STRT 443: Healthcare Strategy - Winter Quarter 2018 Syllabus
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NOTE: THIS SYLLABUS IS PRELIMINARY AND WILL CHANGE BEFORE THE CLASS BEGINS.
STUDENTS IN THE EVENING AND WEEKEND PROGRAM WILL HAVE DIFFERENT DATES.
STRT 443: Healthcare Strategy
Winter Quarter 2018 Syllabus
Section 61
Mondays and Thursdays
1:30pm – 3:00pm
Professor Craig Garthwaite
4231 Global Hub
(847) 491-2509
e-mail: c-garthwaite@kellogg.northwestern.edu
0NOTE: THIS SYLLABUS IS PRELIMINARY AND WILL CHANGE BEFORE THE CLASS BEGINS.
STUDENTS IN THE EVENING AND WEEKEND PROGRAM WILL HAVE DIFFERENT DATES.
COURSE OVERVIEW AND OBJECTIVES
The fundamental question of strategy is both simple and difficult: “How can a firm make long-run
profits?” As you have discussed in your other strategy classes at Kellogg, the answer to this question
is far more complicated than simply raising revenue or cutting costs. Firms face fundamental trade-
offs and deal with a variety of legal and economic constraints that limit their ability to earn long run
profits.
In 2015, the U.S. healthcare sector accounted for approximately 17 percent of GDP. This economic
activity involves a diverse set of industries with public, nonprofit, and for-profit buyers and sellers.
Firms operating in the U.S. healthcare sector face additional difficulties that at times require sector
specific strategies. For example, the government represents a near majority of spending, customers
rarely directly pay for services, quality is difficult to observe, information is not commonly held
across market participants, and value is often best provided by a coordinated set of economic actors
that face different incentives. Together, these features (and many others) make developing and
maintaining profit maximizing strategies quite difficult. Further complicating matters, many firms in
the health sector are non-profit organizations whose explicit goal to maximize social value while
competing directly with for-profit firms.
The aim of this course is to build upon your existing courses and frameworks to provide the tools
necessary for crafting successful strategies for firms operating in the U.S. health sector. As a
participant, you will be introduced to the key strategic problems facing the complete set of
healthcare organizations and to develop strategic frameworks that can be applied in a variety of
settings.
In addition, this course will explicitly cover recent health reform efforts and how those can represent
both opportunities and threats for participants in a variety of markets. This will involve a variety of
more policy related topics and questions than might be found in a strategy class focusing on a
different sector.
TEACHING APPROACH
This courses combines both lecture and case discussion formats. Because the aim of the course is
build your own critical and analytical thinking abilities, you will spend much of your time preparing
for and engaging in class discussion. These will include longer cases and shorter examples of firms
that currently confronting the theoretical course concepts.
Many of our discussions will be based on both large and small business cases. Cases tend not to
have a single, tidy solution. However, there are always better and worse answers, and valid and
invalid inferences. Cases never contain all the information you would like to have to make a
decision—in this way, they are very much like real life. You may find it frustrating to be pushed to
make a decision or take a stand when you are not sure whether it is the right one; this is the nature
of real-world business decision-making. Cases often offer conflicting information. They will require
you to make judgment calls. This kind of ambiguity is also a feature of real-world business decisions,
particularly in a field such as health which almost uniquely combines the uncertainty of the business
and policy world.
1NOTE: THIS SYLLABUS IS PRELIMINARY AND WILL CHANGE BEFORE THE CLASS BEGINS.
STUDENTS IN THE EVENING AND WEEKEND PROGRAM WILL HAVE DIFFERENT DATES.
In addition to both lecture and case discussions, at times we will conduct activities that involve
“flipping the classroom.” This is an instructional approach where many things that were traditionally
considered homework are moved into the classroom. For these activities, such as the in-class
debates, you will be provided with materials beforehand and then our class time will be used for
debates, short presentation, or other discussion based learning activities.
PREPARATION
Preparing for a case discussion means more than just reading the case. Each case assignment will
include several preparation questions. I suggest reviewing the questions before reading the case.
There is no explicit preparation task to do as you read the conceptual readings from the textbook or
articles, but it is a good idea always to be asking yourself, “Do I believe this argument? Where else
does it apply? When would this approach not be useful?”
If for some reason you are not prepared for class, I expect you to let me know before class. I know
that you are juggling work, other classes and other commitments; you don’t need to give me an
explanation. However, if you haven’t told me otherwise, then you have implicitly committed to be
ready to contribute to the class if I should call on you.
HOW TO STUDY FOR THIS COURSE
The aim of this course is to make you more rigorous, critical, precise, and thorough in your analysis
of strategy issues in the healthcare sector. In short, to change the way you think about problems that
firms face in this industry. The only way to do this is to practice it steadily throughout the quarter.
