US Markets – December 12, 2017

Healthcare Policy

US Healthcare Policy Highlights

  • The US Food and Drug Administration (FDA) finalizes guidance meant to assist the Centers for Medicare and Medicaid Services (CMS) in determining whether CMS should reimburse an investigational device. While a device may not be reimbursable during early clinical trials, information gained during such studies now can be utilized potentially to help support a category change, and thus full reimbursement, for the device during subsequent studies (RAPS.org)
  • In the Medicare Physician Fee Schedule and Quality Payment Program final rules for 2018 recently released by CMS, the agency is delaying the start of the program until 2020 to give the Advanced Diagnostic Imaging industry time to get used to the program. The Program was originally scheduled to begin in January. However, organizations representing radiology professionals cited a lack of specifics for how the program would work and workflow challenges that healthcare organizations had not ironed out (Health Data Management)
  • The US House and Senate Republicans will discuss the repeal of the Affordable Care Act’s individual mandate when they meet in a conference, and leave the ACA mandate for employers, the one that prompts the employer shared responsibility payment (ESRP), untouched. The proposed legislation would provide a two-year extension of the CSR payments to insurance companies providing health insurance policies on government healthcare exchanges, and greater flexibility to states in developing solutions to their healthcare challenges by making changes to the ACA’s state innovation waiver process (ACA Times)
  • CMS aims at regulatory reforms to ease provider burden with several new initiatives such as the Patients Over Paperwork and Meaningful Measures initiatives.
    • Patients Over Paperwork initiative reduces regulatory burdens on providers to enable them to spend more time on clinical tasks
    • Meaningful Measures initiative is a new approach to quality measurement and to streamline current measure sets, moving from process measures to a focus on outcome-based measures going forward (Health Data Management)
  • CMS releases a list of 32 clinical quality measures under consideration (MUC) as part of its Meaningful Measures initiative, which is designed to whittle down the number of quality measures to those most critical. CMS considered 184 measures submitted by stakeholders during an open call for the development of the MUC list, which was narrowed down to 17 percent of the original submissions. The initiative is aimed at reducing significant administrative strain federal reporting requirements places on providers (EHR Intelligence)
  • The American Medical Association (AMA), AMGA, Medical Group Management Association (MGMA), National Association of ACOs (NAACOS) and Premier Inc. laud the introduction of H.R. 4580, the “ACO Improvement Act of 2017” sponsored by Rep. Peter Welch (D-VT) and Rep. Diane Black (R-TN). H.R. 4580 includes
    • Waivers for all ACO tracks on cost-sharing for certain primary care services, and waivers for existing rules on telemedicine and remote monitoring
    • Three-day prior hospitalization waiver for skilled nursing facility services and waiver of the homebound requirement for 2-sided tracks
    • ACO choice of method for assigning beneficiaries
    • Bonus payments for quality achievement and for quality improvement
    • Improved methodology to better account for changes in patient health status over time (Premier Inc)

