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The Future Health Ecosystem Today
@chasedave
1 | @chasedave
> The Future Health Ecosystem Today
> Current Problems
> Clinical Care
> Patient-Centric Care
> Wellness & ...
2 | @chasedave
THE FUTURE HEALTH ECOSYSTEM
TODAY
3 | @chasedave
THE FUTURE HEALTH ECOSYSTEM WILL FOCUS ON THE TRUE DRIVERS OF OUTCOMES
Source: RWJF/UWPHI.3
GENETICS DIET &...
4 | @chasedave
Vector 2:
Evidence-Based Decisions
Vector 3:
B2C Health
Improvement Programs
Vector 1:
Next Generation Prim...
5 | @chasedave
Vector 5:
Analytics and
Clinical Decision
Support
Vector 2:
Next Generation
Primary Care
Vector 3:
Value-Ba...
6 | @chasedave
Advance Directives
Programs/Services
Next Gen Benefits
Social Services
Access/Management
Vector 1:
Equilibr...
7 | @chasedave
GPS-EnabledSensorsVector 1:
Targeted
Monitoring and
Rapid Response
Vector 2:
Community-
Based Health
Initia...
8 | @chasedave
Personalized Medicine
Continuous Monitoring of
Clinical and Non-Clinical Data
Better Understanding of
How P...
CURRENT PROBLEMS
10 | @chasedave
A STARK IMBALANCE WITH DRAMATIC REPERCUSSIONS
Source: RWJF/UWPHI; Bipartisan Policy Center.
4%
Health
Beha...
11 | @chasedave
THE SWANS ARE IN THE WATER, BUT WHAT COLOR ARE THEY?
CadillacTax
A consumer movement
is triggered
Aging-in...
12 | @chasedave
HEALTHCARE’S COLLATERAL DAMAGE IS SIGNIFICANT
> State budgets for healthcare coverage vs other priorities
...
13 | @chasedave
AN UNHEALTHY WORKFORCE BURDENS EMPLOYERS AND ECONOMY
SMOKING
+ $5,800
Additional annual costs per employee...
14 | @chasedave
OUR POPULATION IS AGING AND SICKER THAN EVER
50+ 65-74
> The U.S. population
aged 50+ is expected
to grow ...
15 | @chasedave
THIS GENERATION’S TOBACCO: SUGAR AND A SEDENTARY LIFESTYLE
> For every additional
serving above the USDA’s...
16 | @chasedave
$210bn
Unnecessary Services
$190bn
Administrative Costs
$130bn
Inefficient
Delivery of Care
$55bn
Preventi...
17 | @chasedave
AND TOTAL HEALTHCARE SPENDING IS SEVERELY DISPROPORTIONATE
 5% of patients
 50% of dollars
Source: U.S. ...
18 | @chasedave
Angiogram
CT scan, head
Cost perhospital day
Appendectomy
Hip replacement
Coronary artery
bypass
LOWER COS...
19 | @chasedave
HIGHER SPENDING ≠ BETTER HEALTH OUTCOMES
Rank Country
1 France
2 Switzerland
3 Denmark
4 Netherlands
5 Aus...
20 | @chasedave
22
Knee Replacements 1st
Tonsillectomy 1st
MRI Exams 2rd
CT Exams 3rd
VOLUME INCENTIVE = OVERTREATMENT AND...
21 | @chasedave
“Physician burnout climbs 10% in 3 years, hits 55%”
- MEDSCAPE
LAYERING BUREAUCRACY ON TOP OF FLAWED SYSTE...
CLINICAL CARE
23 | @chasedave
1. Government intervention = catalyst
2. Employers shifting risk and insurers responding to regulation and...
24 | @chasedave
GOVERNMENT INTERVENTION = CATALYST
2009 2010 2011 2012 2013 2014 2015 2016 2017 2020
Mar: PPACA
> HITECH A...
25 | @chasedave
EMPLOYERS SHIFTING RISK OR SELF-FUNDING
Percent of Covered Workers Enrolled in a $1,000+
Deductible Plan (...
26 | @chasedave
95%
TRADITIONAL INSURERS ARE ADMINISTRATIVELY INEFFICIENT,
HAVE CAPPED MARGINS, AND ARE IN A NEW BATTLEGRO...
27 | @chasedave
Prominent Employers Using Private Exchanges
172
> Private exchange operators as of October 2014
PRIVATE EX...
28 | @chasedave
REIMBURSEMENT CUTS DEMAND A CHANGE IN OPERATIONS
AND STRATEGY BY PROVIDERS
> Medicare FFS payment cuts and...
29 | @chasedave
VOLUMES SHIFTING OUTPATIENT, AND THE GOVERNMENT WILL TAKE
CONTROL OF THE INPATIENT SETTING
42% 58%
19%
15%...
30 | @chasedave
RISK-SHARING AND THE INCORPORATION OF OPERATIONAL EXPERTISE
ARE THE FUTURE
Risk-Based Revenue Breakdown
(%...
31 | @chasedave
ACO GROWTH HAS RESULTED IN WIDENING REACH, BUT MANY ARE
STRUGGLING TO REDUCE SPENDING
MSSP Cohort First-ye...
32 | @chasedave
High out-of-pocket costs...
COST SHARING BY PAYERS AND PATIENTS BRINGS WITH IT REPERCUSSIONS AND
NEW OPPOR...
33 | @chasedave
PAYERS
CLAIMS COSTS/FINANCE UTILIZATION EMR
PROCEDURES OUTCOMES
PRESCRIPTIONS
SUPPLYCHAIN
• Coordinated ca...
34 | @chasedave
TRADITIONAL PAYERS ARE RESPONDING IN NUMEROUS WAYS
Source: The Advisory Board Company.
Trends
✚ Omni-Chann...
35 | @chasedave
SHIFT FROM VOLUME TO VALUE IS UNDERWAY, BUT A LONG WAY TO GO
...but many providers still don’t have financ...
36 | @chasedave
WHILE HOSPITALS FOCUS ON M&A, INNOVATORS ARE INNOVATING
Hospital M&A Activity has accelerated Partnerships...
37 | @chasedave
PATIENT REGISTRATION CARE COORDINATION INSURANCE ELIGIBILITYVERIFICATION
CODING SCHEDULING PATIENT STATEME...
38 | @chasedave
EHR INCUMBENTS USING TRADITIONAL STRATEGIES TO PROTECT MARKET POSITION
FragmentedPlayers
23% 9%
2014
CONCE...
39 | @chasedave
VENDORS THAT RESPOND TO POPULATION HEALTH-FOCUSED CUSTOMER
NEEDS WILL WIN
Identification of various sub-
p...
40 | @chasedave
BUT THERE IS STILL A LONG WAY TO GO TO BEGIN REALIZING
THE VALUE OF POPULATION HEALTH
of payers and provid...