You can’t learn it by “cramming” it all just before the exam. You should think of this course like
sports, or exercise, or learning a musical instrument: you can’t really learn anything, and you certainly
can’t get better at it, but just watching from the sidelines. Practically, here are the most important
steps to doing this.
1. Come to class prepared. There is no substitute to this. If you haven’t read and thought about
the material, you won’t get very much out of what is going on.
2. Engage in class discussion. Class time is not entertainment, and you shouldn’t expect to just sit
back and listen. Engaging means both listening critically to what other people are saying, and
evaluating whether you think their arguments are right, and speaking up when you think you have
something to contribute.
3. Summarize and synthesize. After every class session, write yourself a one-page summary of
what was covered in class: what did we talk about, and what lessons were you supposed to take
away. Note that the purpose of this is to do it yourself. Forcing yourself to summarize and synthesize
this way is how you internalize and obtain ownership of the material. If your study group splits this
up and each does a day, you’ve missed the point; it’s not about having the one page write-up, it’s
about creating it.
2NOTE: THIS SYLLABUS IS PRELIMINARY AND WILL CHANGE BEFORE THE CLASS BEGINS.
STUDENTS IN THE EVENING AND WEEKEND PROGRAM WILL HAVE DIFFERENT DATES.
4. Practice. The only way to get good at thinking in a new way is to practice it. When you meet a
strategy issue somewhere else (in the news, talking with someone, in another course, out shopping),
use the tools and frameworks of the course to understand it. A particularly good way to practice is
by using the EXTRAs posted on the Canvas site. When you read them, try to figure out what I think
is interesting about them. Apply the frameworks from class to understand them better.
5. Consider studying with a group. Some people find it helpful to study and discuss things with a
group, some don’t. You are looking for a group that discusses carefully and thoroughly, but doesn’t
descend into protracted arguments. Once you’ve discussed as much as you productively can, drop it
and pick up the discussion in class rather than beating it to death.
READINGS
A course packet, which includes the cases on the syllabus, is required. This course packet is
available from the following link: https://www.study.net/kellogg/.
In addition to the study.net course packet, this course also relies on a large number of
mandatory readings from the popular press. These readings are available in two, identical
formats:
1) An additional reading packet available for download from the Canvas website. This packet
contains all of the readings for which you have purchased copyrights using your student fees.
2) You also have the option of downloading the article one-by-one directly from the library
using the “Course Reserves” section of the Canvas website.
A Note on Readings: This course requires a large amount of reading in order to facilitate class discussion and
make sure that everyone is operating with a complete set of facts to participate in the class discussion. Note that where
there are articles that are primarily providing background information that we will not have an explicit discussion of in
class, I have listed the readings as optional “background readings.” These readings are optional and are provided for
students who may need some more information in order to better follow the classroom discussion. In some instances I
provide specific information about the relationship between the background readings and the lecture for the day. I leave
it to your discretion as to how much to read and/or skim these materials in order to be able to follow the class lecture.
If you have any questions about these background or other questions about preparing for
the course based on not having a lot of familiarity with healthcare in the United States
please don’t hesitate to reach out to me and schedule a meeting.
ADDITIONAL COURSE MATERIALS
The following materials will be posted on the course’s Canvas website.
• Course announcements: I will use the Canvas site to post course-related announcements
and reminders. As a result, you should check the site regularly. If there is something critical
to which I need to draw your attention, I will also email you.
3NOTE: THIS SYLLABUS IS PRELIMINARY AND WILL CHANGE BEFORE THE CLASS BEGINS.
STUDENTS IN THE EVENING AND WEEKEND PROGRAM WILL HAVE DIFFERENT DATES.
• Assignments: The website will contain the group project assignments, the individual case
assignments, and the preparation questions for each case.
• Slides and handouts from class: Anything I hand out in class will be posted on Canvas. If
you miss something or lose something, you can find it there. These will also be posted to
the “Modules” section of Canvas.
• Extras and Updates: I will also post in the “Modules” section of Canvas items related to
our class discussion. These items, labeled “EXTRA” or “UPDATE” are optional readings.
The UPDATEs give further information about companies or issues we have discussed in
class. EXTRAs provide additional examples where the tools or frameworks discussed in
class would have useful application.
DELIVARABLES
Individual case assignments: 35%
Prior to the 9th and 19th class sessions you will submit two individual case assignments about most
favored nation clauses and quality provision in the nursing industry, respectively. The first case
involves an analysis of the effect of most favored nation clauses on firm strategies in the
pharmaceutical sector. The second case involves an analysis of different
Group Case Assignment: 20%
During the 12th class session, you will conduct a quantitative analysis of the role of the different
strategies that firms pursue as they attempt to maximize profits in the nursing home industry. This
case will involve a good amount of data work, which would broadly mimic the type of analysis that
you would need to do in a healthcare consulting role.
