Moving Forward: Outlook on the
Innovation-Cost Reduction
Equation
Dr. Joseph M. Smith, MD, Ph.D, FACC

CONFIDENTIAL – Do n...
Why we’re here

CONFIDENTIAL – Do not reproduce or distribute
“Then, as the Baby Boomers start to retire and health
care costs continue to rise, the situation will get even
worse. By 2...
Costs are rising faster than income

CONFIDENTIAL – Do not reproduce or distribute
Gary and Mary West
 Entrepreneurs and philanthropists with a commitment to
creating a new ecosystem to lower health care ...
Solely funded by pioneering philanthropists Gary and Mary
West, it consists of four entities:

an independent, 501(c)(3) n...
Is technology the answer?
Most analysts agree that the most important
factor contributing to the growth of spending for
he...
State of Affairs
 Total costs of diagnosed diabetes: $245 billion in 2012
 Diabetes affects 26 million Americans
 5th l...
In Context …
$176
Billion
$192
Billion

$78
Billion
Source: American Diabetes Association (2012), American Heart Associati...
Direct Cost of CM Disease is Increasing
Percentage of Chronic Disease Costs

Source: American Diabetes Association (2012),...
From the hospital’s perspective
 More than 40% of all health care expenditures attributed to
diabetes come from higher ra...
From the hospital’s perspective
 Highest cost is in the chronically sick patients with non-preventable
hospitalizations -...
Three opportunities for innovation and cost
savings:
 How do we prevent people from becoming
diabetic?
 How do we preven...
Takeaways

CONFIDENTIAL – Do not reproduce or distribute
Welldoc, the first FDA-cleared prescription
software

CONFIDENTIAL – Do not reproduce or distribute
The Artificial Pancreas:
Easily conceived and amazingly
challenging to bring to market.

Source: Wikipedia

CONFIDENTIAL –...
1964
Arnold Kadish, MD
(private practice, Beverly
Hills) is usually credited
as the first to create a
“wearable” insulin p...
1970s

The first practically useful AP evolved from
early-to-mid 1970s work of Michael Albisser
and others which was comme...
What we see now: Monitors and pumps

Source: Dexcom, Glysens

CONFIDENTIAL – Do not reproduce or distribute
The future: Pancreas or islet cell transplants

CONFIDENTIAL – Do not reproduce or distribute
Regenerative medicine

CONFIDENTIAL – Do not reproduce or distribute
Viral gene therapy

Source: Wikipedia

CONFIDENTIAL – Do not reproduce or distribute
Can technology help move effective care from hospital to
home?
Remove excessive cost of care delivery due to site of care
...
Chronos v. Kairos

CONFIDENTIAL – Do not reproduce or distribute
It is time (kairos) to re-engineer health care:
Persistent economic crisis,
Threateningly unfavorable demographics,
Unsust...
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West Health DiabetesMine Summit 2013_Closing Remarks

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Joseph Smith, CEO of West Wireless, gave an excellent presentation at the 2013 DiabetesMine Innovation Summit (Nov.15, Stanford University) on "Moving Forward: Outlook on the Innovation-Cost Reduction Equation."