41 | @chasedave
VIRTUAL MEDICINE HOLDS PROMISE
74%
Source: CDC; Truven Analytics; Center for Connected Health Policy, as o...
42 | @chasedave
KEEPING PATIENTS OUT OF THE HOSPITAL IS THE NEW GOAL
“I think my job ultimately is to close every one of o...
43 | @chasedave
BUT AN UNCERTAIN REGULATORY LANDSCAPE REMAINS
Mental Health
Office Visits
Smoking Cessation
Substance Abus...
44 | @chasedave
BUT THIS HASN’T SLOWED THE BATTLE TO BUILD A NETWORK
Business Model
Delivery Method Freemium B2C B2B2C
Vid...
C O M P A N I E S / D E A L A C T I V I T Y / I N V E S T O R S
46 | @chasedave
PAYER MANAGEMENT/BENEFITS MANAGEMENT
CLINICAL CARE INNOVATORS
MOBILITY, VIRTUAL MEDICINE, AND REMOTE PATIE...
47 | @chasedave
CLINICAL CARE INNOVATORS
DATA ANALYTICS AND POPULATION HEALTH
PRACTICE MANAGEMENT/RCM/PRODUCTIVITY
TOOLS A...
48 | @chasedave
$63mm
$50mm
$16mm
$70mm
$58mm
$40mm
2013
WORKFLOWS ANALYTICS/PH TELEHEALTH OTHER
2014
WORKFLOWS ANALYTICS/...
49 | @chasedave
IPOs $131mm $261mm $1.3bn
BENEFITS WORKFLOWS ANALYTICS
SEPT. 2013 OCT. 2013 APRIL 2014
$75mm $127mm $53mm ...
50 | @chasedave
PATIENT-CENTRIC CARE
51 | @chasedave
1. Patients become educated price-seekers
> Entrepreneurs are empowering them
2. Decentralized medicine an...
52 | @chasedave
> The number of Americans with an HSA Account is expected
to skyrocket
PATIENTS ARE BEING FORCED TO TAKE C...
53 | @chasedave
AND SELF SELECTING INTO HIGH DEDUCTIBLE AND LEAN HEALTH PLANS
Annual Deductibles of Individual Plans Selec...
54 | @chasedave
A NEW KIND OF PATIENT IS IN THE WAITING ROOM
> Millennials are beginning to utilize the healthcare system ...
55 | @chasedave
> Various tools are being created with the goal of improving care navigation and
transparency, and empower...
56 | @chasedave
0
10
20
30
40
50
60
0
10
20
30
40
50
60
0
10
20
30
40
50
60
TOOLS AIMED AT FIXING PRICE FAILURES ARE EMPOW...
57 | @chasedave
TOTAL– Big 6
Sites,
Market Share 901 50% 457 24% 140 8% 103 6% 80 4% 30 2% 1,711 93%
Health System
Affilia...
58 | @chasedave
AND A NEW PRIMARY CARE MODEL IS IN THE MAKING
> Concierge/DPC practices have grown dramatically since 2005...
59 | @chasedave
While some practices are working with insurers on bundled products for the individual market, in the near ...
60 | @chasedave
ON-DEMAND IS MAKING ITS WAY TO HEALTHCARE
Heal Pager Medicast Retrace Health
FOUNDED 2014 2014 2013 2013 2...
61 | @chasedave
FINANCES DOCUMENTS
ACTIVITY SOCIAL=
CONSUMERS ARE BRINGING THEIR LIVES TO THE INTERNET AT A RAPID PACE
62 | @chasedave
AND HEALTHCARE IS NEXT mHealth apps are set to become
a regular part of care
86%
of clinicians believe mHe...
63 | @chasedave
THE PATIENT WILL BE AT THE CENTER OF THE FUTURE HEALTHCARE SYSTEM
FUTURE FOCI:
Primary Physician
Consultin...
64 | @chasedave
CARE EPISODE REIMBURSEMENT
Traditional Foci
1. Diagnostics
2. Technology
3. Drugs
4. Beds
5. Procedures
PR...
65 | @chasedave
INDUSTRY STAKEHOLDERS MUST EMBRACE PATIENT ENGAGEMENT
Those with Significant Investments in Patient Engage...
66 | @chasedave
PAYERS WERE FIRST TO DO SO WITH MIXED RESULTS
Health Matters
GOLDWALKERCOLORFALL
67 | @chasedave
And providers have much to learn from their efforts
> Vendors providing frictionless and secure integratio...
68 | @chasedave
CareMore: A PROVIDER EMBRACING A PATIENT-CENTRIC MODEL
1
Early intervention is central to their model. Lon...
C O M P A N I E S / D E A L A C T I V I T Y / I N V E S T O R S
70 | @chasedave
PATIENT-CENTRIC CARE INNOVATORS
HEALTH INFORMATION, TRANSPARENCY, AND PLAN INFORMATION
PATIENT RELATIONSHI...
71 | @chasedave
PATIENT-CENTRIC CARE INNOVATORS
CONSUMER-FRONTING PAYER PRODUCTS THAT HELP MANAGE BENEFITS AND PAYMENT
CAR...
72 | @chasedave
NOTABLE RECENT FINANCINGS
PRIVATE PLACEMENTS
2013
ENGAGEMENT INFORMATION CARE ACCESS
$10mm $8mm $68mm $40m...
73 | @chasedave
$91mm $178mm $100mm
CARE ACCESS INFORMATION INFORMATION
JAN. 2014 MARCH 2014 MARCH 2014
NOTABLE RECENT FIN...
74 | @chasedave
WELLNESS & PREVENTION
75 | @chasedave
1. The era of open information in healthcare is underway
2. Wearables show promise, but not perfected
3. T...
76 | @chasedave
PAYERS
CLAIMS COSTS/FINANCE UTILIZATION EMR
PROCEDURES OUTCOMES
PRESCRIPTIONS
SUPPLYCHAIN
• Coordinated ca...
77 | @chasedave
WEARABLES SHOW PROMISE
65%
WEIGHT
61%
BLOOD
SUGAR
57%
BLOOD
PRESSURE
54%
EXERCISE
36%
NUTRITION
36%
PAIN
3...
78 | @chasedave
> Declining rate of sustained activity tracker use over ownership
BUT COULD BE A FAD AND ARE TARGETING THE...
79 | @chasedave
86%
wearables would make users
vulnerable to security breaches
82%
feared wearables would
invade their pri...
80 | @chasedave
Rapidly declining cost of sequencing the human genome
THE LIFE SCIENCE INDUSTRY’S “TRANSISTOR MOMENT”
Allo...
81 | @chasedave
HAS THE POTENTIAL TO REVOLUTIONIZE MEDICINE
TRADITIONAL MEDICINE
One size does not fit all
PERSONALIZED ME...
82 | @chasedave
LARGE PHARMA CAN’T RESIST FOR LONG
3
Include diagnostics in development,
trial design, and treatment
Payer...
