From Volume to Value · actionable findings on diagnostic industry markets, related regulatory...
Transcript of From Volume to Value · actionable findings on diagnostic industry markets, related regulatory...
From Volume to Value:
Laboratory Industry
Strategic Outlook
California Clinical Laboratory Association
Annual Conference
November 7, 2013
G2 Intelligence © 2012 Kennedy Information, LLC
About G2 Intelligence • Advancing the Business of Diagnostic Medicine
• Our mission is to deliver relevant, meaningful, and
actionable findings on diagnostic industry markets,
related regulatory changes, and laboratory operations.
• We’ve covered and reported on the diagnostic industry
for over 30 years.
• We deliver topical and analytical periodicals, proprietary
research studies, and custom advisory services, and
through live and virtual events, facilitate industry
meetings and information exchanges.
G2 Intelligence © 2012 Kennedy Information, LLC
G2 Intelligence © 2012 Kennedy Information, LLC
A Critical Juncture
• Providers under pressure
• Value-based case for pathology and labs
– Optimally informed care decisions
• Challenges—and opportunities—abound
G2 Intelligence © 2012 Kennedy Information, LLC
Overview
• The big shift: From volume to value
• High-value, high-growth: Molecular
diagnostics
• Sneak peek: G2’s latest industry
benchmarks and market forecasts
G2 Intelligence © 2012 Kennedy Information, LLC
Overview
• The big shift: From volume to value
• High-value, high-growth: Molecular
diagnostics
• Sneak preview: Industry benchmarks and
market forecasts
G2 Intelligence © 2012 Kennedy Information, LLC
Volume to Value: Full Steam Ahead
G2 Intelligence © 2012 Kennedy Information, LLC
Hospitals and Health Systems Facing
Serious Threats
G2 Intelligence © 2012 Kennedy Information, LLC
Desperately Seeking New Delivery Models
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Bundled
Payment Models
Coming to
Cancer Care
Source:
Lee Newcomer
Health Affairs, April 2012
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New (Value) Math:
Profit = Someone Else’s Revenue
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Decision Time: Is Your Lab a Savings
Generator or a Source of Savings?
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Care Decision-Making:
A Problematic Process
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Key Source of Poor Performance?
Information Overload
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What is the Return on Decision (ROD)?
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The Value of Pathology and Lab Medicine:
Optimally Informing Care Decisions
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Claim Your Rightful Role as
The Decision Expert
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So What’s the Difference?
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Can Dx-Informing Services Add
Significant Value? Let’s See…
G2 Intelligence © 2012 Kennedy Information, LLC
G2 Intelligence © 2012 Kennedy Information, LLC
G2 Prometheus Study: Key Findings
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Examples of Value Generation
G2 Intelligence © 2012 Kennedy Information, LLC
Overview
• The big shift: From volume to value
• High-value, high-growth: Molecular
diagnostics
• Sneak preview: Industry benchmarks and
market forecasts
G2 Intelligence © 2012 Kennedy Information, LLC
Molecular Diagnostics:
More Than Just Another Test
• One sample, potential for many tests
– Versatile: sample type, size
• Examples of cost savings
– Decrease hospital stay
– Establish duration of therapy
– Discontinue ineffective therapy
– Ability to identify high-risk patients
G2 Intelligence © 2012 Kennedy Information, LLC
Molecular Diagnostics:
More Than Just Another Test • Labs relying on own send-out data as primary input for deciding
which tests to develop/bring in-house
– Time vs. resources
• Calculating send-out charges and startup costs
– What is cost per reportable result?
• What factors determine…
– Reagent costs -Supply costs
– Labor costs -Quality control/assurance costs
– Equipment costs -Standard costs
– Supply costs
G2 Intelligence © 2012 Kennedy Information, LLC
MDx Innovation: A Virtuous Circle Research
Identifies molecular marker (mutation, etc.) and clinical implications
Test Development With demand comes need to improve test effectiveness and efficiency
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• New tests and
technologies
• Personalized medicine
• Demand from specialists,
patients
• Influx of newly insured
• Value-based healthcare
• Aging population
• Reimbursement cuts
• Payer utilization
management, coverage
denials
• Lower patient healthcare
utilization due to
unemployment, high costs
• Physician education needs
G2 Intelligence © 2012 Kennedy Information, LLC 28
I am confident I can… PCP Cardiologist Oncologist
Explain test results to my patients 46% 61% ▲ P 84% ▲ P, C
Identify appropriate patients for testing 45% 57% ▲ P 85% ▲ P, C
Understand and interpret the test results 42% 52% ▲ P 83% ▲ P, C
Choose the right test 35% 50% ▲ P 83% ▲ P, C
Choose which lab to send tests to 30% 35% 56% ▲ P, C
Determine if the test is covered by insurance 24% 30% 39% ▲ P, C
Determine the right insurance codes 23% 25% 34% ▲ P, C
▲ P = Significantly higher than Primary Care. ▲ P, C = Significantly higher than Primary Care and Cardiology Source: Coamey, Jerry. “MDx and MDs: Is a dose of knowledge the prescription for adoption.” CAHG Physicians Landmark Study. Page 3.
