2011 0406 making money by creating value in healthcare webinar

Copyright © 2011 wmdo.org

The medical device industry’s most trusted source for professional online training.

MAKING MONEY BY

CREATING VALUE IN HEALTHCARE

-OR –

WHY INDUSTRY WILL REVOLUTIONIZE HEALTHCARE

Wednesday, April 6h, 2011

A WMDO informational webinar

Presented by KARIN ROOF, M.B.A., M.S.

Principal, MedLinX MedTech Consulting, LLC

The webinar will begin in a few moments. Please wait.


Healthcare is Screaming for Change

Sources: http://www.cms.gov/NationalHealthExpendData/02_NationalHealthAccountsHistorical.asp; www.santarosaconsulting.com/SantaRosaTeamBlog/

post/2009/12/11/Health-Care-Delivery-In-The-United-States-e28093-Feverish-Pace-or-Just-Suffering-From-Fever.aspx

Where Will Effective Solutions Come From?

http://www.cms.gov/NationalHealthExpendData/02_NationalHealthAccountsHistorical.asp


Who Will Fix It?


Outline for Today

Making Money by Creating

Value in Healthcare

Value in Healthcare

The Need for Solutions

Technology & Market Trends

Focus Areas: Chronic Disease

& Prevention

Why Industry?


Source: New York, 23 April 2009. http://www.ey.com/GL/en/Newsroom/News-releases/Media---News-Release---Failing-to-demonstrate-value-of-

innovation-is-top-risk-facing-life-sciences-sector--according-to-Ernst---Young

Value in Healthcare

TECHNOLOGY & MARKET TRENDS3

THE NEED FOR SOLUTIONS2

VALUE IN HEALTHCARE1

KEY AREAS FOR FOCUS4

WHY INDUSTRY?5

http://www.ey.com/GL/en/Newsroom/News-releases/Media---News-Release---Failing-to-demonstrate-value-of-innovation-is-top-risk-facing-life-sciences-sector--according-to-Ernst---Young











































Used to be…

See a

Need

Develop a

Product





WHY INDUSTRY?5


Creating Value in

Healthcare is

Complicated… Complex

Clinical

Needs

Sophisticated

Technologies

Regulatory

Environment

Overwhelmed

Customers

HealthCare

Reform

Cost

New

Comparative

Effectiveness

Research

CriteriaQuality -

Technical &

Clinical





WHY INDUSTRY?5


Unique Requirements: Clinical / Regulatory





WHY INDUSTRY?5


What is Value?

In healthcare lingo, it is often referred to as

Cost / Benefit





WHY INDUSTRY?5


Key Problems in the U.S.

C-O-S-T The four letter word in U.S. Healthcare.

Pharma & MedTech Tech are NOT the direct culprits

Inferior results, in spite of high spending & high tech

Large % of the population in uninsured, making access to

healthcare problematic





WHY INDUSTRY?5


Sources: http://stats.oecd.org/Index.aspx?DataSetCode=HEALTH ; http://en.wikipedia.org/wiki/Health_care_in_the_United_States.

Growth in US Healthcare Expenses is Unsustainable





WHY INDUSTRY?5

In 2009, the US spent $2.5 trillion on health care, representing 17.3% of the GDP, up from 16.2% in 2008.

http://en.wikipedia.org/wiki/File:Health_costs_USA_GDP.gif


It’s Healthcare Delivery, not Technology, That Drives Cost…

$-

$100

$200

$300

$400

$500

$600

$700

$800

2008 U.S. Health Expenditure: $2.3 trillion ($billions)

American Well: The Doctor Will E-See You Now CASES | ELIE OFEK, RON LAUFER | MAR 30, 2010.





WHY INDUSTRY?5


Healthcare Delivery vs. Drugs & MedTech

$-

$500

$1,000

$1,500

$2,000

$2,500

HC Delivery Drugs & MedTech

2008 U.S. Health Expenditure: $2.3 trillion ($billions)

13% of Total

87% of Total

Technology

represents

3% of Total





WHY INDUSTRY?5

American Well: The Doctor Will E-See You Now CASES | ELIE OFEK, RON LAUFER | MAR 30, 2010.


Spending Alone Does not Increase Value





WHY INDUSTRY?5

More spending

does not equal

more quality


How Did We Get Here?





