A Call to Action for Value Management

By Nathan W. Tierney
Director of Value Management
and the Author of
Value Management in Healthcare







In healthcare, the overarching goal for providers, as well as other stakeholders, must be improving value for patients. Here, value is defined as the health outcomes achieved that matter most to patients relative to the cost of achieving those outcomes. Improving value requires either improving one or more outcomes without raising costs, or lowering costs without compromising outcomes, or both. Outcomes empower patients, clinicians, and payers and will influence the future healthcare delivery landscape in three distinct ways:

1. Patients shall choose the providers for their care based on outcome value scores
2. Providers shall be data-informed to make targeted improvements and learn
3. Payers shall measure return on investment and direct patients to high-value providers 

My upcoming, evidence-based book seeks to provide healthcare delivery organizations a Value Realization Framework and methodology for establishment of Value Management Offices in order to support quality of care and provide safe delivery of value-based outcomes that matter most to patients, clinicians, and payers. 

“The universal development and reporting of outcomes at the medical condition level is the single highest priority to improve the performance of the health care system”- from Redefining Health Care, by Michael E. Porter and Elizabeth O. Teisberg.

Problems Facing Healthcare Delivery Organizations

Globally, countries are investigating new healthcare delivery strategies to prioritize value-based outcomes over volume. National governments are introducing policies, implementing new reimbursement methods, and collaborating with health organizations to enact change. The new laser-beam focus on achieving the best health outcomes for patients at the lowest cost will transform the healthcare industry. 

Companies are also interested in value-based outcomes. These companies are paying high prices for employee health data in order to predict risks and health needs. The implications for this situation are significant for employees, employers and insurers. As an example, if a company thought you were at risk for diabetes, it might offer you an incentive to join a weight-loss program or send personalized reminders to visit a doctor for a checkup.  Employers do have a vested interest in healthy and productive employees as well as a fiduciary interest in what they pay for employee healthcare insurance, but does use of health-related data constitute improper use of employer and employee relationship?

From the Strategy that will Fix Health Care, by Michael Porter and Tom Lee:
“Provider organizations understand that, without a change in their model of doing business, they can only hope to be the last iceberg to melt. Facing lower payment rates and potential loss of market share, they have no choice but to improve value and be able to ‘prove it.’”

Recommendation for Healthcare Delivery Organizations

It is recommended that organizations create a Value Management Office to serve as a center of excellence for determining evidence-based outcome measurements. This facilitates the creation of value-based care and payment models. Value-based care and payment models support IT governance by evaluating business case investments and projected benefits to link people, processes, and technology. Patients and providers should work together to define and drive the industry towards value. 

Implementation of a collaborative Value Management Office enables organizations to evaluate projected and realized strategic, operational, and financial benefits from major business process changes, and enterprise initiatives, and establishes critical value-based care models. The shared vision is for Healthcare Delivery Organizations to apply value management as a way of doing business to ensure efficient deployment of capital, improved clinical outcomes, and achievement of strategic, operational, and financial objectives.

Healthcare organizations are examining innovative ways to deliver improved patient outcomes at lower cost. This has involved traditional process improvement methodologies, which have been effective in reducing traditional defects and efficiency improvements. However, these efforts have failed to utilize new technologies, analytics and value frameworks that provide both horizontal and vertical alignment for value-based healthcare.

The Value Realization Framework provides the methodology for aligning Mission, Vision, and Values with concrete Critical Success Factors (agency goals), measurable Key Results Indicators (outcomes), objective and measurable Key Performance Indicators (actions). The methodology seeks to ensure quality of care, patient safety, and Health Information Technology Programs, which improves service delivery, product delivery, information security, fiscal management, clinical outcomes, and operational metrics (Figure 1). 

This standards-based process also ensures present IT systems continuously perform as required, contribute to overall business goals, and delivery of expected outcome-oriented results. 

 Figure 2: Value Realization Framework

Conclusion

Primum non nocere, “First do no harm,” the Hippocratic Oath calls on the healthcare community to ethically uphold the highest standards of providing safe and quality care to those in need. This calling goes beyond minimizing mortality rates and instead requires standards with which to achieve a predictive outcome. A standard is something quantifiable and used as a measure or model in a comparative evaluation to determine the value of an outcome. Without standards, there can be no improvement, which is why establishing a center of excellence to determine outcome measurements is so critical. Only through establishment of a Value Management Office and a standards-based Value Realization Framework will Healthcare Delivery Organizations truly shift from reactive to proactive in the provision of value-based care. This shift is the catalyst for change within our healthcare system that empowers patients, clinicians, and payers by delivering desired clinical, financial, patient satisfaction, employee satisfaction, process improvement, and learning and growth outcomes from the perspective of the individual – not the institution. 