83 | @chasedave
0
2,000
4,000
6,000
8,000
10,000
1996 2000 2004 2008 2012 2013
AMERICA’S GROWING CULTURE OF WELLNESS
Organ...
84 | @chasedave
WELLNESS IS BEGINNING TO PENETRATE THE WORKPLACE
WHAT THEY OFFER
BIOMETRIC TESTING
HEALTH RISK
ASSESSMENT
...
85 | @chasedave
BUT ARE THE RESULTS REAL?
PEPSICO
> Employee engagement is questionable
24%
actually participate in
employ...
86 | @chasedave
THE RACE TO BUILD A HEALTHCARE DATA PLATFORM IS ON
ACQUISITIONSINVESTMENTSPLATFORMSPARTNERSHIPS
INNOVATORS...
C O M P A N I E S / D E A L A C T I V I T Y / I N V E S T O R S
88 | @chasedave
PHYSICAL FITNESS DIET & NUTRITION
VITAL SIGN MONITORING & WEARABLE TECH WELLNESS & PREVENTION PROGRAMS
WEL...
89 | @chasedave
SOCIAL ENGAGEMENT, NETWORKS, COACHING MEDICATION MANAGEMENT AND ADHERENCE
GENOMICS/PRECISION MEDICINE BEHA...
90 | @chasedave
2013
PRECISION/GENOMICS BEHAVIORIAL HEALTH WEARABLES WELLNESS
$40mm
$30mm $239mm $43mm $63mm $21mm
$12mm $...
91 | @chasedave
$102mm $732mm
GENOMICS WEARABLES
FEB. 2015 JUNE 2015
NOTABLE RECENT FINANCINGS
IPOs
CREDITS & CONTACT
INFORMATION
93 | @chasedave
P R O F E S SI O N AL P R I O R E X P . E D U C A T I O N
Kevin Cable
ManagingDirector
kcable@cascadiacapi...
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The Future Health Ecosystem Today

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An industry-wide survey of the health ecosystem. By looking at leading operating models that are representative of the future health ecosystem, the viewer can get a handle on how the future will look.

Published in: Healthcare

The Future Health Ecosystem Today

  1. 1. The Future Health Ecosystem Today @chasedave
  2. 2. 1 | @chasedave > The Future Health Ecosystem Today > Current Problems > Clinical Care > Patient-Centric Care > Wellness & Prevention > Credits & Contact Information CONTENTS
  3. 3. 2 | @chasedave THE FUTURE HEALTH ECOSYSTEM TODAY
  4. 4. 3 | @chasedave THE FUTURE HEALTH ECOSYSTEM WILL FOCUS ON THE TRUE DRIVERS OF OUTCOMES Source: RWJF/UWPHI.3 GENETICS DIET & EXERCISE TOBACCO USE ALCOHOL & DRUG USE SLEEP SEXUAL ACTIVITY ACCESS TO CARE QUALITY OF CARE EDUCATION EMPLOYMENT INCOME FAMILY/ SOCIAL SUPPORT COMMUNITY SAFETY AIR QUALITY WATER QUALITY HOUSING TRANSIT
  5. 5. 4 | @chasedave Vector 2: Evidence-Based Decisions Vector 3: B2C Health Improvement Programs Vector 1: Next Generation Primary Care SleepTracking/ Testing: Wearables/Hardware Personalized Medicine/Genomics Health Information Care Navigation Disease Management Peer Networks Health Coaching Decision-MakingTools Care Access Remote Patient Monitoring Patient Engagement Wellness Programs GENETICS DIET & EXERCISE TOBACCOUSE ALCOHOL& DRUG USE SLEEP SEXUALACTIVITY Family Support and Self-Help Patient Groups Source: RWJF/UWPHI.
  6. 6. 5 | @chasedave Vector 5: Analytics and Clinical Decision Support Vector 2: Next Generation Primary Care Vector 3: Value-Based Care Vector 4: Operational Efficiency Vector 1: Disease-Specific Care Pathways Transparency Virtual Medicine Remote Patient Monitoring Retail Clinics, DPC Care Coordination Patient EngagementBig Data Personalized Medicine Medication Management Nanotechnology House Calls Practice Management, EMRs, Pharmacy Management ACCESSTO CARE QUALITYOF CARE Tech-EnabledServices Knowledge Sharing Source: RWJF/UWPHI.
  7. 7. 6 | @chasedave Advance Directives Programs/Services Next Gen Benefits Social Services Access/Management Vector 1: Equilibrating Healthcare Expense Vector 2: Community-Based Health Initiatives Vector 3: Aging & End-of- Life Programs House Calls Hospice Programs Virtual Medicine Incentive ProgramsWellness Programs EDUCATION EMPLOYMENT INCOME FAMILY/SOCIAL SUPPORT COMMUNITY SAFETY Early ID and Prevention Programs Source: RWJF/UWPHI.
  8. 8. 7 | @chasedave GPS-EnabledSensorsVector 1: Targeted Monitoring and Rapid Response Vector 2: Community- Based Health Initiatives Food,Housing and Transportation Access Next Generation Public Transport Environmental Response Mechanisms Continuous Monitoring (wi-fi,bluetooth,etc.) Vector 3: Affordable Living and Access AIR QUALITY WATER QUALITY HOUSING TRANSIT Built Environment Design Broadband Connectivity Source: RWJF/UWPHI.
  9. 9. 8 | @chasedave Personalized Medicine Continuous Monitoring of Clinical and Non-Clinical Data Better Understanding of How Patient Behaviors Affect Outcomes Episodic to Real-Time, Micro-Targeted Care Predictive and Actionable Analytics Access to Care Proactive Medicine > Reactive Medicine Care Coordination Enhanced Cell Identification and Tracking THE PREVIOUSLY UNFATHOMABLE WILL BECOME A REALITY
  10. 10. CURRENT PROBLEMS
  11. 11. 10 | @chasedave A STARK IMBALANCE WITH DRAMATIC REPERCUSSIONS Source: RWJF/UWPHI; Bipartisan Policy Center. 4% Health Behaviors 8% Other 88% Medical Services 10% Physical Environment 20% Clinical Care 30% Health Behaviors 40% Social & Economic Factors What Drives Outcomes? Where Do We Spend Money? Unhealthy Workforce CollateralDamage Chronic Disease Obesity Wasted Spending Overtreatment
  12. 12. 11 | @chasedave THE SWANS ARE IN THE WATER, BUT WHAT COLOR ARE THEY? CadillacTax A consumer movement is triggered Aging-in-place Medicare pricing expands to self-insured Medicare allowed to negotiate with pharma Tax-exempt health systems lose status State AG’s pursue physician non-competes The bursting of the hospital bond bubble Like the newspaper/publishing industry at the internet’s inception, the healthcare industry is on the verge of its transistor moment. Which of today’s healthcare incumbents will fail to survive?
