US Markets – December 19, 2017

Healthcare Policy

US Healthcare Policy Highlights

  • There are 8.9 million children in the U.S. whose health depends on the federally-funded Children’s Health Insurance Program (CHIP), which could be empty on funds in months or in some cases weeks. CHIP’s funding expired at the end of September 2017 and the Senate has failed to bring the legislation to the floor. The program offers health insurance coverage to those children whose parents don’t have or can’t afford private insurance but also do not qualify for Medicaid. It operates as a block grant system: the federal government gives lumps of cash to individual states, which allocate that money as they see fit (Time)
  • Clinical labs are suing the CMS over a planned multibillion-dollar cut to their reimbursement. They expect to lose USD 670 million next year as part of CMS’ effort to pay the same rate for tests as private payers. CMS decided to exempt many labs from reporting what private insurance companies were paying for tests to reduce regulatory burdens. According to industry groups, the rates were decided by the CMS based on data collected from labs with the biggest test volumes receiving the highest discounts from test manufacturers (Modern Healthcare)
  • The Centers for Medicare and Medicaid Services on Tuesday adds new measures to its compare websites for inpatient rehabilitation facilities and long-term hospital stays. These measures will be used to compare hospitals on care quality (Healthcare Finance)
  • A new reimbursable Improvement Activity is being added to the CMS' Merit-based Incentive Payment System (MIPS), which includes using digital tools to monitor patients outside the hospital. The activity “Engage Patients and Families to Guide Improvement in the System of Care" includes remote monitoring as well as reviewing and interpreting patient-generated health data, provided the physician uses clinically-endorsed tools that include an active feedback loop (Mobi Health News)
  • Healthcare.gov had its strongest week during Dec. 3-9, 2017 (week 6) with more than 1 million selecting plans. According to the latest data from the CMS, since open enrollment started on Nov. 1 there have been nearly 4.7 million plan selections in six weeks. With just six days of open enrollment left to measure there would need to be 4.5 million sign-ups in that time to equal last year’s total of 9.2 million sign-ups on Healthcare.gov (Fierce Healthcare)
  • Paul Chang, MD, professor of radiology and vice chair of radiology informatics for the University of Chicago Medicine, states that radiologists must use IT to reduce variability and to reverse common trends that are currently working against quality. It is important to rely on data driven workflow rather than retrospective review
    (Health Data Management)
  • According to a Government Accountability Office report, during the fiscal years 2011 and 2016, the Department of Veterans Affairs funneled more than USD 1.1 billion to improve an EHR it is now seeking to replace. It paid 138 contractors USD 224 million and USD 880 million for the modernization efforts. The top five awards given to contractors for the iEHR and VistA Evolution projects between 2011 and 2016 include
    • 1. ASM Research (USD 162.6 million)
    • 2. Systems Made Simple (USD 92 million)
    • 3. HP Enterprise Services (USD 81.9 million)
    • 4. Harris Corp. (USD 73.3 million)
    • 5. Technatomy Corp. (USD 65 million) (Becker’s Hospital Review)

Healthcare Economy

US Healthcare Economy Highlights

  • A spate of hospital deals stands to remake the U.S. health-care landscape. Health systems with at least 166 hospitals and USD 39 billion in combined annual revenue have announced merger plans. More announcements are on the way (Bloomberg)
  • According to a recent survey conducted by AMGA, a trade association leading the transformation of health care in America, measuring and reporting quality has become a barrier to improving it, diverting resources from the provision of care itself. Respondents cited several data-related obstacles to the transition to value-based care, including: the lack of access to administrative claims data from payers. (Stat News)
  • Limited patient participation in cancer research remains an inhibitor to progress in treatment. According to a report by PBS NewsHour, just 5% of cancer patients participate in clinical trials. Key facts:
    • In 2016 there were an estimated 1.7 million new diagnoses of cancer in the U.S of which 600,000 people died
    • Besides the willingness of patients to participate in trials, limited access to novel cancer therapies is a major hindrance to patient enrollment
    • Established the Gulf South NCORP clinical trials network, which currently consists of more than 22 treatment facilities staffed by more than 90 investigators across Louisiana, with one location in Mississippi. The effort tripled the number of patients enrolled in clinical trials in Louisiana (Becker’s Hospital Review)
  • The American Hospital Association (AHA) calls for the FDA to step up its medical device cybersecurity oversight in the wake of the WannaCry ransomware attack. The AHA wants the FDA to ensure manufacturers handle the situation better next time by setting “clear measurable expectations” for how they should respond before incidents occur. Then when a security breach happens the trade group wants the FDA to play a more active role in helping its members to bounce back (Fierce Biotech)

