05/20/2015

Old habits die hard: Accommodating the newly insured


by Mitch Morris, MD, Vice Chairman, National Health Care Providers Lead, Deloitte LLP

They say that old habits die hard. Who are “they”? They are the retired executives who still wake up at 5 a.m. to read the paper front to back while enjoying a cup of coffee. They are the parents who continue to remind their fully grown, adult children to eat their vegetables. They are also many of the previously uninsured who, once they’ve gained insurance coverage, continue to visit emergency departments for their regular care.

This resistance to change was the subject of a recent op-ed that appeared in The New York Times. In it, Ezekiel Emanuel referenced a new study by the American College of Emergency Physicians. The study found that three-quarters of emergency physicians have seen increases in patient visits since the Affordable Care Act (ACA) passed.1

Emergency physicians aren’t the only ones feeling the pressure. The Deloitte Center for Health Solutions 2014 Survey of US Physicians shows that 44 percent of physicians are treating more newly insured patients. The effects are felt differently depending on physician specialty: primary care physicians (PCPs) are more likely to report seeing increases in newly insured patients (56 percent) than are surgical specialists (40 percent), non-surgical specialists (38 percent) and other physicians (33 percent).2

As outlined in the recent Expanding coverage: How primary care physicians are accommodating the newly insured report, among the PCPs who are seeing an increase in newly insured patients, many report the patient influx is straining resources.

May 19 Graphic
Source: Deloitte Center for Health Solutions, 2014 Survey of US Physicians

While opponents of the ACA may view this as a failure of its policies, I’m in the same camp as Dr. Emanuel. I believe that people will continue acting on old habits, seeking care where it is familiar to them, until something or someone educates them on alternative options that exist.

That is why it’s not enough to stop at the coverage expansion; health insurance coverage does not equal health literacy. Dr. Emanuel references some of the programs that have attempted to curb this trend. The collaborative between Group Health Cooperative of Puget Sound and SEIU Healthcare NW Health Benefits Trust is just one example of the larger issue at hand: patient engagement and education should go hand-in-hand with increased access to health insurance coverage and health care services.

Moreover, Deloitte’s findings from the forthcoming 2015 Survey of US Health Care Consumers suggest that consumers may be more ready to do this than many previously thought. Many consumers are interested in comparing health plans, providers and services based on cost and quality. And, one in five is interested in using a website, mobile app or personal medical device to learn more about or choose between different treatment options.

In order to advance patient engagement, where can organizations begin? Health plans and health systems are looking at how to use technology and social media to reach out to patients to help them navigate their health services. Not everyone is technologically enabled, and sometimes marketing and outreach campaigns can raise awareness. It is a process of ongoing education that needs to be easy to access and culturally sensitive. Those providing hands-on primary care also have an important role in helping the newly insured better understand how to maintain good health and, when they are not well, how to best access services appropriately. Together, these efforts should not only reduce inappropriate utilization of emergency services, but they should also enable healthier populations.

Allowing mid-level providers to practice to the top of their license may also help. We’ve already seen what can happen when these initiatives are enacted. In Kentucky, shortly after the state expanded Medicaid, the expansion population was using PCP services 55 percent more than the traditional Medicaid population.3 To alleviate the pressure on PCPs, the state legislature expanded nurse practitioners’ scope of practice, allowing them to assist with care coordination and chronic disease management.

As a physician, I know that arming PCPs with care coordination tools and chronic care management capabilities could also help move the needle on patient engagement. Ultimately, once patients become fully aware of the myriad options they have to receive care, I believe they will begin to make wiser choices around when and where they seek that care. At that point, maybe they’ll be able to finally say they kicked their old health care habits.

 

Read the entire Health Care Current here and subscribe to receive weekly updates.

 

Mitch Morris, MD, Vice Chairman and National Healthcare Provider Lead, Deloitte LLP Mitch Morris is the National Leader for the Health Care Provider sector at Deloitte including Consulting, Audit, Tax, and Financial Advisory Services. Dr. Morris has more than 30 years of health care experience in consulting, health care administration, research, technology, education, and clinical care.
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PS. In observance of the Memorial Day holiday, the Deloitte Center for Health Solutions will not publish a Health Care Current on Tuesday, May 26, 2015.

 

Sources:
1 Emanuel, Ezekiel, “How to solve the ER problem,” New York Times, May 6, 2015; American College of Emergency Physicians, “ER visits continue to rise since implementation of Affordable Care Act,” May 4, 2015
2 Other physician type is comprised of Anatomic/Clinical Pathology, Occupational Medicine, Public Health and General Preventive Medicine, and Other (i.e., some other specialty not listed).
3 Deloitte, Commonwealth of Kentucky Medicaid Expansion Report, February 2015

05/18/2015

Can digital technology truly transform health and social care?


 by Karen Taylor, Director, UK Centre for Health Solutions

The Deloitte UK Centre for Health Solutions recently launched the report Connected health: How digital technology is transforming health and social care, which analyses opportunities and barriers to the adoption of technology enabled care (TEC). While the emphasis is on the UK, many of the challenges and potential solutions are relevant to most health economies facing rising demand for services in the face of constrained supply of health and social care resources. The report considers how digital technology is shifting the dynamics between patients and clinicians, and helping providers to work differently.

Using technology to enhance health and social care delivery is not new; telephone consultations, personal alarms and web-portals have been around for years and have grown in popularity over the last decade. The difference today is the increasing functionality of mobile technologies and in particular the smartphone, as well as the proliferation in health apps and wearable technology.

Indeed, in the UK, some 75 percent of the UK population now goes online for health information, 70 percent of the adult population owns a smartphone, with the over 55 age group recording the highest growth rate; and there are currently more than 100,000 health apps that can be downloaded from the various app platforms. Other notable developments are the availability of health care wearables, such as digital blood pressure monitors and glucose sensors, and patient and provider access to real-time health care data and information. Additionally, smartphones are incorporating a growing range of sensors which monitor changes in physiology.

