US Markets – January 16, 2018

Healthcare Policy

US Healthcare Policy Highlights

  • Trump signs an executive order directing the secretaries of defense, homeland security and veterans affairs to develop a plan to provide "seamless" access to mental health and suicide prevention resources for 12 months for members leaving the armed forces (US News)
  • CMS issues new guidance to support state efforts to improve Medicaid enrollee health outcomes by incentivizing community engagement among able-bodied, working-age Medicaid beneficiaries.
    • The policy responds to numerous state requests to test programs through Medicaid demonstration projects under which work or participation in other community engagement activities – including skills training, education, job search, volunteering or caregiving – would be a condition for Medicaid eligibility for able-bodied, working-age adults

    • The new guidance does not impact the eligibility of individuals for Medicaid due to a disability, elderly beneficiaries, children and pregnant women (CMS)

  • CMS estimates that there are only 700 issuers in the individual and small group markets, which is down from 2,400 in an earlier estimate. CMS is seeking permission from the White House's Office of Management and Budget to continue collecting data annually from exchange plans about their enrollees' risk profiles (Modern Healthcare)
  • CMS launches a new voluntary bundled payment model called Bundled Payments for Care Improvement Advanced (BPCI Advanced). BPCI Advanced includes 32 clinical-care episodes that providers can choose from; 29 of which are in the inpatient setting and three in the outpatient setting (Modern Healthcare)

Healthcare Economy

US Healthcare Economy Highlights

  • According to The Atlantic, the healthcare industry surpassed manufacturing and retail for the first time in history to become the US largest employer in the last quarter. Few driving forces for this industry are:
    • Aging population: By 2025, a quarter of the workforce will be older than 55. As a result, more and more Americans will require care and the healthcare industry will need more workers
    • Resistance towards change: The opposition to globalization and automation boosts the healthcare industry. However artificial intelligence and programmable robots may be able to replace radiologists and surgeons, and might affect in the industry in future
    • Subsidization: Much of healthcare is publicly subsidized through money spent on Medicare, Medicaid, healthcare benefits for government employees and private insurance. Therefore, healthcare employment remains strong, even during the country's worst economic downturns (Becker’s Hospital Review)
  • Key takeaways from the 2018 JP Morgan Healthcare Conference, based on the strategies of over 20 of the largest and most prestigious healthcare delivery systems in the US:
    • Must scale up
    • Must pursue "smart growth" and find new revenue streams
    • Must measure and manage cost and margins
    • Must become a brand
    • Must engage your physicians
    • Must leverage analytics
    • Must help solve the opioid epidemic
    • Must manage social determinants of health in the communities you serve
    • Must protect yourself from cyber risks (Becker’s Hospital Review)

Technology Briefs

  • According to cybersecurity firm Cryptonite's 2017 Health Care Cyber Research Report, there were 140 data breaches reported to HHS' Office for Civil Rights breach portal as IT or hacking events in 2017; 36 of which were ransomware related. Few other highlights of the reports are:
    • In 2016, there were 19 events reported that involved ransomware, but in 2017, that number jumped to 36, representing an 89% increase
    • There were 3.4 million records compromised in 2017, a decrease from 13.4 million compromised in 2016
    • IT/Hacking incidents increased 23.89 percent, with 113 incidents reported in 2016 to 140 incidents reported in 2017
    • In 2017, ransomware made up 25 percent of all data incidents reported to HHS’ office of civil rights
    • All six of the largest IT/Hacking healthcare events reported in 2017 were attributed to ransomware.
      • Airway Oxygen - 500,000 records compromised
      • Women's Health Care Group of Pennsylvania - 300,000 records compromised
      • Urology Austin - 279,663 records compromised
      • Pacific Alliance Medical Center - 266,123 records compromised
      • Peachtree Neurological Clinic - 176,295 records compromised
      • Arkansas Oral and Facial Surgery Center - 128,000 records compromised (Becker’s Hospital)
  • AHIMA subject matter experts predict the top issues for healthcare organizations in 2018 in the Health Information Management (HIM) Domain - informatics, data analytics, privacy and security, rules and regulations, information governance (IG), education and workforce, clinical documentation improvement (CDI), and inpatient/outpatient coding. Below are few highlights:
    • The coming year is set to bring regulatory changes and new challenges for healthcare providers. To overcome these obstacles, healthcare organizations will need to leverage their big data assets with the help of qualified informaticists, analysts and health information management (HIM) professionals
    • Enterprise-wide information retention policies will continue to trouble providers in 2018
    • Informaticists will work to reduce physician burnout with EHRs in 2018 by helping to optimize workflows and interfaces
    • The regulatory reporting requirements that come with initiatives like MACRA will also keep data analysts busy in the next year
    • Clinical documentation improvement (CDI) specialists will continue to assist claim denials teams in 2018
    • The 2018 budget will affect the funding of the ONC and the Office for Civil Rights (OCR) (Healthcare IT News)

