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Presentation By Greg Caressi, Frost & Sullivan.
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The CEO 360 Perspective of the Medical Devices Industry
Greg CaressiSenior Vice President, Healthcare
Frost & Sullivan
2
Key Take-Aways
Event Title:
Speaker/Facilitator:
Session Title:
16th Annual Medical Devices, 2011
Greg Caressi
The CEO 360 Perspective of the Medical Devices Industry
Top 3 Take-Aways for Participants
Guide to 2011 economic trends and predictions of their impact on healthcare markets
Framework of the changing interactions of stakeholders in the system
Insight on Healthcare Reform - the implications and impact, one year later
3
Common Forces Impacting All Healthcare Stakeholders
Patients Physicians Hospitals Pharma/Biotech Devices Health IT Payers
Economic Constraints - The Great Recession, Credit Crunch, Unemployment, Rising Deficits
Regulatory Changes - ARRA/HITECH, PPACA, HIPAA 5010, ICD-10, FDA
Political & Social Change - Partisan Politics, Empowered Consumers
Increased Use of Information Technology - Internet, Mobile Devices, EHR/PHR, apps, gaming
Demographics/Epidemiology - More chronic illness, poor nutrition, obesity, aging population, poverty
4
Economic Issues Impacting Healthcare in 2011:Private Sector
• Continued high unemployment rate strains govt budgets• 2011 GDP growth > job growth• Higher productivity in 2010 – we really are doing more with less
• Interest rates to remain low despite inflation pressures• FED will not raise interest rates in near term• Credit crunch only in terms of banks’ willingness to loan, fear of
defaults
• Inflation increasing, driven by energy costs• HC costs will rise faster than inflation, but downward pressures exist
• Generics• Medicare payment limitations
• Real wages continue stagnant• Elective surgeries will not fully rebound, due to unemployment,
limited wage gains, consumer debt burdens, etc.
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Economic Issues Impacting Healthcare in 2011:Public Sector and Hospitals
• Federal govt budget deficits will remain high
• Budget deficit debates on 12% of budget eventually will come around to Medicare/Medicaid
• 50% of HC spending will be funded by US Govt in 2012
• No pullback on govt funding for HCIT
• Hospitals need a new business model• Focus on both horizontal and
vertical growth
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Future of Healthcare
What Will the Future Look Like?
Healthcare increasingly data driven and customized
Healthcare more like other service industries
Globalized care delivery
Greater collaboration and information sharing across value chain
Greater transparency of prices/costs and outcomes
Increased development of standards of care and incentives to adopt them
Increasingly challenging market for new technologies. Demonstrating value will be essential.
Focus on economics
Longer time to market for new technologies
Declining influence of clinical decision makers
More “generics” – technologies providing same value at lower price, stripped down feature sets
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Obama Administration Goals Accelerating Many Trends
The Health Information Technology for Economic and Clinical Health Act (HITECH), part of the American Recovery and Reinvestment Act of 2009 (ARRA) included >$35 B in incentives to help healthcare organizations modernize operations through the use of health information technology
HITECH specifically allocates $19.2 B in the form of direct payments to increase the use of EHRs by physicians and hospitals
CBO estimates that HITECH incentives will boost physician EHR adoption rates to 90% by 2019
Two key pieces of legislation will dramatically accelerate the pace of changeHITECH
(February 2009)PPACA
(March 2010)
The dual passage of the Patient Protection and Affordable Care Act (PPACA) and the Health Care and Education Reconciliation Act of 2010, puts into place a series of changes in the way providers are compensated and expands access to health insurance to 32 million Americans who currently are without coverage
Primarily, PPACA is health insurance legislation. Secondarily, it addresses reimbursement and physician payment for services
More emphasis on diagnosis, monitoring, preventive care leading to increased collaboration with other providers
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Shifting the Financial Gravity of the SystemIn
vest
men
t
Continuum of Care
“At Risk” Undiagnosed Chronically IllManaged
Chronically IllUnmanaged
Endof Life
Healthy
$
$$$
$$$$
$$
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Shifting the Health Focus of the System
Prevention/Wellness
Disease/Care Management
Healthy/“Worried Well”
“At Risk” Undiagnosed Chronically IllManaged
Chronically IllUnmanaged
Endof Life
Continuum of Care
Siz
e o
f Im
pa
cted
Po
pu
lati
on Goal:
Keep People Healthy Longer
Goal:Keep
People Healthy Longer Goal:
Manage or Mitigate
Risk
Goal:Manage
or Mitigate Risk Goal:
Diagnose and
Reduce Treatment
Delay
Goal:Diagnose
and Reduce
Treatment Delay
Goal:Manage
Goal:Manage
Goal:Move to
More Interaction and Self-
Mgmt
Goal:Move to
More Interaction and Self-
Mgmt
Goal:Informed Decisions
Goal:Informed Decisions
ü Early identification and prevention
ü Access to new forms of care delivery to improve patient knowledge, self-help and health
ü Connection to benefits design to increase coverage for those services which prevent disease and improve health over long term
