10/16/2014

Imagine health care without technology


by Bill Copeland, Vice Chairman, U.S. Life Sciences & Health Care Leader, Deloitte LLP

Try to imagine not being able to read. Howard Wainer, an American statistician, poses this challenge to his statistics students when he teaches his introductory course. To him, the idea of statistics to those who learn it is similar to learning how to read or swim. He goes on to explain that, while it is difficult to learn these skills, once you do, you cannot imagine a time that you were unable to read or swim.1

Try to imagine health care without technology. No MRIs, X-rays or even stethoscopes. For me, it’s difficult to imagine—technology has brought the health care industry a long way. However, despite the massive investments many organizations have made on information technology (IT), it is not doing all the things we want it to do—systems do not talk to each other, and use of these systems for new analytic insights is just beginning.

Stakeholders across the health care system are working to correct this disparity. While there may be frustrations around Meaningful Use and challenges with adopting electronic health records, the support behind health IT continues to grow. Even with this support, however, challenges still remain.

My colleague Sarah Thomas and I recently had an opportunity to address some of the most pressing IT challenges facing the health care system. In June Senators Ron Wyden and Charles Grassley, who represent the Senate Committee on Finance, sent a letter to stakeholders from across the health care continuum asking for comments and feedback on the state of data transparency in the health care system.

Their request was backed by some eye-opening statistics:

  • The amount of information that is stored digitally has grown from 25 percent to 98 percent worldwide since 2000
  • Five quintillion bytes of digital data existed in 2003—as much is generated every two days now2

We responded to this request from Senators Wyden and Grassley by discussing two questions that are critical to the health care system:

How can the federal government encourage a “culture of interoperability”?
Interoperability is a patient safety issue. Some estimate that anywhere from 8-14 percent of medical records have information attributed to the wrong patient.3 In order for the health care system to move toward greater interoperability, advancements in technology are not enough—even with the unprecedented rate of progress that has taken place in the last decade. The federal government could inspire this culture of interoperability by:

  • Offering incentives to providers and other stakeholders to agree upon and implement standards that are flexible enough to meet the broad scope of needs of individual stakeholders in the system
  • Encouraging vendors (e.g., electronic medical records) to expose their data model and agree to use the same standards (both existing and future) for use in collaborations, roadmaps and coalitions related to interoperability
  • Identifying and promoting the use of best practices to build interoperability into a system early in development
  • Broadening Medicare and Medicaid incentives for health IT from technology adoption and use alone to include successful interoperability

How can the government encourage consumer engagement in health care?
Patients want their doctors to use health IT, but more can be done to advance patient engagement. Deloitte’s 2013 Survey of Health Care Consumers found that seven in 10 consumers say they would prefer a physician who uses health IT over a physician who does not.4 Mobile apps, telehealth and other nontraditional care delivery models are enhancing overall consumer engagement in health care, but more can be done to advance the consumer engagement movement in health care and capitalize on consumer interest. The federal government could lead the way toward greater consumer engagement by:

  • Advancing more pilot testing in the area of telehealth to help ensure this evolving model of care does not introduce new sources of error into clinical processes
  • Creating demonstration projects that reduce regulatory barriers to telehealth technologies and guide stakeholders on how to develop and refine telehealth programs to improve health outcomes and reduce costs by making care more efficient and convenient
  • Driving reimbursement reforms to achieve quality outcomes against evidence-based standards through its role as both a payor and a provider
  • Further incentivizing and setting the example for the use of value-based insurance design as a way to create incentives for consumers in Medicare Advantage and the private health insurance marketplaces to make health care decisions that are cost-conscious

The Deloitte Center for Health Solutions’ surveys have found system-wide discontent with health care. Consumers do not believe the system is providing value, nor is it meeting their needs.5 Employers are also looking for more: 52 percent want greater transparency around prices, and 46 percent want clear, accessible information about care provided by doctors.6 These findings suggest that there is great potential for new product ideas at the intersection of information technology and consumer demand for transparency.

My youngest daughter was born at the turn of the century, and incredible to me, cannot imagine life without computers or the Internet. The U.S. health care system could one day move to one in which my grandchildren can only picture the system as one where systems connect with each other and consumers use tools that help them find the highest value services, plans and providers. 

Read the entire Health Care Current here and subscribe at: www.deloitte.com/centerforhealthsolutions/subscribe.

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Sources:
1 SAS Institute Inc., “Analytically Speaking – Interview with Howard Wainer,” http://www.sas.com/apps/webnet/webcast_viewer.htm?index=wc_jmp01sep14bc
2 Senators Ron Wyden & Charles Grassley, Letter to Stakeholders on June 12, 2014, http://www.finance.senate.gov/imo/media/doc/Wyden Grassley data transparency letter5.pdf
3 ONC, “Patient Identification and Matching Final Report” February 2014. http://www.healthit.gov/sites/default/files/patient_identification_matching_final_report.pdf
4 Deloitte Center for Health Solutions, “Survey of U.S. Health Care Consumers,” 2013
5 Deloitte Center for Health Solutions, “Survey of U.S. Health Care Consumers,” 2013
6 Deloitte Center for Health Solutions, “Survey of U.S. Employers,” 2013

Bill Copeland, Vice Chairman, U.S. Life Sciences & Health Care LeaderBill Copeland is the U.S. Life Sciences and Health Care Leader for Deloitte LLP and the sector leader of the practice's health plans group. Bill helps companies and governments better address the direct challenges and extended ramifications caused by new developments with ICD-10, electronic health records, health insurance exchanges and accountable care organizations.

10/14/2014

Blurring lines and radical transformation: M&A in life sciences and health care


by Phil Pfrang, Life Sciences and Health Care Financial Advisory Leader, DTTL

Without question, the life sciences and health care industry is transforming radically; both blurring the lines between providers, health plans, and life sciences companies and breaking down the traditional geographic borders that have historically defined industry participants. Deloitte Touche Tohmatsu Limited recently completed a global survey of M&A trends in the life sciences and health care industry in collaboration with the Economist Intelligence Unit (EIU) to explore the drivers behind this transformation and the factors that are top of mind for life sciences and health care companies as they react to market forces. A number of key findings emerged from the results of the survey.

