The recently-announced acquisition of the oncology data company Flatiron Health by Roche for $2.1B represents a robust validation of the much-discussed but infrequently-realized hypothesis that technology entrepreneurs who can turn health data into actionable insights can capture significant value for this accomplishment.
Four questions underlying this deal (a transaction first reported, as usual, by Chrissy Farr) are: (1) What is the Flatiron business model? (2) What makes Flatiron different from other health data companies? (3) Why did Roche pay so much for this asset? (4) What are the lessons other health tech companies might learn?
The Flatiron Business Model
To a first approximation, Flatiron has a model that can be seen as similar to tech platforms like Google and Facebook – delight (or at least offer a useful service to) front-end users, and then sell the data generated to other businesses. For Flatiron, the front-end users are oncologists (mostly community, some academic), and the data customers are pharma companies. In contrast to Google (and also in contrast to the less successful Practice Fusion, recently acquired at a loss), Flatiron doesn’t sell access to front-end users themselves (e.g. through targeted ads), but rather access to de-identified, aggregated clinical information.
Success of this model requires that the Flatiron platform is attractive to oncology practices, who must feel that they’re getting distinct value from it and believe that it helps them fulfill their primary mission of taking care of cancer patients. If this is true, then the Flatiron platform will enjoy continued traction from its current base, and may more easily win over new users (including practices that use a different EMR system, like Epic, but still want access to the Flatiron network and analytics).
Our healthcare system is self-destructing, a fact made more obvious every single day.A few years ago, a number of brave physicians who were fed up with administrative burden, burnout, and obstacles to providing care for patients started a movement –known as Direct Primary Care (DPC.)This is an innovative practice model where the payment arrangement is directly between a patient and their physician, leaving third parties, such as insurance or government agencies, completely out of the equation.
The rapidly growing number of DPC physicians have organized into a group called the DPC Coalition (DPCC); suddenly, the Centers for Medicare and Medicaid (CMS) is paying attention.As of February 2018, there are 770 DPC practices across the United States with new clinics opening each week as brave physicians leave the “system” behind, never looking back. Breaking free from the chains of insurance and government, this group is restoring the practice of medicine to its core, a relationship between a physician and their patient.
CMS understands there is a problem with the way Medicare services are being delivered to tax payers; it turns out their idyllic version of “high quality” care is not as affordable as they predicted.All evidence indicates the DPC model is not only capable of generating significant cost reduction, but also saving the federal government billions if administered on a large-enough scale.As fewer physicians accept Medicare and convert to DPC practices, CMS wants a piece of the pie.
For what is now an annual tradition, we are once again attempting to be healthcare soothsayers. We are proud to share with you our 10 healthcare predictions for 2018. In 2017, amaz-ingly, eight of our predictions came true.
For 2018, we are betting on the following:
1. Another Theranos
We think at least one healthcare information technology company with an enterprise value of more than $1 billion (not including Outcome Health, which we could not have predicted tanking so spectacularly quickly) will be exposed as not having product results to support their hype. It will also expose embarrassed investors who did not do careful diligence and founders with poor integrity.
2. Hospital hiring slows
After a decade of sustained hiring every month, hospitals will stop. Many will downsize their administrative staffs as admissions continue to slowdown and reimbursement pressures intensify. We expect multiple months with net healthcare job losses which would be the first time this has occurred since the Bureau of Labor Statistics started tracking the data.
3. Successful HCIT exits
After a long wait, and more than $10 billion of venture capital invested in startups over the past five years, we will begin to see successful IPO and M&A exits. These will reassure growth investors to keep pouring money into companies with traction.
4. Amazon does not disrupt PBMs
Despite daily rumors, we think Amazon will not shake up the PBM sector. Instead, Amazon will limit its healthcare market footprint to its existing consumer products and distributing non- regulated healthcare goods to healthcare providers (adopting a B2B and not B2C strategy).
