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Trends and Opportunities
MassMEDIC Meeting April 25, 2014 Sharad Rastogi
Healthcare Informatics and MedTech Innovation
PwC
The unsustainable trajectory of the healthcare market requires changes in how information is utilized With increased cost trends and an aging
population, U.S. health spend is expected to double over the next 8 years to $4.6 trillion1
Per capita health expenditures will nearly double
as consumers age2 and in 2020, 17% of the U.S. population is expected to be >65
$2,442
$1,702
$2,503
$5,542
$9,736
$-
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
0
20
40
60
80
100
120
Under 5years
5 - 17years
18 - 44years
45 - 64years
65 yearsand over
U.S
. P
op
ula
tio
n
( m
illi
on
s)
TotalPopulation(in millions)
Per CapitaHealthExpenditure
Sources: 1) CMS Nat’l Health Expenditure Forecast 2010-2020; 2) 2009 Health and Human Services Medical Expenditure Panel Survey; 3) Centers for Disease Control and Prevention. Rising Health Care Costs Are Unsustainable. April 2011 4)Forrester: North American Technographics Customer Experience Online Survey: 4Q2011(US)
State and federal governments spend 1,000 times more
money to treat disease than to prevent it
Healthcare payers continue to focus on improving outcomes and lowering costs…
Non-compliance with prescription medication costs
an estimated $290 billion per year
Chronic disease treatment accounts for over 75% of national health expenditures
Over 30% of healthcare spend is wasted
through inefficiencies, fraud, and other errors
…but are not meeting customer expectations
Health plans rank the lowest industry in
customer satisfaction3
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Health Plans
Retailers
Very poor Excellent Good Okay Poor
US ranks 46th among 48 countries in healthcare efficiency
2
PwC
The consumer revolution has transformed several industries and is starting to transform the health industry
Industry Past (industry centric) Present (consumer centric)
Banking Bank Teller • bankers’ hours • branch only
ATMs, Mobile Banking • available 24/7 • Location-agnostic
Travel
Travel Agency • limited hours • limited locations • annual updates
Online Booking • on demand booking • location agnostic • real time pricing
Retail
Standardized marketing and inventory • national campaigns • Sunday circulars
Customized • website, location-
specific • data-driven targeted
promotions
Health
Physician Office, Hospitals, Pharmacy • set hours & locations • standardized
treatment plans • queue for care • myHealth
Personalization • Personal connected
health • Individualized
services, treatments and drug protocols
Consumer centricity requires a better understanding of customers (Patients, Payers, & Providers) and their behaviors. This changes the dynamics of the relationship and often empowers consumers to take greater ownership of decisions
1980’s-2010’s
Future Shift
3
April 2014
PwC
50% of mobile phone and tablet users will
have downloaded mHealth apps within five years - Mobile Health Trends and Figures 2013-2017
$43 Billion potential annual consumer
market for remote/mobile monitoring devices –
HRI Healthcare Unwired
Diet Physical Activity Stress Medication Adherence
New sources of health and wellness data that can be collected and monitored continuously in ‘real-life’ settings
Personal sensing devices and apps
Consumer adoption
Sleep Glucose
New data are being generated and made available to enable more holistic understanding of consumer health and behavior
This new data provides valuable insights about consumers outside of clinical settings and can be integrated to enable
P4 Medicine (Predictive, Preventive, Personalized, Participatory)
4
April 2014
PwC
Winning with Informatics requires a shift from reporting to prediction – Life Sciences lags other industries
Co
mp
lex
ity
High Prediction & Optimization
What might happen?
Monitoring What’s
happening now?
Analysis Why did it happen?
Reporting What
happened?
Business value
High
Industrial Products
Consumer Products
Insurance
Asset Mgmt
H.C. Provider
H.C. Payer
Internet
Retail
Banking
Utilities
Life Sciences
Entertain- ment
Media
Telecom
Leadership
Low
Life Sciences Industry Analytics Maturity
Typical Questions Answered by Life Sciences Today…
• Are we optimizing investments effectively across channels?