What factors are driving M&A activity?

Respondents to the survey identified increased financial and competitive pressures as the number one driver of M&A activity. From the great patent cliff impacting biopharmaceutical companies to the competitive pressures facing medical device manufacturers to the impact of health care reform globally, participants in the life sciences and health care market are feeling increased financial and competitive pressures and one way to deal with those pressures is to seek additional economies of scale through M&A. The pace of change within the industry through disruptive technologies, new approaches to the delivery of care, such as personalized medicine, and the emergence of new delivery models, is putting further pressure on life sciences and health care companies to innovate. And often times the fastest way to innovate is through acquisitions.

What geographic regions are likely to see the greatest level of investment and from where?

The results of the survey indicate that life sciences and health care companies expect to direct future investment through M&A activity toward high growth markets at the expense of lower growth markets. Specifically, Asia Pacific was identified as the number one outbound investment market for companies based in both Western Europe and North America. In fact, Western European companies, arguably companies operating in one of the slowest growth markets globally, indicated that only 31% of their M&A investments would be directed toward their home geographic territory. Almost two-thirds of the outbound M&A investment for Western European companies would be directed toward Asia Pacific, arguably the fastest growing life sciences and health care market. 63% of companies based in Asia Pacific indicated that their primary target market for M&A would be right at home in the Asia Pacific market.

While the big life sciences and health care companies that operate in North America, Asia Pacific, and Western Europe all indicated significant investment abroad, the smaller companies based in geographic regions such as the Middle East, Africa, Eastern Europe, and Latin America indicated they were much less likely to invest abroad. In fact, only about half of that group indicated they were likely to invest outside of their primary geographic home base and even then, most indicated that their investments would be in “adjacent geographies where cultural and language differences were less significant." For example, Western Europe was identified as the primary outbound market for companies based in the Middle East, Africa, and Latin America – very different from the strategy of the rest of the world, including even Western Europe where only 31% of companies actually based in that region identified that as their primary target market for M&A.

What are the greatest challenges associated with international expansion?

The survey also asked respondents to identify the greatest challenges with respect to international expansion and the results seem to align closely to the geographic orientation discussed above. The number one challenge identified was related to knowing the market and regulation, which are arguably the same thing. Life sciences and health care is one of the most highly regulated industries and the ability to navigate those regulations is key to the success of any international expansion strategy. Clearly, the larger companies based in North America, Western Europe, and Asia have the scale and depth of resources to navigate the complexity of global regulations.

In the coming years, life sciences and health care companies will face a wide range of pressures – from regulatory to economic – and keeping pace will require alternative business models, additional skills, greater efficiencies, new paths to innovation, and creative strategies for growth. The firms that learn how to embrace change, move faster, and tolerate risk will be the ones most likely to flourish.

Read M&A trends in life sciences and health care: Growth at the global intersection of change to explore the full findings.

 

Phil Pfrang, Partner, M&A Transaction Services, Deloitte & Touche LLP

Phil Pfrang is DTTL financial advisory leader for the Life Sciences and Health Care industry. He has assisted clients with more than 600 completed or proposed transactions in a broad cross-section of industries. He has served many of DTTL's most important strategic and private equity clients. Phil has extensive experience in international and cross-border transactions.

10/09/2014

Attention passengers: The Open Payments database is now live


by Harry Greenspun, M.D., Senior Advisor, Deloitte Center for Health Solutions, Deloitte Services LP

I fly a lot, so I’ve gotten pretty good at managing travel disruptions. Despite storms, strikes, technical malfunctions and even volcanoes, I generally find a way to arrive close to where I need to be relatively close to when I need to be there.

Therefore, when I woke up in Chicago on Friday, September 26 to the alert that O’Hare and the nearby airspace was shut down, I was confident I could find my way home to Washington, D.C. that night. Between using my airline’s website, monitoring a third-party flight status site that pulled data from the Federal Aviation Administration and exchanging emails with my friend Jim (a commercial pilot), I was quickly able to ascertain that my flight would not go, but another might. After securing a reservation on that flight, I was able to track and monitor the status of the inbound aircraft, re-arrange calls and meetings and update my rides to and from the airports. Ultimately, I arrived home about 90 minutes later than originally planned, which allowed me to keep my normal evening schedule of eating dinner with my family and walking the dog. In this instance, faced with real-time decisions, I was able to access the data I needed to take action.

Four days later, last Tuesday, September 30, 2014, I got the alert that the Centers for Medicare & Medicaid Services (CMS) Open Payments database, a next step in the governments march toward transparency, had gone live. Intended to “give the public more information about the financial relationships between physicians and teaching hospitals and applicable manufacturers and GPOs,” the site includes a broad swath of data:

  • Information about financial relationships between physicians and teaching hospitals and medical device and pharmaceutical manufacturers and group purchasing organizations (GPO) that might exist (including names and locations for each in the relationship)
  • The nature of the payment being shown, such as consulting fees, gifts, food and beverage, research and grants
  • Whether the payment is associated with a specific drug or medical device, and if so, the applicable name1

Reaction to the release mirrored the prior release of Medicare data on physician payments (see the My Take, “Seeing past the blind spot: is transparency in health care enough?” from the January 28, 2014 Health Care Current). While some groups lauded the increase in transparency, others raised concerns about accuracy and whether users could take the data out of context or confuse the payments for research with marketing and entertainment relationships. The next day, the headline in my inbox read “Open Payments website reveals $3.5 billion paid to docs, hospitals.”2