On Jan. 18, an article by Dr. Lee Goldstein of Boston University and colleagues in Brain, a leading neurological journal, was released and touted as proving the link between subconcussive hits to the head and chronic traumatic encephalopathy (CTE) (“Real risk of CTE comes from repeated hits to the head, study shows,” Feb. 4). That same day the CTE advocacy group — the Concussion Legacy Foundation — announced a national campaign called F14G Football to convert all under-14 football into flag football, thereby eliminating tackle football.
The message sent to assembled media and onlookers was that eliminating tackle football for youth is the key to safeguarding the brains and futures of America’s youth.
The truth is not so simple.
The scientific evidence linking youth casual sports play to brain injury, brain injury to CTE, and CTE to dementia is not strong. We believe that further scientific research and data are necessary for accurate risk-benefit analysis among policymakers for two reasons.
First, evidence-based science calls for research to be conducted under generally accepted principles. The case series presented by the Boston University group, primarily due to its ascertainment bias, is weaker than the evidentiary standard sufficient to demonstrate an association or causation and conflicts with pathologic findings in other studies.
CTE pathology in the brain has been shown by British pathologists to be present in approximately 12 percent of normal healthy aged people who died at an average age of 81 years (Ling et al. Acta Neuropathologica). The presence of CTE pathology in the brain on autopsy has not been shown to correlate with neurologic symptoms before death.
To be clear, CTE pathology could be present in a normal person.
The 4th amendment of the U.S. Constitution shields an individual (or business) from unreasonable government intrusion. It is inferred this right extends to ALL people, regardless of profession.Advanced nurse practitioners are independently practicing medicine in 23 states yet are not subject to onerous Maintenance of Certification (MOC) requirements– physicians are not equally protected under the law.Physicians must fight, as one group, against the burden of MOC.We have two choices:become a Doctor Squared (Dr. ²) or join an alternative certification organization such as the National Board of Physicians and Surgeons (NBPAS.)
A Doctor Squared (Dr. ²) denotes one who obtains both an MD and a DNP (Doctor of Nurse Practitioner) degree.This allows independent practice and eliminates the power of MOC.Reviewing a list of affordable DNP programs in the country shows a degree from the University of Massachusetts – Boston DNP program only costs $10,180.Coursework is online, and will take only 3 years if attending part-time.Renewal of an MD license in Washington State costs $697 biannually while DNP license costs $125, putting more money in my pocket.Additionally, the continuing education requirement is different; advanced practice nurses must complete 15 hours annually while physicians need 50 hours annually even though both professions are independently practicing medicine.According to Medscape, malpractice insurance rates are $12,000 yearly (2012) for a family physician, while a family nurse practitioner pays $1200, one-tenth as high.Remember, the cost of MOC for internal medicine is $23,600 every 10 years.
As I walk into the building, the sheer grandiosity of the room is one to withhold — it’s as if I’m walking into Grand Central station. There’s a small army of people, all busy at their desks, working to carry out the next wave of innovations helping more than a million lives within the Greater Philadelphia region. However, I’m not here to catch a train or enjoy the sights. I’m at the office of the President and CEO of Thomas Jefferson University, Dr. Stephen Klasko, currently at the helm of one of the largest healthcare systems in the U.S.
Let me backup a little.
The theme of nearly every conversation about the future of technology now revolves around Artificial Intelligence (AI). Much weight is placed on the potential capacity of AI to disrupt industries and change them to the very core. This pressure has been felt to a large extent within nearly every aspect of healthcare where AI has been projected to improve patient care delivery while saving billions of dollars.
Unfortunately, most discussions exploring the implications of AI only superficially look at either the product or the algorithm that powers these products. The short-sightedness of this approach is not an easy one to fix. Yes, clinical studies validating AI backed products are vital but AI cannot be viewed just like any other drug or a medical device. There’s much more to be considered when we examine the broader role of this technology, because this technology can shape the entire healthcare system. To place the impact of a far reaching technology, you need an even longer sighted vision. It’s a rare breed of people that have experienced the tumultuous history of change within medicine but can still call upon the lessons learned to execute innovations and bring meaningful results.