Lincoln Douglas debate material: 10%
As we will discuss in class, there is a good deal of discussion and controversy around the R&D and
pricing process for pharmaceuticals. During the 7th class session, we will have an in-class debate
about this issue. Specifically, your team will be asked to prepare to participate in a debate covering
the following question:
“Resolved: The United States Government Should Repeal the Orphan Drug Act”
Teams will be assigned based on the group project assignment described below. I will provide some
initial background reading about the Orphan drug act, but expect that teams will primarily do their
own research regarding the potential implications of a repeal.
The debates will follow a modified “Lincoln-Douglas” debate format that is described in detail in a
reading on the Canvas site. For each debate, the affirmative and alternative teams will be chosen at
random. In addition, two teams will be selected to be judges (one team will be chosen randomly
from the pool of affirmative teams and the other from the pool of alternative teams). At the formal
close of the debate, the judges will vote on the winning team.
4NOTE: THIS SYLLABUS IS PRELIMINARY AND WILL CHANGE BEFORE THE CLASS BEGINS.
STUDENTS IN THE EVENING AND WEEKEND PROGRAM WILL HAVE DIFFERENT DATES.
All teams will be asked to turn in a memorandum—not to exceed 1,200 words of text, including
figures, graphs, or tables, but excluding footnotes (roughly 3 pages)—that (a) summarizes the team’s
opening argument, the contentions it intends to make, and the logic, reasoning, and evidence used to
support the contentions; (b) rebuts the points that a team arguing the opposing position would be
likely to make. Each memorandum must be turned in at the beginning of class and should indicate
the word count (again, including figures, graphs, and tables). All teams will be graded based on the
quality of the arguments and debate points in their memorandum. There is no restriction on the
sources that you can access for the debate. However, please be sure to footnote your sources.
Group Project: 20%
For the group project, you will work in groups of 5-6 to develop a business strategy for a new venture.
(I will describe the options in class, e.g., designing a strategy for a new chain of nursing homes, and I
will assign groups based on interests and prior experience.) Your deliverable for this project is the
slide deck for a 15 minute presentation and a 10-12 page paper. The 10-12 page paper will capture
your narrative in written (non-bulleted) form, and will include your discussion of the relevant
industry background. The page limit is firm, so you will want to allow for ample time to edit your
document to ensure it is concise and synthesizes your work. Exhibits should complement your
narrative, rather than merely extend it (i.e. they aren’t a place to “park” more text you couldn’t fit
into your paper). During week 9 of the course, one group from each topic will present and defend
your strategy during class, highlighting the rationale for your choices, and answering questions from
both your classmates and the professor.
I will assign groups during the second week of class. If you wish, you may specify one other
classmate to be included in your group, and your request will be honored if that classmate also
selects you and if it is feasible in light of other group allocation objectives (e.g., project preferences
and diversity of skill sets, group size, etc.). Note that the groups for the group project will also be the
groups that are used for the Lincoln-Douglas debate assignment.
All students must submit a group evaluation form upon conclusion of the project. This form
(available on the course website) allows you to allocate points to each team member to reflect
his/her contribution to the project. There are 100 points in total, so that an even allocation across 5
team members implies 20 points each. I ask that you include additional comments explaining the
reasoning for your allocation.
Participation (including For Class questions): 15%
The class participation grade provides you with an added incentive to prepare for class—the value of
your own learning should be the primary incentive. Case discussions work well as learning tools
when everyone participates.
Your participation will be graded on quality, not volume. You should provide insights, observations,
inferences, or conclusions that not only express your viewpoint, but also defend your analysis. Your
comment should be relevant to the topic at hand, and should advance the discussion. A simple
opinion or viewpoint is not very valuable without any justification. I value comments that respond
to, elaborate on, lend support to, contradict, or correct a comment by one of your classmates.
Counter-productive comments include opinions without a justifying argument, pure repetition of
previous point, and rambling, vacuous or disparaging comments.
5NOTE: THIS SYLLABUS IS PRELIMINARY AND WILL CHANGE BEFORE THE CLASS BEGINS.
STUDENTS IN THE EVENING AND WEEKEND PROGRAM WILL HAVE DIFFERENT DATES.
Discussion constitutes a large portion of our class time; you will have ample opportunity to
participate. I will cold call in class, both to give you an incentive to prepare for class, and to make
sure the class discussion does not collapse to a handful of students.