• What are my sales trends and trend influencers?
• What expenses can be reduced while maintaining revenue?
• How do I better manage wholesaler inventory?
• What programs / offers are being used by HCPs and patients?
Leaders from Other Industries are using Analytics
Sample Questions Answered Today…
• What is the optimized marketing spend that maximize customer engagement?
• What is my predicted aggregate performance six months out?
• What trends in the data indicate suspect activities and risks based on fraud or regulatory scrutiny?
Most LS companies conduct historical reporting and analysis focused on cost containment and operational efficiency and
rely on vendors to generate advanced analytics insights
• A top consumer electronics retailer can predict in-store sales with 95% accuracy six-months in advance
• A global CPG company can predict and monitor sales at the individual store level of their retailers worldwide
• A top casino operator runs frequent simulations on its gaming floor to maximize slot and table game revenue
5
April 2014
PwC
The value of a device is no longer solely in the product itself, it is in the information it produces and services it enables
Integrated services & business models that address clinician & consumer needs are becoming increasingly important
Medtech companies have a wealth of untapped data and will play a major role in customer centric strategies
New entrants are staking their claim (e.g., Google, Verizon, etc.) and MedTech must adapt its approach to compete
Medtech companies are looking to open innovation as a key approach to drive future growth
Medtech lags behind other industries for customer centric strategies and social, mobile, analytic, and cloud technologies
2
3
4
5
6
1
The market is demanding a different focus and approach to MedTech innovation
New Innovation
Focus
New Approaches
to Innovation
6
April 2014
PwC
To address these trends, Medtech executives anticipate a broader and more balanced mix of innovation
Source: PwC Medtech Innovation Survey 2013
Traditionally MedTech has been focused on incremental innovation of products and technology; there is a shift to new types of innovation and a recognition that there is a need for more radical and breakthrough innovation initiatives
7
April 2014
PwC
We are seeing a growth of data sets that expand beyond payer data to more provider and consumer focused data
“Big Data” in healthcare includes enabling connectivity between ever-increasing data sources. Many stakeholders are focusing on integrating provider and payer data and exploring the potential of consumer data to improve health care decision making.
Physicians
EMRs, Practice Management
Systems, ePrescribing
Hospitals
EMRs, Revenue Cycle Systems,
Ancillary Systems
Laboratories
Lab results
Health Information Exchanges
Electronic Health Records
Provider
Financial
Medical claims, Pharmacy claims,
Premiums
Medical Mgmt
Utilization Mgmt, Case Mgmt, Disease
Mgmt, Drug Adherence
Performance Measures
Hospital, Provider, Plan, Pharma
Benchmarks
National, Regional, Industry
Payer
Relationships
Provider-Patient, Family, Friends, Thought Leaders
Self Reported
Social Media, Web, Mobile, Health Risk
Assessments
Behaviors
Demographics, market segments, socio-economic
Experience
Customer Satisfaction,
Symptom relief
Consumer
8
April 2014
PwC
Informatics-enabled business value can be realized across the life sciences enterprise
R&D
Clinical Trial Recruitment and Cycle Time Reduction
Comparative Effectiveness Research
Real World Evidence Personalized Medicine
Sales & Marketing
Promotional Effectiveness
Outcome-based Reimbursement Models
Pricing Optimization Customer / Product
Profitability
Supply Chain
Supply Chain Accountability & Product Security
Inventory Planning and Control
Production Optimization Forecasting
Effectiveness
Finance
Working Capital Improvements
SG&A Reporting
Margin Improvements
Cash Visibility
9
April 2014
PwC
Leading healthcare companies are already employing Informatics in a range of applications
Kaiser Permanente1 Blue Shield of California2
• Implemented a new integrated computer system called HealthConnect
• System’s goal is to drive data exchange across all medical facilities and promote the use of EHRs
• Results
- Improved outcomes in cardiovascular disease
- Achieved an estimated $1 B in savings from reduced office visits and lab tests
• Partnered with NantHealth to develop a new integrated technology system