Curious, I decided to look for myself, utilizing the CMS Data Explorer. It took me a few tries, and the help of one of our policy analysts, but I was eventually able to get an 11 MB spreadsheet that contained many lines of information, physicians’ names and companies. The immediate question that came to my mind was, once any concerns about the site and context are quelled, will patients begin to take notice? Aside from the catchy headlines, consumers’ interest in and use of publically available data has historically been quite low. Deloitte’s survey of U.S. health care consumers found that only one in eight consumers say they referred to a score card or report card to compare doctors in the past year.3

If consumers really do begin to take notice, in my opinion, it could open up additional areas for individual organizations and the industry to address:

  • What will be the impact on policies at institutions? Conflict of interest policies are nothing new, and many organizations (both by regulation and by choice) have adopted strict rules around relationships and disclosure related to business interests, self-referral and other sources of undue influence. However, other organizations may lack this rigor, and the release of this data could serve as a call to action.
  • How will the information impact innovation, public-private partnerships and industry-sponsored research? As noted, a major category of payments highlighted is for clinical research, and those who take the time to examine the data closely will hopefully be able to tell the difference between that and payments for meals and entertainment. Still, some may be concerned that their appearance in the database may ultimately be misinterpreted and their level of trust undermined. As a consequence, will institutions begin to reconsider their relationships with incubators, consortia and other platforms for research and development?
  • What about other new entrants? While the data reflects payments from pharmaceutical and medical device companies, many other industries are pushing their way into health care and seeking relationships with physicians. While many types of firms may currently fall outside the scope of this program, technology firms, retailers, developers and others represent a vast new frontier of potential influences to physician behavior. Will physicians begin to prescribe use of these new devices (e.g., mobile apps)? If so, will that bring those types of products into the regulatory spotlight?

As I sat in O’Hare airport, even in an evolving situation, I had the information I needed to respond. As health care consumers become savvier, using the experiences they gain from other industries, they may expect to have information and tools to support their health care decisions. The health care industry, and new firms wishing to enter into it, might have a competitive advantage if they pay more attention to consumer perception and decision making.

 

Read the entire Health Care Current here and subscribe at: www.deloitte.com/centerforhealthsolutions/subscribe.

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Sources:
1 CMS, “Open Payments Data in Context, http://www.cms.gov/OpenPayments/About/Open-Payments-Data-in-Context.html
2 Jaimy Lee, Modern Healthcare, “Open Payments website reveals $3.5 billion paid to docs, hospitals,” September 30, 2014
3 Deloitte Center for Health Solutions, “2013 Survey of Health Care Consumers

Harry Greenspun, MD, Senior Advisor, Health Care Transformation and Technology, Deloitte Center for Health Solutions, Deloitte LLP

Harry Greenspun, MD is a director with Deloitte Services LP and the senior advisor at the Deloitte Center for Health Solutions. He has held a diverse range of clinical and executive roles across the health care industry, giving him a unique perspective on current and future challenges.

10/06/2014

Medical devices and additive manufacturing: A natural fit


by Glenn Snyder, Principal, MedTech Practice Leader, Deloitte Consulting LLP

The disruptive potential of additive manufacturing (AM), often referred to as “3D printing,” is undeniable. We’re on the ground floor of a new technology that offers the promise of enormous change in the way we design, create, market, and distribute products.

Many would agree that life sciences and medical technology (medtech) companies are uniquely positioned to take full advantage of cutting-edge AM technologies and prospective funding sources to build potentially game-changing business models.

The medtech industry already stands at the forefront of this transformative change. Medical applications account for a significant portion of the AM market; about one-sixth of system-related revenues according to a 2013 study by Wohler Associates.1

AM capabilities align well with the growing needs of the medtech segment. We think it’s a natural fit. Medical devices and tools tend to be small: hearing aids, surgical implants, dental crowns. They are also value-dense, combining high value with relatively small physical volume. Finally, medical devices benefit from AM-enabled custom-tailoring to improve patient fit and clinical efficacy.

There is strong and growing financial interest in supporting new technological applications across the sector. In 2012, medical device revenues topped $121 billion, with forecasts placing growth at an annual rate of 5.4 percent.2

If successful technological application is the product of opportunity, timing, and resources, then the future of AM for medical product development and along the supply chain is exceedingly bright. However, medtech companies face critical business decisions; and those decisions, and how they develop operating plans based on them, will determine their level of success.

In our view, companies in the medtech space can follow one of four distinct tactical paths to incorporate AM into their business planning and manufacturing processes, with ascending levels of risk and potential profitability:

Center_For_Health_Solutions_DUPress_Additive_Manufacturing

Path I: Those seeking to maintain their competitive footing, but reluctant to incur substantial risk or costs generated by AM adoption can opt for stasis, perhaps limiting their investment to adopting AM for rapid prototyping, production and custom tooling, or the creation of illustrative medical models.

Path II:  A second path centers on supply chain evolution. On this path companies take advantage of scale economies offered by AM as a potential enabler of supply chain transformation for the products they offer, perhaps finding new ways to deploy medical technologies, such as print-on-demand capabilities in hospitals and clinics.

Path III: A third emphasizes product evolution through greater commitment to areas such as mass customization and bioprinting. On this path, companies take advantage of the scope economics offered by AM technologies to achieve new levels of performance or innovation in the products they offer.

Path IV: The fourth path available to industry participants is broader and more inclusive, effecting evolutionary changes to both supply chain and product manufacturing. It’s an appealing approach for business leaders with a touch of daring, willing to adopt new business models with AM as a core component. But it does require forward-thinking companies whose leaders have an appetite for tackling risk and operational uncertainty.

The challenges facing implementation of an AM model might give some company leaders pause. Medtech manufacturers face tough regulatory pressures from the U.S. Food and Drug Administration and other oversight agencies. However, this oversight may not be as burdensome as it is for drug makers; cycles of innovation tend to be shorter in the devices sector, but new medical devices can take as long as 10 years to come to market.

We think federal oversight will likely intensify for AM products as these innovations are so new and the impact of 3D implants, including their structural quality and endurance, demand more intensive scrutiny. While the potential benefits of AM are many (it can spur additional innovation, improve patient access to life-saving devices, simplify and accelerate the supply chain and production process, and achieve considerable savings), are medtech companies willing to commit the time and resources to AM to overcome potentially burdensome regulations?

