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The Week That Was: Crises In Healthcare Communications

The Week That Was: Crises In Healthcare Communications

March 14, 2016 0 Comments

HAS BANKING’S BOUNTIES HIT THE UPPER BOUNDS?

Perhaps. Last week, Deutsche Bank said it will cut 2015 bonuses by 17% (though it is still paying out a whopping $2.7 billion). Deutsche’s co-CEO John Cryan cited the cause for the cuts as poor financial performance and rising litigation costs. Cryan and his co-pilot Jeurgen Fitschen both rejected bonuses for the 2015 fiscal year. And the belt tightening didn’t stop there. Barclays shares tumbled last Tuesday after the company slashed dividends, implemented a hiring freeze and reduced its payouts to investors. At Goldman, even iconic CEO Lloyd Blankfein saw his restricted stock compensation cut by 4%. Blankfein, who last year told investors he was in treatment for a curable form of lymphoma, saw his bonus reduced because his investment banking firm failed to achieve return on equity thresholds. The performance dip was due, in part, to legal expenses from settling federal and state probes from the mortgage lending crises. While Blankfein’s $24 million payout for 2015 is nothing to sniff at, it’s a far cry from the $70 million he got pre-crash.

Our Take: One wonders how many recruiter calls went in and out of Deutsche Bank on Friday and why Cryan chose to so visibly broadcast he’d be paying his people less. He was certainly seeking to address frustrated shareholders, but, we wonder if he could also be telegraphing to the banking industry that it should “pump the brakes” on bonuses? If yes, it’s a risky move for a firm seeking to maintain talent and prevent attrition in a competitive industry. But, in a world where global economic uncertainty persists and many households are running on stagnant wages, perhaps a public message about paying investment bankers less is indeed the right medicine. If this election season shows us anything, it is that the domestic environment is becoming increasingly populist, whether it’s a permutation of “red,” “blue” or another color altogether. With a populace focused on the chasm between wealth and poverty, the potential for regulation of the banking industry is uncertain. So, while Deutsche’s move to dial back stratospherically high bonuses was the result of poor performance…it may also be sounder direction for the banking industry, especially in an election year.


 

THERONOS FACES THE MUSIC…AAAAAHGAIN

If it were not already hanging by a thread, Theranos’ corporate reputation took another hit this week. Yet another article in The Wall Street Journal revealed details of an unreleased report by Centers for Medicare and Medicaid Services (CMS) that found that the medical laboratory company continued to run blood tests on patients despite knowing of erratic quality control results in a key facility. The blood test in question, prothrombin time, measures the ability of blood to clot and is used by doctors to adjust patients’ dosages of blood thinners. Theoretically, the wrong reading could allow patients’ blood to become too thin or thick, increasing the respective risk of bleeding, or having a devastating clot or stroke. In response, Theronos’ spokesperson said in a statement that the company has “no reason to believe that these issues have affected patients’ health.” EEK…not a very reassuring message for our teammate with DVT!

Our Take: Could this once rumored unicorn be on its way to becoming a uni-corpse? Last week’s disclosure has been the latest in a slew of missteps that have bedeviled Theranos. When federal inspectors are linking your company name to phrases like “deficient practices” and “jeopardy to patient health and safety,” you are in a hole that will be difficult to dig out of. And it’s not the first time Theranos was less than upfront. Apparently, when initial reports about the efficacy of Theranos tests broke in a WSJ investigation last fall, Walgreens, a major Theranos partner, found out about it from the media. While Theranos and its founder Elizabeth Holmes may have come up with a brilliant idea to disrupt the conventional diagnostics industry, that wisdom seemingly does not extend to their routinely defensive communications strategy. At this point, Holmes should divulge to investors and customers any other “shoes left to drop” and reconsider a strategy and tone for building back stakeholder trust.


 

CMS SLOWS PART B REIMBURSEMENT; ADVOCACY GROUPS SAY “NO THANK YOU”

Last week the White House and Center for Medicare & Medicaid Services announced a proposed pilot program that would reduce physician payments tied to prescribing medicines in an effort to curb Medicare spending on prescription medicines. Currently, under Medicare Part B, doctors are compensated based on a drug’s average sales price plus 6 percent. Under the new rules, that rate would drop to 2.5 percent, with a flat payment of about $16. The government says it hopes this action will incentivize physicians to apply “higher value” drugs in place of expensive medicines – and avoid doctors prescribing more expensive medicines to support their bottom line. Advocates immediately raised concerns about the potential impacts of such a program. “It is inappropriate for CMS to manipulate choice of treatment for cancer patients using heavy-handed reimbursement techniques,” said Dr. Allen Lichter, chief executive officer of the American Society of Clinical Oncology. The “pilot” program could go into effect in two phases after a 60-day comment period and would run for five years.

Our Take: Overwhelming change to healthcare spending is not possible without an act of Congress — an unlikely notion until a new administration is in place. However, the White House is able to provide recommendations, or use current policies from the ACA such as the Plan B overhaul, to initiate action. While none of these changes are final policy today, smart healthcare industry representatives should see 2016 as the breeding grounds for potential policies that could germinate in 2017 – 18.

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