The exponential growth in the capability and capacity of the technology has led to a number of concerns from actual and potential users, including patients and staff uncertainty as to which apps or wearables are most reliable and trustworthy. Indeed, one of the biggest concerns identified by doctors, is about evidence of outcomes. In response, agencies like NHS Choices and its NHS Health Apps Library have developed criteria which judge apps for safety and technical proficiency. For example: 

  • For apps to be included on the NHS Choices search website, which in early 2015 lists around 300 apps, they must be reviewed by a technical team (testing relevance, legal compliance and data protection), then by a clinical team (to test scientific rigour)
  • PatientView, an independent organization that works closely with patients and health and social campaigning groups worldwide, has developed a systematic method of appraising health apps. As of March 2015, there are 358 apps recommended for the Apple platform and 233 for Android, with smaller numbers recommended for use on other platforms.

Globally, there are cultural and regulatory barriers to the adoption of TEC, the extent of which varies from country to country. A consultation exercise by the European Commission in 2014 identified widespread concerns about issues such as quality, reliability, data overload, privacy, and security. Although concerns about the cost-effectiveness of TEC are lessening due to the improving quality and reliability of devices and apps and the falling cost of digital technology.

A further problem is that TEC solutions have been technology-driven, often without the involvement of those people they are aimed at. Health care providers are often reluctant to engage with technology, partly due to the scale and pace of changes, and partly through lack of education and training and concerns over liability and funding.

Technology has the power to improve access to health care services, especially for people with mobility problems. This is recognized by the UK government, but there are concerns about inequality of access to the technology due to the cost and differences in broadband speeds. There are also challenges due to the lack of interoperable patient records.

Putting aside these concerns, the potential for digital technology to transform services, as the report shows, is enormous. In particular it is an important driver of patient engagement, and can help shift the balance of power from the traditional approach, where the patient is dependent on health care staff for information and support to one where they are co-producers in managing their own health.

Digital technology is also key to the service integration agenda, helping to improve communication within and between provider organizations. It can also help increase productivity, improve patient monitoring, reduce avoidable service use, improve outcomes, and deliver cost savings. As health care shifts towards a patient-centered, outcome-based delivery model, digital technology will be an essential partner in health and social care transformation. 

An important development as a result of the use of digital technology is new entrants into the health care market, comprising global technology companies, pharmaceutical companies (which are among the most active publishers of health apps), medical technology companies, and indeed supermarkets. Their involvement raises the possibility of new health care provider models and approaches to health research transforming the patient experience.

Innovations in science and technology today will transform health care tomorrow. At the moment, the pace of change in the technology is increasing at an exponential rate, but the question remains whether developments will provide little more than hype for the health care industry, or whether they will truly transform care.

 

Karen TaylorKaren Taylor is the Research Director of the Centre for Health Solutions. She supports the Healthcare and Life Sciences practice by driving independent and objective business research and analysis into key industry challenges and associated solutions; generating evidence based insights and points of view on issues from pharmaceuticals and technology innovation to healthcare management and reform.
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05/14/2015

Physicians under pressure: Was the “doc fix” enough?


by Harry Greenspun, M.D., Director, Deloitte Center for Health Solutions, Deloitte LLP 

One day when I was a kid, I came home from school and Sedgie, the family dog, wasn't there to greet me at the door like usual. I asked my mom where Sedgie was and she replied that she had taken him to the vet to be “fixed.” Now quite suspicious, I asked her why. She told me that it was to help him stay out of trouble and make him easier for us to manage. A few hours later, we went to pick him up at the vet. Still woozy from pain killers and sporting the “cone of shame,” one thing was clear: Sedgie was not happy.

On April 16, 2015, President Obama signed the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), which addressed the perennial “doc fix” issue by permanently repealing automatic Medicare payment cuts under the sustainable growth rate (SGR) (see the April 21, 2015 Health Care Current). Along with the SGR repeal, MACRA also includes language that consolidates three existing quality incentive programs into the Merit-Based Incentive Payment System (MIPS). Beginning in 2018, MIPS will assess eligible professionals on their quality, use of resources, Meaningful Use of electronic health records (EHRs) and clinical practice improvement activities.

While the SGR issue may have been fixed, many of my doctor friends are still not happy. And much of their frustration is directed at governing bodies. Whether it’s coming from regulatory agencies or their own certifying boards, physicians are under a great deal of pressure.

For years, physicians have faced a series of measures intended to modernize and digitize the practice of medicine. Each program and new legislation followed a similar path: encourage early adoption through incentives and discourage laggards through penalties. An easy example to recall was the passage of Medicare Improvements for Patients and Providers Act of 2008 (MIPPA), which incentivized physicians for their e-prescribing practices. Through the E-Prescribing Incentive program, the US Centers for Medicare and Medicaid Services (CMS) paid eligible professionals (EPs) bonuses that started at 2 percent in 2009. Until the program expired in 2013, EPs who successfully utilized electronic prescribing received bonus payments averaging $3,000 in 2009, $3,836 in 2010 and $1,912 in 2011. In 2011, CMS decreased the incentive from 2 to 1 percent. Physicians were also on the hook if they failed to report during these years. As recently as 2014, EPs could see 2 percent adjustments in their Medicare payments for not being a “successful e-prescriber.”

In 2009, the passage of the Health Information Technology for Economic and Clinical Health (HITECH) Act ushered in the era of Meaningful Use. CMS is expected to provide $27 billion in incentive payments over the six-year duration of the program. Meanwhile, providers are also expected to transition from using the ICD-9 coding system to the more robust ICD-10 by October 1, 2015.

While these programs were designed to transform an antiquated and unsustainable health system, Deloitte’s 2014 Survey of US Physicians found that one in four physicians believe the scale and speed of health care system transformation has been far too fast. It also found that approximately three in four physicians believe EHRs increase costs and do not save time.

So they’ve fought back, seeking changes to the requirements and timetables of these programs. The deadline to transition to ICD-10 has been delayed twice, and due to industry pushback, CMS has also proposed modifying the Meaningful Use program to reduce reporting requirements.

Beyond governmental programs, battles now rage between physicians and their own specialty boards. In 2014, the American Board of Internal Medicine (ABIM) adopted new maintenance of certification (MOC) requirements. In a recent JAMA Internal Medicine publication, 11 physician focus groups pushed back against requirements intended to ensure that physicians were up-to-date on today’s standards of practice. The publication cited misalignment between the MOC's intent and a cumbersome recertification process. In protest, many of my colleagues now sport a “no MOC” button along with their stethoscopes and pen lights on their white coats.