  13. 13. 12 | @chasedave HEALTHCARE’S COLLATERAL DAMAGE IS SIGNIFICANT > State budgets for healthcare coverage vs other priorities Mental Health PublicHealth Education Human Services Infrastructure & Housing Law& PublicSafety LocalAid $0 B $3 B $6 B $9 B $12B $15B -22% -31% -12% -11% -14% -13% -51% FY01 FY14 GIC, MassHealth & other coverage + $5.4b + 37% −$3.6b − 17% Source: Massachusetts Budget and Policy Center; figures all adjusted for GDP growth. % change
  14. 14. 13 | @chasedave AN UNHEALTHY WORKFORCE BURDENS EMPLOYERS AND ECONOMY SMOKING + $5,800 Additional annual costs per employee with various lifestyle risks > Lost Revenue $1,900-$2,250 per employee per year > Lost Employee Time 45,000,000 avoidable sick days per year > Lost Output $576 billion is lost by the U.S. economy due to workforce illness Poor employee health leads to... And adds costs to employers budgets DIABETES + $4,413 OBESITY + $4,237 HIGH BLOOD PRESSURE + $1,077 Source: Berman et al., tobaccocontrol.bmj.com; NBCH, Februrary 2012; Van Nuys et al., American Journal of Health Promotion, May/June 2014; Kowlessar et al., JOEM, May 2011.
  15. 15. 14 | @chasedave OUR POPULATION IS AGING AND SICKER THAN EVER 50+ 65-74 > The U.S. population aged 50+ is expected to grow to 132mm... 2010 109mm 2030 132mm 2030 39mm …and the number aged 65-74 will nearly double 2010 22mm $0.75 of every $1 spent > Chronic disease is an epidemic that is expected to worsen... ...and account for the vast majority of healthcare expenditures 2010 2030 TOTAL(MM) 149mm 171mm PROPORTION 48% 49%
  16. 16. 15 | @chasedave THIS GENERATION’S TOBACCO: SUGAR AND A SEDENTARY LIFESTYLE > For every additional serving above the USDA’s recommended 12 tsp sugar per day, a child is 60% more likely to become obese. 4x # of TVs in homes has QUADRUPLED 2x # of foodservice establishments has DOUBLED 2x 3x Soda consumption has DOUBLED in girls, and TRIPLED in boys Obesity in children aged 6-11 1980 6.5% 2008 19.6% 2010 1in 3 children are overweight or obese 1+hrs 7.5 hrs DAILY SCREEN TIME 1.5hrs 4.5hrs for children ages 8-10 (2009) Soft drink consumption has spiked 1978 2002 16.9 oz/day 26.8 oz/day 12tsp sugar 22tsp HFCS Source: CDC; Whitehouse.gov.
  17. 17. 16 | @chasedave $210bn Unnecessary Services $190bn Administrative Costs $130bn Inefficient Delivery of Care $55bn Prevention Failures $105bn Inflated Prices $75bn Fraud U.S. HEALTHCARE WASTE = NETHERLANDS GDP $765bn in wasted spending Source: Institute of Medicine (2009 data); The World Bank (2009 data)
  18. 18. 17 | @chasedave AND TOTAL HEALTHCARE SPENDING IS SEVERELY DISPROPORTIONATE  5% of patients  50% of dollars Source: U.S. Agency for Healthcare Research and Quality.
  19. 19. 18 | @chasedave Angiogram CT scan, head Cost perhospital day Appendectomy Hip replacement Coronary artery bypass LOWER COST PROCEDURES HIGHER COST HIGHEST COST $30 $800 $1000 $1350 $68,000 $100 HIGHER PRICES = HIGHER SPENDING Argentina, Canada, Chile, India France, Germany, Spain, Switzerland United States Source: International Federation of Health Plans. Graphic: Wilson Andrews - The Washington Post. Published March 2, 2012.
  20. 20. 19 | @chasedave HIGHER SPENDING ≠ BETTER HEALTH OUTCOMES Rank Country 1 France 2 Switzerland 3 Denmark 4 Netherlands 5 Australia 6 Canada 7 Germany 8 Norway 9 UK 10 U.S.A 11 New Zealand Rank Country 1 UK 2 New Zealand 3 Switzerland 4 Canada 5 Norway 6 Australia 7 Netherlands 8 France 9 Denmark 10 U.S.A 11 Germany Diabetes Extremity Amputation(1=best) Asthma Mortality (1=best) 2.5x Asthma 6.7x Diabetes 3.0x Congestive Heart Failure > U.S. chronic disease hospital admissions compared to peer countries Source: OECD Health Care Quality Indicators Data 2009, data from 2007, compared to Canada; OECD Health Data 2011, The Commonwealth Fund
  21. 21. 20 | @chasedave 22 Knee Replacements 1st Tonsillectomy 1st MRI Exams 2rd CT Exams 3rd VOLUME INCENTIVE = OVERTREATMENT AND SPECIALTY-RICH CARE 87.5% of U.S. physicians are specialists 61.3% OECD average > HAIs: Longer stays, more provider volume 5 98,987 People die annually in the U.S. from HAIs, more than breast cancer and prostate cancer COMBINED Averagehospital stay (days) 28k Prostate Cancer 41k Breast Cancer 99k HAIs > USA winning the race for most procedures Source: GE, JESS3; OECD Health Data 2012.