Market Segments

Oncology/Genomics

  • Foundation Medicine reports preliminary 2017 results. Below are the key highlights:
    • Total revenue of approximately USD 48.9 million for the Q4 of 2017 and approximately USD 152.9 million for the full year ended December 31, 2017, a 70% and 31% increase in the Q4 and full year ended December 31, 2016, respectively
    • Revenue from biopharmaceutical companies is expected to be approximately USD 33.4 million in the Q4 of 2017 and approximately USD 99.7 million for the full year ended December 31, 2017, compared to $19.0 million and $78.8 million in the Q4 and full year ended December 31, 2016, respectively (Foundation Medicine)
  • Syapse, enters into a multi-year strategic collaboration with Roche to make precision medicine a reality for more cancer patients and their healthcare providers. Syapse and Roche will work jointly to develop software products and analytics solutions that empower healthcare providers with the tools and insights they need to practice precision medicine at scale, with the goal of improving patient outcomes and health-related quality of life (Syapse)
  • CancerLinQ LLC partners with National Society of Genetic Counselors (NSGC), the professional society for genetic counselors, to provide expertise to CancerLinQ, the American Society of Clinical Oncology’s (ASCO) health information technology platform aimed at improving the quality of cancer care using real-world cancer data
  • GE and Roche enter into a partnership to develop integrated digital diagnostics platform to improve oncology and critical care treatment.
    • Companies aim to develop jointly-branded clinical decision support software for faster, more accurate, more confident decision-making, enabling earlier diagnosis and individualized treatment
    • Partnership will apply advanced analytics to in-vivo data from GE’s medical imaging and monitoring equipment with in-vitro data from Roche’s biomarker, tissue pathology, genomics and sequencing portfolio (Business Wire)

Imaging

  • McKesson wins USD 400 million Imaging Health IT System contract from Department of Defense (DoD).
    • McKesson will likely supply and maintain the system called Digital Imaging Network - PACS (DIN-PACS) IV - until December 15, 2027. Military branches and federal civilian agencies including the Army, Navy, Air Force, and Marine Corps will benefit from the new system
    • The contract has a five-year base with one five-year option period. The maximum dollar amount offered covers the life of the contract. McKesson will be expected to supply and maintain systems in Georgia and other areas within and outside of the continental US (EHR Intelligence)

Watson Platform for Health

  • Microsoft and Mozzaz (a digital health company) partner to deliver secure digital health for complex care. As a Co-Sell partner, Mozzaz will expand its reach into the Microsoft customer ecosystem through co-selling and joint marketing campaigns with a powerful and secure digital health solution (PR News Wire)

VBC - Providers

  • Cerner appoints the former CEO of Philips North America, Brent Shafer as new CEO. Shafer served Philips for over 12 years and played a key role in helping Philips develop and strengthen its healthcare focus, increase its profitability and grow its market share (Healthcare IT News)
  • East Lancashire Hospitals NHS Foundation Trust selects Cerner as its preferred supplier to provide the trust with a new electronic patient record. The new Cerner Millennium EPR will replace a venerable patient administration system that has been in use at the trust for over 30-year (Digital Health)
  • Neshoba County General Hospital and Nursing Home chooses Cerner to implement an integrated EHR and revenue cycle management system across its acute, ambulatory and nursing home facilities (Neshoba Democrat)
  • Optum appoints Sheryl R. Skolnick, as Executive Vice President, Strategic Relationships. Previously Skolnick has served as Managing Director, Director of Research & Senior Health Care Analyst at Mizuho Securities USA LLC, the US subsidiary of Mizuho Securities, a major global investment banking and securities firm (Optum)
  • The Green Mountain Care Board approves Epic System a USD 151.7 million contract - EHR project for four hospital affiliates of the University of Vermont Health Network with an implementation period of six years. The new system will replace a patchwork of programs that do not communicate across hospital boundaries, often a barrier to providing the highest quality and coordinated care when patients receive treatment in multiple care settings (Vermont Biz)
  • OptimizeRx Corp (digital health messaging provider) expand its partnership with Allscripts Healthcare which now includes a variety of real-time messaging to Allscripts ambulatory platforms. The agreement includes financial, informational, and clinical messaging delivered at the point-of-care through Allscripts ePrescribe, Allscripts Professional EHR and Allscripts TouchWorks EHR solutions (Global News Wire)
  • Change Healthcare announces the general availability of first enterprise-scale blockchain solution, Intelligent Healthcare Network for Healthcare. The Intelligent Healthcare Network currently processes more than 50 million claims events daily and up to 550 transactions per second through its blockchain (Change Healthcare)
  • Wolters Kluwer Health signs an agreement to divest ProVation Medical, the procedure documentation, and order set management software business, to Clearlake Capital Group, L.P. for USD 180 million in cash (Wolters Kluwer)
  • TPC (a network of independent health systems) and Vizient forms a strategic agreement for comprehensive sourcing, performance improvement and cost management services, including strategic sourcing, utilization management, and clinical and operational consulting, as well as, service line, clinical and supply chain analytics (Vizient)