There is broad agreement that in order to transform our health system into one that rewards healthy populations and improved outcomes, significant change likely will be needed. However, the pace of that change, the burdens it imposes and the role of various stakeholders likely will continue to be debated. Deloitte’s 2014 Survey of US Physicians shows that more than seven out of 10 physicians are satisfied with the practice of medicine. But, physicians have demonstrated that if they perceive they are being pushed too far, they push back.

Physicians today are facing demands from multiple fronts, whether it’s compliance requirements for federal health IT programs or demands from their own certifying boards. Organizations can support their physicians through these demanding times by developing capable physician leaders and partnering with them to navigate the complex regulatory, capital and governance issues that will likely help manage the transition.

Sedgie was a wonderful dog and lived a full and happy life. However, even though he had been fixed and readily responded to treats, if he felt cornered or threatened he would snarl and snap. The one thing that could never be changed about him was his instinct for self-preservation.

 

Read the entire Health Care Current here and subscribe to receive weekly updates.

 

Harry Greenspun, MD, Senior Advisor, Health Care Transformation and Technology, Deloitte Center for Health Solutions, Deloitte LLPDr. Greenspun, director with the Deloitte Center for Health Solutions, Deloitte Services LP,  serves health care, life sciences and government clients on key innovation and clinical transformation issues. He was named one of the “50 Most Influential Physician Executives in Healthcare” by Modern Healthcare, co-authored the book “Reengineering Healthcare” and has served on advisory boards for the World Economic Forum, WellPoint, HIMSS, and Georgetown University. He previously served as the CMO for Dell.
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05/11/2015

New payment models in health care: Who should lead the change?


by Sarah Thomas, Research Director, Deloitte Center for Health Solutions, Deloitte Services LP

I had a small skin problem that (I thought) called for seeing a dermatologist. At my health plan, one still needs to get a referral to see a specialist, and it took me a while to get to see my doctor. Once I got to the appointment, however, the doctor did an eloquent job of convincing me that I didn’t need medical treatment. He shared tools with me to help me understand what kinds of problems I should follow up on and what was benign.

I was slightly annoyed at having wasted my time to go in, but he charmed me into a good mood by telling me about the change he’d made in his career. He had retired from private practice to work for a large health system on a salary. He told me how much he enjoyed convincing people not to get unnecessary care rather than finding a reason to provide more treatment, which, in his old practice, helped maintain his income. I think my dermatologist is unusual in seeking out a new approach to medicine.

I’ve reflected on that conversation several times as I looked at the results of Deloitte’s 2014 survey of US physicians. Respondents expressed concern about shifting to value-based payment approaches, which is what public and private purchasers are calling for and most of which create bonuses or penalties based on total cost of care for a patient and quality of results. Surveyed physicians are—in essence—concerned that they will be penalized for factors outside their control. This concern is clearly present in the responses despite the other interesting finding—that physicians predict 50 percent of their incomes will be through these new payment systems within 10 years. So, physicians see the change coming but are worried about it.

A number of different stakeholders are pushing for change; some are more influential and trusted than others. Payers—not traditionally popular with many physicians—are pushing hard. Health plans and health systems adopting value-based care models like Accountable Care Organizations are leading the charge. So is Medicare, with its goals for transforming the traditional part of the program. Medicare also recently announced funding for private organizations to help support change.

Could and should physician membership organizations or boards, too, lead this change? Or should they react with the same caution as many of their members? On the one hand, such organizations have great access to their members, and their leadership usually works hard to keep members’ interests front of mind. Some examples include the American Academy of Cardiology’s work on quality measure development and the Society of Thoracic Surgeons’ registry intended to help surgeons benchmark their performance to others’.

Another is the work of the American Board of Internal Medicine’s (ABIM) foundation around the Choosing Wisely campaign. With other stakeholders, the foundation is asking physician groups to identify services that are overused or should be used more thoughtfully. Organizations moving on to value-based care might target these services to watch more closely and educate physicians to be more parsimonious in their use.

On the other hand, if organizations get ahead of their membership, they may risk rebellion.

A recent kerfuffle illustrates the risks of leading change as a membership organization. Several articles have revealed strong discontent among internists with the ABIM’s approach to influencing physician performance.

ABIM requires internal medicine specialists to demonstrate that their knowledge is up to date by taking regular tests in its Maintenance of Certification (MOC) program. This program, involving a periodic test of a physician’s knowledge, has “raised the bar” by adding more content and requirements over time. More physicians are failing the tests.

One school of thought would say that the ABIM has been visionary in trying to improve value in health care with initiatives like these. The other school of thought, articulated in the article, The ugly civil war in American medicine, takes aim at the MOC program. It says ABIM has been forcing this change for its own financial betterment. Physicians pay to take these tests, and if more physicians fail, they need to pay more to retake the tests. These critics also say that “raising the bar” has been achieved by adding questions to the test that are unfair—one of the big concerns we heard in our physician survey.

It is too soon to tell what ABIM will decide to do in response to the criticism—I will watch with interest. The organization may have a public relations challenge on its hands and should consider how to re-engage with internists. I hope they are able to preserve the best parts of their strategy while keeping their members on board.

Should physician member organizations lead charge? My answer is yes, if they are careful to get a buy-in from critical members and make sure that the strategy is as good in execution as it is in concept.

 

Sarah Thomas, Director of Research, Deloitte Center for Health Solutions, Deloitte LLPSarah Thomas is  the director of research for the Deloitte Center for Health Solutions. Sarah has experience in public policy, ranging from reimbursement to addressing issues such as quality in Medicare, Medicaid and the private health insurance market, including health insurance exchanges and marketplaces. She has more than 13 years of government experience.

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This posting originally appeared in the Essays section of Deloitte University Press.

 

05/07/2015

A beautiful strategy is nothing without results


by Reynold W. (Pete) Mooney, Deloitte Touche Tohmatsu Limited (DTTL) Global Managing Director, Life Sciences and Health Care

To paraphrase a famous expression from Winston Churchill, no matter how beautiful your strategy is, you should occasionally look at the results. The saying has never been truer for life sciences firms that are reshaping the industry through mergers and acquisitions (M&A).