If Value = Outcomes (Benefits) / Costs (Inputs), then the value story is providing any patient regardless of sex, age, race or location, a safe and quality health outcome relative to the cost of achieving those outcomes. A Value Management Office can help be the conduit for telling your organization’s value story.

Nathan Tierney is an accomplished senior executive and leader in value management, with over 21 years experience in multibillion-dollar domestic and international operations, developing innovative and profitable methodologies, advising disparate levels of leadership, and managing in complex environments. 

He has a proven track record of performance in all fields, and a natural propensity to analyze outcomes both strategically and objectively while remaining pragmatic and focused. Information about Nathan's upcoming book, Value Management in Healthcare: How to Establish a Value Management Office to Support Value-Based Outcomes in Healthcare, can be found here.

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i Porter, M. E., & Lee, T. H., MD. (2013). The Strategy That Will Fix Health Care. Retrieved October 12, 2016, from https://hbr.org/2013/10/the-strategy-that-will-fix-health-care

ii Adapted from International Consortium for Health Outcomes Measurement. 2012 

iii Maslow, A.H. (1943). “Psychological Review – A Theory of Human Motivation
 

iv  Porter, M. E., and Teisberg, E. O. Redefining health care: creating value-based competition on results. Harvard Business Press. 2006 

v  Wired Magazine (2015). “Security this Week: Employers are Paying Data Firms to Predict Your Health Risks”http://www.wired.com/2016/02/security-this-week-employers-are-paying-data-firms-to-predict-your-health-risks/ Access February 20, 2016
 

vi Porter, M. E., and Thomas H. Lee. The Strategy that will Fix Health Care. Harvard Business Review. 2013 

vii Adapted from International Consortium for Health Outcomes Measurement Intro Presentation. 2015

Frost Perspectives/Healthcare Transformation of Medical Device Industry

   
By Brahadeesh Chandrasekaran
Industry Analyst, Transformational Health
Frost & Sullivan

Introduction

The pressure to reduce healthcare expenditure, intensifying competition, and consolidation of hospitals and health systems has brought unprecedented changes in the way medical device companies do business. The dynamic marketplace is transforming the traditional way of doing business and requires the medical device manufacturers to rethink their existing business models and create value proposition for customers through innovative products and solutions. This transformation of medical device industry is fueled by an ageing population, proliferation of chronic diseases, increasing emphasis on quality of care and treatment, stringent regulatory landscape focusing on patient safety and cost-containment, empowered and informed customers, and emerging technologies.

The Market – Global Medical Devices Market

While medical device manufacturers are striving hard to address the challenges, the dynamic marketplace also presents huge opportunities for the companies.

Exhibit 1: Global Medical Devices Market, 2015-2016

Source: Frost & Sullivan

Note: In-Vitro Diagnostics is not included in medical devices market

The global medical devices market is estimated to be $330 billion in 2016, an increase of 4 percent growth from 2015. Orthopedics is the largest segment in the medical devices market and it is estimated to remain so for the next 5 years, contributing approximately 14 percent of the global market. Minimally invasive devices and cardiovascular devices complete the top three segments of the medical devices market with approximately 12 percent and 10 percent respectively.

In terms of region, United States led the market with approximately 39 percent of the global market followed by Japan, Germany and China. The top 10 countries contributed to almost 80 percent of the global market.

The Big Picture – Changes in Medical Device Industry

The transformation of existing business models in the medical device industry is primarily attributed to the four factors:

1. Cost and Pricing Pressure: The declining R&D productivity coupled with increasing pricing pressure has resulted in eroding profit margins for medical device manufacturers. Hence medical device companies need to optimize their R&D investment to have right product mix and high manufacturing efficiency. One of the key strategies of medicaldevice companies is the focus on high growth markets and high growth segments to increase the profit margin and minimize the risk of pricing pressure in developed countries such as the US and countries in Europe.
2. Power Shifting to Payers and Providers: Payers and providers are gaining more importance in the selection of medical devices. The move towards value-based care is allowing payers and providers to reap benefits with improved quality, patient outcomes and better profitability. Though medical device companies are facing uphill challenges in adjusting to the new value-based payment models, it provides opportunities for the companies by working closely with payers and providers and provides a holistic approach for patient care, which is essential for long-term sustainability. The new models include risk-based revenue sharing models where companies share the risks and profitability with the providers on an individual patient basis.
3. Digital Transformation: Similar to other industries, medical device industry is undergoing digital transformation to control costs, enhance patient care and improve utilization of providers. The wearable devices are already starting to deliver their value-proposition by providing continuous monitoring of patients that has high significance in patient management. Digital technology provides opportunity not just to enhance the patient care but also provide data to make informed business decisions. For example, data from the connected devices can help manufacturers better understand the patient behavior, and performance of the devices. Such data provide valuable insights for the medical device companies to develop more effective products and solutions. For example, according to the medicaldevice recall report FY2003 to FY2012 by FDA, the number of medical device recalls increased 97 percent during this period. Digital technology such as predictive analytics or patient monitoring features in devices can help companies to proactively identify the quality issues and improve the device performance. In addition, digital technology allows companies to provide a holistic approach in care delivery and expand in to new service areas of patient management.
4. Healthcare Consumerism: Consumerism in healthcare is playing a significant role in transforming the traditional way of care delivery. The increasing awareness among patients increases their choice of choosing healthcare services and enables them to actively participate in the management of their health and wellness that led to new concept known as Do it Yourself (DIY) health concepts. The consumerism in healthcare has allowed device companies to focus on new initiatives in reaching out directly to them.

Exhibit 2: The need for Transformation in the Medical Device Industry

Source: Frost & Sullivan

These factors are leading to an integrated approach by the medical device companies in providing a holistic approach to the patient care from a pure play medical device manufacturer.

Integrated Approach towards Patient and Disease Management: A Holistic Approach

Historically medical devices have been narrowly focused on singular aspect of a disease or condition. As the complexity of the diseases and the financial burden increasing day by day, there is a need for a multi-level approach to disease treatment. Thus medical device manufacturers are focusing on developing new technologies and services that work with an integrated approach of care continuum, a shift from silos approach. Integrated care reduces the costs and improves the patient outcomes. The integrated approach aims to provide end-to-end solution not just for patients but also for providers in improving their efficiency, infrastructure and treatment efficacy.

Exhibit 3: Evolving Medical Device Business Model towards an Integrated Approach

Source: Frost & Sullivan

For example; in 2013, Medtronic, a leader in the medical device industry, announced the formation of Medtronic Integrated Health Solutions, a new business focused on developing novel partnerships with hospitals, physicians, payers and health systems to deliver high quality care in a cost effective way. The solutions aimed at managing, modernizing, optimizing and developing cath-lab facilities and bring sustainable efficiencies and patient recruitment programs to hospital cardiology department. Medtronic’s Integrated Health Solutions goes beyond the management of cath labs and focuses on creating efficiencies along the entire care continuum, supported by system components such as telehealth. The main goal is to deliver value, optimize outcomes and cost of care delivery, through vendor-independent solutions and long-term partnerships. Similar types of services are offered by many other companies such as Boston Scientific, Philips, St. Jude Medical, etc.

Established medical device companies are embracing this new paradigm and are finding a way to expand the traditional way of doing business and are changing their business models not just from a product perspective but also from a process, service, and relationship with stakeholders’ perspective.

Role of Connected Health Solutions

Connected health solutions enables patients, care providers and payers to access data effectively and make informed decisions on the quality and outcomes of treatment. At a time where the demand for healthcare services continues to rise because of aging population, constrained budgets for hospitals, lack of access to healthcare in many countries, and increasing costs for advanced treatment, the role of connected health is highly significant as it is capable of delivering cost-effective solutions and can significantly improve the patient outcomes. The connected health solutions have allowed medical device companies and digital technology companies to bring out solutions that provide comprehensive care.

For example; Propeller health, a digital health technology company, develops sensors and digital platforms that are used to collect patient medication data and turn it into actionable insights for patients and care providers for the treatment of COPD and Asthma. The company has already partnered with leading inhaler manufacturers such as GSK, BoehringerIngelheim, etc. to integrate their digital technology with the inhalers for improving patient outcomes. In addition, Propeller health partnered with the Institute for Healthy Air, Water, and Soil, the Louisville Metro Public Health and Wellness Department, and the Robert Wood Johnson Foundation officially launched an initiative called AIR Louisville, a first-of-its-kind collaboration using digital technology to improve asthma. The initiative aims to track the asthma patients in Louisville and leverage the data from the Propeller health’s inhaler sensors and asthma management system to make informed decisions on management of patients and environment in Louisville.