  22. 22. 21 | @chasedave “Physician burnout climbs 10% in 3 years, hits 55%” - MEDSCAPE LAYERING BUREAUCRACY ON TOP OF FLAWED SYSTEM, PLACING STRAIN ON ALREADY DISGRUNTLED PHYSICIAN WORKFORCE Source: Medscape’s 2014 Physician Compensation Report; 2014 Survey of America’s Physicians. Do not feel fairly compensated50% Would not choose medicine as their career today42% Plan to accelerate retirement39%Plan to limit access to their practices 44% Anticipate ICD-10 will cause severe problems in their practice 50% Physicians transitioning to cash-only (2011-2013) 100%
  23. 23. CLINICAL CARE
  24. 24. 23 | @chasedave 1. Government intervention = catalyst 2. Employers shifting risk and insurers responding to regulation and a new marketplace for covered lives 3. Providers must respond to shifting reimbursement, cost sharing, and volume reallocation > And are beginning to do so in a number of ways 4. The era of open information in healthcare is underway > But there is still a long way to go to begin realizing the value of population health 5. Keeping patients out of the hospital, and on the internet > But an uncertain regulatory landscape is stifling growth CLINICAL CARE OVERVIEW
  25. 25. 24 | @chasedave GOVERNMENT INTERVENTION = CATALYST 2009 2010 2011 2012 2013 2014 2015 2016 2017 2020 Mar: PPACA > HITECH Act: a bonanza for incumbent EHR vendors Feb: HITECH Act Jan: ACO Medicare incentives Oct: CMS payments for VBP Jan: MLR, Stage 1 of Meaningful Use (MU) Oct: Open enrollment begins Jan: Individual Mandate Medicaid expansion Dec: Stage 2 of MU King v. Burwell Medicare Access and CHIP Reauthorization Act Stage 3 of MU Jan: CadillacTax > ACA driving shift from volume to value > Cadillac Tax: a bonanza for health innovators GOALS > Access> Standardization> Affordability
  26. 26. 25 | @chasedave EMPLOYERS SHIFTING RISK OR SELF-FUNDING Percent of Covered Workers Enrolled in a $1,000+ Deductible Plan (Single Coverage by Employer Size) Percentage of Covered Workers in Self-Funded Plans > ACA Benefits Standards Avoidable Through Self-funding 2009 2013 2000 2014 49% 61% Source: Kaiser Family Foundation and Health Research & Educations Trust, “Employer Health Benefits 2013 Annual Survey,” August 2013; Gabel JR et al., “Small Employer Perspectives On the Affordable Care Act’t Premiums, SHOP Exchanges, and Self-Insurance,” Health Affairs; The Advisory Board Company. 40% 13% 58% 28% Essential health benefits 1 Modified community rating 2 Guaranteedissue and renewability 3 MLR Requirements 4
  27. 27. 26 | @chasedave 95% TRADITIONAL INSURERS ARE ADMINISTRATIVELY INEFFICIENT, HAVE CAPPED MARGINS, AND ARE IN A NEW BATTLEGROUND FOR CUSTOMERS MLR Requirement Limiting Margins Portion of PremiumDollars Mandated for Medical Care Growth in U.S. Healthcare Workforce (1990-2012) Portion of growth in doctors Portion of growth in administrative staff 1 DOCTOR 5 NURSES 10 ADMINS Source: Bureau of Labor Statistics,NCHS, Himmelstein/Woolhandler analysis of CPS; The Advisory Board Company. +75% New Market Issuers Offering Qualified Health Plans On Exchanges Federally-Facilitated Marketplace (36 states) State-BasedMarketplace (8 states reporting) 191 2014 248 2015 61 2014 67 2015 80% Individual and Small-Group Markets Large Group Market 85% 5%
  28. 28. 27 | @chasedave Prominent Employers Using Private Exchanges 172 > Private exchange operators as of October 2014 PRIVATE EXCHANGE ENROLLMENT IS FORECASTED TO TAKE OFF 3 9 19 30 40 2014 2015 2016 2017 2018 Potential Growth Path for Private Exchange Enrollment (mm lives) Source: Accenture, “Are You Ready? Private Health Insurance Exchanges are Looming,”; privatehealthexchange.com; The Advisory Board Company. > Low-wage employers most active to date > Skilled industries in the wings ACTIVE EMPLOYEES (MEDICAREADVANTAGE, MEDIGAPPLANS) RETIREES
  29. 29. 28 | @chasedave REIMBURSEMENT CUTS DEMAND A CHANGE IN OPERATIONS AND STRATEGY BY PROVIDERS > Medicare FFS payment cuts and move to alternative reimbursement will be significant Source: CMS; The Advisory Board Company $260bn Hospital payment rate cuts (2013-2022) $415bn Total FFS rate cuts (2013-2022) 50% Medicare alternative payment target (2018)
  30. 30. 29 | @chasedave VOLUMES SHIFTING OUTPATIENT, AND THE GOVERNMENT WILL TAKE CONTROL OF THE INPATIENT SETTING 42% 58% 19% 15%33% 25% 6% 2% 2012 2022 Average Inpatient Case Mix by Volume N=785 hospitals MEDICARE MEDICAID COMMERCIAL SELF-PAY Source: “Report to the Congress: Medicare Payment Policy,” MedPAC, March 2014; The Advisory Board Company. -20 -10 0 10 20 30 40 Neurosurgery Orthopedics Vascular Services Cardiac Services All Payer Volume Growth Projections (2013-2018) INPATIENT OUTPATIENT -11% 11% 16% 15% 17% -3% 5% 14%
  31. 31. 30 | @chasedave RISK-SHARING AND THE INCORPORATION OF OPERATIONAL EXPERTISE ARE THE FUTURE Risk-Based Revenue Breakdown (% of providers), N=116 71% 21% 5% 3% 13% 39% 38% 10% 0% 20% 40% 60% 80% Under 25% 25-50% 50-75% Over 75% TODAY IN 3 YEARS 20% 25%25% 30% 40% 30% 30% 30% 25% 70% 45% 20% 10% FY 2013 FY 2014 FY 2015 FY 2016 EFFICIENCY OUTCOMESOF CARE PATIENT EXPERIENCE CLINICALPROCESS Medicare VBP Program Domain Weights OTHER MANDATORY RISK PROGRAMS HAI Penalties Readmission Penalties Source: 2013 Care Transformation Survey, The Advisory Board Company; CMS. 65% of the Medicare VBP program will depend on quality metrics by 2016
  32. 32. 31 | @chasedave ACO GROWTH HAS RESULTED IN WIDENING REACH, BUT MANY ARE STRUGGLING TO REDUCE SPENDING MSSP Cohort First-year spending reduction Growth of Accountable Care Organizations (ACOs) 32 146 253 253109 164 205 235 0 200 400 600 1Q12 3Q12 1Q13 3Q13 Medicare Non-Medicare Source: Leavitt Partners; The Advisory Board Company. 67% Portion of U.S. population in a primary care area with an ACO Portion of U.S. population treated by an ACO17% Earned Shared Savings 25% Reduced Spending But Did Not Earn Shared Savings 22% Did Not Reduce Spending 53%