In order to assist in preparation for discussion, for each session I will post some preparation
questions. These are posted to the “Assignments” section of the Canvas website. Some of these
questions require online responses while others require you to carefully consider what you have read
for class that day. At a minimum, everyone in class should be prepared to answer all of the
discussion questions handed out in advance. The purpose of these questions is to prepare you
for the material we will cover in class and for me to get a sense for student views before class
starts. The surveys are not meant to test you and therefore only get graded on whether you
submitted answers to all questions or not. That being said, failure to answer the daily online
questions that require responses will negatively affect your participation score and final grade.
Responses to these daily preparation questions are due by 12:00pm on the day of your class.
Missing class: Learning to articulate your arguments and to evaluate and respond to the arguments
of others is an important part of what you will learn in this class. If you miss class, you will miss this,
and there isn’t a way to “make it up.” In addition, your participation in class is a key component of
the learning for all students, and therefore missing class creates a negative externality. Similarly,
entering the class late is disruptive and creates a negative externality for your classmates. As a result,
you should make every effort not to miss or be late to your class section. If you miss your class
section or are late to your section more than twice, it will begin to lower your class
participation grade. Excessive absences will affect your final grade. If you must miss class, you
should do the readings, prepare and turn in the assignments on time (late assignments will not be
accepted), and arrange to get notes from a classmate about what you missed in class. Recall that I
will post the presentation slides (and anything else that I hand out in class) to the Canvas website
after each lectures. You do not need to inform me that you will be missing class.
CLASSROOM ETIQUETTE
Students are expected to respect Kellogg’s Code of Student Etiquette at all times.
• No electronics (except for assistive technologies with appropriate accommodation
notification). This course maintain a strict no electronics policy. This includes tables and
laptops. We came to this decision for a variety of reasons. Recent research has consistently
shown that students retain less material when they take notes on a laptop. Some of this research
has shown that this poor performance extends to students sitting near the electronic devices as
these neighboring students are inevitably distracted by the electronics user’s “multi-tasking.”
Given the negative direct effects and externalities, I (along with some other faculty at Kellogg
and other universities) have decided to ban all electronics. I will view any violation of this policy
very seriously and it will meaningfully impact your class participation grade. Class PowerPoints
will be posted on the course web site prior to class and I will also have hard copies available in
the classroom.
• Punctuality. Class will start on time. It is distracting to your classmates for you to be climbing
to your seat and settling in while they are trying to pay attention to the class. If you are absent
6NOTE: THIS SYLLABUS IS PRELIMINARY AND WILL CHANGE BEFORE THE CLASS BEGINS.
STUDENTS IN THE EVENING AND WEEKEND PROGRAM WILL HAVE DIFFERENT DATES.
or late more than twice, it will begin to reduce your class participation grade and
excessive absences or lateness will affect your final grade. This also applies to having to
leave class early. In the interests of equity for those who are marked absent for arriving late, you
also will be marked absent if you must leave class early. In order to minimize disruption, if you
must leave early please take a seat near the back door of the classroom if possible.
• Seating chart. Your assigned seat for the semester will be the seat you choose for the second
class session on Monday, January 9th. I use assigned seats to help me keep track of class
discussion, and also to have a place to direct prospective students to sit.
• Beverages and snacks. Out of courtesy to your classmates, please don’t bring something
messy, noisy, or smelly to eat or drink in class. Use good judgment.
Additional guidance will be provided during the quarter, as needed.
ACADEMIC INTEGRITY
Students are expected to respect Kellogg’s Honor Code at all times. The first point of the Kellogg
Honor Code is “not to seek an unfair advantage over other students, including but not limited to
giving or receiving unauthorized aid during completion of academic requirements.” The
consequences of cheating can be failing an assignment or the course, or suspension or dismissal
from the university.
Assignments
Written case assignments are expected to be the efforts solely of the individual or group turning
them in. For individual assignments, you may use discussion with classmates to brainstorm issues,
evaluate alternative approaches, and consider the merits of recommendations. Use your own
judgment to identify the important issues, to construct arguments and to develop correct
conclusions. The same rules apply to groups for group case assignments. The group should not
consult the Internet, friends at other business schools, or people who have taken the course already.
Plagiarism
The members of any academic community are expected not to present as their own ideas or material
from other sources. Northwestern’s academic integrity guidelines state: “A conscientious writer
always distinguishes clearly between what has been learned from others and what he or she is
personally contributing to the reader's understanding.” See
http://www.northwestern.edu/uacc/plagiar.html for more information.
If you use text that is exactly, mostly, or even partially someone else’s words, it needs to be
attributed to that source and the quoted portion needs to be in quotation marks. If you use text that
is paraphrased from another source, it needs to be attributed. This applies even if it something you
yourself wrote that was handed in as an assignment or published elsewhere.
