Categories

Category: The Business of Health Care

ONC & CMS Proposed Rules – Part 5: Business Models

Grant Barrick
Dave Levin

By DAVE LEVIN, MD and GRANT BARRICK

The Office of the National Coordinator (ONC) and the Centers for Medicare and Medicaid (CMS) have proposed final rules on interoperability, data blocking, and other activities as part of implementing the 21st Century Cures Act. In this series, we will explore the ideas behind the rules, why they are necessary and the expected impact. Given that these are complex and controversial topics open to interpretation, we invite readers to respond with their own ideas, corrections, and opinions. In part five of this series, we look at how competition unlocks innovation, and how the proposed rules may disrupt the balance between innovation, intellectual property (IP), and supporting business models.  

____________

The recent publication of proposed rules by ONC and CMS set off a flurry of activity. In anticipation of their implementation, the health care industry is wrestling with many questions around business models. What practices inhibit competition and innovation? How do we balance the need for competition while protecting legitimate intellectual property rights? How can vendors ensure profit growth when pricing is heavily regulated? In this article, we will examine how competition unlocks innovation and the possible disruptions the proposed rules may bring for innovation, intellectual property (IP) and supporting business models.

Unlocking Innovation via Competition

In most markets, innovation is driven forward by competition. Businesses compete on equal footing, and their investment in R&D drives innovation forward. Innovation in health care has been dramatically outpaced by other markets, leading to an urgent need for both disruptive and evolutionary innovation.

What is inhibiting health care innovation? The rules identify a combination of tactics employed in health care that restrict the free flow of clinical data, such as:

  • NDAs
  • Confidentiality Clauses
  • Hold-harmless Agreements
  • Licensing Language

These tactics slow innovation by contributing to an environment where stakeholders resist pushing the boundaries — often because they are contractually obligated not to. The legislation and proposed rules are designed to address the ongoing failure of the market to resolve these conflicts.

As the rules are finalized, we will continue to monitor whether the ONC defines these practices as innovation stifling and how they will implement regulations — both carrot and stick — to move the industry forward.

Continue reading…

Pulling Care Out of Hospital—By Phone, Ambulance, and Good Ol’ House Calls.

By REBECCA FOGG

In the 20th century, hospitals completed their transformation from the hospice-like institutions of the Middle Ages, into large, gleaming centers of advanced medical expertise and technology that save and improve lives every day. But an unintended consequence of hospitals’ dazzling capabilities is a staggering cost burden that’s proving toxic to the American economy.

Today, hospital care accounts for approximately 33% of the US’ $3.5 trillion annual health care expenditures, according to CMS. The drivers of hospital costs are complex and hard to tackle, including (but not limited to) market consolidation that enables price hikes, heavy administrative burdens, expensive technology and patient usage patterns.

In The Innovator’s Prescription, Clayton Christensen et al. explained another important driver of high hospital care costs: conflation under one roof of business models designed to address very different needs—such as the need for diagnosis of unique, complex conditions and experimental treatments, versus that for highly standardized services (for instance, some surgical procedures). This common phenomenon makes optimization of either business model very difficult, and thus drives up overhead costs.

One solution to this seemingly intractable problem is to make home and community the default locations for care, where in many circumstances it can be provided less expensively, more conveniently, and more effectively than in a hospital. Fortunately, business model innovation toward this end is gaining traction.

Continue reading…

Patient-Directed Access for Competition to Bend the Cost Curve

By ADRIAN GROPPER, MD

Many of you have received the email: Microsoft HealthVault is shutting down. By some accounts, Microsoft has spent over $1 Billion on a valiant attempt to create a patient-centered health information system. They were not greedy. They adopted standards that I worked on for about a decade. They generously funded non-profit Patient Privacy Rights to create an innovative privacy policy in a green field situation. They invited trusted patient surrogates like the American Heart Association to participate in the launch. They stuck with it for almost a dozen years. They failed. The broken market and promise of HITECH is to blame and now a new administration has the opportunity and the tools to avoid the rent-seekers’ trap.

The 2016 21st Century CURES Act is the law. It is built around two phrases: “information blocking” and “without special effort” that give the administration tremendous power to regulate anti-competitive behavior in the health information sector. The resulting draft regulation, February’s Notice of Proposed Rulemaking (NPRM) is a breakthrough attempt to bend the healthcare cost curve through patient empowerment and competition. It could be the last best chance to avoid a $6 Trillion, 20% of GDP future without introducing strict price controls.

This post highlights patient-directed access as the essential pro-competition aspect of the NPRM which allows the patient’s data to follow the patient to any service, any physician, any caregiver, anywhere in the country or in the world.

Continue reading…

Why Is the USA Only the 35th Healthiest Country in the World?

By ETIENNE DEFFARGES

According the 2019 Bloomberg Healthiest Country Index, the U.S. ranks 35th out of 169 countries. Even though we are the 11th wealthiest country in the world, we are behind pretty much all developed economies in terms of health. In the Americas, not just Canada (16th) but also Cuba (30th), Chile and Costa Rica (tied for 33rd) rank ahead of us in this Bloomberg study.