The role of connected health solutions is expected to have a huge impact in the transforming healthcare system towards personalized medicine and allow companies to develop technologies, products and solutions towards patient or consumer-centric approach.

The Future

The inevitable radical change in the medical device industry will redefine the traditional way of doing business. Medicaldevice companies that embrace and align their business strategy according to these changes will sustain and can remain profitable. Digital health solutions will play a significant role in the medical device industry and the customers will not only include physicians and GPO’s but also C-Suit, Consumers and Payers. Scalability beyond traditional product offering and competing beyond a company‘s traditional industry will be important, as more companies will begin to converge products and services. Companies like Apple, Google, and IBM will continue to compete outside their domain, pushing traditional healthcare companies to break their dominant business model. Medical device manufacturers must incorporate a socially beneficial aspect to their business models. The preference of payers and consumers will incline toward companies that help them improve their lives and treatment outcomes in a cost-effective way.

What to Watch for in 2017: More Technology,Better Access

With commentary by
Jay Rajda, M.D., M.B.A., FACP
Chief Clinical Transformation Officer
Aetna





Whether it’s smart watches, fitness trackers or artificial intelligence, technology is a part of the health care industry. At Aetna, our experts keep track of technological advances as a part of our mission to increase access to high quality, cost effective healthcare.

Technology opens doors for continuity

The opportunity to use a laptop or smartphone to remotely consult with a physician is convenient and cost effective, and so telemedicine is increasingly popular with patients, providers and insurers alike.

Jay Rajda, M.D., MBA, FACP, Aetna’s chief clinical transformation officer, said the technology and models used for telemedicine will evolve and provide an opportunity for more “continuity” of care remotely.

“Thus far, the most prevalent model one where telemedicine is used primarily for low-complexity urgent clinical issues” Rajda said. “We are excited about the prospects of the role of telemedicine in chronic condition management. As we further develop consumer-centric care models, the ability to access continuity of care by connecting with one’s own primary care physician to manage diabetes or hypertension, could be a valuable proposition for the consumer, improving patient satisfaction. At the same, it holds promise to be able to fulfill the triple aim of improved access and quality, and reduced costs.”

Find balance between wearables, apps and evidence-based medicine

The technology in today’s wearables can detect if someone is walking, running, swimming or climbing and can recognize a person’s emotions. For example, one wearable monitors a person’s breathing patterns to determine if they’re stressed. If they are, the wearable vibrates, prompting the person to take a deep breath.

As technology continues to develop, physicians have to strive to continue to create doctor-patient relationships, according to Gabriela Cora, M.D., DFAPA, a medical director for Aetna Behavioral Health.

In a world where people have vast amounts of information at their fingertips, and where apps and wearable devices give people access to a variety of metrics, Cora emphasized the importance of not overwhelming people with data. She said she finds the blurring line between technology and health care interesting, but reiterated that diagnoses and treatment will be supported by “evidence-based medicine.”

“The integration of technology in health apps and wearables will make a difference as long as it relies on healthy standards,” Cora said. “This is going to be the greatest opportunity – and challenge – in the years to come.”

New payment models may also impact access

Physicians will also be paying attention to large-scale changes that can affect patients, according to John Moore, D.O., FAAFP, Aetna’s medical director for the United States’ Northeast Region. This includes the implementation of the Medicare Access and CHIP Reauthorization Act (MACRA), which went into effect on Jan. 1, 2017, and changes the way Medicare physicians are paid.

Moore explained he’s interested to see how changes from the federal level can impact an individual patient’s opportunity to access affordable health care.

“It’s really critical for health care patients to have coverage to the best of their ability,” Moore said. Noting that the future of the Affordable Care Act is uncertain, Moore continued, “Generally, physicians would like to see patients have access to affordable health care.”

To learn more about timely medical news and analysis, please visit: 
https://news.aetna.com/2017/02/2017-more-technology-better-access/

New Developments in Robotics Rehabilitation

 

By Alind Sahay
Vice President
Noxilizer, Incorporated







Today, robots are present in a variety of application areas in the healthcare space – in surgery, pharmacy, rehabilitation, hospital services and many other areas.  This trend is more recent in the area of rehabilitation robotics but is accelerating and some market research reports are predicting over 20% year-over-year growth.