WHY INDUSTRY?5

http://www.google.com/imgres?imgurl=http://kantan-net.main.jp/worldmap/world_map_gif.gif&imgrefurl=http://www.trendmixer.com/world-map&h=1208&w=2408&sz=186&tbnid=LJ9GPgE-k4r5FM:&tbnh=75&tbnw=150&prev=/images?q=world+map+images&zoom=1&q=world+map+images&hl=en&usg=__yjSEbUb2ZVzVWV8KWm7x9i09Bzs=&sa=X&ei=aC9-TcD5BYTnrAGq253nBQ&sqi=2&ved=0CCwQ9QEwAg



4 Models for How Healthcare is Paid For

Source: T.R. Reid, The Healing of America: A Global Quest for Better, Cheaper, and Fairer Health Care. 2009, The Penguin Press.





WHY INDUSTRY?5

In the U.S.: A mixed bag… but

funding has essentially provided

unconstrained resources for

healthcare, pharma & medtech

CONSUMER PAYS Out-of-Pocket

Patient pays for care. (Poorest

countries, like Cambodia, rural India.)

Socialized Medicine

Healthcare financed & provided by gov’t,

through tax payments. No medical bills;

gov’t is sole payor. (Great Britain,

Scandinavia, Italy, Spain, U.S. VA

System.)

Private Health Insurance

Plans funded by employers and

employees through payroll deductions,

but cover everyone. (Germany, France,

Belgium, Switzerland, Japan, Latin

America)

National Health Insurance

A gov’t payer that citizens pay into, with

private providers. (Canada.)


The U.S. Healthcare Payment System: Fragmented





WHY INDUSTRY?5

Working < 65 – Private Health Insurance

Private health insurance plans funded by

employers and employees through payroll

deductions. (Like Europe, but the system doesn’t

cover all.)

Military Personnel, V.A., or Native

Americans – Socialized Medicine

Healthcare financed & provided by the

gov’t, through tax payments. No medical

bills; gov’t is sole payer. (Like UK)

>65 Retired – Medicare “National Health

Insurance”

Gov’t payer that citizens pay into, with private

providers. (Like Canada)

45 million uninsured Americans - Out-of-

Pocket (16%)

Patient pays for care. (Poorest countries, like

Cambodia or rural India)

Source: T.R. Reid, The Healing of America: A Global Quest for Better, Cheaper, and Fairer Health Care. 2009, The Penguin Press.


Key Trends are Driving Future Direction





WHY INDUSTRY?5

U.S. Healthcare Reform

Comparative Effectiveness Research

Health Information Technology

Consumer Driven Demand

Shift in Innovation to Emerging Markets


Individual mandate: everyone

must be insured.

2014: Insurance “exchanges”

(MA, OR models).

More customers, more restrictions

No recission, denying pre-existing

conditions, lifetime limits, and

limited rate increases

Better drug benefits; Less to Medicare

Advantage

Ounce of Prevention – no out-of-pocket

LTC & coordination between Medicare &

Medicaid

To “Accountable Care”

and Healthiness

Healthcare Reform in the U.S.: What it Means

Source: LANDMARK, The Inside Story of America’s New Health-Care Law and What It Means for Us All, The Washington Post, 2010.





WHY INDUSTRY?5

Expand

coverage

Insurers

Medicare /

Medicaid

changes

Change

Behavior


Taxes

Higher Medicare payroll tax: 1.45 2.35% for >$200k

New Medicare tax on investment income 3.8%

New tax on “Cadillac” plans

Penalties & fees

For employers not providing health insurance

Pharma, med device, and insurance co. fees

Spending Cuts

Eliminate excess Medicare

Advantage plans

Slow increases in Medicare

payment rates

Paying For It: Proposed $938 billion over 10 years

Source: LANDMARK, The Inside Story of America’s New Health-Care Law and What It Means for Us All, The Washington Post, 2010.





WHY INDUSTRY?5


Comparative Effectiveness Research (CER)

What

Provide evidence-based data to inform decision-making for patients, providers,

and payers

• Compares benefits and risks of two or more therapies

• Prioritizes treatments for review with high cost and concerns about

evidence, value & overutilization

Why

More value for health care dollar

• U.S. has more spending than any other country – but poorer outcomes

• Improve current spending – and slow spending growth

When & How

Multi-year, multi-billion dollar effort in U.S.

• Progressive expansion of CER framework expected to link

reimbursement to value evidence

• CER likely to evolve over 3-7 year timeframe to increase standards

WhereIn place & expanding around the world (UK, FR, Australia, Brazil, U.S.)

(Considered in Japan, China)

Source: Kenneth Stein address, LifeScience Alley Annual Conference, Dec. 8th 2010.





