The CEO 360 Perspective of the Medical          Devices Industry                Greg Caressi      Senior Vice President, H...
Key Take-AwaysEvent Title:            16th Annual Medical Devices, 2011Speaker/Facilitator:    Greg CaressiSession Title: ...
Common Forces Impacting All Healthcare StakeholdersPatients    Physicians       Hospitals     Pharma/Biotech         Devic...
Economic Issues Impacting Healthcare in 2011:Private Sector•   Continued high unemployment rate strains govt budgets      ...
Economic Issues Impacting Healthcare in 2011:Public Sector and Hospitals                         •    Federal govt budget ...
Future of HealthcareWhat Will the Future Look Like?Healthcare increasingly data driven and customizedHealthcare more like ...
Obama Administration Goals Accelerating Many TrendsTwo key pieces of legislation will dramatically accelerate the pace of ...
Shifting the Financial Gravity of the System                $$$$                            $$$   Investment              ...
Shifting the Health Focus of the System                                                                               ü   ...
New Care Delivery Models – Patient Centered Medical HomeExisting Medical Home pilots have focused on medication adherence ...
New Care Delivery Models – Accountable Care OrganizationsGroups of providers or practices under theumbrella of one organiz...
Technology To Monitor and Achieve Better Outcomes                            Connected Health         Remote Patient      ...
Shifts Underway to Support Remote Access and TrackingCMS support                                                   More em...
Patient Perspective:Shifting Healthcare Expectations Consumer experiences in other markets affecting                      ...
Connected Health Solution Success Based on AlignmentWith Stakeholder Goals, Perceived Benefits HCP benefits               ...
Demographics : Applications : Device     Two (market-oriented) views of the business decisions that       must be accommod...
Connected Health Via What Device?                      PROs                                                  CONs         ...
Smart Phones the Platform of Choice for Future ConnectedHealth Apps?Source: Frost & Sullivan             Penetration of sm...
Best PracticesLook for systems, not technology• Multiple contact methods, follow up channels to  escalate contact as neede...
Regulatory Issues Impacting mHealth:Medical Device Needing Approval?        Expect regulation of software apps and monitor...
Which Apps Will the FDA Have More Interest In? Pacemaker                                                                  ...
Summary of Impact of Policy and Market Trends                  Move away from fee-for-service to bundled payments based on...
Expect Continued Drive To Capture Long-term Gains ofHCIT Investments and Information Exchange                       •   Go...
Contact Info         Greg Caressi         Senior Vice President         Healthcare & Life Sciences         (650) 475-4555 ...
Frost & SullivanAn Active Contributor to Global HC Market Development      Comprehensive  Supply-side Analysis            ...
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The CEO 360 Perspective of the Medical Devices Industry

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The CEO 360 Perspective of the Medical Devices Industry

  1. 1. The CEO 360 Perspective of the Medical Devices Industry Greg Caressi Senior Vice President, Healthcare Frost & Sullivan
  2. 2. Key Take-AwaysEvent Title: 16th Annual Medical Devices, 2011Speaker/Facilitator: Greg CaressiSession Title: The CEO 360 Perspective of the Medical Devices Industry Top 3 Take-Aways for Participants Guide to 2011 economic trends and predictions of their impact on healthcare markets Framework of the changing interactions of stakeholders in the system Insight on Healthcare Reform - the implications and impact, one year later 2
  3. 3. Common Forces Impacting All Healthcare StakeholdersPatients Physicians Hospitals Pharma/Biotech Devices Health IT Payers Economic Constraints - The Great Recession, Credit Crunch, Unemployment, Rising Deficits Regulatory Changes - ARRA/HITECH, PPACA, HIPAA 5010, ICD-10, FDA Political & Social Change - Partisan Politics, Empowered Consumers Increased Use of Information Technology - Internet, Mobile Devices, EHR/PHR, apps, gaming Demographics/Epidemiology - More chronic illness, poor nutrition, obesity, aging population, poverty 3