It’s a tightrope walk. Push too fast and it could turn out to be too costly in terms of time and resources. Respond too slowly and cautiously, and medical device manufacturers could find themselves well behind the competitive curve. Business leaders across the industry need to decide how they will proceed, assess the regulatory landscape, and plan accordingly.

To learn more, read 3D opportunity in medical technology: Additive manufacturing comes to life.

1 Wohlers Associates, Additive manufacturing and 3D printing: State of the industry, 2013, p. 14. 2Espicom Business Intelligence Ltd., The WorldMedical Markets Fact Book 2012, 2012.

 

Glenn Snyder, Principal, MedTech Practice Leader, Deloitte Consulting LLP

Glenn Snyder is a principal with Deloitte Consulting LLP, leading Deloitte’s medical technology industry practice. He advises clients in the areas of corporate growth, business model innovation and commercial strategy.

10/02/2014

Applying a venture capital approach to accelerate cures


by Terri Cooper, PhD, Principal, Federal Health Sector Leader, Deloitte Consulting LLP

Seventeen years ago many of us were tuned into the O.J. Simpson trial and preparing our telescopes for the last viewing of Hale-Bopp until the year 4397. For some that may seem like a long time ago, but 17 years is the short end of the typical life cycle for a scientific discovery in medicine. Many medicines take anywhere from 17 to 23 years to make their way into the day-to-day practice of doctors and hospitals.1 And, the majority of initially promising discoveries – 86 percent2 to over 95 percent3 by some estimates – fail to even make it that far.

Given the complexity of the medical research and development (R&D) process and the careful testing that is required to be sure biopharmaceutical products are safe and effective, these facts may be easy to understand. But, for many, they are not easy to accept.

As I covered recently in a blog post, “The Ebola outbreak: A call to action for a translational approach to R&D,” the goal of translational medicine (TM) is to bring a greater number of biopharmaceutical products into health care delivery more quickly and successfully. However, the current TM process has been regarded by many as complex and protracted. Government agencies and nonprofits (“funders”) often lack a systematic business framework to select and fund TM projects for maximum potential investment return.

Venture capitalists (VC) currently play a major role in the U.S. economy, but there is more to be gained from them than just their investments. The VC model offers a framework for funders to integrate into their TM evaluation processes. VC practices for project identification and decision making, active project and portfolio management, and partnerships could help funders more effectively select and assess TM projects.

What core elements of VC could funders apply to their TM decisions?

Rigorous project identification and decision making: VCs use rigorous processes to assess and compare projects in a systematic and objective manner with respect to multiple factors. They seek out expertise before executing deals. By performing a similar business-centered project analysis, vetted with external multi-disciplinary experts, TM funders could undertake a more strategic project selection approach. Key questions for TM funders might include:

  • How should market considerations such as prevalence, burden of disease and available treatments be built into the vetting process?  
  • What is the potential of scientific merit in terms of novelty of pathway and level of innovation?
  • Does the project have technical merit with respect to the potential feasibility of moving along the TM continuum?
  • Is there commercial viability or reimbursement potential in the project?
  • What is the potential level of financial/social return on investment?
  • Does the project have potential for achieving positive impacts on health?
  • Are there multi-disciplinary experts both internal and external, such as advisory boards, available to help determine where and how to invest?

Active project and portfolio management: VCs have strategic plans and portfolios that are carefully selected to align with the organization’s goals. They often invest in multiple industry segments and take a long-term strategic view of their investments. They typically provide managerial and technical support, such as consulting services or business training. Through active project and portfolio management, TM funders may be able to develop a balanced portfolio with a long-term impact view where projects are funded in stages based on the achievement of milestones. Depending on the projected long-term return on the TM investment, management decisions could be made about whether the project could be licensed, sold, engulfed into another project, or receive additional funding. Key questions for TM funders might include:

  • Does project collection (portfolio) reflect an integrated, complementary strategy or vision?
  • Is the time length of a project balanced/assessed against its level of potential success?
  • Is overall risk managed by achieving a balance between high-return and low-return projects?
  • Are short- and long-term investment impacts assessed against other investment opportunities?
  • Could funding schedules be set to provide funding in series/rounds or stages based on meeting specific performance milestones?
  • What internal managerial and technical support, such as in the area of talent acquisition or business plan development, do the grantees require? Does the funder have the right in-house experts to deliver this support or do they need to be acquired?
  • Has the business plan development involved an iterative process with multiple stakeholders?

Collaboration and partnerships: VCs use their extensive networks to connect and facilitate collaboration among the start-up companies with which they have relationships. They also may identify and consolidate entities, such as those developing similar products, for greater efficiency and market positioning. A similar approach to partnerships/collaborations could provide TM funders a greater flow of data and effective practices. In this light, TM funders could consider questions such as:

  • What collaborative relationships, and grantee incentives to participate, might be established to facilitate the exchange of ideas and insights among similar projects?  
  • Does the funder have the right network of external experts to assist scientists in moving their project from lab to market?
  • Does a shared informatics infrastructure (for validating, evaluating, integrating, and sharing data among project stakeholders) exist or does it need to be created?  How could funders partner to improve, expand, or develop this infrastructure?

In 2013 VCs provided $29.6 billion worth of capital to more than 4,000 investments.4 In doing this, they provided millions of jobs and trillions in revenue. By looking to this framework, funders may be able to improve the pace, focus and adoption of high-impact TM projects to accelerate cures.

It’s been 17 years since millions of teenagers were flocking to the CD stores to buy the Titanic movie soundtrack. Meanwhile, heart disease takes 600,000 lives per year, cancer takes nearly 1,600 lives per day and every 67 seconds someone is diagnosed with Alzheimer’s.5 Improvement in the translational timeline is needed now.