WHY INDUSTRY?5


Initial National Priorities for CER

Source: Initial Priorities for Comparative Effectiveness Research, IOM, 2009. http://books.nap.edu/openbook.php?record_id=12648&page=100





WHY INDUSTRY?5

http://books.nap.edu/openbook.php?record_id=12648&page=100


The U.S. is Implementing Health Information Technology (HIT)





WHY INDUSTRY?5

HITECH

Policies 2011 Meaningful

Use Criteria

(Capture/Share

data) 2013 Meaningful

Use Criteria

(Advanced care

process with

decision support)

2015 Meaningful

Use Criteria

(Improved

Outcomes)

Mean

ing

ful

Use C

rite

ria

HIT-Enabled Health ReformAchieving Meaningful Use

2009 2011 2013 2015

HIT-Enabled Health Reform


Where is payment for Healthcare going?





WHY INDUSTRY?5

CONSUMERS

PAY

High deductible insurance

plans

Developing nations without

insurance systems


Where Is MedTech Innovation Going? Shifting to Emerging Markets





WHY INDUSTRY?5




The race for global leadership - assessment of nine countries’ capacity and capability for medical technology innovation: Brazil, China, France, Germany, India, Israel, Japan, United Kingdom, U.S.

Key findings:

The medtech innovation ecosystem, long centered in the US, is moving offshore.

US consumers aren’t always the first to benefit from new medical technology and could eventually be last.

The nature of innovation is changing as developing nations become the leading markets for smaller, faster, more affordable devices that enable delivery of care anywhere at lower cost.

Source: http://www.pwc.com/us/en/health-industries/health-research-institute/innovation-scorecard/index.jhtml

Price Waterhouse Cooper’s

Medical Technology Innovation Scorecard





WHY INDUSTRY?5


PWC Innovation Scorecard: U.S. vs. China

Source: http://www.pwc.com/us/en/health-industries/health-research-institute/innovation-scorecard/index.jhtml





WHY INDUSTRY?5

5.55.5

http://www.pwc.com/us/en/health-industries/health-research-institute/innovation-scorecard/index.jhtml










Two Hot Focus Areas





WHY INDUSTRY?5

Chronic Disease Management

Prevention

http://www.att.com/iphone


Where is the $? What can Technology Impact?

Source: An Unhealthy America: The Economic Burden of Chronic Disease. Milken Institute, Oct. 2007.

Chronic Disease Burden*:

• > 100 million Americans

have Diabetes, Kidney

Disease, Hypertension,

and/or Cardiovascular

Disease

• 2 of 3 Americans are

overweight; 1 in 5 is Obese

• Chronic diseases account

for 96% of Medicare

Spending

• Complications from chronic

disease account for ~75%

of US healthcare spending!





WHY INDUSTRY?5


Chronic Disease Management Example

Expensive chronic disease

with repetitive hospital visits

Management metrics can prevent

hospitalizations and increase Quality

of Life

Congestive Heart Failure

1 in 5 Americans >40 will develop

Heart Failure





WHY INDUSTRY?5


Prevention is another Hot New Area in Healthcare





WHY INDUSTRY?5


Why Industry? Innovation is the Key to Success

Money is no longer an unlimited resource in healthcare.

Reducing the cost of healthcare in all markets, but especially

uninsured and emerging markets, is key.

Cost Effectiveness Research will drive innovation that is

VALUABLE in terms of Benefit / Cost.

Innovation will migrate to lower-cost, efficient solutions that utilize

wireless and internet technologies.

Industry, not government, is capable of innovating market-

based solutions that creatively satisfy stakeholder needs.





WHY INDUSTRY?5


Example: Wireless Technology

Source: http://www.westwirelesshealth.org





WHY INDUSTRY?5

QualCom’s

http://www.westwirelesshealth.org/


Objective for Industry


Outline for Today

Making Money by Creating

Value in Healthcare

Conclusion – THANK YOU

Value in Healthcare

The Need for Solutions

Technology & Market Trends

Focus Areas: Chronic Disease

& Prevention

Why Industry?


Questions & Answers

Please type your question in the chat box located to the lower left of your screen.


Due to time restrictions, we can not guarantee an answer to every question during this session.

Please note that many questions will be answered by following the more extensive courses at WMDO.

Thank you for your comprehension.


Creating Value in Healthcare


WMDO has created especially for medical device professionals the online

course: “Creating Value in Healthcare course” to get you up and on the right

track now.

This course is designed to orient learners to the most fundamental sources of

value in healthcare. It provides high level context on healthcare customers /

stakeholders and the care continuum. Understanding at this high level is

intended to enable industry to maximize the value their products/services

provide, and hence provide the basis for solid industry positioning for a

profitable long-term business model. By briefly examining examples of

companies who have succeeded and failed in creating value, it is hoped that

learners will prevent making similar mistakes themselves.

Be sure to check out the online course:

www.wmdo.org

Available now at:

2011 0406 making money by creating value in healthcare webinar

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