ü Reducing administrative and clinical waste
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• Communication among the care teams is essential requiring an extensive use of health IT, including EHRs, e-Rx, clinical decision support, secure messaging and patient/provider Web portals
• Communication among the care teams is essential requiring an extensive use of health IT, including EHRs, e-Rx, clinical decision support, secure messaging and patient/provider Web portals
• Physician practice designated as a patient's "medical home" to coordinate the continuum of care and improve qualityand outcomes
• Physician practice designated as a patient's "medical home" to coordinate the continuum of care and improve qualityand outcomes
• The medical home model promotes a team based approach = increased collaboration and communication among stakeholders
• The medical home model promotes a team based approach = increased collaboration and communication among stakeholders
New Care Delivery Models – Patient Centered Medical Home
• Increased interaction, sharing of info among care team
• Increased patient empowerment focuses on understanding of disease and medications
• Increased interaction, sharing of info among care team
• Increased patient empowerment focuses on understanding of disease and medications
Existing Medical Home pilots have focused on medication adherence as key to goals of patient empowerment and reducing hospital readmissions
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ACO models:• require tracking of info
and outcomes• focus on chronic
disease management to improve outcomes
• Increase patient engagement, activation and accountability
• Utilize monitoring and analytics to achieve health outcomes
Groups of providers or practices under the umbrella of one organizing entity with responsibility to improve health, care efficiency + experience and outcomes for a defined population
New Care Delivery Models – Accountable Care Organizations
Engage in joint decision-making to manage the full continuum of care
The efficient operation of ACOs will be highly dependent on a solid information infrastructure, including health information exchange
ACOs must meet certain criteria, including quality measurements and share in the cost savings for Medicare and Medicaid programs
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Technology To Monitor and Achieve Better Outcomes
Remote Patient Monitoring
Remote Patient Monitoring
Hospital-based Systems
Hospital-based Systems
Consumer HealthConsumer Health
TelehealthTelehealth
Connected Health
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Shifts Underway to Support Remote Access and Tracking
Requirement to reimburseRequirement to reimburse
CMS supportCMS support
States that mandate telemedicine reimbursement by private insurance:VirginiaMaineNew HampshireOregonCalifornia Colorado Georgia
Hawaii Kansas Kentucky Louisiana Texas Oklahoma
• “The use of a telecommunications system may substitute for a face-to-face, "hands on" encounter for consultation, office visits, individual psychotherapy and pharmacologic management.”
• “Each of these categories is ‘not considered telemedicine’ or ‘telemedicine’ by CMS. Rather, they are considered the same as services delivered on-site and are to be coded and will be paid in the same way.”
More emphasis on diagnosis, monitoring, preventative care
Track and document outcomes
Greater info flows to support training, patient education/interaction
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ConsumerExpectations
Entertainment & Media§ Customized products§ Home services
Retailing & Finance§ Customer service focus§ Comparison shopping§ Self-service, online shopping§ Special offers
Manufacturing & Distribution§ Faster time to market§ One stop shop§ Anytime anywhere
care
Patient Perspective:Shifting Healthcare Expectations
24 / 7 / 365 support to resolve questions,
One stop resolution, or call back
Proactive outreach to address issues affecting consumer
24 / 7 / 365 support to resolve questions,
One stop resolution, or call back
Proactive outreach to address issues affecting consumer
Ability to control and customize use and service features
Consumer controls interaction
Ability to control and customize use and service features
Consumer controls interaction
Consumers expect real time info at pt of consumption
Info comes to consumer
Consumers expect high levels of interaction and Q&A in face to face encounters
Consumers expect real time info at pt of consumption
Info comes to consumer
Consumers expect high levels of interaction and Q&A in face to face encounters
Consumer experiences in other markets affecting expectations from healthcare:
Key success factors• Utility• Ease of use• Engaging, not sterile
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Connected Health Solution Success Based on Alignment With Stakeholder Goals, Perceived Benefits
HCP benefits
• See more patients
• Influence patient behavior change
• Improve outcomes
• Leverage patient support system – wider caregiver group, family, etc.
Patient benefits
• Convenience, control of timing
• Increased interaction on demand
• Immediate access to system, info
• Behavior change
• Ability to support family health
Market development issues:
•Will physicians be able/willing to accommodate increased info flows
•Patient thresholds on willingness to pay?