There are plenty of M&A examples to look to. In 2014, deals among companies in the life sciences industry represented more than $200 billion—a number greater than the revenue of the entire US fast food industry.1 This is a remarkable figure, especially given that there were no big pharma “mega-mergers” last year.2

M&A is the topic of the panel discussion “Growth and Transformation Strategies at the Intersection of Change: M&A and Beyond" that I will be moderating at the Financial Times (FT) US Healthcare and Life Sciences Conference in New York City on May 6, 2015.3 While traditional M&A has occurred to enable some businesses to achieve scale economies, boost market power and generate cost-saving synergies, I expect the discussion at the conference will center on the fact that this recent round may have been different. The “new world” of transactions is enabling companies to create value through focus and solidify their positions in preferred therapeutic areas.4

As I explained in Beyond M&A: Alternative arrangements appear to be reshaping the life sciences landscape, companies are continuing to invent new and exciting ways to do this:

May 5 Current

Transacting a merger or an acquisition is not a strategy—it is a tactic that can be used to accomplish an organization’s strategic business objectives. At the end of the day, all of this activity is about achieving the desired results: acquiring needed new skills, capabilities and assets, while sharing risk as effectively as possible.

To ensure these strategies succeed, companies will likely need to break down internal barriers and look outside themselves for sources of innovation. They may also need to surmount hurdles that can get in the way of achieving these desired results. Consideration of these strategies may mean taking a keen eye to the following hurdles:

  • Political realities and the limits of geography: Regulatory factors that can impede a company from expanding may be out of your control. This is particularly true when it comes to cross-border transactions. In addition to regulatory matters, increased competition and the ability to identify a target may be significant challenges to international expansion.
  • Brand recognition: Some companies are spinning off new enterprises and businesses that are targeted to specific therapeutic areas or types of customers. Others are forming separate standing companies. It may be wise to consider whether a company’s brand recognition is crisp enough in the given therapeutic field to out-perform the competition. 
  • Tolerating risk: Organizational leadership should consider performing a sufficient risk assessment before making any moves. This may include developing a heightened awareness and increased focus on regulatory compliance risk as well as the affinity for cost-effective alignment and integration of compliance programs and quality systems. Firms that learn how to embrace change, move faster and tolerate risk will be most likely to flourish.
  • Organizational factors: Leaders may need to consider whether there is enough capital available to sustain any transition and whether the leadership committed to making this change in competitive approach is in place. 
  • New conversations: The shift from a volume-based to a value-based approach to care has provider and health plan organizations seeking the necessary skills and tools to manage populations. As such, life sciences firms may be critical partners along the journey if they are able to speak the same value-based language. Organizations should consider whether these new collaborations, colleagues and partners can help them do that.

M&A, in the broadest sense, should remain a major force in reshaping the life sciences landscape. With the cost of developing and launching new drugs in the billions, players will likely continue to look for ways to diversify their risk while acquiring unique skills necessary to develop today’s drugs. While some consolidation is likely to continue, we may see more new arrangements – swaps, spin-outs, partnerships and collaborations – as the industry transforms itself.

The ultimate test of these new strategies will be whether or not these new arrangements are achieving those desired results, the most important of which is better aligning with the needs of the patient.

 

Read the entire Health Care Current here and subscribe to receive weekly updates.

 

Reynold W. (Pete) Mooney, Deloitte Touche Tohmatsu Limited Global Managing Director, Life Sciences and Health CareReynold W. (Pete) Mooney is the Managing Director for the Global Life Sciences and Health Care Industry Practice of Deloitte Touche Tohmatsu Limited. He is a corporate strategy consulting professional with an extensive background in manufacturing and operations in process industries. Over the thirty years of his international consulting career, he has assisted senior executives take advantage of growth opportunities in business segments undergoing dramatic change, transition and globalization.

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Sources:
1 Statista, “Revenue of the United States fast food restaurant industry from 2002 to 2018 (in billion US dollars),” http://www.statista.com/statistics/196614/revenue-of-the-us-fast-food-restaurant-industry-since-2002/
2 Pharma & Biotech 2014 in Review, EvaluatePharma, March 2015. EvaluatePharma classifies “big pharma” as companies with a market value of more than $25 billion and which includes 21 global drug makers.
3 The FT US Healthcare and Life Sciences Conference is hosted by the Financial Times, in association with Deloitte.
4 Pharma & Biotech 2014 in Review, EvaluatePharma, March 2015

05/04/2015

Secure, vigilant, resilient: A sound strategy for cyber-defense


by Mark Ford, principal, Deloitte & Touche LLP

There are two types of health care organizations – those already hit by cyber-attacks, and those that will be. A steady stream of headlines about major system breaches and data theft from providers and health plans has reinforced a growing awareness that the health care industry is more vulnerable today than ever. But let's talk about why.

I think this greater vulnerability can be attributed to a number of factors. First, health care has underinvested in security, especially the provider sector. Attackers will tend to go where rewards are high and risks are low.  Against this backdrop is the growth of digital health, as well as the evolution and the expansion of patient consumerism. Investments to manage these risks, on the whole, are not keeping up with the new and evolving risks being introduced; and now with the introduction of more automation as more and more diverse kinds of data are being collected and stored, health care organizations are becoming attractive targets. Malicious actors can be after anything from theft of identities to theft of intellectual property – and in the worst case, to disrupt operations or harm patients.

We’re facing a fundamental shift in tactics and strategies, on both sides. But the response has been mixed. To date, many providers have been guided mostly by compliance mandates. Meeting basic HIPAA requirements, however, isn’t enough. Fighting the spread of committed and relentless attacks by only reacting to breaches is like “treating symptoms instead of curing the underlying disease,” and isn’t the right strategy.

The bad news is that despite toughening federal and industry standards, clever attackers aren’t going away anytime soon.  Even in the face of a much more sophisticated-persistent threat, too many organizations are still opting to “treat the symptoms” as the cornerstone of their cyber-defense strategy.

On the provider level, I do not believe there is a full grasp of risk and vulnerability, or how to address either. Some have called it a kind of “blissful ignorance:” “If we don’t think about it too often, we don’t have to worry about it,” or a twist on the old saying… “Hear no evil, see no evil, there must be no evil!”