Many doctors have little or no formal training in genetics and frequently order the wrong test, misinterpret results, or fail to refer the patient to a genetic counselor.
G2 Intelligence © 2012 Kennedy Information, LLC
G2 Intelligence © 2012 Kennedy Information, LLC
G2 Intelligence © 2012 Kennedy Information, LLC
• Robust modeling
• Integrates diverse research
sources and estimation
methods
• “Triangulation” approach offsets
inherent biases and flaws
• Sources include: primary research
such as surveys of laboratories, modeling
based on disease incidence and testing
guidelines, secondary research of the in vitro
diagnostics industry, and top-down estimates
from Medicare sources
G2’s Approach to Estimating the Market
G2 Intelligence © 2012 Kennedy Information, LLC
• G2 estimates the U.S.
molecular diagnostics market at
$7.8 billion in 2013
• Growth of 4% from 2012
• Forecasting 9% market growth
(2013-2014)
• Forecasting CAGR of 10%
(2013-2015)
G2 Intelligence © 2012 Kennedy Information, LLC
G2 Intelligence © 2012 Kennedy Information, LLC
G2 Intelligence © 2012 Kennedy Information, LLC
Sector Sizes (2013)
G2 Intelligence © 2012 Kennedy Information, LLC
G2 Intelligence © 2012 Kennedy Information, LLC
Payer Value: Attractive in a value-based purchasing world? Assay Technology: Moving toward “game-changing” technology? Therapeutics: Impacting prescribing decisions? Population: Growing patient population?
G2 Intelligence © 2012 Kennedy Information, LLC
• Integration with other areas of the laboratory while continuing to play
a complementary and/or replacement role?
• Progress across full range of disease testing:
– Diagnostics, screening, therapy response, risk/relapse prediction
• Specific tests (particular disorders) broader assays (variants)
• Focus on defining clinical significance of findings
– Effects of single gene on common diseases generally small
– Labs clarify how they will assist physicians with the complex
interpretation of clinical data generated • What do genotypes mean? Will pharmacist be involved in final recommendation to physician?
• Moving to a point-of-care orientation
• Next-generation sequencing
MDx 2020
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Game Changers:
Next-Generation Sequencing
© 2013 Kennedy Information, LLC
G2 Intelligence © 2012 Kennedy Information, LLC
Game Changers:
Next-Generation Sequencing
G2 Intelligence © 2012 Kennedy Information, LLC
Game Changers:
Next-Generation Sequencing
• Early applications: Multigene panels to address specific
medical situations where clinical utility has been more
adequately substantiated
– Prenatal screening, inherited-disorder carrier screening, id of rare
genetic conditions involving defined genes, tumor characterization to
guide targeted therapeutic choices, panels for identifying drug
metabolism status
• Multigene panels create foundation for more comprehensive
whole-genome testing
• Expansion of available phenotype–genotype correlative data
will accelerate application
• Platform manufacturers, software developers designing
applications to meet rigor, standards of clinical diagnostics
G2 Intelligence © 2012 Kennedy Information, LLC
G2 Intelligence © 2012 Kennedy Information, LLC
Game Changers: Value-Based Payment
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PBM PGx Options CVS Caremark/ Generation Health
Express Scripts/Medco
Offers companion MDx
Lab network with testing services
Collaborations on research/pilot studies (e.g., clinical utility)
• Funding research/pilot studies • Establishing lab networks • Facilitating “turn-key” testing through contracts with Genetic Benefit Managers • Educating clinicians, payers, and patients • Key access point for information: clinical, economic, and educational • Linked to patient treatment adherence; potential for expanded models of liaison between physician, hospital, lab, and the patient
Game Changers: PBMs and PGx
G2 Intelligence © 2012 Kennedy Information, LLC
Overview
• The big shift: From volume to value
• High-value, high-growth: Molecular
diagnostics
• Sneak preview: Industry benchmarks
and market forecasts
– U.S. Clinical Laboratory and Pathology
Testing 2013-2015: Market Analysis, Trends,
and Forecasts (coming soon from G2)
G2 Intelligence © 2012 Kennedy Information, LLC
What is your lab doing in response
to historic changes in the way that
lab services are delivered, valued,
and reimbursed?
• The big shift: From volume to value
• High-value, high-growth: Molecular
diagnostics
• Sneak preview: Industry benchmarks and
market forecasts
Thank you