  4. 4. Economic Issues Impacting Healthcare in 2011:Private Sector• Continued high unemployment rate strains govt budgets • 2011 GDP growth > job growth • Higher productivity in 2010 – we really are doing more with less• Interest rates to remain low despite inflation pressures • FED will not raise interest rates in near term • Credit crunch only in terms of banks‟ willingness to loan, fear of defaults• Inflation increasing, driven by energy costs • HC costs will rise faster than inflation, but downward pressures exist • Generics • Medicare payment limitations• Real wages continue stagnant• Elective surgeries will not fully rebound, due to unemployment, limited wage gains, consumer debt burdens, etc. 4
  5. 5. Economic Issues Impacting Healthcare in 2011:Public Sector and Hospitals • Federal govt budget deficits will remain high • Budget deficit debates on 12% of budget eventually will come around to Medicare/Medicaid • 50% of HC spending will be funded by US Govt in 2012 • No pullback on govt funding for HCIT • Hospitals need a new business model • Focus on both horizontal and vertical growth 5
  6. 6. Future of HealthcareWhat Will the Future Look Like?Healthcare increasingly data driven and customizedHealthcare more like other service industriesGlobalized care deliveryGreater collaboration and information sharing across valuechainGreater transparency of prices/costs and outcomesIncreased development of standards of care and incentivesto adopt themIncreasingly challenging market for new technologies.Demonstrating value will be essential.Focus on economicsLonger time to market for new technologiesDeclining influence of clinical decision makersMore “generics” – technologies providing same value atlower price, stripped down feature sets 6
  7. 7. Obama Administration Goals Accelerating Many TrendsTwo key pieces of legislation will dramatically accelerate the pace of change HITECH PPACA (February 2009) (March 2010)The Health Information Technology for The dual passage of the PatientEconomic and Clinical Health Act Protection and Affordable Care Act(HITECH), part of the American (PPACA) and the Health Care andRecovery and Reinvestment Act of Education Reconciliation Act of 2010,2009 (ARRA) included >$35 B in puts into place a series of changes in theincentives to help healthcare way providers are compensated andorganizations modernize operations expands access to health insurance to 32through the use of health information million Americans who currently aretechnology without coverageHITECH specifically allocates $19.2 B Primarily, PPACA is health insurancein the form of direct payments to legislation. Secondarily, it addressesincrease the use of EHRs by reimbursement and physician paymentphysicians and hospitals for servicesCBO estimates that HITECH incentives More emphasis on diagnosis, monitoring,will boost physician EHR adoption preventive care leading to increasedrates to 90% by 2019 collaboration with other providers 7
  8. 8. Shifting the Financial Gravity of the System $$$$ $$$ Investment $$ $ Healthy “At Risk” Undiagnosed Chronically Ill Chronically Ill End Managed Unmanaged of Life Continuum of Care 8
  9. 9. Shifting the Health Focus of the System ü Early identification and prevention Prevention/Wellness ü Access to new forms of care delivery to improve patient knowledge, self-help and health ü Connection to benefits design to increase coverage for those services which prevent disease and improve health over long term Goal: Size of Impacted Population Keep ü Reducing administrative and clinical waste People Healthy Longer Goal: Disease/Care Manage Management or Mitigate Risk Goal: Diagnose and Reduce Goal: Treatment Move to Goal: Delay More Manage Goal: Interaction and Self- Informed Mgmt Decisions Healthy/ “At Risk” Undiagnosed Chronically Ill Chronically Ill End “Worried Well” Managed Unmanaged of Life Continuum of Care 9
  10. 10. New Care Delivery Models – Patient Centered Medical HomeExisting Medical Home pilots have focused on medication adherence as key togoals of patient empowerment and reducing hospital readmissions • Physician practice • The medical home model designated as a patients promotes a team based "medical home" to approach = increased coordinate the collaboration and continuum of care communication among and improve quality stakeholders and outcomes • Increased interaction, • Communication among the sharing of info care teams is essential among care team requiring an extensive use of • Increased patient health IT, including EHRs, e- empowerment focuses on Rx, clinical decision support, understanding of disease secure messaging and and medications patient/provider Web portals 10