Healthcare Economy

US Healthcare Economy Highlights

  • According to the Centers for Medicare and Medicaid Services (CMS), growth in healthcare spending in the United States slowed in 2016 following two years of expansion under the Affordable Care Act. Driven by slower enrollment growth in health insurance programs, health spending decreased 4.3 percent to $3.3 trillion compared to a 5.8 percent growth rate in 2015 (Reuters)
  • More than 50 percent of all healthcare providers in the US, i.e., over 1,000 hospitals, 25,000 clinics, and 580,000 healthcare providers, are connected through the Carequality interoperability framework. Carequality is a national-level, consensus-built, common interoperability framework to enable exchange between and among health data sharing networks. In October 2017 alone, more than 1.7 million documents were shared among healthcare organizations through the Carequality Interoperability Framework (Globe Newswire)
  • The U.S. FDA approves a new cancer screening test, and the Centers for Medicare & Medicaid Services at the same time proposes to cover its costs to beneficiaries. The FoundationOne CDx (F1CDx) is a next generation sequencing (NGS)-based test that can provide information on genetic mutations that may help patients with cancer (i Advance Senior Care)
  • CMS Chief Seema Verma speaks about her top health care policy priorities. Some of them include:
    • Drug pricing – Exploring the idea of whether CMS should pass on the manufacturer rebates for patients. Create more competition to bring down drug prices by making available more generics or biosimilars
    • GOP repeal of the individual mandate – Individual mandate is ineffective and has driven up premium prices. Plans to make things more flexible, market friendly, and create more choices. Trying to build a comprehensive Congressional solution, that will provide flexibility for states and empower states, and will address the underlying reasons of why costs are going up so much
    • Patient empowerment – Plans to drive patient empowerment across all programs - Medicaid, Medicare, and the CMS exchange programs – by putting out more information for individuals and structuring the programs in a way that incentivize the beneficiaries to be active consumers of their healthcare
    • The opioid crisis – creating a new waiver for states that will increase access to treatment for the affected. Working towards streamlining measures and focusing things that are about outcomes, not about process. For example, the CMS’s star rating for managing pain aggressively with patients
    • Hospital consolidation - With Patients Over Paperwork aimed at reducing regulatory burden and Meaningful Measures initiative, CMS is working towards reducing regulatory burden for healthcare providers (Forbes)
  • Two major hospital systems - Ascension and Providence St. Joseph Health - are in talks about a possible merger that would create the largest U.S. owner of hospitals. A deal would create an entity of unprecedented reach, with 191 hospitals in 27 states and annual revenue of $44.8 billion, based on the most recent fiscal year. (Wall Street Journal)
  • Catholic Health Initiatives (CHI) and Dignity Health sign a definitive agreement to combine ministries and create a new, nonprofit Catholic health system.
    • The new health system includes more than 700 care sites and 139 hospitals, offering people and communities access to quality care delivered by approximately 159,000 employees and more than 25,000 physicians and other advanced practice clinicians. The organizations are geographically complementary with no overlap across hospital service areas across 28 states
    • The new organization will be led by an office of the CEO. Dean and Lofton will both serve as CEOs, each with specific and independent responsibilities and decision-making authority
    • The deal is anticipated to close in the second half of 2018 and is subject to federal, state, and church approvals (Dignity Health)

Technology Briefs

  • Apple and Stanford Medicine launch a study to monitor users' heart rhythms using the Apple Watch heart rate sensor and alert users who are experiencing Atrial Fibrillation (AFib). With this study, Apple and Stanford hope to
    • demonstrate how health tracking wearables could usher in more proactive user health monitoring
    • solidify Apple’s narrative that the Apple Watch is "the ultimate device for a healthy lifestyle (Business Insider)
  • According to a recent HIMSS Analytics survey, healthcare providers are interested in increasing the role of artificial intelligence in their organizations in the near term. However, the implementation of AI initiatives comes with challenges
    • Budgets
    • Lack of technical expertise
    • Existing technology infrastructure inadequate (Healthcare IT News)
  • According to Frost & Sullivan, by 2025, 10 percent of hospitals across the globe will become or will have started cloud computing and data analytics implementations to become smart hospitals. The total market opportunity is approximately $11 billion, with the data analytics market for smart hospitals reaching revenues of $5.9 billion in 2018 and cloud computing reaching revenues of $5.1 billion (PR Newswire)
  • According to the latest Office of Inspector General’s (OIG) semi-annual report to Congress, information technology and cybersecurity issues exist in numerous areas such as grants management and mental health services. OIG wants to keep working on grants management, mental health services, managed care programs and value-based care, and the quality and safety of programs serving American Indian and Alaska Native beneficiaries. However, the completeness, accuracy, and timeliness of data is a critical factor as OIG investigates these key areas of concern (Health IT Security)
  • Deloitte’s ninth annual Tech Trends report highlights emerging technologies that companies are harnessing to foster innovation and growth—from enterprise data sovereignty to digital reality, the no-collar workforce and more. It also showcases how organizations that orchestrate the collision and confluence of these disruptive technologies can drive greater value across the enterprise (Deloitte)