I strongly recommend against the practice of cutting and pasting from a source into a “working
document” that will eventually become the final document handed in, unless you insert the
appropriate quotation marks and citations at the same time. This is especially true for group
7NOTE: THIS SYLLABUS IS PRELIMINARY AND WILL CHANGE BEFORE THE CLASS BEGINS.
STUDENTS IN THE EVENING AND WEEKEND PROGRAM WILL HAVE DIFFERENT DATES.
assignments where another group member may not realize that something you put into the
document needs a citation.
In the context of this course, it is acceptable to refer to concepts, frameworks, and analytical tools
from the readings or class lectures without citation. You may also refer to the material in cases
without citations. However, do not quote or paraphrase analysis from another source and present it
as your own.
OFFICE HOURS
In general I will make myself available for office hours using the Outlook scheduling assistant, i.e. if
you would like to meet we can find a time to get together and/or schedule a phone call if there is an
immediate concern. In addition, I will be holding “Cafeteria” office hours from 11:00-12:00 on
Monday mornings. I will find a table in the dining area and will be available for any questions that
you may have.
8NOTE: THIS SYLLABUS IS PRELIMINARY AND WILL CHANGE BEFORE THE CLASS BEGINS.
STUDENTS IN THE EVENING AND WEEKEND PROGRAM WILL HAVE DIFFERENT DATES.
DAY-BY-DAY SCHEDULE
The United States Healthcare Sector and the Affordable Care Act (ACA)
January 8 (Monday)
• D. Leonardt, “Making Healthcare Better,” New York Times, 11/3/2009.
• A. Gwande, “The Cost Conundrum,” New Yorker, 6/1/2009
• S. Hall, “The Cost of Living,” New York Magazine, 10/20/2013.
• OBAMACARE HBS CASE #9-714-029 [AVAILABLE VIA STUDY.NET]
BACKGROUND READING (these articles will not be formally discussed but you may find them useful)
• “The Hospital Industry,” Health Economics, Jay Battacharya, Timothy Hyde and Peter Tu,
2014. [AVAILABLE VIA THE CANVAS WEBSITE]
- We will cover this reading in more depth during Session 5, but if you have little familiarity with
these issues it would be good to skim this article now
• Z. Cooper et al., “The Price Ain't Right? Hospital Prices and Health Spending on the
Privately Insured,” NBER Working Paper #21815.
January 11 (Thursday)
• OREGON HEALTH INSURANCE DESIGN, HKS799-PDF-ENG [AVAILABLE VIA
STUDY.NET]
• J. Surowiecki, “Ebolanomics,” New Yorker, 8/25/2014
January 17 (Wednesday) – NOTE THE UNUSUAL WEDNESDAY SESSION OF CLASS
• MEDICARE AND DRUG ELUDING STENTS, HBS CASE #905M53-PDF-ENG
[AVAILABLE VIA STUDY.NET]
January 18 (Thursday)
• ALAMEDA HEALTH SYSTEM, HBS CASE: PH5020-PDF-ENG [AVAILABLE VIA
STUDY.NET]
• A. Samuels, “Should Obamacare Help Pay for Housing?,” The Atlantic, October 27, 2014.
BACKGROUND READING
• A. Mitchell, “Medicaid Disproportionate Share Payments,” Congressional Research Service, June 17,
2016. [AVAILABLE ON CANVAS WEBSITE]
• T. Coughlin, “Safety Net Hospitals Post ACA Implementation: Risks and Rewards in a Period
of Rapid Change” [AVAILABLE ON CANVAS WEBSITE]
9NOTE: THIS SYLLABUS IS PRELIMINARY AND WILL CHANGE BEFORE THE CLASS BEGINS.
STUDENTS IN THE EVENING AND WEEKEND PROGRAM WILL HAVE DIFFERENT DATES.
o Note: You will likely find these readings to be a useful background if you are not familiar with the
financing of safety net hospitals in the United States. We will not explicitly discuss these readings
but we will talk broadly about how safety net hospitals are financed and operate in the post-ACA
world.
Added Value in Healthcare
January 22 (Monday)
Added Value and Health Insurance Networks
• B. Wysocki, “FTC Targets Hospital Merger in Antitrust Case,” Wall Street Journal, June 17, 2005.
• R. Weldon, “Trying to Revive H.M.O.s, but Without Those Scarlet Letters,” New York Times,
2/28/2016.
• E. Rosenthal, “Sorry We Don’t Take Obamacare,” New York Times, May 14, 2016.
Added Value in Pharmaceutical Industry
• Jack, “The fall of the world’s best-selling drug,” Financial Times, Nov. 28, 2009.
• J. Rocgkoff, “How Pfizer Set the Cost of its New Drug at $9,850 Per Month,” Wall Street Journal,
Dec. 9, 2015.
