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Health-care sector feels economy's pinch

By September 24, 2008 Health

Many consumers skip visits to doctor, cut pills

The Wall Street Journal

As the credit crunch threatens to throw the economy into a deep slump, Americans are already cutting back on health care, a sector once thought to be invulnerable to recession. Spending on everything from doctors’ appointments to preventive tests to prescription drugs is under pressure.
The number of prescriptions filled in the U.S. fell 0.5 percent in the first quarter and a steeper 1.97 percent in the second, compared with the same periods in 2007 — the first negative quarters in at least a decade, according to data from market researcher IMS Health. Despite an aging and growing U.S. population, the number of physician office visits also has been declining since the end of 2006. Between July 2007 and 2008, the most recent month for which data are available, visits fell 1.2 percent, according to IMS.
In a survey by the National Association of Insurance Commissioners last month, 22 percent of 686 consumers said that economy-related woes were causing them to go to the doctor less often. About 11 percent said they have scaled back on prescription drugs to save money. Some of the areas being hit include hip and knee replacements, mammograms, and visits to the emergency room, according to a survey conducted by D2Hawkeye Inc., a Waltham, Mass., medical data analytics firm, on behalf of The Wall Street Journal.
Health-policy experts said that patients’ short-term care cutbacks could lead to more medical problems and higher spending down the road. As more people forgo screenings or wait until minor medical problems blow up into serious complications, hospital and emergency-room admissions could eventually spike.
“Once you’ve had that heart attack and end up in the hospital, that’s when the expensive stuff begins,” said Dana Goldman, director of health economics at the Rand Corp., a nonprofit research institute in Santa Monica, Calif.
Impact has been swift
Health-care companies say the current economic slump’s impact on demand for medical services has been surprisingly swift. Laboratory Corp., the country’s second-largest clinical lab-testing company by sales after Quest Diagnostics Inc., says the number of blood tests and other types of lab work it does for uninsured customers fell 8 percent in the second quarter, compared with the 1 percent quarterly growth it usually sees.
The company’s analysis of outside market data also shows that obstetrician-gynecologist visits, the sole source of preventive care for many women, dropped 6 percent in the first quarter compared with the same period last year.
“That says to me that people are just deferring care if it’s not acute,” said Laboratory Corp.’s chief executive, David King.
Speaking at an investor conference this month, Walgreen Co. Chief Executive Jeffrey Rein said the U.S. is experiencing the “tightest prescription market” in his 27-year career, as more cash-strapped patients skip their pills or take half doses. He said the company has looked at different ways to get people to fill prescriptions. For example, pharmacists are reaching out to patients through phone calls and emotional appeals such as, “Do they want to be around when their kids grow up, or their grandkids?” Rein said.
Follow-up is harder
Jim King, a family physician in Selmer, Tenn., said visits at his practice this summer were down 10 percent to 15 percent compared with summers past, even though 90 percent of his patients have some form of insurance. A big problem, he says, is getting patients back for tests to check on diabetes or to act on referrals to specialists, many of whom are 40 miles away in Jackson, Tenn.
“It’s hard to get people to follow up when they’re having to decide between the gas bill, the electric bill or deciding to come in and see the doctor,” King said.
Many insured Americans face much bigger out-of-pocket costs today than just a decade ago. The average family plan deductible at an employer last year ranged from $759 for health-maintenance organizations to $3,596 for a high-deductible plan with a savings-account option, according to the Kaiser Family Foundation. The cost of premiums to employees has nearly doubled to $3,281 a year since 2001.