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P.S. For more on how translational sciences can benefit medical research, see the “NIH awards $17 million for 3D tissue chips research” story below and view Deloitte’s recent whitepaper, “Path to 21st Century Cures – A Call to Action."

Read the entire Health Care Current here and subscribe at: www.deloitte.com/centerforhealthsolutions/subscribe.

 

Sources: 1 Balas EA, Boren SA. Managing clinical knowledge for health care improvement. In: Bemmel J, McCray AT, eds. Yearbook of Medical Informatics. Stuttgart, Germany: Schattauer Publishing; 2000:65‐70. 2 Westfall JM, Mold J, Fagan L. Practice‐based research: “Blue Highways” on the NIH roadmap. JAMA. 2007;297:403–6. 22 3 NIH. About NCATS. Available at: http://www.ncats.nih.gov/about/about.html 4 Recent Stats & Studies. 2014  April 3, 2014]; Available at: http://www.nvca.org/index.php?option=com_content&view=article&id=344&Itemid=103 5 Centers for Disease Control and Prevention, “Heart Disease Facts,” 2014; American Cancer Society, “Cancer Facts and Figures,” 2014; Alzheimer’s Association, “Alzheimer’s Facts and Figures”

Dr. Terri Cooper is a Principal of Deloitte Consulting and is the leader of the Federal Health Practice. She has two decades of experience working in various capacities relating to the Life Sciences Healthcare Business. For the past 18 years she has worked as a consultant to the industry. Prior to joining Deloitte Consulting she was a partner in the Global Pharmaceutical/Life Sciences Practice within IBM Business Consulting practices, where she had responsibility for leading the Global R&D Pharmaceutical/Life Sciences Practice. In her current client relationship role she has responsibility for product and service offerings in research and development to selected global pharmaceutical companies headquartered in the U.S. Dr. Cooper is a frequent participant at industry conferences where she frequently speaks on topics relating to the issues affecting pharmaceutical research and development.

09/29/2014

The Ebola outbreak: A call to action for a translational approach to R&D


by Terri Cooper, PhD, Principal, Federal Health Sector Leader, Deloitte Consulting LLP

As of this week, the Ebola outbreak in West Africa has killed more than 3,000 people across Guinea, Liberia, Nigeria, Senegal, and Sierra Leone.1 It marks the largest Ebola outbreak in history. One clear focus throughout the outbreak has been on finding a cure. In light of this health crisis and the increasing concern about the rising prevalence of serious chronic diseases, it seems a perfect time to redouble our efforts on shifting to a translational strategy in life sciences—a strategy that could help bring innovative and cost-effective products to market more quickly.

Traditionally, the research and development (R&D) processes within the life sciences value chain –  discovery, development, and delivery –  have occurred in silos with limited sharing of data and effective practices from one step to the next, and little or slow looping back to earlier phases with insights and information that might inform future iterations of improvement and innovation at each stage. Today and through the current process, translation of scientific evidence from discovery into health care practice typically takes 17 to 23 years.2 Companies, governments, and people are losing time, money, and opportunities – opportunities to improve health outcomes around the world, as well as chances to revive the global competitiveness of the U.S. However, forces within the health care landscape, such as legislation, regulation and the rise of big data and analytics, are pushing stakeholders to look differently at how they approach the value chain.

Shifting to a translational approach – in which a more dynamic, integrated, and continuous process of data sharing occurs between the traditional steps in the R&D value chain – holds great opportunity for accelerating iterations of scientific discovery and development, implementing evidence in practice more efficiently and effectively, acquiring a deeper knowledge about product safety and effectiveness, and reducing overall R&D costs. It’s hard to think of anything that could be “lost in translation” if companies were to refine their R&D process in the ways that a translational approach suggests.

What would a translational approach to R&D look like?

Moving toward a system of translational medicine would create a continuous flow of data between the discovery, development and delivery processes of the R&D value chain. By increasing data sharing between these steps, a continuous and systematic process improvement cycle is established. That cycle can then provide critical information than might be typical for decisions arising along the value chain, resulting in the earlier termination of unsuccessful compounds, improved trial design and recruitment, better understanding of disease and care pathways, and improved post-marketing surveillance capabilities.

How can we move faster? 

Speeding up the R&D process will require action on several fronts. Progress is occurring in many areas, but acceleration is needed to address growing health threats and recent declines in the global competitiveness of the U.S. Deloitte recently had the opportunity to engage with Congress on this process by producing a report, “Deloitte’s Path to 21st Century Cures: A Call to Action.” In it, we identify several ideas for achieving a translational approach to the R&D value chain: 

  • Increase incentives to use translational approaches in biopharmaceutical R&D by increasing or refocusing government funding; adjusting legal and regulatory frameworks and policies; and modifying reimbursement policies in ways that support increased collaboration and data sharing between the discovery, development and delivery phases.
  • Encourage multi-stakeholder collaboration and teaming models to strengthen cooperation and increase dissemination of scientific and market-derived information across the R&D value chain. Public-private partnerships and consortia could be leveraged to improve and accelerate research. Patient-centered care advocacy organizations could help coordinate and accelerate research through patient-focused research initiatives, patient education, or through patient reach via social networks. Improved regulator-industry communication could provide more timely and relevant guidance and inputs.
  • Leverage health information technologies and integrate data sources to gain new insights regarding consumer behavior, product safety and efficacy, and potential directions for biopharmaceutical innovation. Wearable and implantable medical and personal health devices, electronic health records, websites and email, mobile applications, and social networking are increasing the connectivity between patients, providers, and developers and creating vast amounts of data. This data could be used not just for monitoring, but also for predictive analytics at the population level and to drive development and improvement of drugs. Electronic medical records could be used to understand comparative (i.e., relative) benefits of a new product versus the standard of care or improve clinical trial recruitment. Social media networks could be leveraged to communicate treatment efficacy to patients.
  • Pursue the development of innovative study designs and advanced statistical methods that can increase speed-to-market for some product applications and provide valuable insights to cycle back to discovery and development. While randomized controlled trials will likely always be required for initial product approval, non-randomized observational and quasi-experimental studies that use real-world data collected for other purposes may be sufficient for determining safety and efficacy of supplemental applications. Stakeholders should also consider enabling comparative effectiveness research, leveraging clinical trial data, and accelerating biomarker and surrogate endpoint validation.
  • Strengthen adverse event reporting by establishing a broader system that incorporates a variety of detection sources and methods, such as electronic medical records, the internet, and social media networks, or uses validated biomarkers to identify an adverse event.