  11. 11. New Care Delivery Models – Accountable Care OrganizationsGroups of providers or practices under theumbrella of one organizing entity withresponsibility to improve health, care efficiency +experience and outcomes for a defined population ACO models: • require tracking of info and outcomes Engage in joint decision-making to • focus on chronic manage the full continuum of care disease management to improve outcomesACOs must meet certain criteria, including quality • Increase patientmeasurements and share in the cost savings for engagement, activationMedicare and Medicaid programs and accountability • Utilize monitoring and analytics to achieve health outcomesThe efficient operation of ACOs will be highlydependent on a solid information infrastructure,including health information exchange 11
  12. 12. Technology To Monitor and Achieve Better Outcomes Connected Health Remote Patient Consumer Health Monitoring Hospital-based Telehealth Systems 12
  13. 13. Shifts Underway to Support Remote Access and TrackingCMS support More emphasis on diagnosis, monitoring, preventative care• “The use of a telecommunications system may substitute for a face-to-face, "hands on" encounter for Track and document outcomes consultation, office visits, individual psychotherapy and pharmacologic management.” Greater info flows to support training,• “Each of these categories is „not considered patient education/interaction telemedicine‟ or „telemedicine‟ by CMS. Rather, they are considered the same as services delivered on-site and are to be coded and will be paid in the same way.” Requirement to reimburse States that mandate telemedicine reimbursement by private insurance: Virginia Hawaii Maine Kansas New Hampshire Kentucky Oregon Louisiana California Texas Colorado Oklahoma Georgia 13
  14. 14. Patient Perspective:Shifting Healthcare Expectations Consumer experiences in other markets affecting Key success factors expectations from healthcare: • Utility • Ease of use Retailing • Engaging, not sterile & Finance § Customer service focus § Comparison shopping Manufacturing § Self-service, online shopping & Distribution § Special offers § Faster time to market § One stop shop ConsumerConsumers expect § Anytime anywhere Expectations real time info at pt care of consumptionInfo comes to consumer 24 / 7 / 365 support to Ability to control and customize use and resolve questions,Consumers expect service features high levels of One stop resolution, or Consumer controls interaction call back interaction and Q&A in face to Proactive outreach to Entertainment face encounters address issues & Media affecting consumer § Customized products § Home services 14
  15. 15. Connected Health Solution Success Based on AlignmentWith Stakeholder Goals, Perceived Benefits HCP benefits Patient benefits • See more patients • Convenience, control of timing • Influence patient behavior change • Increased interaction on demand • Improve outcomes • Immediate access to system, info • Leverage patient support system – • Behavior change wider caregiver group, family, etc. • Ability to support family health Market development issues: •Will physicians be able/willing to accommodate increased info flows •Patient thresholds on willingness to pay? •Many benefits accrue to payers, but solutions being sold to providers and patients 15
  16. 16. Demographics : Applications : Device Two (market-oriented) views of the business decisions that must be accommodated in connected health solutions DEMOGRAPHICS DEMOGRAPHICS OF USERS OF USERS Drastic shift in If/when near future re: applications comfort with migrate, will devices? devices need to change? DEVICE DEVICE 16 16
  17. 17. Connected Health Via What Device? PROs CONs Single use device• Device functionality designed and built to • Distribution issues match applications and connectivity platform • Single use devices have poor record of (display, response, two-way video, etc.) success in mass market deployments to• Don‟t have to deal with integration issues to patients in telemedicine - hard to scale multiple device platforms Smartphone / Handheld Computer• New functionality funded by device vendors: • Device functionality, form factor may not meet • Will utilize latest tech within short time needs of all applications and users• Addition of mobility increases value of apps • Two-way video • Adherence reminders • Keyboarding, small buttons • PERS emergency calls • Dependent on network coverage and costs of • Geofencing, tracking/location wireless data network service providers TV as access device• TVs in place in nearly 100% of households • Functionality tied to capabilities of remote• Existing high penetration and comfort with use control or purpose-built console/keyboard by elderly population • No existing success stories despite attempts: Phillips Motiva, WebTV 17 17