Rehabilitation robotic systems are used in order to restore function or to provide assistive motor and motion functions.  These robots are generally segmented into assistive robots, prosthetics, orthotics, therapeutic robots and exoskeleton robots.  Intuitively, it makes sense to use robots for rehabilitation therapy as there is need for repetitive motion which needs to be in a specified and controlled range to stimulate recovery and not cause damage.  Additionally, robots generally have feedback devices and can measure progress of recovery and can therefore be used by therapists to optimize settings for patient recovery.

Though the current market for rehabilitation robots is relatively small (a few hundred million) when compared to surgical robots (a few billion), this market is expected to grow rapidly with advances in sensor technology, processing power, robotic technology and the potential for use of Artificial Intelligence.  Therapeutic areas for rehab robots include a) acute and chronic neurological disorders arising from stroke, traumatic brain injury, spinal cord injury, cerebral palsy, multiple sclerosis etc. b) orthopedic rehabilitation and c) other non-neurological and non-orthopedic  areas.  A quick review of the incidence and prevalence of stroke on a worldwide basis indicates a potential for a significant multi-billion dollar market.  At this time, although there are some leading players in this space, there is no dominant player.

For stroke therapy, there is general clinical agreement that, at a minimum, the introduction of robotic systems into clinical practice is useful in promoting the standardization of treatment and cost-effective use of human resources.  There is sufficient clinical data that shows that early treatment and intense treatment is better for recovery from stroke – and deployment of robots has the potential to ensure proper early and intense treatment.  However, the current robotic devices are heavily task oriented and provide simple repetitive movement patterns.  There is significant research in the use of engaging games coupled with automation that has shown the possibility of further improving outcomes.  These games, by engaging the patient, provide the possibility of improved therapy compliance and also, by their very nature stimulate neurological recovery in ways that a repetitive movement pattern cannot.  Games, though need to be well designed for this purpose.  There are a number of research institutions that have designed such games and some well-funded spin-off companies based on this research.

As we look at the future, one key factor that is a barrier to adoption is the cost of these devices.  The more complex high-end robots in the neuro-rehab space may cost around $100,000 and some of the more sophisticated exoskeleton assisting devices may cost around $200,000.  To improve adoption these prices need to come down and/or more innovative business models need to be developed that reduce the cost of use to customers.  Within the U.S., re-imbursement models for rehabilitation treatment do not allow for direct payment of costly robotic systems, rather treatment costs have to be fitted within the Medicare re-imbursement models. A 1990 study estimates the total direct cost of stroke to be $40.6 B, split into 45% short-term care costs, 35% long-term ambulatory costs and 17.5% nursing home costs. With well-thought studies, it should be possible to generate evidence that long-term care costs will come down with improved recovery and capture part of the savings from cost-reduction to either insurance or to patients/family.

In addition, there appears to be significant opportunity for companies to launch products using strategies similar to gym equipment.  For clubs, equipment is generally higher end and economic models are based on membership dues.  Some more well-to-do customer buy equipment for home use.  Companies should explore this model (and some are beginning to do so) as the opportunity is large due to high numbers of chronic patients and the willingness to pay for lower ‘club’ dues rather than high therapist fees in a hospital setting.

Clinical data for the use of robotic systems for therapeutic and functional rehabilitation is promising.  Robotics intuitively makesense for systematic rehabilitation.Coupled with gaming, connectivity and artificial intelligence, robotic systems have the potential to make significant positive impact on the lives of patients and reduce the economic and social impact, specially, of neurological related issues.  In the long-term, costs will come down and businesses will come up with innovative economic models based to significantly drive adoption.

Alind Sahay is a research and development business leader and innovator with over 20 years experience developing and launching innovative medical devices for global markets, which includes over 12 years leading product development for image based robotics at Integrated Surgical Systems and navigation systems at GE Healthcare. His business development experience encompasses defining and executing on technology-based opportunities, including licensing and collaborations.

Currently, he is Vice President, Research and Development at Noxilizer. Previous positions include Program Director, Endo Health Solutions, where he was responsible for the complete research and development portfolio for the Healthronics product line and Director, Product Development at Terumo Cardiovascular Systems, where he managed new product development and line-extensions for cardiac pumping systems and associated disposables.