Technology Briefs

  • According to Frost & Sullivan, 2018 will be a tipping point for mainstream adoption of popular digital health tech/solutions (e.g., artificial intelligence, mHealth/wearables, telehealth, Big Data analytics, and robotics) and the transition of noble technologies from research/proof-of-concept to actionable healthcare and clinical applications (e.g., blockchain and cancer immunotherapy products). Experts suggest:
    • Data monetization will unleash the power of patient data to achieve better outcomes across the healthcare value chain
    • Digital transformation of patient monitoring along with data hubs using cell phone networks will drive health revenue, further reducing hospital inpatient census
    • There will be growing awareness of current inefficiencies in healthcare delivery; for example, poor utilization of operating theaters
    • Optimization of resources, care coordination employing technology-based platforms, and products or services that improve the efficiency of healthcare delivery will be in demand
    • Highly capitalized players like Amazon, Alibaba, and Google will reshape whole segments of healthcare, revolutionizing and simplifying patient experiences and patient empowerment (Frost and Sullivan)
  • According to research published by Accenture and the American Medical Association (AMA) there is a strong need for improved cybersecurity education for physicians.
    • Four in five (83%) physicians have experienced some form of cyberattack
    • Cyberattacks cause operational interruptions (74%)
    • Physicians think that ePHI sharing is important
    • Physicians rely on third-party security assistance
    • New technologies bring new challenges (American Medical Association)
  • According to Maria Palombini, director of emerging communities and initiatives development at the IEEE Standards Association, blockchain offers two critical opportunities for the pharmaceutical supply chain - combatting counterfeits and supply chain optimization. Current supply chain infrastructure is siloed and fragmented, creating an opportunistic market for the growth of Internet pharmacies and the overall counterfeit drug trade (Healthcare IT News)
  • According to a survey conducted by the Pittsburgh-based Center for Connected Medicine (CCM), in partnership with the Health Management Academy (The Academy) the majority of health systems plan to increase technology spending to improve their healthcare cybersecurity measures in 2018.
    • 92% of respondents said they were increasing their technology spending for cybersecurity needs
    • 54% of surveyed executives said their organization’s cybersecurity spending will focus on identifying potential threats (Health IT Security)
  • According to the PwC Health Research Institute, the continued uncertainty and risk the healthcare industry will face in 2018 will motivate healthcare organizations to boost their efficiency across functions. The report highlights 12 trends that will impact the healthcare industry in 2018. Some of them are as following:
    • AI is the new coworker. Organizations will automate routine jobs
    • Only 28% of consumers ages 50 to 64 are familiar with Medicare Advantage
    • While 95% of provider executives believe their organization is protected against cybersecurity attacks, only 36% have access to management policies and just 34% have a cybersecurity audit process (Healthcare IT News)
  • According to IDC, worldwide spending on digital transformation (DX) technologies (hardware, software, and services) is expected to be nearly USD 1.3 trillion in 2018, an increase of 16.8% over the USD 1.1 trillion spent in 2017. Healthcare provider industry (21.7% CAGR) will see the third fastest DX spending growth over the five-year forecast, after construction and retail (IDC)
  • According to IDC forecasts healthcare providers across the world will spend a total of USD 8.9 billion in adopting industry cloud solutions during 2017.
    • This industry is expected to increase spending by 20% year over year in 2018 (to USD 10.64 billion) on industry cloud solutions
    • By 2021 the spending on will increase to USD 17.6 billion
    • Total cloud adoption spends (USD16.30 billion globally) across finance, manufacturing, and healthcare providers, the United States is expected to hit 73% of worldwide spend in 2017 and grow at 20% year over year in 2018 (IDC)

Market Segments

Oncology/Genomics

  • University of Cincinnati Cancer Institute (UCCI) joins Caris' Precision Oncology Alliance™ (POA). UCCI marks the 20th institution to join the growing alliance, which was established to develop standards of care and best practices for tumor profiling by leveraging the Caris experience dataset of more than 125,000 clinical cases with thousands of associated patient outcomes (PR Newswire)
  • Caris Life Sciences demonstrates the identification of a new mechanism of action to treat non-Hodgkin lymphoma (NHL). The company uses its proprietary ADAPT Biotargeting System™ to find novel molecules and mechanisms for therapeutic and diagnostic applications (Caris Life Sciences)

