US Markets – February 13, 2018

Healthcare Policy

US Healthcare Policy Highlights

  • Donald Trump Budget 2019 (Healthcare Updates):
    • HHS: Allocates USD 68.4 billion to HHS, a 21% decrease or USD 17.9 billion less than what HHS received in 2017
    • Opioid: Provides USD 17 billion for opioid-related spending with USD 13 billion for HHS over the next two years to combat the opioid epidemic by expanding access to prevention, treatment and recovery support services and mental health support
    • NIH: Includes at least USD 2 billion for the National Institutes of Health for two years
    • Chronic Care Act: Adds the Chronic Care Act which expands telehealth benefits for Medicare Advantage members in 2020 and allows accountable care organizations to expand the use of telemedicine
    • CHIP: Extends CHIP funding through federal fiscal year 2023
    • Others: Includes provisions for Community Health Centers, National Health Service Corps and Medicare programs that help rural area providers (Healthcare IT News; Modern Healthcare; CNN; NBC News )
  • CMS cancels the Direct Decision Support (DDS) Model, announced in 2016, due to operational and technical issues with the proposed Model design. DDS Model was aimed at partnering with seven decision support organizations, which provides health management services, to help a total of 700,000 Medicare beneficiaries with hip osteoarthritis, herniated disk or spinal stenosis, stable ischemic heart disease, prostate cancer, benign prostate hyperplasia and knee osteoarthritis. Those non-provider organizations would’ve received a fixed monthly payment for very beneficiary for engaging with those patients on behalf of CMS, with 25% of the money held back as an annual performance metrics (Modern Healthcare)
  • CMS restarts an initiative to prevent providers from illegally billing some Medicare beneficiaries for cost-sharing. The agency will start sending new billing notices to providers this summer, alerting them when certain beneficiaries should not be billed for cost-sharing.

    • CMS first launched the effort last year after receiving reports that providers hit some patients that were dually eligible for Medicare and Medicaid with coinsurance costs even though they were enrolled in a savings program (Modern Healthcare)

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Healthcare Economy

US Healthcare Economy Highlights

  • Professors from Cornell University and Lehigh University provide the following insights as per their research study "The Impact of Obesity on Medical Costs and Labor Market Outcomes in the US”:

    • US national medical expenditures devoted to treating obesity-related illness in adults rose from 6.13% in 2001 to 7.91% in 2015, an increase of 29%
    • In 2015, states such as Arizona, California, Florida, New York and Pennsylvania devoted 5% to 6% of their total medical expenditures treating obesity-related illness, whereas North Carolina, Ohio, and Wisconsin spent more than twice that (over 12%) of all health care dollars in those states to treat obesity-related illness (Eurekalert)
  • The study Healthcare of Tomorrow from U.S. News & World, identifies four trends in the healthcare industry:
    • IoT explosion drives diversification of devices and new challenges
    • Widespread adoption of digital clinical workspaces
    • HIT cloud adoption will begin a steeper increase as security concerns decline
    • More Devices = More Threats = More Security Frameworks (US News)
  • A study conducted by John Hopkins on more than 50,000 child pairs finds children of low-income parents enrolled in Medicaid had a 29% higher probability of receiving a well-child visit compared with children of low-income parents not enrolled in Medicaid. The relationship between well-child visits and Medicaid enrollment was the strongest in families with incomes of 100% to less than 200% of the federal poverty level, or about USD 24,600 annually for a family of four (Hopkins Medicine)

Technology Briefs

  • A study titled 2017 State of Privacy and Security Awareness Report from MediaPro reveals a majority of healthcare workers lack data privacy and security preparedness. The study included responses from 1,009 US healthcare employees. Few highlights:
    • 78% of healthcare employees showed some lack of preparedness with common privacy and security threat scenarios
    • ~25% of physicians and other types of direct healthcare providers showed a lack of phishing email awareness
    • 24% of healthcare employees had trouble identifying a handful of common signs of malware (Health IT Security)
  • A survey conducted by Syneos Health Communications on 800 European and American patients in three disease areas - atrial fibrillation, Type 2 diabetes, breast cancer and 200 caregivers for people with Parkinson’s disease, reveals patients fear the replacement of doctors with AI however find comfortable interacting with AI virtual nurse assistants (Global News Wire)
  • The Department of Homeland Security (DHS) Science and Technology Directorate (S&T) awards a total of USD 5,643,466 across seven organizations to develop new tools to arm researchers with the latest insight and an increased collection of cybersecurity incident data to understand and counter cyberattacks. Out of the total fund, Healthcare related is:
    • Massachusetts General Hospital, Boston, was awarded USD 950,000 to develop a medical device cybersecurity data repository. This repository, which will be developed through an effort titled “Healthcare Data Generation and Curation for Cybersecurity Analysis,” will enhance cyber protection of hospital clinical environments (DHS)