As Congress and the president call for increased funding and more resource investment in the area of Ebola research, we are at a point where speeding up life sciences innovation has never felt more urgent.

While there are challenges that need to be addressed, including balancing priorities, dealing with limited resources and protecting privacy and security, I believe overcoming them will be well worth the resources and effort that the strategic, organizational and operational change will likely require. And, the investments we make to strengthen data sharing and insight exchange across the R&D chain will have benefits beyond bringing more products to market faster. The collaborative and information connections we begin to put in place today phases could not only bolster life sciences R&D global competitiveness, they could also have a positive and lasting impact on business sustainability and growth for life science companies and improved health care quality and outcomes for consumers.

Read more in Deloitte’s Path to 21st Century Cures: A Call to Action.

Dr. Terri Cooper is a Principal of Deloitte Consulting and is the leader of the Federal Health Practice. She has two decades of experience working in various capacities relating to the Life Sciences Healthcare Business. For the past 18 years she has worked as a consultant to the industry. Prior to joining Deloitte Consulting she was a partner in the Global Pharmaceutical/Life Sciences Practice within IBM Business Consulting practices, where she had responsibility for leading the Global R&D Pharmaceutical/Life Sciences Practice. In her current client relationship role she has responsibility for product and service offerings in research and development to selected global pharmaceutical companies headquartered in the U.S. Dr. Cooper is a frequent participant at industry conferences where she frequently speaks on topics relating to the issues affecting pharmaceutical research and development.

 

[1] CDC, 2014 Ebola Outbreak in West Africa, accessed on September 26, 2014 http://www.cdc.gov/vhf/ebola/outbreaks/guinea/index.html; [2] Balas EA, Boren SA. Managing clinical knowledge for health care improvement. In: Bemmel J, McCray AT, eds. Yearbook of Medical Informatics. Stuttgart, Germany: Schattauer Publishing; 2000:65‐70.

09/24/2014

Consumer engagement: Is less more?


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

I was lucky to be able to attend TEDMED 2014, held in Washington, D.C., September 10-12 at the Kennedy Center. I have been to more conferences than I can remember, but this one is really different and, without question, a lot of fun (and no, no drum circles, but yoga was offered). It was not just the music and other performances, the international and diverse mix of participants or the extraordinarily healthy food that made this conference different. What I probably liked best was having the chance to quiz and learn from the many innovators presenting their ideas in the Hive, a tent that was full of activity.

As I walked around the Hive, a trend began to emerge. I saw examples of health care products, many using mHealth applications and others using other technologies to collect consumer data so that providers could use it to monitor and manage care. Several speakers even talked about their inventions in this area.

In thinking about the range of technologies I encountered, they seemed to fall along a spectrum of consumer engagement. Some required little input from consumers while others required extensive interaction. Health care experts tend to hold two schools of thought in this area: One school of thought is that consumers who learn about their conditions will become “activated” and excited to take charge of their condition as informed patients. The other school believes that we don’t need to have consumers highly engaged in their care—perhaps the data can just come from them, and they don’t have to do much to produce it.

When I worked with a large, consumer-focused organization five years ago, there was enormous interest in the potential for personal health records (PHRs). These fall squarely in the first school of thought. As I listened to proponents describe the features of PHRs at the conference, I couldn’t help but stack up those exciting concepts with the reality of my personal experience of being a busy mother of two, working full time, with lots of experience helping my mother, her friends and a variety of other older folks navigate Medicare, Medigap and the rest of the health care system. I couldn’t picture myself, much less my mother, taking the time to document all the interactions with the health care system – it just seemed like too much work.

So it was with great interest that I listened to the presentation from Josh Stein, a “serial entrepreneur,” who said something squarely in-line with the second school of thought that really resonated with me. He said that some of the best ideas in the new technologies do not require patients or consumers to become actively engaged. Instead, the technologies take on as much of the job as possible. Josh’s company, AdhereTech, has invented a “smart pill bottle” that uses cell-phone technology to monitor whether patients are taking their medications. And when they forget, the system sends a text or calls to remind the patient to take the medication. Josh also talked about the Internet of Things (IoT) where things like this smart pill bottle might connect to other things (knees, other apps, refrigerators, electronic health records) to create data that could help a physician and care team remotely track a patient’s care pattern over time. The overall patient data could then be used to gain new insights on how people respond to therapies. Ultimately, this technology could lay the groundwork for better technology and care.

This presentation made me think that one aspect of mHealth is how much it makes the patient do. In my opinion, the less a technology makes people do, the more likely it will be in successfully getting the information into the hands of those who can use it to realize the potential for the IoT. On the other hand, I am happy to be proven wrong, as I love the vision of activated patients taking charge of their own conditions.

Two other examples of innovations I saw at TEDMED 2014 help illustrate examples in these two schools of thought:

  • MySugr Companion is an app that uses an adorable/irritating monster to help people with diabetes track their blood sugar readings. It also provides reminders and games intended to get users to eat right, exercise and understand their condition. It relies on consumers to enter the information and falls in the first school of thought: one could engage people to manage their diabetes and learn more about it.
  • By contrast, Ginger.io provides information that comes from a consumer’s smartphone sensors to their physician – patients are passive (after downloading the app, presumably). The technology has three components – the app, behavioral analytics engine and a provider dashboard – and the goal is to allow physicians to track care between visits.

I hope these innovators prove to be very successful. I will watch with interest as these companies work to find the right business models and markets for their products.