• T. Gryta, “What is a ‘Pharmacy Benefit Manger,’” Wall Street Journal, July 21, 2011.
• “Pharmaceuticals and the Economics of Innovation,” Health Economics, Jay Battacharya, Timothy
Hyde and Peter Tu, 2014. [AVAILABLE VIA THE CANVAS WEBSITE]
o Note: We will be broadly discussing the role of regulation, patent, and the FDA in the
sustainability of competitive advantage for firms in the pharmaceutical industry. This article
provides some broad information about this sector that will serve as the basis of a large portion of the
lecture. There will not be a formal case discussion of this chapter, but it provides information that
will helpful you better understand the lecture. I leave it to you to determine how much of this
textbook chapter that you want to read/skim.
• A. Frakt, “Why Preventing Cancer is Not the Priority in Drug Development,” New York Times,
Dec 28, 2015.
Background Reading
• “Follow the Pill: Understanding the U.S. Commercial Pharmaceutical Supply Chain” Kaiser
Family Foundation
• Note: This article is a little bit old, so don’t pay much attention to the market statistics. However, its
description of the activities of the various firms is the most accurate I have found. It will be useful for
students without a strong understanding of how both products and money move between various firms in
this market.
January 25 (Thursday)
• Pay-to-delay’ pharmaceutical deals smack of illegal collusion,” Washington Post editorial, March
24, 2013
10NOTE: THIS SYLLABUS IS PRELIMINARY AND WILL CHANGE BEFORE THE CLASS BEGINS.
STUDENTS IN THE EVENING AND WEEKEND PROGRAM WILL HAVE DIFFERENT DATES.
• “Drug Makers and Antitrust: is Cash All That Matters?” Wall Street Journal, March 19, 2014
• G. Harris, “Prilosec Maker Switches Switches Users to Nexium, Thwarting Generics,” June 6,
2002.
• Federal Trade Commission’s Brief as Amicus Curiae, Mylan v. Warner Chilcott, November 2012.
Case 2:12-cv-03824-PD Document 116-2
• “Judge Rules Drug Maker Can’t Shelve Old Pill,” New York Times, December 11, 2014.
Background Reading
• M. O’shea and C. Mikson, “The Hatch-Waxman Act: still critical, still in flux,” The
National Law Journal, vol. 27, no. 70.
o Note: For both today’s lecture and the next session we will spend some time talking about the
generic drug industry. While there are many laws and regulations governing this industry, an
important component for strategy in both the brand and generic sector is the Hatch-Waxman
act. We will cover some important features of this act in class, but this document will help those
who are entirely unfamiliar with this portion of the healthcare sector.
• “The Hatch-Waxman Act: A Primer,” Congressional Research Service [AVAILABLE ON
CANVAS WEBSITE]
January 29 (Monday)
In-Class Lincoln Douglas Debate: Resolved: The United States Should Repeal the Orphan Drug Act
Industry Analysis, Long Run Industry Structure, and Dynamic Competition
February 1 (Thursday)
The Hospital Industry
• “The Hospital Industry,” Health Economics, Jay Battacharya, Timothy Hyde and Peter Tu, 2014.
[AVAILABLE VIA THE CANVAS WEBSITE]
• D. Armstrong, “A Surgeon Earns Riches, Enmity By Plucking Profitable Patients,” Wall Street
Journal, 8/2/2005.
The Health Insurance Industry
• U Reinhardt, “How Much Money Do Insurance Companies Make,” New York Times, 9/25/2009.
11NOTE: THIS SYLLABUS IS PRELIMINARY AND WILL CHANGE BEFORE THE CLASS BEGINS.
STUDENTS IN THE EVENING AND WEEKEND PROGRAM WILL HAVE DIFFERENT DATES.
February 5 (Monday)
Due Session 7: Medicaid MFN Mini Case
• J. Rockoff and E. Silverman, “Pharmaceutical Companies Buy Rivals’ Drugs, Then Jack Up the
Prices: List prices soar on Valeant’s heart medications and other firm’s drugs, driving up costs,”
Wall Street Journal, 4/26/15.
February 8 (Thursday)
• V. Marone and L. Dafny, “Oscar Health Insurance: What Lies Ahead for a Unicorn Insurance
Entrant?”, December 2016
• M. Chafkin and Z. Tracer, “A Kushner Bets on Obamacare in the Era of Trump,” Bloomberg
Business Week, June 15, 2017.
• B. Herman, “Why Venture Capital Firms are Pouring Money into Health Insurance,” Modern
Healthcare, March 19, 2016.