• System’s goal is to help doctors, hospitals, and health plans to deliver evidence-based care that is more coordinated and personalized
• Their goals: improve healthcare delivery and patient outcomes, especially regarding prevention and care coordination
AstraZeneca3
• Partnered with WellPoint’s data and analytics subsidiary, HealthCore
• Goal is to conduct real-world studies to determine the most effective and economical treatments for some chronic illnesses and common diseases
• AstraZeneca will use HealthCore data, together with its own clinical-trial data, to guide R&D investment decisions
Medtronic4
• Partnered with Aetna on Heart Failure and Diabetes
• Goal is to understand how device data and implantables could be used to assess how chronically ill patients’ fluid retention could predict worsening heart failure
• Partnership is also looking to use claim data to identify good candidates for insulin pumps
Payer Provider Pharma MedTech
Sources: 1) Kaiser Permanente: HealthConnect® Electronic Health Record; 2) BCBS CA: NantHealth and Blue Shield of CA form Proactive Healthcare Collaborative to Coordinate Personated Care; 3) AstraZeneca: AstraZeneca and HealthCore Announce Real-World Evidence Data Collaboration in the US; 4) MDDI Online: Medtronic Teams up With Aetna On HF and Diabetes. Good Idea or Bad?
10
April 2014
PwC
MedTech companies should better leverage their information assets to establish competitive advantage and address unmet needs The traditional healthcare business model has been influenced by new trends …
… that leading to innovation taking shape around digitizing and embedding technology in medical devices.
Better usage of product IDs and supply chain data to improve operations and enhance services
Wireless devices and mobile health technology
SMART devices that collect patient and device usage data
Growing Expectations for “Big Data” There’s a new culture of creating and sharing data to prove efficacy, identify clusters, standardize practice, streamline work flow, and increase efficiency along entire HC delivery process
Medical and Pharma Error Reduction Push is for technology that informs decisions, catches adverse events before they occur, monitors that patient gets appropriate treatment, and reduces human and infrastructure errors
Disease Management and Health Outcomes Emphasis being placed on improving health outcomes by helping patients manage their disease and adhere to treatment regimens, personalizing their care, and diagnosing earlier
Healthcare Cost Containment To control costs, tech that will move care from HC facilities to homes, prevent hospitalizations, improve hospital efficiency, reduce LOS, and help with early diagnosis will be valued
Data collection, storage, mining, and analysis tools for operational and clinical data
SMART devices that can communicate with other HIT
Early, rapid, and personalized diagnostic tools
Tools, programs, and devices that encourage and support medication adherence and treatment regimen compliance
Patients Demanding Transparency and Empowerment Push toward information democracy and direct-to-consumer marketing is spreading into care and driving consumer-led action
dd
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April 2014
PwC
MedTech companies will need a new organizational mindset to embrace change and enhance informatics capabilities
Companies will need to invest in the technology and people to make informatics a success
• Data storage, infrastructure, Analytics, and improved information sharing
• Training and hiring Data Scientists who know and understand your business
Companies will need willingness to take on risk and try new business models that extend beyond the product
• Taking on more risk in the value chain to own a disease (Diagnostics, treatment, and outcomes)
• Owning the delivery of drug or device diagnostics and analytics from shipment to dosing
Companies should create an environment that encourages curiosity, fast failure, and innovation
• Enable a culture of calculated risk taking to develop products faster
• Learn and adapt to define and tests products internally and in the marketplace
12
April 2014
PwC
PwC: Mining Healthcare Data Video
13
April 2014
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PricewaterhouseCoopers LLP 125 High St Boston, MA 02110; USA T: +1 617.530.4726 sharad.rastogi@us.pwc.com
Sharad Rastogi Principal Advisory