Deloitte’s surveys of physicians and consumers are finding that the market is demanding these products; consumers and physicians are beginning to catch on to the value of mHealth. But, while consumers march forward and adopt greater use of mHealth for managing their health improvement goals (44 percent), monitoring and managing health issues (46 percent) or even sending a photo of a health related issue to their provider (55 percent), physicians may not be quite as far along.1 Our 2014 Survey of U.S. Physicians found that only 24 percent of physicians use mHealth, even though 90 percent of them own smartphones.2 At some point, hopefully these two critical components of the health care system will come to agreement on the potential behind innovative mHealth technologies.

Read the entire Health Care Current here and subscribe at: www.deloitte.com/centerforhealthsolutions/subscribe.

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1 Deloitte Center for Health Solutions, “mHealth: A check-up on consumer use,” 2013
2 Deloitte Center for Health Solutions, “Annual Check-Up on Physician Adoption of Health IT,” 2014

Sarah Thomas, Director of Research, Deloitte Center for Health Solutions, Deloitte LLPSarah Thomas is a director with Deloitte Services LP and the director of research for Deloitte's 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.

 

09/19/2014

How can a health system maximize the value of disruptive technology?


With the emergence of wearables, remote monitoring, predictive medicine, and comparative analytics, how can a health system maximize new technologies and digital engagement? In the new video “The CIO’s role in maximizing the value of disruptive technologies”, Deloitte leaders discuss the value of digital engagement, the future of personalized predictive medicine, and responding to disruptive technology in a value-based reimbursement world. The full transcript of the interviews can be found below.

 

"The CIO’s role in maximizing the value of disruptive technologies" is part of a new three-part video series Innovative challenges for the modern CIO which explores the advantages of disruptive technologies, the comparative and predictive nature of analytics, and the evolving role of the CIO as they hedge their bets, manage the IT portfolio across the enterprise, and address the care of growing patient populations with complex needs.

Video transcript

Harry Greenspun, MD, Director, Deloitte Services LP: So just when we look at what digital engagement really means, there are sort of two camps going on right now. We have a very enthusiastic camp about empowering consumers and giving them information. And, we contrast that, with the actual behaviors of consumers and we find our own study shows that most consumers are pretty disengaged. And so, bridging the gap between the enthusiasm of getting people all the stuff that they want to have and actually getting the consumers to want to have it is going to be a really important factor. Consumers get information from lots of different sources. But the degree of trust they have in those varies considerably. People trust their doctors, people trust hospitals, but as you start seeing messages getting delivered by other sources, how much trust do consumers really have in those. And what we often see is, people will get information off one channel, but bring it to a more trusted channel to see if this is actually accurate and if it applies to them.

Brett Davis, Principal and General Manager, ConvergeHEALTH by Deloitte, Deloitte Consulting LLP: The last big piece to truly create personalized predictive medicine is the environment, and understanding what happens outside of the four walls of the health system as well as outside of our underlying molecular make-up. And that’s where wearable technology and remote devices, and the whole mhealth trend really can come into play. So we’ll have insights of what happens in a clinical setting, within your underlying molecular make up as well as in the environment. Those three things aggregated, are going to give us tremendous insights in the human health and disease, and allow us to truly personalize care as well as predict future disease.

Harry Greenspun: Wearables are fascinating! I wear devices myself to check my exercise. And what we’ve seen is that these devices have become very popular in the wellness and fitness space. The really exciting time will be when we will start transitioning into the actual health care space. So, when will tracking your exercise actually be part of showing to your payer, that you are actually serious about your health and well-being and will you get a discount on your health insurance for doing that? So I think where organizations can start in terms of wearable devices, it’s sort of both ends of the spectrum of health. So, on the healthiest patients you already have people wearing them. So this is probably a great way to leverage what they are doing to make sure that people engage in healthy lifestyles and encourage them to do so. The flip side of that is that the very sickest of the sick, if you can do some monitoring of them, maybe get an early warning that something is going on, and eventually will start moving in from the sickest to the healthiest into the middle.

Brett Davis: Comparative analytics are critically important because in a value-based reimbursement world, it’s about how you are doing versus others and so the ability to characterize how you are managing a population and demonstrate value relative to others is going to be absolutely critical. And here’s where traditional benchmarking really falls down. Because some might think comparative analytics - benchmarking. The reality is traditional benchmarking is like telling your failing student - do better. It diagnoses the problem, but it doesn’t tell you what you need to do. So, true comparative analytics in the future will be able to characterize populations at a clinically nuanced level, to be able to understand in subpopulations why certain things are working.

Tim Smith, Principal and National Leader of Health Care Information Technology, Deloitte Consulting LLP: Usually why we advise a client to take a look at their analytics program, it’s to figure out what you have today. Many organizations have the beginnings of an analytics portfolio, but it may be disjointed and certainly not centralized in a way that could be effective, and so a lot of times we are asking an organization to take a look at what assets they have today, find out where the gaps are and then actually create a plan. I think half the battle is just having a plan for how I can actually expand my current analytical capability to meet the ultimate goals of the organization.

Harry Greenspun: We’ve often talked about innovative and disruptive technologies, where’s the business case? And there are number of technologies that have been around for a long time, Telehealth is an example. It’s been around since the 1920s. Very slow to catch on not because of a lack of good technology, but because of a lack of aligned incentives. And as we move towards value-based reimbursement, outcomes-based reimbursement, suddenly its openness to work with innovation. And you have the ability to say, you know what, by applying these device putting a wearable on somebody doing a remote monitoring, we actually can improve outcomes. We can lower re-admissions. Those things are tied to real dollars and now we can make a business case.

Tim Smith: I think the CIOs ability to deal with destructive technologies, is critical to the organization as a whole, and obviously not just to IT. And I think it’s because the IT, those investments and those assets, have really become strategic for the organization. It changes the way you interact with your entire eco-systems, whether it be health plans, life sciences organization, your patients, your providers. And so the world of tomorrow is technology enabled .And I think, the CIO has to be in the center of that.

