21st Annual
JPMorgan Healthcare Conference

By Lorraine Ruff and David Gabrilska, Partners
Milestones, the critical thinking company
Seattle, WA

With all the scientific breakthroughs and novel approaches to drug development that characterize the 25-year old biotechnology industry, it seems ironic that some of the more straight-forward issues are, in fact, becoming critical path issues that can retard or prevent new medicines from reaching the patient.

We sat in on the JP Morgan Healthcare Conference’s keynote address delivered by former US Food and Drug Administration Commissioner David A. Kessler, MD, and a panel reporting on the critical shortage of nurses in the United States and industrialized nations and the "raiding" of talent by industrialized nations from developing nations. Kessler and the panel called for innovative thinking without which the benefits of striking advances in the biological sciences could be diminished.

There’s a disturbing trend in the approval of new molecular entities (NMEs). For the past three years, fewer NMEs have been approved than the year before: 27 in 2000 and 24 in 2001. In 2002, there were 17 NMEs approved, the lowest number in the past 10 years. The industry blames the FDA for increased caution and less efficient approval cycles; Kessler says it’s related to new drug applications that have not been prepared well, the lack until just recently of an FDA commissioner, the CBER/CDER product consolidation whereby review of certain categories of products, e.g., monoclonal antibodies for therapeutic use are being transferred from CBER to CDER; and a number of key departures from the agency’s management.

Kessler called for a "broader strategy that involves a consortium of the investment community, the pharmaceutical industry, academia and Washington. "We need to collectively think more broadly," he said, adding that the broader thinking needs to have science at its base and be more predictable through the incorporation of new technologies.

Kessler suggested setting up a national laboratory system for "biological exploration and the developmental industrial processes, similar to the national lab system for high energy physics.

"It’s becoming increasingly difficult to do clinical research, [there are] too many barriers," he said. "We need to invest in new technologies such as in vivo pharmacology and incorporate these technologies into drug research and development so that researchers can see how drug candidates would interact on the molecular level. We need to train a whole new generation of physician-scientists at our medical school to do clinical investigation."

Kessler said that the "CBER/CDER product consolidation will set biotech behind." He said "the reorganization was not handled well and will result in many CBER scientific staff leaving the agency at a time when the biotechnology industry needs their scientific expertise" the most. He added that 75 percent of the applications received met the criteria of CBER’s "refusal to file" policy.

"CBER historically provided more hand-holding and worked with the sponsor," Dr. Kessler said. "It will be difficult to ensure a consistent biological product - the Europeans found this out the hard way with EPO. This scientific expertise will not be available in the reorganization."

He said that the industry should not politic for faster approvals, which equates to lower standards at the FDA.

"Don’t go there as an industry. You will lose the confidence of the American people. This should be the greatest era of biological research," he said.

Efficiently managing the drug discovery, regulatory review and approval process occupied significant mindshare at the conference.  Another area of focus at the conference was healthcare services, a growth sector during the past year, and safe haven for many institutional investors. The topic was the impact of the growing nurse shortage on patients, the nursing profession, hospital systems and the nation’s health.

Due to the increasing health care needs of aging baby boomers and a drop in the number of college students choosing nursing as a profession, the United States will face a shortage of 114,000 registered nurses by 2015, according to a recent report by the AMA Council on Medical Service.

The fix to date has been raiding among hospital systems (providers) in US hospitals and care facilities and more recently between hospitals and clinics in other countries. The practice is expensive and disruptive. Some providers have concluded that the issue runs much deeper than nurse dissatisfaction with hospital politics and scheduling and have begun to rethink the fundamentals beginning with an understanding of the market.

While there were numerous examples of the problem presented, one panelist presented a compelling discussion about solutions underway at the North Shore Long Island Jewish Health System, the nation's third largest, non-profit, secular healthcare system, with a $3.2 billion annual operating budget, 18 hospitals and 32,000 employees (5,000 physicians and 7,000 nurses.

"We were very concerned about where the next generation of nurses would come from," said Maureen White, chief nurse executive, at the North Shore health system.

Ms. White explained that North Shore first looked to existing staff, who told their employer they desired more education, more responsibility and to attain a life-long dream to become a nurse that had been precluded by a lack of funds for education or education that had been interrupted by family responsibilities.

North Shore partnered with community colleges and together created on-site programs, paid for tuition, and made sure that work schedules accommodated classes.

"We required no [post education] service agreements," Ms. White said. "People pointed out that we had made a mistake, but we believed so much in our employees we felt they would stay following their graduation." More than 400 people submitted applications. For those that didn’t make the cut due to academic deficiencies, North Shore provided remedial classes and encouraged participants to apply again. In the summer of 2001 there were 60 students admitted; in the Fall of 2001 an additional 90. Currently there are more than 300 students enrolled in the program.

The North Shore Long Island Jewish Health System is similarly focused on retention of nursing staff.

"It’s called ‘Work/Life Balance’, " Ms. White explained. We look for ways to free up days off by providing direct deposit and free checking, pickups for dry cleaning, online ordering of groceries and free delivery, child- and elder-care, all with the understanding from the suppliers that in exchange for selling to our staff, pricing would be less than it would be outside the health system. We’re also working with amusement parks and other entertainment providers for reduced ticket prices.

"These programs engender loyalty and attract staff," Ms. White said.

Although Ms. White didn’t mention it, we learned that the North Shore Long Island Jewish Health System operates the only hospitals in New York State to be honored with Magnet Recognition for Excellence in Nursing Service - the highest honor in the nursing profession.

There are other initiatives underway at other health systems.

• Traveling nurse programs whereby the nurse contracts to sites within the healthcare system for 13-week periods. HCA spokesperson Beverly B. Wallace, Vice President Revenue Cycle Operations Management, said that her company has designed the "Opportunities for a Lifetime" program, including a traveling nurses program within HCA domestic and European facilities. "A nurse can visit Denver for 13 weeks in time for ski season," she said.
• Some health systems are thinking outside the box. Following 9/11 when it appeared that the airline industry would suffer personnel layoffs, HCA established a $5 million fund for retraining of flight attendants. The program has 350 participants.
• A number of professional service firms are in the business of managing traveling nurses. Recently, their activities have expanded to international nurse recruitment that include the requisite immigration and naturalization processes and costs. Recruiting nurses from the Philippines can take up to two years. The costs are borne by the hospital system.

Catherine Garner, Vice President of In Hospital Services, at Healthstream, a company that provides online education for nurses and other health professionals, cautioned that with all the innovation that health systems are employing there are still pockets of resistance. One of the bottlenecks the nursing profession is facing is the boards of regents at state universities.

"Boards of Regents are not open to innovative ideas and funding change," Ms. Garner said. "In Colorado, there are 1500 fewer nurses than what they need to stay current. The Board of Regents won’t expand the nursing program and the curriculum is out of date," she said.

Ed O’Neil, MPA, PhD, Director of the Center for the Health Professions at UCSF, said that to address the on-going nursing shortage there needs to be a new business model that is led by a third party organization that builds a consortium among hospital delivery systems, staff and students.

"You see a glimpse of this in King County/Seattle in which the University of Washington has created a consortium of four hospitals so that the UW’s FTEs are then exercised," he said.

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