• A. Frakt, “JAMA Forum: How to Get Public Option Benefits Without a Public Option,”
Available at: https://newsatjama.jama.com/2016/10/05/jama-forum-how-to-get-public-option-
benefits-without-a-public-option/
• Goldstein, “Critics say ACA ‘risk’ strategies are having a reverse Robinhood effect,” Washington
Post, January 13, 2016.
• D. Cutler, “Where Are The Health Care Entrepreneurs? The Failure of Organizational
Innovation in Health Care” NBER Working Paper #16030 [Available via Canvas]
•
Competitive Advantage and Differentiation
February 12 (Monday)
• A. Zuger, “For a Retainer, Lavish Care by 'Boutique Doctors',” New York Times, Oct. 30, 2005.
• NEW CONCIERGE DOCTOR ARTICLE
DaVita and the Dialysis Market
• Kent Thiry and DaVita: Leadership Challenges in Building and Growing a Great
• “God Help You, You’re on Dialysis,” The Atlantic Magazine, December 2010.
• S. Rice, “CMS announces first shared-risk program for kidney care,” Modern Healthcare, Oct 8,
2015
Strategic Fit: ACA Insurance Marketplaces
• L. Levitt et al., “Assessing ACA Marketplace Enrollment,” Kaiser Family Foundation.
• B. Herman, “Struggling with Health Net, Centene will drop many Arizona ACA plans,” Modern
Healthcare, July 26, 2016.
• L. Lorenzetti, “UnitedHealth Hasn’t Given Up on Obamacare Altogether,” Fortune, April 20,
2016.
Please review the 2015 10-K Forms for both UnitedHealth and Centene to better understand the lines of businesses
in which they are operating. These are available at:
12NOTE: THIS SYLLABUS IS PRELIMINARY AND WILL CHANGE BEFORE THE CLASS BEGINS.
STUDENTS IN THE EVENING AND WEEKEND PROGRAM WILL HAVE DIFFERENT DATES.
Centene: https://www.sec.gov/Archives/edgar/data/1071739/000107173916000192/form10k.htm
UHC: http://www.unitedhealthgroup.com/~/media/8C945A8A1C9647A899EE8AE0EC588ADB.ashx
Background Reading
• J. Paradise, “Medicaid Managed Care: A Primer and National Overview”
February 15 (Thursday)
• CANCER TREATMENT CENTERS OF AMERICA (A): HBS CASE: 313012-PDF-ENG
[AVAILABLE VIA STUDY.NET]
• S. Beyler and R. Respaut, “Special Report: Behind a cancer-treatment firm's rosy survival claims”
Reuters, 3/6/2013
• QUALITY PROVISION IN THE NURSING HOME INDUSTRY: KELLOGG CASE
[AVAILABLE VIA CANVAS WEBSITE]
Due Session 10: Nursing Homes Case Exercise
Sustainability of Competitive Advantage
February 19 (Monday)
• AMGEN INC: PURSUING INNOVATION AND IMITATION (A): HBS CASE: 714424-
PDF-ENG [AVAILABLE VIA STUDY.NET]
• O. Staley, “Novartis-Glaxo Unit Swaps Show Industry Overhaul,” Bloomberg, April 22, 2014.E.
Silverman, “As Hep-C Sales Decline, Wall Street wonders what Gilead does for its next act,”
STATNews, July 26, 2016.
• M. Herper, “Vertex Pharmaceuticals and The Price Of Inspiration,” Forbes, Sep 5 2017.
• KITE-GILEAD MERGER
Boundaries of the Firm
February 22 (Thursday)
• R. Kuttner, “Columbia/HCA and the Resurgence of the For-Profit Hospital Business,” New
England Journal of Medicine, 1996, 335:362-368.
• R. Kuttner, “Columbia/HCA and the Resurgence of the For-Profit Hospital Business,” New
England Journal of Medicine, Aug 8, 1996, 335: 446-453.
• R. Connor, R. Feldman, B. Dowd and T. Radcliff, “Which type of hospital mergers save
consumers money,” Health Affairs 16, no.6 (1997):62-74
• Gaynor, Marty and Bob Town, “The Impact of Hospital Consolidation,”
http://www.rwjf.org/en/library/research/2012/06/the-impact-of-hospital-consolidation.html
• R. Town, D. Wholey, R. Feldman, L. Burns, “Revisiting the Relationship between Managed Care
and Hospital Consolidation” HSR: Health Services Research 42:1, Part I (February 2007).
o Note: You are only responsible to read 219-223
13NOTE: THIS SYLLABUS IS PRELIMINARY AND WILL CHANGE BEFORE THE CLASS BEGINS.
STUDENTS IN THE EVENING AND WEEKEND PROGRAM WILL HAVE DIFFERENT DATES.