Market Segments

Oncology/Genomics

  • Foundation Medicine presents new data generated with FoundationOne®Heme, its comprehensive genomic profiling (CGP) assay for hematologic malignancies and sarcomas at the American Society of Hematology (ASH) Annual Meeting.
    • Data from a broad range of blood cancers, including acute myeloid leukemia (AML), myeloproliferative neoplasms (MPN), and non-Hodgkin lymphoma (NHL), including primary central nervous system lymphoma (PCL), demonstrate the value of integrating FoundationOneHeme into clinical care.
    • The data demonstrate the potential for CGP to improve disease classification, to offer personalized prognostic information and to support therapeutic treatment decision making by informing treating physicians about the use of novel treatment options, including cancer immunotherapies. (Foundation Medicine)
  • McKesson Canada acquires retailer Well.ca, which sells health, wellness, natural and baby products online. The deal brings online commerce capabilities and digital experience to McKesson Canada's retail assets, including the Rexall Drug Store chain. (The Globe and Mail)
  • Dr. Aradhana Ghosh, an expert in specialty care and oncology, joins Syapse as Vice President of Oncology. In her current role, Dr. Ghosh will provide clinical expertise to product development, corporate strategy, and sales implementation as she leads the Syapse clinical group.

    Dr. Ghosh is a board-certified medical oncologist and practiced hematology-oncology at Kaiser Permanente. She was also the Medical Director of Specialty Care for Santa Clara Health & Hospital System. She also served as a Physician Executive at McKesson and most recently as a Medical Oncologist at IBM Watson Health (Syapse)

  • NantHealth supports a research study initiated by the University of California, San Francisco (UCSF) that will use NantHealth’s GPS Cancer™ panomic molecular analysis test to explore the molecular basis of patients with metastatic or recurrent breast cancer (Business Wire)
  • Caris Life Sciences is working on several new clinical assays and plans to submit its gene panel for approval by the US FDA. The company already has approval from the New York State Department of Health, which the FDA accredited as a reviewer, for SNV and indel detection through its 592-gene panel, as well as for its gene fusion assay, and that the department is currently reviewing the panel for microsatellite instability testing (Genome Web)

Life Sciences

  • UnitedHealth Group's Optum will acquire DaVita Medical Group for approximately $4.9 billion, adding nearly 300 medical clinics to its network. Key aspects of the deal:
    • Acquisition includes DaVita Medical Group's clinics in Florida, California, Colorado, Nevada, New Mexico and Washington, as well as 35 urgent care centers and six outpatient surgery centers
    • Post acquisition, DaVita Medical Group will join OptumCare division, which works with more than 80 health plans and 30,000 affiliated physicians.
    • The deal will close in 2018, subject to regulatory approval
    • DaVita Medical Group leadership team will have executive roles at the combined company
    • Combined leadership and expertise of each company will be used to enhance patient care and value
    • This is the third major transaction Optum inked this year, followed by Surgical Care Affiliates in January and Advisory Board's healthcare consulting business in November (Becker’s Hospital Review)

Imaging

  • GE Healthcare launches DeltaVision Ultra, a high-resolution widefield deconvolution microscope optimized for imaging and analysis of cellular and subcellular processes, up to 50 μm beyond the coverslip and down to 250nm in size. It overcomes the conventional shortcomings of widefield microscopes and captures images from the most challenging samples, including small structures, dim samples and live cells (Technology Networks)

Watson Platform for Health

  • Amazon Web Services (AWS) partners with Cerner to help with the adoption of healthcare to the cloud. The collaboration will enhance Cerner’s HealtheIntent platform with Amazon's advanced analytics at greater speeds to large healthcare organizations that operate on a bigger scale and across geographies. Cerner's HealtheIntent platform facilitates the gathering and retrieval of and access to patient electronic records (EHRs) including prescriptions to facilitate their analysis by hospitals and healthcare professionals (Nasdaq)
  • Google launches an open source version of DeepVariant, the artificial intelligence tool that last year earned the highest accuracy rating at the precisionFDA’s Truth Challenge. The open-source tool will enable academic medical centers, hospitals, insurance companies and other healthcare organizations to embark on artificial intelligence, cognitive computing, and machine learning as well as precision medicine and the genomic sequencing that entails (Healthcare IT News)

VBC - Payers

  • UCHealth renews its membership agreement with Vizient, Inc. The agreement allows UCHealth to continue its access to the Vizient group purchasing contract portfolio and will optimize the delivery of sourcing, analytic, advisory and collaboration services (Business Wire)
  • Wolters Kluwer Health partners with Omnicell, Inc. to distribute Omnicell’s IVX Workflow system, which integrates with Wolters Kluwer’s market-leading Simplifi 797®. The partnership enables customers to easily acquire and deploy integrated automation and quality tools together to improve accuracy, enhance safety and facilitate compliance with IV compounding best practices (Business Wire)