09/18/2014

Chasing the vision of safe, high-quality, effective, and efficient care


by Mitch Morris, MD, Vice Chairman and National Healthcare Provider Lead, Deloitte LLP

I have been working with electronic health records (EHRs) for more than 25 years. If you asked around during the late 1980s, you would probably have heard from EHR proponents a vision of enabling safe, high-quality, effective and efficient care. Today, information technology has dramatically advanced, but the vision has not changed. So in 2014, why is it when we ask physicians and other clinicians about the value of EHRs, their answers range from lukewarm to downright cold?

The Deloitte Center for Health Solutions undertakes an annual survey of U.S. physicians to better understand their evolving perspectives, including those on EHRs.1 This year, the results were (again) somewhat disappointing but not terribly surprising.

It was encouraging to see that 56 percent of respondents have achieved Stage 2 of Meaningful Use (MU), and 26 percent are at Stage 1.2 But 18 percent report that they have not started the MU journey, and 70 percent of that group has no plans to do so in the future. And, while 70 percent of physicians indicated they think that EHRs enable analytics and 60 percent feel they support value-based care, other results indicate that the potential has not been realized.

Three out of four physicians surveyed3 report that EHRs increase costs and do not save them time. This survey is not alone in its findings: Through another recently released survey, Clem McDonald and colleagues found that physicians say that EHRs “waste an average of 48 minutes per day.”4 Part of me wonders if these physicians have forgotten the days of hunting down medical records and waiting for faxes. But those of us working with hospitals and physicians on a regular basis don’t need a survey to tell us things are not quite right. Just look at the rapidly growing profession of scribes—people who follow around doctors taking down their observations for recording in an EHR. Meaningful Use? Really?

So how did we get to the point where, despite an inspiring vision; prodigious investments of time and money; advances in computational and interface abilities; and more than 900 exhibitors each year at the Health Information Management and Systems Society (HIMSS) conference, many in the physician community still believe we have relatively little to show in the way of a true value-add?

I don’t believe there is a simple answer. We know physicians use technology in their lives: according to our survey more than 90 percent own smart phones. Yet only 24 percent report using mHealth at work. Security concerns, a confusing array of applications that are far from interoperable and a lack of time and reimbursement are all cited as issues.5 Perhaps the most significant factor is that many organizations implemented EHRs to achieve MU under a tight deadline with an equally tight budget. True clinical transformation with a careful examination of workflow and clinical roles, implementation of evidence-based and best practices and change management were often modest efforts. Many health systems automated legacy approaches to care and have not been able to achieve the benefits of MU.

There are many exceptions where health systems have taken the time and effort to use technology to achieve clinical transformation and true value was achieved. But our survey results and those of other researchers show we have a long way to go as an overall industry.

What can be done? Health systems should consider focusing on:

  • Enhancing clinical systems already in place; this could help organizations meet challenges faced with shrinking reimbursement, rising consumerism, the move from volume to value, and enabling population health management.
  • Continuing to invest in and work on having clinicians lead the transformation of care enabled by EHRs.

Checking the box on the MU application was not the finish line but rather just a milestone on the journey. Health care organizations should focus on using technology investments to realize the original vision—one that is more relevant than ever.

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Sources:
1 To read more about these findings and the survey methodology and to connect with the authors, visit: www.deloitte.com/us/2014physiciansurvey
2 Among physicians who are aware of the MU status at their primary work-setting
3 Among physicians whose primary work-setting has EHR that currently meets MU stage 1 or 2 requirements
4 Clement J. McDonald, Fiona M. Callaghan, Arlene Weissman, Rebecca M. Goodwin, Mallika Mundkur, and Thomson Kuhn, “Use of Internist's Free Time by Ambulatory Care Electronic Medical Record Systems,” JAMA Internal Med, Published online September 08, 2014
5 Deloitte Center for Health Solutions, 2014 Survey of U.S. Physicians

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.

09/17/2014

Burning ships on the journey to mobile health


by Harry Greenspun, MD, Director, Deloitte Services LP, Deloitte Center for Health SolutionsTwitter

For many years, the adoption of electronic health records (EHRs) and other technologies among physicians was viewed as a forced march. Discussions on the topic focused on how to drag this group forward, kicking and screaming, until they eventually complied. Tactics included hauling away the paper records, invoking the spirit of Cortés burning his ships. Sports analogies then took over taking score of how many docs had crossed the goal line. However, we have only recently been able to step back and get a broader view of what happens after implementation.

In our 2014 survey of U.S. physicians, we examined a number of issues related to health IT, EHRs, and mobile health (mHealth).  Like other recent studies, we found a lot of ambivalence. Doctors saw advantages and drawbacks, while highlighting concerns about productivity and privacy.  One of my particular interests is in mHealth, so I started digging deeper into the data. Interestingly, with mHealth, interest is strong, but adoption appears to be lagging.

4_HIT infographic_mHealth interest (4)

However, those who have adopted mHealth technologies report using mHealth tools regularly – 49% of them reporting daily use. In short, it appears that once physicians begin using mHealth, they are converted. 

1_HIT infographic_mHealth adoption (3)

The lesson here is that, once exposed to valuable mobile tools which enhance capabilities and improve the patient experience, doctors will likely embrace mHealth technologies. Forcing them to do so does not work (note that Cortés apparently did not, in fact, burn his ships). As more appreciate the virtues, more will likely join the expedition.

Click here to view the infographic of key findings from Deloitte's 2014 Survey of U.S. Physicians.

 

Harry Greenspun, MD, Senior Advisor, Health Care Transformation and Technology, Deloitte Center for Health Solutions, Deloitte LLP

Harry Greenspun, MD is a director with Deloitte Services LP and the senior advisor at the Deloitte Center for Health Solutions. He has held a diverse range of clinical and executive roles across the health care industry, giving him a unique perspective on current and future challenges.

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