•Many benefits accrue to payers, but solutions being sold to providers and patients
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Demographics : Applications : Device
DEMOGRAPHICS OF USERS
DEVICE
APPLICATI
ONS
DEMOGRAPHICS OF USERS
DEVICE
Two (market-oriented) views of the business decisions that must be accommodated in connected health solutions
Two (market-oriented) views of the business decisions that must be accommodated in connected health solutions
Drastic shift in near future re: comfort with
devices?
Drastic shift in near future re: comfort with
devices?
If/when applications migrate, will
devices need to change?
If/when applications migrate, will
devices need to change?
16
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Connected Health Via What Device?
17
Smartphone / Handheld ComputerSmartphone / Handheld Computer
• Device functionality designed and built to match applications and connectivity platform (display, response, two-way video, etc.)
• Don’t have to deal with integration issues to multiple device platforms
PROs
• Distribution issues
• Single use devices have poor record of success in mass market deployments to patients in telemedicine - hard to scale
CONs
Single use deviceSingle use device
• New functionality funded by device vendors: • Will utilize latest tech within short time
• Addition of mobility increases value of apps• Adherence reminders• PERS emergency calls• Geofencing, tracking/location
• Device functionality, form factor may not meet needs of all applications and users
• Two-way video• Keyboarding, small buttons
• Dependent on network coverage and costs of wireless data network service providers
TV as access deviceTV as access device
• TVs in place in nearly 100% of households
• Existing high penetration and comfort with use by elderly population
• Functionality tied to capabilities of remote control or purpose-built console/keyboard
• No existing success stories despite attempts: Phillips Motiva, WebTV
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Smart Phones the Platform of Choice for Future Connected Health Apps?
Source: Frost & Sullivan
Penetration of smartphones even higher among physicians 63% of physicians own smartphones, expected to rise to 81% smartphone penetration among physicians by 2014*
*Manhattan Research = “Physicians in 2012: The Outlook for On Demand, Mobile and Social Digital Media”
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Best Practices
Look for systems, not technology •Multiple contact methods, follow up channels toescalate contact as needed
•Monitor + engage with patients•Support two-way patient-provider interactions
Learn from other industries where mobilizing processes is successful
Must solve problems of individual user holding the device •Convenience•Efficiency•Knowledge pushed to the edge
Can’t use tech to jump value chain Can increase info and interaction within value chain:
Providers (many layers) Patient Family
20
Regulatory Issues Impacting mHealth: Medical Device Needing Approval?
FDA has stated software validation will be required for mobile medical applications. Whether such devices would have to go through 510(k) or pre-market approval processes, or be ruled 510(k)-exempt has not yet been determined
and…
In EU, regulators state stand-alone software CAN be considered a medical device
so…
Conclusion = IT DEPENDS
Both the FDA and the EU have stated clarity is coming … under evaluation
Expect regulation of software apps and monitors collecting data, no direct regulation of smart phone or computer as transmission channel
?
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Which Apps Will the FDA Have More Interest In?
FCC overtly encourages mHealth exploration and device innovation, support for test beds
Big issue for FCC is (frequency) interference
Easy Hard EasyPacemaker Calorie
Counter
Risk will likely determine regulatory response
If doctor bases medical decision on this data, or provides support for medical decision = medical device? “NOT DETERMINED YET”
FDA has stated that the status of mHealth application guidance
“still a matter of discussion”
“under development”
more guidance in coming months
22
Summary of Impact of Policy and Market TrendsV
OLU
ME
to
V
ALU
E
TR
AC
KIN
G ,
AN
ALY
TIC
S
Health IT cost subsidies by government and commercial payers; increased focus on prevention and reduced hospital admissions
New care models focused on collaboration, information exchange/awareness, achieving health outcomes, especially with chronic disease care
Greater need to document process of care and document outcomes Tracking of care, results
Increased patient empowerment to understand and manage disease. Patient interacts directly with caregivers via remote monitoring and mobile apps
Move away from fee-for-service to bundled payments based on quality of care Increased use of analytics, care protocols MEDIUM
TERM
SHORTTERM
Physician realignment, health care workforce shortages, and provider consolidation
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Expect Continued Drive To Capture Long-term Gains of HCIT Investments and Information Exchange
• Govt action on interoperability and health info exchange is the next step
• HIE ROI > EHR ROI
• Data entry dilemma: voice processing?
• Freeing data (via XML?) unlocked data flows drive research and innovation
• Key question Who will own aggregated data?
• Providers• Payers• Some EHR vendors have access rights to
aggregated data
• Analytics and aggregating information for consumers for their individual decision making is an opportunity
• From Quality ratings to Care decisions
25
Frost & SullivanAn Active Contributor to Global HC Market Development
ComprehensiveSupply-side Analysis
RobustEnd-user Analysis
Thought Leadership
Hosting Industry Forums
StrategicExpert Analysis
Recognizing Best Practices
