers money, time, and hassle. And the truth is: Many medical conditions just aren't that complicated. With the aid of diagnostic software, a nurse practitioner can discover what ails you and prescribe the remedy -- all in the time it takes my wife or me to roam Rite-Aid's aisles to find some Elmo toothpaste and cherry lip gloss for the wee Trend Desklings.

Put these two drugstore trends together, and you have a glimpse into the emerging health-care marketplace. Just as physicians no longer have a monopoly on health information, with these customer-friendly in-store clinics, docs no longer have a monopoly on health services, either. Today, consumers want routine care -- think oil or tire changes for the body -- to be fast, cheap, and convenient.

But buyers are often willing to pay a premium for products and services that are more holistic, that carry a compelling back story, or provide them with a sense of meaning. This is perilous for big companies that don't adapt. But it's a potential bounty for large retailers like CVS, Walgreens, and Rite-Aid that can combine scale with nimbleness. (Full disclosure: In the last year and a half, I have done one small project for CVS. It was unconnected to the ideas in the column. I don't own shares in CVS.)

Taking on childhood obesity

In healthcare, the word innovation usually brings up images of fancy new gadgets or breakthrough drugs. But innovation, meaning the application of new ideas, goods, services or practices intended to be useful (source of definition: Wikipedia), can apply to the positive change happening in public schools today, namely the squeezing out of fatty foods and high-calorie drinks from the cafeteria.

Just yesterday, Coca-Cola, PepsiCo and Cadbury Schweppes (the owner of Dr. Pepper) announced they would remove soft drinks, iced teas & juices from cafeterias and vending machines. Why? Largely it's "in response to the growing threat of lawsuits and state legislation," according to the May 4, 2006 NY Times article "Bottlers Agree to a School Ban on Sweet Drinks."

Under an agreement between beverage makers and health advocates, students in elementary school would be served only bottled water, low-fat and nonfat milk, and 100 percent fruit juice in servings no bigger than eight ounces. Serving sizes would increase to 10 ounces in middle school. In high school, low-calorie juice drinks, sports drinks and diet sodas would be permitted; serving sizes would be limited to 12 ounces.

The agreement, which includes parochial and private schools contracts, is voluntary, and the beverage industry said its school sales would not be affected because it expected to replace sugary drinks with other ones.

...

Still, about 35 million public school children would be affected by the agreement, which would apply to extended school functions like band practice but would not apply to events likely to be attended by parents, like evening plays or interscholastic sports. An additional 15 million students attend schools that operate under stricter regulations, where the guidelines would not apply.

It looks like the Alliance for a Healthier Generation, a joint project between President Bill Clinton's foundation and the American Heart Assocation, brokered the deal. He said, "We've been talking to them for months and months, and they may have liked the way we were working with them, not just singling them out... I'm glad we did it without litigation and could accelerate the process."

During the news conference for the announcement, Pres. Clinton -- who has become active with Governor Huckabee of Arkansas in promoting healthier lifestyles to fight obesity, put a good spin on the companies' joint action, calling it courageous. But:

Later in the day, Mr. Clinton said it was more than the threat of lawsuits that spurred the agreement.

Regardless of why, it is the what that matters: by 2009 most schools will no longer be serving soda in schools. This is part of a broader movement by activist legislators, policy groups & progressive schools sweeping the nation, the main aim of which is to ban all fatty foods & drinks from public schools.

This is important because child psychologists have shown that habits formed in childhood and pre-adolescence hold the strongest grip into adulthood. And so the thinking goes if kids eat junk food because that is all that's available, they will do so into adulthood, promoting chronic diseases like heart disease and diabetes. And if kids eat healthy food because that is what's available, then they will keep those habits and be healthy as adults.

Switching gears a bit, what's sad about the NY Times article is that it didn't mention the pioneering work of Susan Combs, Agriculture Commissioner of Texas.

Here is the

Time story on her from December 2004. And at the Time's Obesity Summit earlier earlier that year, Ms. Combs' efforts were acknowledged.

We heard about extraordinary nutritional overhauls going on in the schools of Texas, a state with a very high obesity rate, and those changes reflect the effort of one government official: state agricultural commissioner Susan Combs. She has shown what strong government leadership can do.

In summary, using executive powers in new ways (as Ms. Combs had done) and legislatures becoming oriented around preventative healthcare (e.g., NYC, which banned sodas from schools, fears the huge costs associated with caring for chronically diseased citizens, which it foresaw unless it acted drastically) is "innovative healthcare." And the strongarming by Pres. Clinton and like-minded leaders & organizations of corporations to encourage healthiet habits, even using the threat of lawsuit, is just the latest salvo in this important battle.

Hope they keep fighting the good fight.

P.S. I wrote Ms. Combs a month ago to commend her for her great foresight and for standing up to corporate giants for the sake of both young Texans kids and the state's future fiscal health. Here's the letter she wrote me back with. I thought it was pretty cool of her to write back.