  33. 33. 32 | @chasedave High out-of-pocket costs... COST SHARING BY PAYERS AND PATIENTS BRINGS WITH IT REPERCUSSIONS AND NEW OPPORTUNITY FOR PROVIDERS > As a result, providers are turning to technologies that can improve referrals, marketing efforts and operational efficiencies, as well as reduce administrative burden. Source: The Advisory Board Company; Aon Hewitt; “Medical Debt Among People With Health Insurance,” Kaiser Family Foundation; Bankrate.com; National Survey of Employer-Sponsored Health Plans 2014, Mercer. …discourage utilization Large medical bills... …means more bad debt Can’t meet the higher rangeof out-of-pocket health cost limits 63% Don’t have savings to cover a $1,000 ER visit 62% Americans strugglingwith medical debt are insured 70% Patients becoming price-sensitive... …and more likely to shop Forgoing care when sick or injured because of cost15% Patientsreport using homeremedies instead of seeking medicalattention 33% Large employers now offer a price transparency tool77% Average U.S.Employee will pay: $2,487 out of pocket/yr $6,600 $13,200 Under ACA,2015 out-of-pocket cost ceilings: Worker’s share of costs 52% over last 5 years
  34. 34. 33 | @chasedave PAYERS CLAIMS COSTS/FINANCE UTILIZATION EMR PROCEDURES OUTCOMES PRESCRIPTIONS SUPPLYCHAIN • Coordinated care • Improved outcomes • Interoperability • Population health • Lowercosts • Disease prevention • Adherence SATISFACTION THE ERA OF OPEN INFORMATION IN HEALTHCARE IS UNDERWAY TRIALRESULTSAND EFFICACY SALESAND DRUGHISTORY • R&D productivity • Trial improvement • Improving efficacy• Careaccess • Price transparency • Convenienceandcost • Good health EXERCISEDATA PURCHASES BEHAVIORS,SOCIAL DATA PROVIDERS GOALS PATIENTS DATAGOALS PHARMA DATAGOALSDATAGOALS CLAIMS COSTS • Payment innovation • Data acquisition • Provider-performance transparency • Lowering costs • Reducingclaimspaid • Winningshare • Wellness & prevention
  35. 35. 34 | @chasedave TRADITIONAL PAYERS ARE RESPONDING IN NUMEROUS WAYS Source: The Advisory Board Company. Trends ✚ Omni-Channel Understanding and Delivery Model for Reaching Out to and Engaging with Consumers ✚ Relationships and Partnerships with Providers That Support Value- Based ReimbursementModels ✚ Private Cloud Solutions to Better Manage Data Collection, Aggregation, and Analytical Efforts ✚ Data Management and Warehousing Technology Partnerships Health Matters Consolidation $38 billion July 2015 $1.25bn cost savings $6.8 billion July 2015 $52 billion June 2015 $2bn cost savings $14 billion March 2015
  36. 36. 35 | @chasedave SHIFT FROM VOLUME TO VALUE IS UNDERWAY, BUT A LONG WAY TO GO ...but many providers still don’t have financial “skin in the game” 47% of value-oriented payments exclude financial risk Commercial health plans have dramatically shifted how they pay physicians and hospitals... % of commercial health plan payments that are value-based 2013 2014 11% 40% % of patients attributed to a provider with a payment reform contract 2013 2014 2% 15% 10% of payments to specialists are value-oriented 24% of payments to primary care physicians are value-oriented Source: The Scorecard of Payment Reform 2014, Catalyst for Payment Reform; plans responding represent 65% of commercially-insured lives in the U.S.
  37. 37. 36 | @chasedave WHILE HOSPITALS FOCUS ON M&A, INNOVATORS ARE INNOVATING Hospital M&A Activity has accelerated Partnerships and Affiliations on the rise Heart & Vascular Center Markey CancerCenter 0 20 40 60 80 100 120 2009 2010 2011 2012 2013 2014 1Q 2015 An incredibly fragmented U.S. hospital system 4,500 acute care hospitals 2,000 hospital companies ...means a perceived opportunity to control costs and coordinate care Source: Pricewaterhouse Coopers.
  38. 38. 37 | @chasedave PATIENT REGISTRATION CARE COORDINATION INSURANCE ELIGIBILITYVERIFICATION CODING SCHEDULING PATIENT STATEMENTS ANALYTICS RCM E-PRESCRIBING ACCOUNT ALERTS REFERRALMANAGEMENT DENIALMANAGEMENT PROVIDERS ARE BEGINNING TO EMBRACE TECHNOLOGY TO STREAMLINE WORKFLOWS
  39. 39. 38 | @chasedave EHR INCUMBENTS USING TRADITIONAL STRATEGIES TO PROTECT MARKET POSITION FragmentedPlayers 23% 9% 2014 CONCERNS 1 DATA BLOCKING 2 DATA SILOS 3 VENDOR LOCK-IN 4 POOR INFORMATION EXCHANGE Source: MedScape EHR Report 2014. 10 YEARS AGO 2014 CONCERNS
  40. 40. 39 | @chasedave VENDORS THAT RESPOND TO POPULATION HEALTH-FOCUSED CUSTOMER NEEDS WILL WIN Identification of various sub- populations with different needs Tools that enable collaboration across providers, patients and payers Tools that aggregate community level data Ability to gather and incorporate continuous data on total populations Solutions that analyze clinical, claims, and socioeconomic data > Identifying, collecting, and utilizing actionable information will be critical 1 2 3 4 5
  41. 41. 40 | @chasedave BUT THERE IS STILL A LONG WAY TO GO TO BEGIN REALIZING THE VALUE OF POPULATION HEALTH of payers and providers think a national publicHIE is at least 10 years away 92% PHYSICIANS 81% HOSPITALS 94% INSURERS/PAYERS remain meaningfully unconnected in regards to intelligentinteroperability POPULATION HEALTH REQUIRES CHANGES IN THEBUSINESS MODEL OF CURRENT VENDORS Open APIs and PaaS for developers HIE Application Ecosystem Rapidly Extended Functional Capabilities > Firms with a wide offering of population health tools, revenue cycle management services, patient portals, dashboards, and analytics will emerge as the next wave of health IT leaders In effort to coordinatecare, private exchanges will outpace public efforts Cerner wins DoD contract with interoperability capabilities and partnerships Epic launches CareEverywhere Source: Healthcare IT News; HIMSS Analytics. 82% REALITY TAKEAWAY/RESPONSE REALITY TAKEAWAY/RESPONSE
  42. 42. 41 | @chasedave VIRTUAL MEDICINE HOLDS PROMISE 74% Source: CDC; Truven Analytics; Center for Connected Health Policy, as of September 2014; Teladoc. 71% of employer-sponsored ER visits not necessary 417 mm (33%) could be treated through telehealth 1.25bn Ambulatory care visits per year in US Employees are open to virtual care Currently offer telehealth services Plan to offer telehealth in coming year 54% of 18-29 Year Olds 49% earn > $71,000 53% work > 35 Hours And Employers Are Responding 48%
  43. 43. 42 | @chasedave KEEPING PATIENTS OUT OF THE HOSPITAL IS THE NEW GOAL “I think my job ultimately is to close every one of our hospitals...If it were my wife or my mom or my kids, I never want them in the hospital.” -- DavidFeinberg, CEO Geisinger Health System Source: HIMSS Analytics; Allied Market Research; Berg Insight. REMOTE PATIENT MONITORING 2014 26% of providers utilized some form of RPM 4m Units 2020 >20m UnitsBlood pressure monitor market share 71% Mount Sinai accountable care program (Sep 2010 – May 2012) resulted in: • Paramedics trained for and completing home visits for high-riskpatients • 911 callers offered options besides ER • Nurse health line for non-emergency situations RE-THINKING OPERATIONS Admissions 43% ER Visits 54%