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  • And of course, this has become part of the national dialogue…
  • In the first 90 days… The CardioMetabolic Syndrome (CMS) disease solution team has gained deep domain knowledge of the disease state, important risk factors, and the cost associated with each segment of the disease (whether segmented by individual disease progression, site of care, or cost of each component risk or organ dysfunction). The cluster of cardiometabolic risk factors can lead to CVD, type 2 diabetes and CKD if poorly managed. Today - patients and providers struggle to manage blood pressure, weight, high blood sugar and hyperlipidemia.Based on the most current data, we see CardioMetabolic Disease costing U.S. healthcare system a total $446 billion in direct costs. Obesity has recently been named a disease. If trends continue, total U.S. healthcare costs associated with obesity could reach almost $1 trillion by 2030. (Source: Almanac of Chronic Disease, 2013 Edition Interactive Data Tool)Note: Focus on Individual Disease States Presents Limited, Fractured View of Patient Health  Risk Factors arethe Underlying Force Multiplier Behind Disease States, Comorbidities
  • Of the $2.7 trillion in annual spend on healthcare costs in the U.S. - $2 trillion is for chronic disease – 3 out every 4 dollars per the CBOs calculations. CardioMetabolic Disease accounts for 22% of the direct costs, or $446 billion.
  • As we follow the money, some key conclusions…(see bullets on slide)Note: Dyads and triads are pairs and triplets of chronic disease occurring together in a single patient regardless of reason for admission
  • Looking to impact the largest cost of cardiometabolic disease leads us to look at inpatient stay and related costs.Early thinking has us investigating process improvement for hospitalized patients with CMD-related chronic conditions.We think that disruption to the hospital discharge process would allow for patients to be discharged earlier to the home with equivalent level of care they would receive in the hospital. By shifting site of care, we anticipate reduced costs and potential tie-in for reduced readmissions, ER visits and medication adherence.Benefits may also extend to improved discharge process with “soft” discharge at hospital and “in-depth” discharge in the home, improved patient engagements, and enhanced transition of care with family and community support.West Health could pull on core competencies related to technology-enabled logistical support (care coordination).Key Solution Features:Initial target of highest cost patientsHealth Care Professionals (HCPs) allocated and dispatchedHospital level services dispersed and managed in the fieldSets in motion “patient connectedness” strategyEngages patient beyond hospital & improves fragmented uncoordinated outpatient carePatients socially connected to healthcarePatient population surveillance
  • West Health DiabetesMine Summit 2013_Closing Remarks