Watson Platform for Health

  • Microsoft announces the private preview of a new AI-powered project from Microsoft’s Healthcare NExT initiative. The initiative is designed to enable healthcare partners to easily create intelligent and compliant healthcare virtual assistants and chatbots. These bots are powered by cognitive services and enriched with authoritative medical content (Microsoft)

VBC - Providers

  • Royal Philips acquires VitalHealth for its cloud-based population health management technology. Co-founded by Mayo Clinic and Netherlands-based Noaber Foundation, VitalHealth develops tools for outcome measurement, patient engagement, care coordination and analytics to help manage chronic disease. Its products are deployed at more than 100 healthcare networks in the U.S. and abroad (Healthcare IT News)
  • Cerner challenges a contract awarded to Epic Systems. At stake is a seven-year USD 62 million contract UI Health signed with Epic for an EHR system to replace a variety of legacy technology. According to reports, Cerner was denied a chance to demonstrate its product and Epic was the only bidder to provide a demonstration (Healthcare IT News)
  • CliniComp sues Cerner over an alleged direct infringement of its 1997 patent. The suit alleges Cerner’s remote hosting capabilities on its Millennium architecture mirrors the technology described in CliniComp’s patent for an enterprise healthcare information management system that gives users access to remote-hosted healthcare applications through a public network. (Healthcare IT News)
  • Lifespan announces an alliance with GE Healthcare to deploy data analytics, improve patient flow and focus on lowering costs. The arrangement is a shared-risk model in which they will jointly work to pinpoint USD 182 million in savings by retooling organizational efficiencies for Lifespan over the next six years. (Healthcare IT News)
  • The U.S. Department of Veterans Affairs puts on hold Cerner’s USD 10 billion contract to revisit how well Cerner’s system would interact with systems at private health care providers that the VA uses.(Politico)
  • In Premier’s latest Margin of Excellence report, Premier identifies 10 diagnoses with the biggest opportunity to curb variation within the intensive care unit (ICU) and reduce unnecessary length-of-stay. The findings underscore the value of identifying evidence-based improvement opportunities that healthcare leaders are focused on. Some of the opportunities to reduce variation includes:
    • Sepsis patients with major complications or comorbidities: Represents 19% of the ICU reduction opportunity
      Infectious and parasitic diseases associated with operating room procedures, and major complications or comorbidities: Represents 15% of the ICU reduction opportunity
    • Cardiac valve and other major cardiothoracic procedures without cardiac catheterization, but with major complications or comorbidities: Represents 12% of the ICU reduction opportunity
    • Respiratory system diagnosis with ventilator support for up to 96 hours: Represents 9.5% of the ICU reduction opportunity (Premier Inc)
  • Wolters Kluwer Legal & Regulatory launches the next generation of MediRegs to provide healthcare compliance and reimbursement professionals with advanced search capabilities and real-time regulatory updates (Daily Telescope)
  • Vizient expands membership agreement with Northshore that includes Vizient’s Clinical Database and Resource Manager. Northshore will use Vizient’s CDB analytics solution to help guide their performance improvement efforts in achieving better patient outcomes (Illinois Business Daily)
  • Horizon Health Network and Service New Brunswick extend its contract term with Allscripts through 2024, to further clinical advancements in EHR software and enhance the care experience for patients in its community. The organization has been an Allscripts client for more than two decades (Allscripts)
  • Allscripts acquires Practice Fusion (cloud-based EHR company for doctors and patients) for USD 100 million in cash. The deal is expected to close in the first quarter of 2018. Allscripts strengthens its presence in ambulatory space with this acquisition (Healthcare IT News)
  • Vizient, Inc. launches a new Clinical Documentation Improvement (CDI) solution designed to support the implementation of best-in-class processes, education, and training for hospitals (Vizient)
  • Allscripts CEO Paul Black talks about McKesson acquisition and 2018 goals:
    • The acquisition doubled Allscripts’ client base on the inpatient side
    • Allscripts will maintain McKesson Paragon EHR and make Paragon a great community hospital solution that's got inpatient, outpatient and revenue cycle all baked into one EMR
    • Allscripts is enabling interoperability across EHRs
    • Allscripts is facilitating third-party developers to build on top of Allscripts EMRs and interoperability platform
    • Allscripts is investing in the post-acute arenas, including behavioral health, mental health, substance abuse, long-term care and home health
    • In 2018, Allscripts will update their core set of EMRs to enhance their core capabilities: the hosting, revenue cycle, total IT outsourcing and professional services; expand international business; work on value-based tools, cost-accounting solutions, interoperability platform and payer and life sciences suite of solutions to make them more consumer-centric; and expand post-acute care platform
      (Becker’s Hospital Review)