But the better news, and what has me optimistic about the future, is that other industries, such as the financial and public sectors, are investing heavily in cyber security and leading the way with innovative solutions.  Simultaneously, the cyber security technology industry is developing more effective tools – technological, strategic, personal, and process-driven – to help mitigate future attacks and the damage they cause.  With all the headlines in the news, we are seeing health care companies take a more risk-centric approach, both preventively and post-breach.

As more and more providers, health plans, and life sciences organizations begin to understand the strategic imperative of addressing cyber risk comprehensively, they are beginning to ask the right questions:

  • If an enterprise does the right things relative to cyber security, how does that positively impact the business (i.e., drawing new patients to the health system or plan)?
  • What will it mean for protecting market share and shareholder value?
  • With the right structure, plan, people, and technology in place, can an organization leverage an actual breach or a genuine threat to proactively demonstrate how resilient they can be?
  • What will it cost to not invest in what is needed to be secure, vigilant, and resilient?

Some advisors (especially product vendors) try to identify point solutions such as applying encryption, stronger authentication, and patches. These are necessary, but again, this is also “treating the symptoms,” and only part of what is needed to “cure the disease.” Organizations have to put a structure in place that incorporates thinking about and enabling a more comprehensive system of cyber-defense. The three pillars of any successful cyber-defense strategy should be built upon three major concepts: a secure foundation, a vigilant grasp of the continuously evolving threat, and the resilience to bring the business back. 

Knowing what you have in place today, and then investing to build a secure foundational program with appropriate risk-based controls is step one. Vigilance means having the ability to continually monitor threats and adjust as needed; this is a critical element of any effective cyber-security program. And resilience is the framework to survive attacks and ensure business (not just technology) sustainability and continuity against this ever evolving threat.  It’s the ability to recover from an attack in the shortest amount of time when it happens... and it will. 

The move toward a much more open digital landscape expands access and efficiency in information-sharing, on the part of both consumers and providers. But that comes with a price – a more open system provides additional opportunities for hackers.

It’s a price we’re going to be paying, because no one wants to go back. The footprint is broad. The attack surface is getting bigger, and can be more easily penetrated. The cyber-security stakes are higher than they have ever been.

The secure, vigilant, and resilient defense won’t guarantee you 100% security… that’s a fantasy. But it will certainly direct organizations to triage and treat the underlying disease vs. treating the symptoms, thereby protecting assets and operations that matter most to a health care organization’s mission to protect and save lives.

 

More from Mark on cyber security in the health care industry:

 

 

 

Mark Ford, principal, Deloitte & Touche LLPMark Ford is the Life Sciences & Health Care Cyber Risk Services leader for Deloitte & Touche LLP. He has consulted with hundreds of health care, life sciences and health plan organizations, incorporating cyber security and privacy programs into their daily operations. He helps clients tackle the challenging problems they face in the ever-evolving cyber world. Mark advises his clients on how to manage changing regulatory challenges such as compliance with HIPAA and HITECH rules.

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04/30/2015

What if health care wasn’t the way it is?


by Sarah Thomas, Research Director, Deloitte Center for Health Solutions, Deloitte Services LP

“And that’s the way it is.” This famous signoff from renowned newscaster Walter Cronkite marked the end of the CBS Evening News broadcast every night for nearly 20 years. Some may argue this same expression could be affixed to the end of many statements about health care. It’s too expensive…It’s not coordinated enough…Too many tests are ordered for those who don’t need them while not enough preventive care is provided to those who really need it…And that’s the way health care is.

But, what if that wasn’t the way it is?

So far this year, health care has been humming—if not spinning—from announcements, collaborations and legislative and regulatory changes. The goal of each is basically the same: slow health care cost growth and improve health outcomes and patient experience through value-based care.

It’s important to remember what’s at stake here. If value-based care succeeds, it could impact more than just the health care system. Federal and state governments may spend less on public health programs like Medicare and Medicaid. Health care coverage might also be more affordable for employers. And ideally, slower growth in health care costs could also allow employers to raise their employees’ salaries.

If done right, I think value-based care also has the potential to improve the way people interact with the health care system and providers in several ways.

Better patient experience: The new payment schemes involve measuring and rewarding providers for their performance on patient experience. Patient experience reflects many specific attributes of care, including access, communication, amenities and outcomes. Patients may gain more control of their chronic conditions and go to the hospital less often. And when they do go to the hospital, they may avoid hospital infections or errors.

Better care coordination: As information flows between physicians and facilities, fewer patients may need to have tests redone or bring their x-ray results from one consultation to another. If medications and tests aren’t missed or duplicated, providers also know who they are responsible for and the network is able to track who did what to whom and how well in order to reward or penalize people appropriately. This may also incentivize providers to partner with other high-quality providers who can share data effectively.

New dynamics between physicians and patients: Physicians may challenge patients to adhere better to medical advice and to be more active partners in managing their conditions. One outcome of this could be that patients better understand their conditions and the implications of diet and exercise. As we point out in a recent Deloitte Review article, Rising consumerism: Winning the hearts and minds of health care consumers, “upcoming generations may well be expected to approach health care just as they do other services and to seek to curate their own experiences.” There may be market opportunities for the next generation of transparency tools to support consumers choosing among providers and better understanding treatments. But, for people who like physicians to tell them what to do, this shift in expectations may be challenging.

While there is a lot of focus on the potential that value-based care holds, it doesn’t mean that we as patients and consumers should shy away from asking critical questions of this plan for the future of health care. I’ve been asked many questions by friends and colleagues who sit outside of my health care circle. One that resonates with me most often is, “Does this mean we are going back to the days before physicians and individuals rebelled against strict gatekeeping, denials and preauthorization requirements in managed care? And even worse, is this the rationing that some have expected to come out of the Affordable Care Act (ACA)?”

Value-based care does not necessarily mean that consumers will have less choice of providers. Under the Medicare Shared Savings Program, for example, consumers can go to any provider they wish. That said, an organization that is successful in delivering on integration and coordination might focus specialist referrals to the physicians and other providers who have the best results.

Another question I commonly hear is, “Could value-based care turn back the hands of time on high cost sharing, which consumers are telling us makes health care so expensive?” Supporters argue that shifting more costs to the consumer saves money, and consumers’ response – cutting back on care – also means lower spending. And, while consumers faced with high out-of-pocket health care expenses may react with poor medication adherence, there are also strategies to prevent that. One strategy some plans and health systems may employ is to offer lower cost-sharing for high-value interventions coupled with disease management. Such programs could lead to better outcomes and reduced use of costly services.