  44. 44. 43 | @chasedave BUT AN UNCERTAIN REGULATORY LANDSCAPE REMAINS Mental Health Office Visits Smoking Cessation Substance Abuse Wellness Visit Prolonged Outpatient Rural Eligible Facilities Source: CMS; Center for Connected Health Policy. FEDERAL LEVEL Current Medicare Coverage SERVICES LOCATION TelehealthEnhancement Act of 2013 Medicare TeleHealth Parity Actof 2015? Medicare HealthParityAct of 2014 STATE LEVEL State Medicaid programs that reimburse for: Live Video Store-and-forward Remote Patient Monitoring 47 9 1629 States with telehealth parity laws 8 States with proposed parity law 47 States that require physician to be licensed in state of patient 13 States with cross-border telemedicine license
  45. 45. 44 | @chasedave BUT THIS HASN’T SLOWED THE BATTLE TO BUILD A NETWORK Business Model Delivery Method Freemium B2C B2B2C Video/Phone Kiosks Text Store-and-forward
  46. 46. C O M P A N I E S / D E A L A C T I V I T Y / I N V E S T O R S
  47. 47. 46 | @chasedave PAYER MANAGEMENT/BENEFITS MANAGEMENT CLINICAL CARE INNOVATORS MOBILITY, VIRTUAL MEDICINE, AND REMOTE PATIENT MONITORING CARE COORDINATION / NEW ENTRANTS
  48. 48. 47 | @chasedave CLINICAL CARE INNOVATORS DATA ANALYTICS AND POPULATION HEALTH PRACTICE MANAGEMENT/RCM/PRODUCTIVITY TOOLS AND POC MANAGEMENT/EHR
  49. 49. 48 | @chasedave $63mm $50mm $16mm $70mm $58mm $40mm 2013 WORKFLOWS ANALYTICS/PH TELEHEALTH OTHER 2014 WORKFLOWS ANALYTICS/PH TELEHEALTH OTHER 2015 WORKFLOWS ANALYTICS/PH TELEHEALTH OTHER $40mm$85mm $29mm $400mm $100mm $89mm $78mm $54mm $45mm $36mm $30mm $30mm $131mm $125mm $100mm $41mm $25mm $21mm $24mm $15mm $81mm $50mm $32mm $24mm $21mm $110mm $82mm $71mm $101mm $41mm $19mm NOTABLE RECENT FINANCINGS $395mm $120mm $70mm $55mm $54mm $25mm $500mm $178mm $100mm PRIVATE PLACEMENTS
  50. 50. 49 | @chasedave IPOs $131mm $261mm $1.3bn BENEFITS WORKFLOWS ANALYTICS SEPT. 2013 OCT. 2013 APRIL 2014 $75mm $127mm $53mm $600mm WORKFLOWS BENEFITS BENEFITS ANALYTICS JUNE 2014 JULY 2014 DEC. 2014 FEB. 2015 $223mm $196mm $100mm $157mm WORKFLOWS ANALYTICS WORKFLOWS TELEHEALTH MAY 2015 JUNE 2015 JUNE 2015 JUNE 2015 NOTABLE RECENT FINANCINGS
  51. 51. 50 | @chasedave PATIENT-CENTRIC CARE
  52. 52. 51 | @chasedave 1. Patients become educated price-seekers > Entrepreneurs are empowering them 2. Decentralized medicine and physician extenders 3. On-demand is making its way to healthcare 4. Healthcare is the next extension of our online lives 5. Patient = center of future health ecosystem > Stakeholders must respond to this new normal or perish PATIENT-CENTRIC CARE OVERVIEW
  53. 53. 52 | @chasedave > The number of Americans with an HSA Account is expected to skyrocket PATIENTS ARE BEING FORCED TO TAKE CONTROL OF THE HEALTHCARE THEY RECEIVE $1.7bn $15.5bn 2006 2012 17mm 50mm 2014 2020 HSA enrollment in large employer plans 2006 4% 2007 5% 2008 8% 2009 8% 2010 13% 2011 17% 2012 19% 2013 20% 2014 20% > HDHP/SO Enrollment for Employer-Sponsored Plans 74% > National HSA assets have grown over 9x from 2006-2012 Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 1999-2014.
  54. 54. 53 | @chasedave AND SELF SELECTING INTO HIGH DEDUCTIBLE AND LEAN HEALTH PLANS Annual Deductibles of Individual Plans Selected on eHealth (October 2013-March 2014) Metal Tiers of Plans Chosen on public exchanges (All Enrollees; October 2013-March 2014) <$500 13% $500-$999 3% $1,000- $1,999 11% $2,000- $2,999 5% $6,000+ 38% Silver 64% Gold 9% Platinum 5% Catastrophic 2% Bronze 20% Source: Breakaway Policy Strategies, “Eight Million and Counting: A Deeper Look at Premiums, Cost Sharing and Benefit Design in the New Health Insurance Marketplaces,” May 2014; eHealth, “Health Insurance Price Index Report for Open Enrollment and Q1 2014,” May 2014; HHS Summary Report, May 2014; The Advisory Board Company. $3,000-$5,999 30%
  55. 55. 54 | @chasedave A NEW KIND OF PATIENT IS IN THE WAITING ROOM > Millennials are beginning to utilize the healthcare system more regularly, with significant consequences for industry stakeholders 0% 25% 50% 75% 100% 1995 1Q 2015 Post-Millennials Millennials Gen Xers Boomers Silents Greatest 31% SILENTS 2% GREATEST 49% BOOMERS 18% GEN XERS 34% MILLENNIALS 1% POST-MILLENIALS 34% GEN XERS 29% BOOMERS 2% SILENTS Source: Pew Research Center.
  56. 56. 55 | @chasedave > Various tools are being created with the goal of improving care navigation and transparency, and empowering and educating the patient-consumer ENTREPRENEURS ARE RESPONDING How exactly does my insurance work? How much should I be paying? How do I know who the best doctor is? My doctor’s hours don’t match my hours. Can someone explain my condition to me in normal words?Does my doctor think about me after I leave the office?
  57. 57. 56 | @chasedave 0 10 20 30 40 50 60 0 10 20 30 40 50 60 0 10 20 30 40 50 60 TOOLS AIMED AT FIXING PRICE FAILURES ARE EMPOWERING PATIENT-CONSUMERS Tulsa, OK $0.6mm 51% Seattle, WA $1.1mm 46% Rockford, IL $1.0mm 50% Savings($K) Total $ Savings Average % Savings Source: The Zero Card. Representative of procedures completed in 2012-2014; Tusla (n=134), Seattle (n=301), Rockford (n=170).
  58. 58. 57 | @chasedave TOTAL– Big 6 Sites, Market Share 901 50% 457 24% 140 8% 103 6% 80 4% 30 2% 1,711 93% Health System Affiliations 47 6 4 46 2 3 108 DECENTRALIZED MEDICINE AND PHYSICIAN EXTENDERS ARE THE NEW NORM > The retail clinic market is highly concentrated and dominated by house-hold names 18% of PCP visits could be handled at retail clinics. > 10 million visits per year by Americans at retail clinics represents only 2% of all primary care encounters. Annual ED Visits Non-Urgent ED visitsshifted to other care sites 132mm 47mm Annual PCP Visits VisitsEligible for NP-Led Care 573mm 103mm Source: CDC/NCHS,“National Ambulatory Medical Care Survey, National Hospital Ambulatory Medical Care Survey.” 2009-2010; The Value Proposition of Retail Clinics, April 2015, RWJF; The Advisory Board Company.