PT Roll Ups Case
BACKGROUND READING
• M. Gaynor and D. Haas-Wilson, 1999, “Change, Consolidation, and Competition in Health
Care Markets,” Journal of Economic Perspectives, 13(1): 141-164.
o Note: We will not formally discuss this article in class. However, it will serve as the basis for some
of the lecture and if you don’t have much experience in M&A or anti-trust issues in health this
provides perhaps the best concise overview of the work in this area.
February 26 (Monday)
• L. Baker, “Acquisition of MRI Equipment by Doctors Drives Up Imaging Use and Spending,”
Health Affairs, December 2010 29(1) 2252-2259.
• Wilde Matthews, “Same Doctor Visit, Double the Cost,” Wall Street Journal, 8/27/2012.
Kaiser
• R. Abelson, “The Future Face of Healthcare,” New York Times, Mar 20, 2013.
• K. Ho, “Barriers to Entry of a Vertically Integrated Health Insurer: An Analysis of Welfare and
Entry Costs,” available at:
http://www.columbia.edu/~kh2214/papers/paper_VertInt_080708.pdf.
o Note: Please read only pages 1-11 pages and 29-30. You DO NOT need to read the entire paper.
• C. Terhune, “HMO giant Kaiser eyes expansion and agrees to buy Washington state insurer,”
Los Angeles Times, Dec 4. 2015.
The Pharmaceutical Benefit Manager Market
• B. Herman, “How drug prices and payment reform are changing the pharmacy benefit
business,” Modern Healthcare, Sep 26, 2015.
March 1(Thursday)
• H. Tabuchi, “How CVS Quit Smoking and Grew Into a Health Care Giant,” New York Times,
July 11, 2015.
• J. Ashwood, M. Gaynor, C. Setodji, R. Reid, E. Weber and A. Mehrotra, “Retail Clinic Visits For
Low-Acuity Conditions Increase Utilization And Spending,” Health Affairs, Mar 2016.
Group Projects
March 5 (Monday)
• Group Project Presentations
14NOTE: THIS SYLLABUS IS PRELIMINARY AND WILL CHANGE BEFORE THE CLASS BEGINS.
STUDENTS IN THE EVENING AND WEEKEND PROGRAM WILL HAVE DIFFERENT DATES.
Emerging Issues: Changing Incentives in Health Care
March 8 (Thursday)
Reforming Provider Pricing: Accountable Care Organizations (ACOs) and Bundled Payments
• TRANSFORMING CARE AT UNITYPOINT HEALTH – FORT DODGE: 615052-PDF-
ENG [AVAILABLE VIA STUDY.NET]
• M.S. Ridgely et al, “Bundled Payment Fails to Gain a Foothold in California: The Experience of
the IHA Bundled Payment Demonstration,” Health Affairs, August 2014
• J.M. McWilliams, L. Hatfield, M. Chernew, B. Landon, and A. Schwartz, “Early Performance of
Accountable Care Organizations in Medicare,” New England Journal of Medicine, June 16, 2016,
374:2357-66.
Reforming Pharmaceutical Pricing
• Wilde Matthews, “UnitedHealthcare Tests a Flat Rate for Cancer Treatment,” Wall Street Journal
December 15, 2014.
• R. Conti, R. Glassman, and M. Ratain, “New Cures Require New Pricing Policies,” Health
Affairs Blog, April 16, 2015.
• P. Loftus and A. Wilde Matthews, “Health Insurers Push to Tie Drug Prices to Outcomes,” Wall
Street Journal, May 11, 2016.
• P. Bach, “Indication-Specific Pricing for Cancer Drugs,” JAMA, October 2014.
March 12 (Monday)
Changes in Insurance Benefit Design
• INSURANCE DESIGN CASE
• M. Chernew, A. Rosen, and A. M. Fendrick, “Value Based Insurance Design,” Health Affairs,
March 2007.
•
Employer Provided Insurance
• Employer Insurance under Employer Mandates and Subsidized Exchanges: Time to Dump or
Stay?” Duggan and Pauly, Health Management, Policy, and Innovation, 2013, 1(2): 45-50.
• B. Klepper, “Will Employers Favor Private Exchanges Over Coverage Sponsorship?”, Health
Affairs Blog, October 17, 2014.
• M. Sanger-Katz, “High Rate of Shopping and Switching in Obamacare Plans Is a Good Sign,”
Margot Sanger-Katz, New York Times 2/26/2015.
15NOTE: THIS SYLLABUS IS PRELIMINARY AND WILL CHANGE BEFORE THE CLASS BEGINS.
STUDENTS IN THE EVENING AND WEEKEND PROGRAM WILL HAVE DIFFERENT DATES.
Course Summary
March 15 (Thursday)
16You can also read