Ultimately, I see more upside than downside for patients in the future value-based care world. Society and individuals may benefit from better, safer and more affordable care. Patients may also get more involved in their care in a way that leads to better health. In the end, we may be able to look back on the current system and say, “That’s the way health care was.”

 

Read the entire Health Care Current here and subscribe to receive weekly updates.

 

Sarah Thomas, Director of Research, Deloitte Center for Health Solutions, Deloitte LLPSarah Thomas is  the director of research for the Deloitte Center for Health Solutions. Sarah has experience in public policy, ranging from reimbursement to addressing issues such as quality in Medicare, Medicaid and the private health insurance market, including health insurance exchanges and marketplaces. She has more than 13 years of government experience.
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04/27/2015

Beyond M&A: Alternative arrangements appear to be reshaping the life sciences landscape


by Reynold W. (Pete) Mooney, Deloitte Touche Tohmatsu Limited (DTTL), Global Managing Director, Life Sciences and Health Care

Anyone witnessing the frenetic deal-making that has recently swept through the industry might logically conclude that mergers and acquisitions have become the dominant force shaping the global life sciences landscape. Companies announced deals worth more than $200 billion in 2014 – a remarkable figure, especially considering the lack of a Big Pharma mega-merger.1 This momentum has continued in the opening months of 2015.

Mergers & acquisitions (M&A) is the topic of the panel discussion “Growth and Transformation Strategies at the Intersection of Change: M&A and Beyond" that I will be moderating at the Financial Times (FT) US Healthcare and Life Sciences Conference in New York City on May 6, 2015.2  A likely focus of the discussion will be M&A’s role in reshaping the increasingly complex life sciences landscape. In my opinion, transacting a merger or an acquisition is not a strategy; it is a tactic that can be used to accomplish an organization’s strategic business objectives.  It is also, perhaps obviously, not the only tactic.

M&A often drives consolidation that enables businesses to achieve scale economies, boost market power, and generate cost-saving synergies. Some might believe this is historically true in life sciences and while it may still be true to a degree (Actavis’ marketplace activities come to mind), I see consolidation as less of an issue in the current (and potentially, future) marketplace. More often, life sciences companies head to the altar for reasons such as strengthening or rationalizing existing product portfolios or areas of focus, replenishing pipelines, and entering new markets.3  So, we are seeing M&A in a broader sense – a variety of economic transactions (or even less well defined relationships) designed to achieve a diversity of business objectives. Unlike the mega-deals of five years ago – Merck/Schering-Plough and Pfizer/Wyeth, for example – the “new world” of transactions are heralded by deals like the Zoetis spin-off from Pfizer or Novartis’ swap of its vaccine assets for GSK’s oncology assets.  These deals enable companies to create value through focus, solidifying their positions in preferred therapeutic areas.4

This is why I find the “and Beyond” part of the FT panel discussion particularly interesting. Increasingly, M&A, in the transactions sense, is just one way forward as life sciences companies respond to change and retool for the future. Collaborations and partnerships among industry peers, companies large and small; academic centers; foundations; and new players outside the health care sector are gaining favor. At the end of the day, all this activity is about acquiring needed new skills, capabilities, and assets, while sharing risk as effectively as possible.  Companies will continue to invent new and exciting ways to do this.

Collaborations to improve drug development

Large biopharma companies have discovered that pooling resources may yield better R&D-related results than going it alone. As evidence, a group of ten leading Big Pharma companies in late 2012 formed a non-profit collaborative, TransCelerate BioPharma, to share R&D costs and improve time to market for new drugs by standardizing development cycles, from early trials through commercialization. TransCelerate has several initiatives in progress and is dedicated to the goals of improving healthcare quality, shortening drug development timelines, and enhancing patient safety.5

Individual life sciences companies are also working collaboratively to help fill gaps in their product pipelines. In late 2014, US drug maker AbbVie formed a  collaboration with Calico, an independent R&D biotech company established by Google, to develop new medicines to combat age-related diseases. The two companies will share costs and profits evenly.6 

Collaborations to hedge R&D-related risk

In an effort to spread the risk and mitigate the high cost of solely sponsoring R&D ventures, collaborations and alliances have become the norm in discovery and early stage development. According to a Deloitte survey, 61 percent of respondents from pharmaceutical companies said that between 2014 and 2017 they may enter into collaboration and licensing agreements as a growth and transformation strategy. In addition, 44 percent of respondents from medical device companies favored R&D collaborations.7 In one example, Merck and Pfizer entered a global agreement to develop and market Pfizer’s SGLT2 inhibitor ertugliflozin for the treatment of type 2 diabetes. Pfizer received an upfront payment of $60 million and Merck and Pfizer will share revenues and certain costs on a 60 percent/40 percent basis.8

Competitors become colleagues to drive innovation

Life sciences competitors are forging collaborations with leading academic centers and, increasingly, foundations in early-stage projects to pursue innovation.9 Another trend: organizations are evolving into fully integrated pharma network (FIPNet). Eli Lilly is a pioneer in this area. It has several deals with the Chorus Program (an independent institution at Eli Lilly that uses a fully outsourced model to perform research trials) and is involved in external venture funds to develop clinical programs. As a result, Eli Lilly has spread the cost and risk of R&D and is effectively leveraging innovative external innovation.  An example of growing foundation funding comes from the Cystic Fibrosis Foundation, which has become highly active in supporting development efforts.

