US Markets – November 07, 2017

Healthcare Policy

US Healthcare Policy Highlights

  • ACA's open enrollment starts on 1 Nov1. Following are the highlights
    • The enrollment period is cut in half
    • Funding for advertising and enrollment navigators slashed
    • Premiums for the most popular plans sold on HealthCare.gov expected to grow an average 34% for 2018 compared to last year (last year’s data not available)
    • Current administration proposal to remove Cost-sharing reduction (CSR) payments to insurers
  • CMS releases "Meaningful Measures" aiming to reduce the regulatory hurdles associated with quality reporting
    • CMS has co-developed Meaningful Measures with the Learning and Action Network, the National Academies of Medicine, the Core Quality Measures Collaborative and the National Quality Forum
    • Through this initiative, these groups will identify the issues most critical to quality improvement and make sure CMS regulations reflect these core areas. The "Meaningful Measures" initiative comes after the launch of "Patients Over Paperwork"2
  • CMS rolls out guidelines to avoid 'information blocking' in MIPS ( Merit-based Incentive Payment System) declarations3. Providers will have to attest to three statements about their use of certified EHR technology:
    • A MIPS-eligible clinician must attest they did not knowingly and willfully take action (such as to disable functionality) to limit or restrict the compatibility or interoperability of CEHRT
    • A MIPS-eligible clinician must attest that they implemented technologies, standards, policies, practices and agreements
    • A MIPS-eligible clinician must attest that they responded in good faith and in a timely manner to requests to retrieve or exchange electronic health information, including from patients, healthcare providers (as defined by 42 U.S.C. 300jj(3)) and other persons, regardless of the requestor's affiliation or technology vendor

Healthcare Economy

US Healthcare Economy Highlights

  • A study by the Journal of Clinical Oncology concludes US cancer drug prices were not affected by competition.
    • After an eight-year follow-up period the study reported that inflation-adjusted increases in monthly prices for all cancer drugs was 18% (leukemia drugs Rituximab and trastuzumab increased by 49% and 44%).
    • Researchers concluded that regardless of competition, there is a steady increase in costs of patented anticancer agents over time.
  • Study from Healthcare Growth Partners (HGP), reveals record high Health IT investments during the start of fiscal 2017 and Q3. HGP examined transactions of 312 US and 180 non-US organizations7. Following are the highlights of the study:
    • $5.63 billion of investments in US organizations
    • 19% of annual growth rate over the last 6 years in US
    • 46% of annual increase globally since 2011

    Technology Briefs

    • A research published in Computer World states that Blockchain Development is the 2nd most (out of 20 job skills) demanded skill in the US job market. According to Upwork, an employment site that specializes in freelancers, Blockchain technologists quote at a rate of ~$115 per hour8

    Market Segments

    Oncology/Genomics

    • Foundation Medicine announces Q3 results9:
      • 45% year-over-year revenue growth, reached a total of $42.7 million in Q3
      • 50% year-over-year growth in clinical tests, reached a total of 17,474 clinical tests in Q3
    • Texas is investigating McKesson’s role in a growing opioid crisis. Several Texas counties have moved to sue McKesson and other companies for economic damages, alleging that manufacturers downplayed addiction risks and their distributors failed to track suspicious orders that flooded communities with pills10
    • McKesson gives tips to White House on how to fight opioid epidemic11. Following are the highlights:
      • Requiring all payers and providers to use opioid management programs;
      • Requiring e-prescribing for all controlled substances across the nation;
      • Harnessing the Food and Drug Administration’s Risk Evaluation and Mitigation Strategies program;
      • Fully leveraging data analytics to identify patients most at risk;
      • Integrating a National Patient Safety Network into the pharmacy dispensing process, including cash prescriptions and prescriber e-prescribing processes

    Life Sciences

    • Linguamatics released Linguamatics I2E 5.2.0 in the beginning of October with availability for Enterprise and On Demand users. Company mentions about speeding the I2E release cycle up to release quarterly, so that it reaches to its customers faster. I2E is the world's leading text mining platform and used by 18 of the top 20 global pharmaceutical organizations plus many other pharmaceuticals and biotechs in the Scrip 10012

    Imaging

  • Fuji announces its earnings of FY2018/3 1H13. Following are the highlights:
    • 6.7% increase in the revenue of FY2018/3 1H compared to the same in last year, reached a total of 1,187.9 billion yen
    • 12.7% increase in the operating income of FY2018/3 1H compared to the same in last year, reached a total of 75.9 billion yen
    • 2.1 times increase in Net Income, reached a total of 70.9 billion yens
  • Fuji receives a new 10-year contract of $768 million as part of the Digital Imaging Network-PACS IV project from the U.S. Department of Defense and the U.S. Department of Veterans Affairs14
  • Watson Platform for Health