To answer this layered question, we need to look at the top ranked countries in the Bloomberg Index: From first to 12th, they are Spain; Italy; Iceland; Japan; Switzerland; Sweden; Australia; Singapore; Norway; Israel; Luxembourg; and France. What are they doing right that the U.S. isn’t? In a nutshell, they embrace half a dozen critical economic and societal traits that are absent in the U.S.:

·     Universal health care

·     Better diet: fresh ingredients and less packaged and processed food

·     Strict regulations limiting opioid prescriptions

·     Lower levels of economic inequality

·     Severe and effective gun control laws

·     Increased attention when driving

When it comes to access to health care, the 34 countries that are ahead of the U.S. in the Bloomberg health rankings all offer universal health care to their people. This means that preventive, primary and acute care is available to 100% of the population. In contrast, 25 – 30 million Americans do not have health care insurance, and an equal number are under insured. For 15 – 18% of our population, financial concerns about how to pay for a visit to the doctor, how to meet high insurance deductibles, or cash payments after insurance take precedence over taking care of their health. Lack of preventive care leads to visits to the emergency rooms for ailments that could have been prevented through regular primary care follow-up, at a very high cost to our health system. Note: We spent $10,700 per capita in health care in 2017, more than three as much as Spain ($3,200) and Italy ($3,400). Many Americans postpone important medical operations for years, until they reach 65 years of age, when they finally qualify for universal health care or Medicare. Lack of prevention and primary care, health interventions postponed, and the constant worry that medical costs might bankrupt one’s family: none of this is conducive to healthy lives.

Continue reading…

Financial Toxicity is Hurting my Cancer Patients

By LEILA ALI-AKBARIAN MD, MPH

As news of Tom Brokaw’s cancer diagnosis spreads, so does his revelation that his cancer treatments cost nearly $10,000 per day. In spite of this devastating diagnosis, Mr. Brokaw is not taking his financial privilege for granted.  He is using his voice to bring attention to the millions of Americans who are unable to afford their cancer treatments.

My patient Phil is among them. At a recent appointment, Phil mentioned that his wife has asked for divorce. When I inquired, he revealed a situation so common in oncology, we have a name for it: Financial Toxicity.  This occurs when the burden of medical costs becomes so high, it worsens health and increases distress.  

Phil, at the age of 53, suffers with the same type of bone cancer as Mr. Brokaw.  Phil had to stop working because of treatments and increasing pain. His wife’s full time job was barely enough to support them. Even with health insurance, the medical bills were mounting. Many plans require co-pays of 20 percent or more of total costs, leading to insurmountable patient debt.  Phil’s wife began to panic about their future and her debt inheritance. In spite of loving her husband, divorce has felt like the only solution to avoiding financial devastation. 

Continue reading…

The Next Frontier: Clinically Driven, Employer-Customized Care

Health systems and employers are bypassing insurers to deliver higher-quality, more affordable care

By MICHAEL J. ALKIRE

Employee health plan premiums are rising along with the total healthcare spending tab, spurring employers to rethink their benefits design strategy. Footing the tab, employers are becoming a more active and forceful driver in managing wellness, seeking healthcare partners that can keep their workforce healthy through affordable, convenient care.

Likewise, as health systems assume accountability for the health of their communities, a market has been born that is ripe for new partnerships between local health systems and national employers in their community to resourcefully and effectively manage wellness and overall healthcare costs. Together, they are bypassing traditional third-party payers to pursue a new type of healthcare financing and delivery model.

While just 3 percent of self-insured employers are contracting directly with health systems today, dodging third parties to redesign employee benefit and care plans is becoming increasingly popular. AdventHealth in Florida announced a partnership with Disney in 2018 to provide health benefits to Disney employees at a lower cost in exchange for taking on some risk, and Henry Ford Health System has a multi-year, risk-based contract with General Motors.

The notion of bypassing payers is attractive for employers, especially on the back of consecutive cost increases they and their employees have swallowed over the last several years. Payers have traditionally offered employers rigid, fee-for-service plans that not only provide little room for customization, but often exacerbate issues with care coordination and lead to suboptimal health outcomes for both employees and their families. Adding to this frustration for employers is the need to manage complex benefits packages and their corresponding administrative burdens.

Continue reading…

Patients Win When Payers and Providers Speak the Same Language

By CECI CONNOLLY

Discouraging headlines remind us daily of the ugly battles between payers and providers. Fighting for their slice of the $3.5 trillion health care pie, these companies often seem to leave the consumer out of the equation.  But it is not the case across the board. Our latest research documents that when doctors and health plans drop their guards, align incentives and focus on the mutual goal of delivering the best possible care, patients win.

For example, when SelectHealth in Utah partnered with obstetricians and refused to pay for medically unnecessary — often  dangerous — early inductions of labor, procedure rates dropped from 28% to zero, leading to shorter labors, fewer C-sections and $2.5 million in annual savings for all. When Kaiser Foundation Health Plan execs collaborated with Permanente doctors around opioid safety, prescriptions for the often-deadly drugs dropped 40%. And, when Security Health Plan in Wisconsin enlisted physicians and surgeons to develop a new outpatient surgery and rehab center, health outcomes improved; patient satisfaction jumped to 98%; and they saved $4.7 million in the first two years.