    1. 1. Moving Forward: Outlook on the Innovation-Cost Reduction Equation Dr. Joseph M. Smith, MD, Ph.D, FACC CONFIDENTIAL – Do not reproduce or distribute
    2. 2. Why we’re here CONFIDENTIAL – Do not reproduce or distribute
    3. 3. “Then, as the Baby Boomers start to retire and health care costs continue to rise, the situation will get even worse. By 2025, the amount of taxes we currently pay will only be enough to finance our health care programs, Social Security, and the interest we owe on our debt. That’s it. Every other national priority – education, transportation, even national security – will have to be paid for with borrowed money.” - Barack Obama, president of the United States CONFIDENTIAL – Do not reproduce or distribute
    4. 4. Costs are rising faster than income CONFIDENTIAL – Do not reproduce or distribute
    5. 5. Gary and Mary West  Entrepreneurs and philanthropists with a commitment to creating a new ecosystem to lower health care costs through technology and innovation.  As a hospital administrator in the 1970’s, Gary witnessed sharp rises in health care costs: • • Average cost of a one-day hospital stay in mid1970’s: $100 Average cost of a one-day hospital stay in 2011: $3,9491  Started West Corporation, one of the largest customer relationship management providers in the world, and grew it to more than 35,000 employees.  Through this experience they realized they could control the business and market they were in, but they couldn’t control rising health care costs which were negatively impacting their employees’ lives.  Lowering health care costs became one of the key initiative areas of the Gary and Mary West Foundation. 1 International Federation of Health Plans, 2011 CONFIDENTIAL – Do not reproduce or distribute
    6. 6. Solely funded by pioneering philanthropists Gary and Mary West, it consists of four entities: an independent, 501(c)(3) non-profit medical research organization an independent, 501(c)(3) non-profit nonpartisan organization a $100 million fund providing capital to mission-aligned companies providing a portfolio of services to mission-aligned companies CONFIDENTIAL – Do not reproduce or distribute
    7. 7. Is technology the answer? Most analysts agree that the most important factor contributing to the growth of spending for health care in recent decades has been the emergence, adoption, and widespread diffusion of new medical technologies and services. Source: Congressional Budget Office, Technological Change and the Growth of Health Care Spending (January 2008). CONFIDENTIAL – Do not reproduce or distribute
    8. 8. State of Affairs  Total costs of diagnosed diabetes: $245 billion in 2012  Diabetes affects 26 million Americans  5th leading cause of death in America  $83 billion in hospital fees (23% of hospital spending)  High costs to Medicare and Medicaid Sources: Kaiser, Health Costs, Health Disparities, Public Health Aug 2010; American Diabetes Association, 2013; Agency for Healthcare Research and Quality CONFIDENTIAL – Do not reproduce or distribute
    9. 9. In Context … $176 Billion $192 Billion $78 Billion Source: American Diabetes Association (2012), American Heart Association (2013), Journal of the American Society of Nephrology (2013) CONFIDENTIAL – Do not reproduce or distribute
    10. 10. Direct Cost of CM Disease is Increasing Percentage of Chronic Disease Costs Source: American Diabetes Association (2012), American Heart Association (2013), Journal of the American Society of Nephrology (2013) CONFIDENTIAL – Do not reproduce or distribute
    11. 11. From the hospital’s perspective  More than 40% of all health care expenditures attributed to diabetes come from higher rates of hospital admission and longer average lengths of stay per admission.  This is the single largest contributor to the attributed medical cost of diabetes.  Of the projected $475 billion in national expenditures for hospital inpatient care (including both facility and professional services costs), approximately $124 billion (or 26%) is incurred by people who have diabetes  $76 billion is directly attributed to their diabetes. 11 CONFIDENTIAL – Do not reproduce or distribute
    12. 12. From the hospital’s perspective  Highest cost is in the chronically sick patients with non-preventable hospitalizations - 90% (JAMA, 2013)  Type-2 diabetics have 2.3x longer hospitalization (AHA, 2013)  71% of all discharges in 2012 have the top 5 CMS chronic condition dyads and triads* coded in record (CDC, 2013) * Dyads and triads are pairs and triplets of chronic disease occurring together in a single patient regardless of reason for admission CONFIDENTIAL – Do not reproduce or distribute
    13. 13. Three opportunities for innovation and cost savings:  How do we prevent people from becoming diabetic?  How do we prevent the complications of diabetes progression?  How can me manage those complications more efficiently and effectively? CONFIDENTIAL – Do not reproduce or distribute
    14. 14. Takeaways CONFIDENTIAL – Do not reproduce or distribute
    15. 15. Welldoc, the first FDA-cleared prescription software CONFIDENTIAL – Do not reproduce or distribute
    16. 16. The Artificial Pancreas: Easily conceived and amazingly challenging to bring to market. Source: Wikipedia CONFIDENTIAL – Do not reproduce or distribute
    17. 17. 1964 Arnold Kadish, MD (private practice, Beverly Hills) is usually credited as the first to create a “wearable” insulin pump, and first to create a portable artificial pancreas by connecting it to a glucose analyzer. Source: Glysens CONFIDENTIAL – Do not reproduce or distribute
    18. 18. 1970s The first practically useful AP evolved from early-to-mid 1970s work of Michael Albisser and others which was commercialized by Miles Labs as the Biostator (a bedside AP). Source: Glysens CONFIDENTIAL – Do not reproduce or distribute
    19. 19. What we see now: Monitors and pumps Source: Dexcom, Glysens CONFIDENTIAL – Do not reproduce or distribute
    20. 20. The future: Pancreas or islet cell transplants CONFIDENTIAL – Do not reproduce or distribute
    21. 21. Regenerative medicine CONFIDENTIAL – Do not reproduce or distribute
    22. 22. Viral gene therapy Source: Wikipedia CONFIDENTIAL – Do not reproduce or distribute
    23. 23. Can technology help move effective care from hospital to home? Remove excessive cost of care delivery due to site of care A 10% cost savings in inpatient costs = $19 billion A 10% cost savings in annual CMD costs = $45 billion CONFIDENTIAL – Do not reproduce or distribute
    24. 24. Chronos v. Kairos CONFIDENTIAL – Do not reproduce or distribute
    25. 25. It is time (kairos) to re-engineer health care: Persistent economic crisis, Threateningly unfavorable demographics, Unsustainable healthcare delivery model, with Unprecedented increased access Ubiquitous wireless communication Emerging pluri-potential sensor technology Proven benefits of medical device technology, smart and learning systems, cloud computing Cost-savings of infrastructure-independent care Societal trends for personal technology, personalized medicine, technology-enabled social networking More than a century after Flexner redesigned American medical training, based on the Hopkins model, it is again time to redesign the way we care for patients and diagnose and treat disease – we cannot afford not to, and ‘patients are waiting.’ CONFIDENTIAL – Do not reproduce or distribute
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