US Markets – February 27, 2018

Healthcare Policy

US Healthcare Policy Highlights

  • HHS, Labor, and the Treasury departments propose a rule to expand the availability of short-term, limited-duration health insurance by allowing consumers to buy plans providing coverage for any period of fewer than 12 months, rather than the current maximum period of fewer than three months. The proposed rule, if finalized, will provide additional options to Americans who cannot afford to pay the costs of soaring healthcare premiums or do not have access to healthcare choices that meet their needs under current law (HHS)
  • HHS, Office for Civil Rights (OCR) launches a collection of new tools and initiatives in response to the opioid crisis, while implementing the 21st Century Cures Act (Public Law 114-255). Below are the highlights:
    • Two new HIPAA webpages focused on information related to mental and behavioral health, one for professionals and another for consumers
    • New collaboration with partner agencies within HHS to identify and develop model programs and materials for training healthcare providers, patients, and their families on permitted uses and disclosures of the protected health information
    • Launch of a working group to study and report on the uses and disclosures under HIPAA of protected health information for research purposes (HHS)

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Healthcare Economy

US Healthcare Economy Highlights

  • America’s Health and Well Being Trust releases a report on US deaths from alcohol, drugs and suicide:
    • Deaths from alcohol, drugs and suicide increased by 11% in 2016, to nearly 142,000

      • Deaths from synthetic opioids, including fentanyl and carfentanil, doubled to 19,400, while deaths from other opioids declined by 3%
      • The alcohol death rate rose by 5% in 2016, and the suicide death rate rose by 1%.
      • While drug and suicide death rates continued to be highest among white Americans in 2016, they increased more for black and Latino Americans than for other demographic groups (AHA)
  • Bon Secours Health System, a Catholic health ministry serving residents across the East Coast, and Mercy Health, a Catholic health ministry serving Ohio announce a merger to establish a 43-hospital entity that serves seven states. The merged entity will have:

    • USD 8 billion in net operating revenue and USD 293 million in operating income
    • 57,000 associates and more than 2,100 employed physicians and advanced practice clinicians
    • More than 10 million patient encounters across seven states, with 43 hospitals and more than 1,000 care sites (PR News Wire)

  • PwC and CB Insights’ Healthcare MoneyTree report provides an overview of US-based VC funding in the healthcare industry for the Q4 2017. Key updates are:
    • A total of USD 14.4 billion was invested through 748 deals. The average VC investment increased from USD 10 million in 2012 to USD 19.3 million in 2017
    • Q4 saw an investment of approximately USD 4 billion in US healthcare in 182 deals compared to 184 deals in the Q3
    • Biotech industries witnessed the largest increase in investments, 43% up from the Q3 and medical device equipment investments fell 38% quarter over quarter

    •  Five companies received the largest deals in the Q4 are:
      • Ginkgo BioWorks ( USD 275 million)
      • Precision Medicine Group ( USD 275 million)
      • Grail (USD 238 million)
      • Cullinan Oncology (USD 150 million)
      • Semma Therapeutics (USD114 million) (PWC; Becker's Healthcare)