These productive partnerships occur in multiple communities across the nation as illustrated in in “Accelerating Adoption of Evidence-Based Care: Payer-Provider Partnerships,” a new report by the Alliance of Community Health Plans. With funding from the Patient-Centered Outcomes Research Institute (PCORI), the 18-month project uncovered five best practices in effective collaboration for health plans:

  1. Build consensus and commitment to change;
  2. Create a team that includes the necessary skill sets, perspectives and staff roles;
  3. Customize education, tools and access to specialized knowledge that the audience needs;
  4. Share timely and accurate data and feedback in a culture of transparency, accountability and healthy competition; and
  5. Align financial investments with clinical and patient experience goals.

Continue reading…

Investment State-of-Play in Big Pharma: Bayer’s Eugene Borukhovich Weighs In

By JESSICA DaMASSA, WTF HEALTH

Bayer’s G4A team launched their 2019 program today, so here’s a little help for anyone curious about the state of pharma startup investment and what it takes to land a deal there these days.

I had the chance to pick the brain of Bayer’s Global Head of Digital Health, Eugene Borukhovich, during JP Morgan Healthcare Week and pulled out these three gloriously thought-provoking soundbites from our conversation to give you some insight as to the mindset over at big Bayer.

  • “Digital therapeutics are shining light on the convoluted, complex mess of digital health”

If you’ve wondered what lies ‘beyond the pill’ for Big Pharma, wonder no more. It seems the answer is digital therapeutics. Eugene predicts that “within the next couple of years, ‘digital health’ as a term will disappear,” and calls out organizations like the Digital Therapeutics Alliance for their efforts to set standards around evidence-base and behavior modification so regulators and strategic investors alike can properly evaluate claims made by health tech startups. As time goes on, it looks like efforts to ‘pharma-lize’ the ways startups take their solutions to market will increase, pushing them into more traditional go-to-market pathways that have familiar and comforting guidelines in place. As Eugene says, “Ultimately, what we say in my team, is that it’s about health in a digital world today.” Sounds like that’s true for both the products he’s seeking AND the way pharma is looking to bring them to market… 

  • “These multi-hundred million [dollar] press releases are great to a certain extent, but what happened to the start-up style mentality?”

When asked about Big Tech getting into Big Health, in the end, it seems, Eugene shakes out to be in favor of the ‘Little Guy’ – or, at least, in their approach. Don’t miss his comments about “cockiness in our healthcare industry” and how Big Tech is working around that by partnering up, but the salient point for startups is that big companies still seem very much interested in buddying with smaller businesses. It’s for all the same reasons as before: agility, the ability to iterate quickly, and the opportunity to do so within reasonable budgets. Eugene offered this telling rhetorical musing: “Just because it’s a combination of two big giants…do you need to do $500 million? Or, do you give some…traction, milestone, [etc.]…to prove it, just like a start-up would?”

  • “In large organizations, transformation equals time, and…we don’t have time.”

“To me,” says Eugene, “the biggest challenge is actually landing these inside the organization.” He’s talking about novel health solutions – digital therapeutics or otherwise – after learning from previous G4A cycles. Culture, precedent, and years of market success loom large in big healthcare companies across the ecosystem, which is one reason why innovation inside them is so challenging. Eugene says he’s “a big believer in a small team – even in large organizations – to take something by the cojones, and get shit done, and move it forward, and push the envelope from the bureaucracy and the process.” There’s a sense of urgency to ‘innovate or die’ in the face of the growing competition in the healthcare industry. “Back to this earlier conversation around whether it’s tech giants or other companies,” he adds, “it is a race to the speed of the organization. How quickly we learn and how quickly we make the decisions. Bottom line, that’s it.”

There’s plenty more great insights and trend predictions where these came from, plus the juicy details behind how G4A itself has pivoted this year. Check out the full interview now.

Radiology in India

By SAURABH JHA, MD

What are the challenges of bringing advanced imaging services to India? What motivates an entrepreneur to start build an MRI service? How does the entrepreneur go about building the service? In this episode, I discuss radiology in India with Dr. Harsh Mahajan, Dr. Vidur Mahajan and Dr. Vasantha Venugopal. Dr. Harsh Mahajan is the founder of Mahajan Imaging, a leading radiology practice in New Delhi, and now a pioneer in radiology research in India.

Listen to our conversation on Radiology Firing Line Podcast here.

Saurabh Jha is an associate editor of THCB and host of Radiology Firing Line Podcast of the Journal of American College of Radiology, sponsored by Healthcare Administrative Partner.

Radiologist Entrepreneurs

By SAURABH JHA MD

What motivates the radiologist entrepreneur? In this episode of Radiology Firing Line Podcast, we talk to Kathryn Pearson Peyton MD, chief medical officer of Mammosphere.

Listen to our conversation here.
 
Saurabh Jha is a contributing editor to THCB and host of Radiology Firing Line Podcast of the Journal of American College of Radiology, sponsored by Healthcare Administrative Partner.

Registration

Forgotten Password?