Market Segments

Oncology/Genomics

  • Intermountain Healthcare, a Utah-based not-for-profit integrated delivery network of hospitals, clinics, a health plan and other medical services, selects Via Oncology to provide clinical pathways for Intermountain’s Oncology Clinical Program. Via Oncology’s Via Pathways helps cancer centers demonstrate the value of their care to patients, referring physicians and payers, by developing and implementing clinical pathways in collaboration with its network of more than 1,500 US cancer care providers. Via Oncology’s Via Pathways includes evidence-based proprietary content developed by committees composed of leading oncologists that forms the basis of clinical algorithms covering 95% of cancer types treated in the US (Elsevier)

Life Sciences

  • IQVIA joins hand with FDA Center for Biologics Evaluation and Research (CBER) to combine advanced analytics and unparalleled information assets to monitor and assist in the evaluation of safety and effectiveness of various CBER-regulated vaccines, blood products and other biologics (IQVIA)
  • Atrius Health, a nonprofit healthcare provider implements Linguamatics health enterprise NLP platform, powered by I2E, to identify and extract critical clinical information hidden within unstructured patient data (Linguamatics)

Imaging

  • Florida Hospital, part of Adventist Health System, selects Agfa HealthCare to implement 80 direct radiography (DR) upgrades at 18 sites. The upgrades will allow Florida Hospital advance its value-based care initiative by delivering the benefits of DR and also optimize the experience and care of patients, provide a smooth, efficient workflow for clinicians, and enhance the hospital’s productivity by making the processes more efficient (Agfa Healthcare)
  • ENDRA Life Sciences Inc, a developer of enhanced ultrasound technologies, renews its collaborative research agreement to develop ENDRA's clinical platform, Thermo-Acoustic Enhanced UltraSound (TAEUS), with GE acting through its GE Healthcare by extending the agreement's term to January 2020.
    • Under the terms of the agreement, GE Healthcare will continue to support ENDRA's efforts to complete commercialization of its TAEUS technology for use in a fatty liver application by, among other things, providing equipment and technical advice, and facilitate introductions to GE Healthcare clinical ultrasound customers (Nasdaq)

VBC – Payers

  • Verscend to acquire the commercial health insurance payer-focused products business from General Dynamics Information Technology. With this acquisition, Verscend will have one of healthcare’s most robust solutions for tackling healthcare fraud, waste, and abuse (FWA), a primary driver of U.S. healthcare costs. The acquisition will also strengthen Verscend’s payer quality analytics and reporting solutions (Verscend)

VBC - Providers

  • Cerner releases its 2017 fourth quarter and full year results:
    • Fourth quarter revenue was USD 1.314 billion, an increase of 4% compared to USD 1.258 billion in the fourth quarter of 2016. Full-year 2017 revenue was USD 5.142 billion, up 7% compared to 2016 revenue of USD 4.796 billion
    • Adjusted net earnings for fourth quarter 2017 were USD 195.7 million, compared to USD 206.2 million of adjusted net earnings in the fourth quarter of 2016. Full-year 2017, adjusted net earnings were USD 804.9 million compared to full-year 2016 adjusted net earnings of USD 790.4 million (Cerner)
  • Allscripts appoints Dennis Olis, the company's interim CFO since May 2017, to permanently remain in the position effective Jan 31. In this role Olis, will take care of company's finance functions, including controllership, tax, internal audit, financial planning and analysis, treasury and investor relations (Becker’s Hospital Review)
  • Epic announces “One Virtual System Worldwide” for clinicians across all organizations using Epic. Through this clinicians can exchange more data and also interact with each other on that data (Epic)
  • Cognizant reports a loss of USD 18 million for the fourth quarter of 2017, compared with net income of USD 416 million in the fourth quarter of 2016. Fourth quarter revenues rose to USD 3.83 billion, up 10.6% from the same quarter in 2016. The healthcare revenue rose by 11.9% in this quarter (Northwestern)
  • Premier Inc, launches a unique new national program designed to drive the highest-level commitment and savings for members through aggregated purchasing of high-quality products and services. The collaborative will also leverage Premier’s tools and services to measure and improve the cost and quality of care (Premier)
  • Premier Inc reports financial results for the fiscal 2018 second quarter ended Dec 31, 2017. Following are the highlights:
    • Net revenue increased by 15% to USD 411.4 million from the same period last year
    • Non-GAAP adjusted EBITDA of USD 133.5 million increased by 9% from the same period last year (Premier)
  • Athenahealth appoints Jeff Immelt, as chairman of the company, effective February 7, 2018. Mr. Immelt is the former chairman and CEO of GE and recognized for advancing digitization across industries, in particular for driving the first wave of digitization across healthcare enterprises and the healthcare industry at large (Athena Health)
  • Athenahealth reports fourth quarter and full Year 2017 results:
    • In the fourth quarter, net revenue increased by 14% to USD 288.2 million from the same period last year and full year revenue increased by 13% to USD 1,082.9 million
    • In the fourth quarter, GAAP net income was USD 31.6 million, and full-year GAAP net income was USD 53.1 million