In the early 1960s, President John F. Kennedy said, “The time to repair the roof is when the sun is shining.” It was a clarion call, a full-throated warning against national complacency in an era of great prosperity.
It was during this same period that community hospitals stood as the dominant force in American healthcare. By the mid-20th century, some 6,000 inpatient facilities had spread throughout the country, often serving as the financial glue of their respective communities. With well-paying jobs and boards made up of dignitaries, local hospitals aroused a great chorus of civic pride.
As health plans, pharmaceutical companies and new care-delivery entrants gain market clout at the expense of the hospital industry, panic is starting to set in. These developments have spurred a recent uptick in hospital mergers, which look more like deals of desperation than long-term growth strategies.
When my classmates and I returned to Boston to continue our first year of medical school early last month, we returned to a very different type of course, called “Essentials of the Profession.” In it, we explored health policy, social medicine, ethics, and other topics outside the realm of traditional physiology and disease but just as important to our roles as physicians. In the health policy class, we learned about escalating healthcare costs and how the landscape of American healthcare is changing. While the inclusion of these topics in our curriculum reflects a significant advance in medical education, our health policy teachings also exposed a critical gap in our training – one that will leave us ill-prepared to meet our future obligations as physicians.
Healthcare providers, we learned, are increasingly expected to consider the cost of clinical care, and the costs of care we deliver will influence how much we’ll be paid. Medicare is increasingly tying physician payment to spending benchmarks such that wasteful healthcare services will be punished with lower reimbursements. Further, providers are being pressured by public and private payers to enter into alternative payment models that force physicians to bear financial risk. This means that doctors may lose money if they spend more on patient care than government-set benchmarks. The goal is to incentivize cost-effective care and penalize inefficiency, in stark contrast to the traditional fee-for-service scheme, which encourages overutilization and contributes to cost growth.
Atezolizumab previously received accelerated approval in second-line metastatic or advanced urothelial cancer based on response rates from a single arm trial. The results of post approval confirmatory phase 3 are now published and demonstrate that atezolizumab did not improve survival versus chemotherapy (11.1 v 10.6 months, HR 0.87, p = 0.41). The concept of accelerated approval is to grant early and conditional approval and access to drugs in diseases of unmet need, and that the decision to fully approve or revoke be made based on results of confirmatory phase 3 trials. That means, if the confirmatory larger phase 3 trial shows that the assumed benefit with the drug didn’t exist, the approval be revoked. Naturally, the FDA has decided to revoke the approval. No, I am joking. The post approval studies don’t seem to matter at all. You can improve response rate in a single arm trial, gain an expedited approval and your approval will always remain. Previously, we also saw that a drug that was given accelerated approval based on response rates in a phase 2 received full approval after it failed to improve survival in a subsequent confirmatory phase 3. Why bother conducting confirmatory studies at all?
NBC should consider re-branding as the “anti-woman” network.Our culture needs to change so women feel valued and respected, comfortable and safe in the workplace, and are provided ample opportunities for leadership and growth.NBC actions show they care little about gender equality in the workplace, prioritizing the comfort of males over that of females.During a recent interview, former “Today Show” anchor Anne Curry asked a poignant question after “not being surprised by the allegations” against “golden boy” Matt Lauer.“What are we gonna do to make sure these women work and are not sidelined and prevented from contributing to the greater good?”My answer is we must continue to call attention when major networks push women aside.
Morgan Radford is an NBC correspondent who reported on parents who were concerned about their children playing football due to risks of long-term neurologic damage.She interviewed two physicians for her segment — a pediatrician by the name of Dyan Hes, MD and Lee Goldstein, MD, PhD, an internal medicine physician.One would think both physicians were interviewed as experts in their fields; however, at some networks there appears to be “a power imbalance where women are not valued as much as men” according to Anne Curry.Dr. Hes is a physician and a mother to a teenage son, whom she understandably, will not allow to play football.Dr. Goldstein is a researcher and recently completed a study about the risk of brain injury resulting from even mild head trauma.