west health diabetesmine summit 2013_closing remarks

CONFIDENTIAL – Do not reproduce or distributeCONFIDENTIAL – Do not reproduce or distribute

Moving Forward: Outlook on the Innovation-Cost Reduction Equation

Dr. Joseph M. Smith, MD, Ph.D, FACC

CONFIDENTIAL – Do not reproduce or distribute

Why we’re here


“Then, as the Baby Boomers start to retire and health care costs continue to rise, the situation will get even worse. By 2025, the amount of taxes we currently pay

will only be enough to finance our health care programs, Social Security, and the interest we owe on our

debt. That’s it. Every other national priority – education, transportation, even national security – will have to be

paid for with borrowed money.”

- Barack Obama, president of the United States


Costs are rising faster than income


Gary and Mary West Entrepreneurs and philanthropists with a commitment to

creating a new ecosystem to lower health care costs through technology and innovation.

As a hospital administrator in the 1970’s, Gary witnessed sharp rises in health care costs:

• Average cost of a one-day hospital stay in mid-1970’s: $100

• Average cost of a one-day hospital stay in 2011:

$3,9491

Started West Corporation, one of the largest customer relationship management providers in the world, and grew it to more than 35,000 employees.

Through this experience they realized they could control the business and market they were in, but they couldn’t control rising health care costs which were negatively impacting their employees’ lives.

Lowering health care costs became one of the key initiative areas of the Gary and Mary West Foundation.

1 International Federation of Health Plans, 2011


Solely funded by pioneering philanthropists Gary and Mary West, it consists of four entities:

an independent, 501(c)(3) non-profit medical research organization

an independent, 501(c)(3) non-profit nonpartisan organization

a $100 million fund providing capital to mission-aligned companies

providing a portfolio of services to mission-aligned companies


Is technology the answer?

Most analysts agree that the most important factor contributing to the growth of spending for health care in recent decades has been the emergence, adoption, and widespread diffusion of new medical technologies and services.

Source: Congressional Budget Office, Technological Change and the Growth of Health Care Spending (January 2008).

http://www.cbo.gov/doc.cfm?index=8947


State of Affairs

Total costs of diagnosed diabetes: $245 billion in 2012

Diabetes affects 26 million Americans

5th leading cause of death in America

$83 billion in hospital fees (23% of hospital spending)

High costs to Medicare and Medicaid

Sources: Kaiser, Health Costs, Health Disparities, Public HealthAug 2010; American Diabetes Association, 2013; Agency for Healthcare Research and Quality


Source: American Diabetes Association (2012), American Heart Association (2013), Journal of the American Society of Nephrology (2013)

$192 Billion

$78 Billion

$176 Billion

In Context …


Source: American Diabetes Association (2012), American Heart Association (2013), Journal of the American Society of Nephrology (2013)

Direct Cost of CM Disease is Increasing Percentage of Chronic Disease Costs


11

From the hospital’s perspective

More than 40% of all health care expenditures attributed to diabetes come from higher rates of hospital admission and longer average lengths of stay per admission.

This is the single largest contributor to the attributed medical cost of diabetes.

Of the projected $475 billion in national expenditures for hospital inpatient care (including both facility and professional services costs), approximately $124 billion (or 26%) is incurred by people who have diabetes

$76 billion is directly attributed to their diabetes.


Highest cost is in the chronically sick patients with non-preventable hospitalizations - 90% (JAMA, 2013)

Type-2 diabetics have 2.3x longer hospitalization (AHA, 2013)

71% of all discharges in 2012 have the top 5 CMS chronic condition dyads

and triads* coded in record (CDC, 2013)

* Dyads and triads are pairs and triplets of chronic disease occurring together in a single patient regardless of reason for admission

From the hospital’s perspective


Three opportunities for innovation and cost savings:

How do we prevent people from becoming diabetic?

How do we prevent the complications of diabetes progression?

How can me manage those complications more efficiently and effectively?


Takeaways


Welldoc, the first FDA-cleared prescription software


The Artificial Pancreas:Easily conceived and amazingly

challenging to bring to market.

Source: Wikipedia

Barker, Mary E.

Do you want this to look like the previous slide?


1964

Arnold Kadish, MD (private practice, Beverly Hills) is usually credited as the first to create a “wearable” insulin pump, and first to create a portable artificial pancreas by connecting it to a glucose analyzer.

Source: Glysens

Barker, Mary E.

is 1964 the headline?


1970s

The first practically useful AP evolved from early-to-mid 1970s work of Michael Albisser and others which was commercialized by Miles Labs as the Biostator (a bedside AP).

Source: Glysens

Barker, Mary E.

See question on slide 20


What we see now: Monitors and pumps

Source: Dexcom, Glysens


The future: Pancreas or islet cell transplants


Regenerative medicine


Viral gene therapy

Source: Wikipedia


Can technology help move effective care from hospital to home?

Remove excessive cost of care delivery due to site of care

A 10% cost savings in inpatient costs =

$19 billion

A 10% cost savings in annual CMD costs =

$45 billion


Chronos v. Kairos


It is time (kairos) to re-engineer health care:

Persistent economic crisis,Threateningly unfavorable demographics,Unsustainable healthcare delivery model, withUnprecedented increased access

Ubiquitous wireless communicationEmerging pluri-potential sensor technologyProven benefits of medical device technology, smart and learning systems, cloud computingCost-savings of infrastructure-independent careSocietal trends for personal technology, personalized medicine, technology-enabled social networking

More than a century after Flexner redesigned American medical training, based on the Hopkins model, it is again time to redesign the way we care for patients and diagnose and treat disease – we cannot afford not to, and ‘patients are waiting.’

west health diabetesmine summit 2013_closing remarks

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