Collaborations with new players to reshape the future

Collaborations with companies outside the traditional life sciences industry are growing, with the dual aims of enhancing the industry’s agility in response to current digital disruptions, and offering a better standard of health care. In one example, Johnson & Johnson’s (J&J) research arm, Janssen Research and Development, entered into an agreement with 3D bioprinting firm Organovo. That firm has been testing liver toxicity to different drug compounds with the help of 3D-printed liver assays, and its agreement with the pharma company is expected to help Organovo’s drug discovery process.10 In addition, J&J announced in August 2014 that it will use Watson, IBM’s big data-related service, for its R&D activities. With the help of Watson, research scientists at J&J are expected to analyze massive amounts of genomic data and patient histories to find genetic profiles that react to drug samples without any side effects.11

M&A, in the broadest sense, will remain a major force in reshaping the life sciences landscape. With the cost of developing and launching new drugs in the billions, players will continue to look for ways to diversify their risk while acquiring unique skills necessary to develop today’s drugs.  Some consolidation is likely to continue, but this will occur in focused areas.  More likely, we will see a plethora of arrangements – swaps, spin-outs, partnerships, alliances and collaborations, to name just a few, as the industry transforms itself to better align with the needs of the patient.

Join us at the Financial Times/Deloitte U.S. Healthcare and Life Sciences Conference on May 6, 2015 in New York City. Visit www.ft-live.com/ushc2015 to review the agenda and confirmed speakers and to learn more about the conference. When registering, take advantage of Deloitte’s 25% discount off the current rate by entering marketing code FTDEL when registering.

 

Reynold W. (Pete) Mooney, Deloitte Touche Tohmatsu Limited Global Managing Director, Life Sciences and Health CareReynold W. (Pete) Mooney is the Managing Director for the Global Life Sciences and Health Care Industry Practice of Deloitte Touche Tohmatsu Limited. He is a corporate strategy consulting professional with an extensive background in manufacturing and operations in process industries. Over the thirty years of his international consulting career, he has assisted senior executives take advantage of growth opportunities in business segments undergoing dramatic change, transition and globalization.

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Sources:

1Pharma & Biotech 2014 in Review, EvaluatePharma, March 2015. EvaluatePharma classifies “big pharma” as companies with a market value of more than $25 billion and which includes 21 global drug makers.

2The FT US Healthcare and Life Sciences Conference is hosted by the Financial Times, in association with Deloitte.

3World Industry Outlook: Healthcare and Pharmaceuticals – August 2014, The Economist Intelligence Unit

4Pharma & Biotech 2014 in Review, EvaluatePharma, March 2015

5TransCelerate BioPharma Inc.

6Google's Calico, AbbVie forge deal against diseases of aging,” Reuters, September 3, 2014, http://www.reuters.com/article/2014/09/03/us-health-abbvie-google-idUSKBN0GY24H20140903. Accessed March 31, 2015

7M&A Trends in Life Sciences and Healthcare, Deloitte

8Merck & Co., Pfizer partner on development of SGLT2 inhibitor ertugliflozin,” FirstWorld Pharma, April 29, 2013., http://www.firstwordpharma.com/node/1079239#axzz3VzvzPsw1. Accessed March 31, 2015

9Mizuho Industry Focus: Restructuring the Pharmaceutical Industry, Mizuho Bank

10 “Organovo Partners with Johnson & Johnson for 3D Bioprinting Drug Discovery Research”, – 24 July 2014, 3D Printing Magazine

11“Johnson & Johnson to IBM: ‘Watson, come here. I want you’. – October 2014, Fortune 

 

04/23/2015

Interoperability falls flat


by Harry Greenspun, M.D., Director, Deloitte Center for Health Solutions, Deloitte LLP

Prior to flying to Chicago for the annual Healthcare Information and Management Systems Society (HIMSS) Conference, I had a lot to do. More than 40,000 health IT professionals, vendors, policy makers, investors and other stakeholders gather for educational sessions, speeches, exhibits, interviews and social events. And lots and lots of walking.

Along with preparing my presentations, packing and sorting through various meeting requests, I had one critical priority: band practice. My band is preparing for a large (for us) gig at the end of May for our high school reunion.

As with prior events, we welcome guest performers to sit in with the band and as a result, we’ve had a range of people showing up to practice in my basement. Each comes with a guitar or bass, plugs into one of my amplifiers and we start making music. Given the distinctive sounds of some of the songs, we will often use effects pedals with our guitars to get the right tone. Each pedal contributes to the overall sound, easily swapped depending on who is playing what, simply by re-routing cables. While we may obsess over the sound, the one thing we don’t fret over is the setup. We just plug and play.

A few days later I found myself in Chicago, walking the exhibit halls and touring the Interoperability Showcase, where vendors highlight the flow of information from one application to the next. To the casual observer, one would think that the industry had fully embraced interoperability.

But, the truth is actually more complicated.

Earlier this month, the Office of the National Coordinator for Health Information Technology (ONC) released a report saying it is “increasingly concerned about” what it views as unreasonable interference and information blocking coming from both vendors and providers. It noted in particular that a few entities had too much control over electronic health information.

The report said that “current economic and market conditions create business incentives” for certain entities to control electronic health information and limit its availability. It pointed to 60 reports of this practice in 2014. Though no specific companies or “bad actors” were named, the report also included several recommendations to increase the exchange of EHR information. The ONC’s recommendations include creating new transparency obligations for developers and new certification requirements that strengthen surveillance of health IT capabilities and pushing for a national governance framework for health IT exchange with clear principles regarding interoperability and information sharing.

How do we reconcile the seemingly contradictory views between the ONC and the broader health IT industry? Health care is evolving quickly, and the requirements many sought when implementing systems have changed dramatically in the last few years. When Meaningful Use (MU) was born out of the Health Information Technology for Economic and Clinical Health (HITECH) Act in 2009, users sought systems to help document visits between providers and patients. Accountable care organizations (ACOs) did not exist, and outside of integrated delivery networks, few engaged in alternative payment methods (APM) that focused on value or outcomes. Even some of the MU Stage I requirements, such as the requirement to share data with patients by burning them a CD, appear quite dated now.

With value-based care, new priorities have emerged: data sharing, care coordination, patient engagement, and predictive analytics. In addition, consolidation among providers and overall convergence in the industry has accelerated the need for interoperability, not just for electronic health records (EHRs), but also for medical devices, wearables and more.

Ultimately, the broader question is, “How can systems keep pace amid such rapid change?” ONC has said it will work with the US Department of Health and Human Services (HHS) to explore whether creating new conditions of participation in federal health programs is feasible or if a more traditional enforcement agency should take a leading role. The ONC also said in the report that requiring more transparency from developers regarding business practices that could interfere with the exchange or use of electronic health information “would be an effective, market-based approach to preventing many types of information blocking.” In particular, it highlighted enabling customers to access, discuss and share information on vendors.