    • Four start ups; Augmedix, BrainQ, Byteflies and Cytovale to join Google's Launchpad Studio. Launchpad Studio is the AI accelerator engine of Google. Launchpad Studio focuses on machine learning startups, technology problems and aims to bridge the gap between healthcare and the frontier tech industry. Google will work with the four start ups for 6 months. After 6 months the four companies will operate similarly to a portfolio company in a VC firm15
    • Geoff Hinton, an AI researcher at Google, outlines an advanced AI technology that improvises the rate at which computers correctly identify images and with reliance on less data. Hinton, an academic whose previous work on artificial neural networks is considered foundational to the commercialization of machine learning, detailed the approach, known as capsule networks, in two research papers posted anonymously on academic websites last week16
    • Microsoft announces a new healthcare division based on artificial intelligence with the aim of developing predictive analytic tools that can alert people about medical problems, help diagnose diseases and recommend the right treatments and interventions17

    VBC - Providers

    • On the Oct. 26 earnings call, Cerner's President Zane Burke indicated the company plans to pursue more EHR contracts from government agencies19
    • Allscripts announces that four more hospitals have extended their Paragon EHR agreements with the company in the Q3 2017, following its acquisition of McKesson's Enterprise Information Solutions unit in August20
    • Allscripts CEO Paul Black urges the Department of Veterans Affairs to focus on providing the nation's veterans with the high-quality, interoperable healthcare they deserve21
    • Allscripts announces its Q3 results22. Following are the highlights:
      • Q3 revenue increased by 11.7% to $451.2 million compared the same quarter revenue last year
      • 20.5% year on year growth, reached to a total of $32.9 million in Q3
    • Frost & Sullivan recognizes GE Healthcare for Enabling Technology Leadership in Customized, Scalable, and Agile Revenue Cycle Management IT Solutions. GE Healthcare's RCM IT suite promotes interoperability and collaboration between healthcare ecosystem participants to reduce denied claim losses 23
    • Vanderbilt University Medical Center (VUMC) launches its own Epic EHR on November 2, 2017. VUMC’s $200 million Epic implementation will replace the health system’s previous McKesson EHR system with 25 separate customized modules of Epic software. Vanderbilt has been working toward the launch for the past two years. So far, VUMC staff members have moved 485,000 patient appointments planned for the next 10 to 12 months into the new Epic system24

    • Epic Systems is sued over a False Claims Act suit that alleges the company’s billing system double bills the government for anesthesia services. Epic refutes the allegations25
    • Columbus Regional Health Physicians (a regional health care system) launches its new Epic EHR at all outpatient locations and physician practices on November 1 . Epic Systems will provide a unified EHR platform for the more than 20 outpatient locations and practices that are part of Columbus Regional’s network of primary and specialty care physician offices26
    • Cognizant Technology Solutions increases its lower end of guidance to grow between 9.5 to 10% to $14.78 to $14.84 billion in 2017, as it sees more clients taking its digital offerings and packaged solutions across verticals. The company states that its end-to-end (consulting and technology) offerings will provide an edge in their healthcare service offerings despite uncertainty in legislation and other market changes27

    • Evolent Health announces an expanded relationship agreement with its long-standing customer, Premier Health, including an agreement to acquire the Medicare Advantage (MA) and commercial assets of Premier Health Plan. Evolent and Premier Health have partnered on a value-based care strategy since 201328

    • Evolent announces its Q3 results29. Following are the highlights:
      • Q3 revenue increased by 79.2% to $107.9 million
      • Q3 Net income (loss) of $(12.6) million
      • New partnership agreement with Beacon Health in Maine to provide health plan management services
    • Wolters Kluwer Health announces that Baton Rouge General (a primary healthcare provider in US) will deploy, POC Advisor (clinical surveillance product), leveraging its clinical surveillance and analytics to reduce sepsis mortality and morbidity rates. The clinical intelligence platform will be a central component of The “Most Wired” hospital’s overall clinical and technology strategy30

    Government

    • Rob Thomas II joins Leidos as VP for strategic accounts, government relations. Mr. Thomas previously served as acting assistant secretary and CIO for the U.S. Department of Veterans Affairs. At Leidos, Mr. Thomas will work to strengthen the company's customer relationships and manage growth strategies31
    • Leidos receives three task orders by the National Institutes of Health (NIH) to provide information technology solutions in support of the National Heart Lung Blood Institutes (NHLBI) Information Technology and Applications Center (ITAC). The contract values approximately $45 million32