Technology Briefs

  • National Institute of Standards and Technology (NIST) publishes a detailed draft report - “Blockchain Technology Overview” aiming to help IT decision makers sift through the hype to make "clear-eyed" choices about how they could (or should) deploy blockchain. The report highlights the areas in healthcare where blockchain can help:
    • Whenever someone visits a care provider, a myriad of transactions take place behind the scenes. Administrative transactions from nurses, doctors, staff, medical providers, insurance companies, and pharmacies could all be written to a blockchain. Transactions (such as checking benefits, eligibility, coverage, and the available medicine supply) could be read from the blockchain” (NIST)
  • A study on “Data Breach Locations, Types, and Associated Characteristics among US Hospitals”:
    • Finds: Hospitals accounted for approximately 1/3rd of all data breaches of all types of healthcare providers. Paper and films were the most frequent location of breached data, occurring in 65 hospitals during the study period (2009 to 2016), whereas network servers were the least common location but their breaches affected the most patients overall
    • Concludes: Hospitals should conduct routine audits to allow them to see their vulnerabilities before a breach occurs. Additionally, information security systems should be implemented concurrently with health information technologies. Improving access control and prioritizing patient privacy will be important steps in minimizing future breaches (AJMC)
  • Top 7 legal challenges facing physicians and hospitals from Jackson Lewis (law firm in the US) Healthcare Industry Team:
    • Hospital and health care system transactions and partnerships: HHS reports at least 69.7% of US hospitals are part of health care systems. The consolidations to attract great scrutiny from the Federal Trade Commission
    • Rise in Qui tam cases to use the False Claims Act: Recovery of USD 2.4 billion from False Claims Act cases in fiscal year 2017 involved the health care industry
    • Healthcare and labor & employment law: According to Law360, Labor & Employment, Data Privacy & Cybersecurity, and Health Care are three of the top four practice areas for 2018
    • Expensive HIPAA compliance and enforcement: In response to increasing ransomware attacks FDA issued guidance and webinars to address the management of cybersecurity in medical devices
    • Rise in the usage of Advanced Practitioner Professionals to supplement direct physician involvement in hospital and ambulatory settings has created legal and ethical issues, particularly for hospitals and health care facilities that must comply with the laws of multiple states
    • Rising number of practicing physicians of 55+, which can lead to age and disability discrimination claims
    • Telemedicine Laws: As per Center for Connected Health Policy, in the 2017 legislative session, 44 states introduced more than 200 telehealth-related pieces of legislation (Lexology)

Market Segments

Life Sciences

  • Cota Inc. (a healthcare real-world evidence and data analytics company) raises USD 40 Million in a Series C round of financing led by IQVIA with major participation by EW Healthcare Partners.
    • Cota plans to use this funding to expand its solutions across healthcare providers, payers and life sciences companies. The funding will also advance its proprietary Cota Nodal Address (CNA) system, a precision disease classification system built on its comprehensive dataset (PR News Wire)
  • Microsoft, Shire plc and EURORDIS join hands to form global commission to address the diagnostic challenge for patients living with a rare disease. Long diagnosis period is one of the most important issues affecting the health, longevity and well-being for rare disease patients and their families (Global News Wire)

Imaging

  • healthio inc., a Brookfield based health & wellness company, to collaborate with GE Healthcare to make their healthio app use a GE Healthcare proprietary algorithm, EK12, in their workflow to provide clinical quality ECG interpretation to home users in association with their health care providers (PR Web)

Watson Platform for Health

  • Google AI can predict cardiovascular problems from retinal scans. A study “Prediction of cardiovascular risk factors from retinal fundus photographs via deep learning” by Google researchers states “Using deep-learning models trained on data from 284,335 patients and validated on two independent datasets of 12,026 and 999 patients, we predicted cardiovascular risk factors not previously thought to be present or quantifiable in retinal images” (Nature; Healthcare IT News)

VBC - Providers

  • GE Healthcare and Navicent Health partner to transform healthcare delivery and lessen the cost of care in central Georgia for the benefit of the local community. The two entities will work together to make system-wide improvements that will cover every aspect of care delivery and generate up to USD 150 million in improvements for Navicent Health (GE)
  • Cerner collaborates with Surescripts to integrate Real-Time Prescription Benefit functionality into the Cerner Millennium electronic health record (EHR). Surescripts Real-Time Prescription Benefit will integrate directly into the physician’s workflow to provide patient-specific prescription information at the point of care (Cerner)
  • Wolters Kluwer releases full-year financial report:
    • Full-year revenue rose by 5% in constant currencies and up 3% organically compared to the revenues in 2016 and reached € 4,422 million in 2017
    • Digital & services revenues up 5% organically (87% of total revenues)
    • Adjusted operating profit margin up 60 basis points to 22.8% (Wolters Kluwer)