  18. 18. Smart Phones the Platform of Choice for Future ConnectedHealth Apps?Source: Frost & Sullivan Penetration of smartphones even higher among physicians 63% of physicians own smartphones, expected to rise to 81% smartphone penetration among physicians by 2014* *Manhattan Research = “Physicians in 2012: The Outlook for On Demand, Mobile and Social Digital Media” 18
  19. 19. Best PracticesLook for systems, not technology• Multiple contact methods, follow up channels to escalate contact as needed• Monitor + engage with patients• Support two-way patient-provider interactions Can‟t use tech to jump value chain  Can increase info and interaction within value chain: Providers (many layers)  Patient FamilyLearn from other industries where mobilizing processes is successfulMust solve problems of individual user holding the device •Convenience •Efficiency •Knowledge pushed to the edge 19
  20. 20. Regulatory Issues Impacting mHealth:Medical Device Needing Approval? Expect regulation of software apps and monitors collecting data, no direct regulation of smart phone or computer as transmission channel FDA has stated software validation will be required for mobile medical applications. Whether such devices would have to go through 510(k) or pre-market approval processes, or be ruled 510(k)-exempt has not yet been determined and… In EU, regulators state stand-alone software CAN be considered a medical device so… Conclusion = IT DEPENDS ? Both the FDA and the EU have stated clarity is coming … under evaluation 20
  21. 21. Which Apps Will the FDA Have More Interest In? Pacemaker Calorie Easy Hard Easy Counter Risk will likely determine regulatory response If doctor bases medical decision on this data, or provides support for medical decision = medical device? “NOT DETERMINED YET” FDA has stated that the status of mHealth application guidance “still a matter of discussion” “under development” more guidance in coming monthsFCC overtly encourages mHealth exploration and device innovation, support for test beds Big issue for FCC is (frequency) interference 21
  22. 22. Summary of Impact of Policy and Market Trends Move away from fee-for-service to bundled payments based on quality of care Increased use of analytics, care protocols MEDIUM TERM TRACKING , ANALYTICS Increased patient empowerment to understand and manage disease. Patient interacts directly with caregivers via remoteVOLUME to VALUE monitoring and mobile apps Greater need to document process of care and document outcomes Tracking of care, results New care models focused on collaboration, information exchange/awareness, achieving health outcomes, especially with chronic disease care Health IT cost subsidies by government and commercial payers; increased focus on prevention and reduced hospital admissions Physician realignment, health care workforce shortages, and SHORT provider consolidation TERM 22
  23. 23. Expect Continued Drive To Capture Long-term Gains ofHCIT Investments and Information Exchange • Govt action on interoperability and health info exchange is the next step • HIE ROI > EHR ROI • Data entry dilemma: voice processing? • Freeing data (via XML?) unlocked data flows drive research and innovation • Key question Who will own aggregated data? • Providers • Payers • Some EHR vendors have access rights to aggregated data • Analytics and aggregating information for consumers for their individual decision making is an opportunity • From Quality ratings to Care decisions 23
  24. 24. Contact Info Greg Caressi Senior Vice President Healthcare & Life Sciences (650) 475-4555 greg.caressi@frost.com 24
  25. 25. Frost & SullivanAn Active Contributor to Global HC Market Development Comprehensive Supply-side Analysis Recognizing Best Practices Strategic Expert Analysis Hosting Robust Industry End-user Thought Forums Analysis Leadership 25

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