While there is a role for government to set and enforce rules and point the industry in the right direction, I believe market forces will likely dominate. I can pull any guitar off my wall and plug it into any combination of amplifier and effects to suit my needs. If something does not sound right, I can quickly swap it out. If something goes wrong, I can easily identify and fix malfunctions. Therefore, I don’t buy products that don’t harmonize with the other elements of my system.

Health systems are beginning to shop for technology the same way, both for EHRs and medical devices. The Center for Medical interoperability will assist hospital and health systems as they and broader health care stakeholders advance interoperable practices across the system. With greater needs to connect applications and facilities to meet new payment models and operational challenges, hospitals and health care systems are sending a message to the industry that they intend to buy products that are proven to be interoperable and, in some cases, interchangeable. Industry efforts, such as the CommonWell Health Alliance, which is creating a vendor-neutral platform to advance effective health data exchange, are responding as well.

While I cannot predict how soon health care technology will play well together, the good news is that our band is sounding pretty good. I am also confident that if my friend Pete shows up with his Telecaster, or Dave arrives with his 1949 Gibson J-45, they can join in without missing a beat.

 

Read the entire Health Care Current here and subscribe to receive weekly updates.

 

Harry Greenspun, MD, Senior Advisor, Health Care Transformation and Technology, Deloitte Center for Health Solutions, Deloitte LLPDr. Greenspun, director with the Deloitte Center for Health Solutions, Deloitte Services LP,  serves health care, life sciences and government clients on key innovation and clinical transformation issues. He was named one of the “50 Most Influential Physician Executives in Healthcare” by Modern Healthcare, co-authored the book “Reengineering Healthcare” and has served on advisory boards for the World Economic Forum, WellPoint, HIMSS, and Georgetown University. He previously served as the CMO for Dell.

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04/20/2015

From patient to customer: Making patient care more customer-centric


by Dan Housman, Director, Deloitte Consulting LLP, CTO, ConvergeHEALTH by Deloitte

The Internet has taught us valuable lessons about what works and what doesn’t in regards to identifying, engaging, and retaining customers.

Retailers are increasingly using sophisticated data aggregation and customer stratification methods to build business and grow revenues. Other industries are also leveraging technological advances to directly improve and enhance customer relationship management (CRM).

The health care industry? Not so much.

For a variety of reasons related to regulatory requirements, competitive pressures, cost considerations and privacy concerns, health care has lagged behind other industries in the development of effective CRM strategies. The industry has been slow to adopt data collection and communication models that promote value-based care and the inclusion of care team members (both clinical and non-clinical).

Since I first entered the health care industry many years ago, I’ve been surprised by the absence of innovative CRM capabilities that are typically commonplace in other industries. The contributing challenges may include:

  • Data fragmentation and the lack of data interoperability: This has made it difficult to collect, centralize, and distribute medical information in a way that can engage the patient more thoroughly.
  • Stakeholder competition: In the provider and health plan sectors, these competitive factors have resulted in a reluctance to both share patient data and collaborate within networks to improve patient outcomes without sufficient financial incentives.

Perhaps these challenges are related to not thinking of patients as customers.

The Affordable Care Act introduced several new changes that accelerate the need to improve outcomes via patient engagement and a customer-focused strategy. These changes include new financing, care model transformations, and value-based structures that leave no doubt – deeper patient engagement is more critical than ever, and developing commercial models to execute this new dynamic is essential.

With the advent of accountable care, provider organizations and integrated health systems may face increasing regulatory and industry requirements to improve clinical outcomes, while simultaneously reducing costs. From a practice standpoint, episodic treatment of symptoms versus the development of long-standing relationships that center on prevention and wellness is akin to missing the forest for the trees.

To build an effective patient relationship management (PRM) model, consider turning back the pages to a commercial generation. The lessons first imparted during the early days of the world-wide web and the development of e-commerce are still instructive and valuable for health care providers, 15+ years after they first began to take hold.

There are a number of strategies organizations can apply to make patient care more customer-centric:

  • Build systems that incorporate e-commerce/CRM tools: Other industries leverage these systems to great advantage. These components could enable patients to have full access to their medical records and subsequently improve their decision-making and management of their health care.
  • Consider utilizing traditional CRM systems: These systems can enable organizations to develop capabilities closer to traditional customer engagement. These systems often contain simple tracking and campaign management methods, the kind patients have perhaps seen with their dentists, but not their primary care physician or specialist.
  • Develop, promote, and utilize available mobile apps: There are tens of thousands of available apps out there that link to medical information, few of which are actually utilized on a regular basis. Health care providers and plan administrators should take advantage of these opportunities to incorporate and leverage patient generated data.
  • Identify, personalize, and utilize the appropriate communication channels to help ensure higher levels of patient engagement: If a patient and provider can accomplish the same outcome or better with text or email as they could in an in-office doctor appointment, then why not leverage the text message? If the goal is to assist a patient with smoking cessation, a text reminder may be more valuable and effective than having the patient schedule an appointment and come in to be given that reminder. The key is to leverage the right communication channel to achieve higher value per interaction.

Think about the conventional office visit. The first 10-15 minutes are usually taken up with questions about the patient’s reason for making the appointment and what’s changed since their last meeting. More direct patient interaction before the visit will likely permit more quality time in-office with the physician. If the future for our industry is to improve patient outcomes, facilitate better access, and reduce costs, patients need to be treated as customers who are willing and able to demonstrate a more active and engaged participation in their personal care.

We have the tools and resources. Now, we need a comprehensive plan, and a genuine commitment.

Hear more from Dan Housman on the topic of patient engagement:

 

To learn more about moving toward customer-centric care, visit the ConvergeHEALTH by Deloitte website.

 

Dan Housman, Director and Chief Technology Officer, ConvergeHEALTH By Deloitte, Deloitte Consulting LLP

Dan Housman is a software veteran with a demonstrated track record of providing valuable and innovative decision support systems to large, complex organizations. Dan leads ConvergeHEALTH’s product innovation efforts with a focus on translational research, bioinformatics and innovative approaches to data capture, analysis, and reporting for clinical quality and performance improvement. Dan earned a BS in Chemistry and Biology from MIT in 1995.

 

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