  59. 59. 58 | @chasedave AND A NEW PRIMARY CARE MODEL IS IN THE MAKING > Concierge/DPC practices have grown dramatically since 2005 and offer numerous distinct advantages Source: Wall Street Journal; Forbes; Oliver Wyman. 48% ER VISITS 2005 2015 146 5,500 ✚ Number of concierge practices is up 3,700% 80 / 100 COMMONDIAGNOSES COVERED Why use the equivalent of auto insurance for an oil change? NET PROMOTER SCORES 93 NPS 51 NPS 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 0.0 0.5 1.0 1.5 2.0 2.5 Patients TransactionVolume($mm) Monthly Transaction Volume ($) Patients 41% HOSPITALIZATIONS 25% OUTPATIENT UTILIZATION
  60. 60. 59 | @chasedave While some practices are working with insurers on bundled products for the individual market, in the near future, a national health insurer will team with a national player in primary care, such as Walgreen’s, to offer DPC at scale to consumers via a gym-like monthly membership fee, taking DPC from a niche offering to a new model consumers begin to understand. TRADITIONAL INSURERS ARE BEGINNING TO EMBRACE DPC, AND OTHERS ARE DRIVING CHANGE United Food and Commercial Workers Union UnitedHERE, Atlantic City Freelancer’s Union, Brooklyn Culinary Workers Union, Las Vegas 2012 2013 2014 2015 UNIONS COMPANIES Source: The Advisory Board Company.
  61. 61. 60 | @chasedave ON-DEMAND IS MAKING ITS WAY TO HEALTHCARE Heal Pager Medicast Retrace Health FOUNDED 2014 2014 2013 2013 2014 FEE/SERVICE $99 On sitedoctor in 1 hour $200 for urgentcare $75-100 for wellness NA $50: NP videoconsult $200: in-person $150 REGION Los Angeles San Francisco NYC San Francisco NA Minneapolis Atlanta TARGET CUSTOMER Adults& Kids Adults& Kids HealthSystems Adults & Kids Pediatric Care
  62. 62. 61 | @chasedave FINANCES DOCUMENTS ACTIVITY SOCIAL= CONSUMERS ARE BRINGING THEIR LIVES TO THE INTERNET AT A RAPID PACE
  63. 63. 62 | @chasedave AND HEALTHCARE IS NEXT mHealth apps are set to become a regular part of care 86% of clinicians believe mHealth apps will be important for patient health management over next 5 years 90%Use mobile devices to engage patients app-enabled patient portals telehealth services text communications remotepatient monitoring 73% 62% 57% 49% 7in 10 U.S. adults track at least one health indicator Source: Pew Self-Tracking, June 2013; Pew Internet & American Life, January 2014; 2013 Accenture Consumer Electronics Products and Services Usage Report; MedData Group, April 2014; HIMSS 2015 Mobile Technology Survey. And the means of tracking are remarkably primitive 49% IN HEAD 34% PAPER 8% MEDICAL DEVICE 7% APP 5% SPREADSHEET 1% ONLINE TOOL
  64. 64. 63 | @chasedave THE PATIENT WILL BE AT THE CENTER OF THE FUTURE HEALTHCARE SYSTEM FUTURE FOCI: Primary Physician Consulting Physician LabInsurance Pharmacy Non-ClinicalActivity Family Hospital Post-Acuteand Home Care Ancillary Sites Personalized treatment 1 Controls method and venue of care delivery 2 Shops for quality and cost 3
  65. 65. 64 | @chasedave CARE EPISODE REIMBURSEMENT Traditional Foci 1. Diagnostics 2. Technology 3. Drugs 4. Beds 5. Procedures PROVIDERS ARE ALTERING THEIR GOALS TO REFLECT THIS NEW FOCUS LONG-TERM HEALTH MANAGEMENT Patient-Centricity Source: The Advisory Board Company. 1. Multi-provider patient portal/tools 2. Medical information is made relevant 3. Patient-generated data is sought out 4. Portable and on the patient’s terms 5. Collaborative care process with shared decision making tools
  66. 66. 65 | @chasedave INDUSTRY STAKEHOLDERS MUST EMBRACE PATIENT ENGAGEMENT Those with Significant Investments in Patient Engagement and Relationship Management Solutions Patient relationship management and engagement work And industry players are responding LESS ACTIVATED MORE ACTIVATED 30-Day Readmissions Medical Errors Poor Communication Health Consequence 28% 13%36% 19% 49% 13% Greater Patient Engagement = Improved Outcomes Source: AARP survey of patients over 50 with 2 or more chronic conditions.
  67. 67. 66 | @chasedave PAYERS WERE FIRST TO DO SO WITH MIXED RESULTS Health Matters GOLDWALKERCOLORFALL
  68. 68. 67 | @chasedave And providers have much to learn from their efforts > Vendors providing frictionless and secure integration with consumer health data, leading to actionable clinical data will win with providers 4 EHR integration is a must; seek interoperability opportunities 1 Analytics are as important as data collection and warehousing 5 Build partnerships with payers to provide health and wellness incentives for patients 2 User must be empowered via actionable clinical insights 6 Easy identification of high-risk patients 3 The simpler the better
  69. 69. 68 | @chasedave CareMore: A PROVIDER EMBRACING A PATIENT-CENTRIC MODEL 1 Early intervention is central to their model. Longitudinal records (8-10 sources) and predictive modeling allow for early intervention to prevent acute episodes. 2 “A high percentage of physician services can be delivered by non-physicians.” 3 A patient can go from being in the easy chair to ICU in 12 hours so they must rapidly intervene. speedy delivery within minutes can save. 4 Capitation is freedom, not risk. Education is what the patient needs, and longitudinal. Key Takeaways from CareMore Business and Care Management Model > Age- and health-adjusted payment for its full patient panel > Patient-first business design required total rethink of patient relationship,health model, and care team > Physician hospitalists include treatment of patients outside hospital > Each chronic condition has its own holistic treatment plan > Information is rapidly processed and forwardedto all members of care team A Medicare healthcare companybasedin Southern Californiaprovidingcare to an exclusively Medicare Advantage population Acquired by Wellpoint in 2011 for $800 million Source: Oliver Wyman.
  70. 70. C O M P A N I E S / D E A L A C T I V I T Y / I N V E S T O R S
  71. 71. 70 | @chasedave PATIENT-CENTRIC CARE INNOVATORS HEALTH INFORMATION, TRANSPARENCY, AND PLAN INFORMATION PATIENT RELATIONSHIP MANAGEMENT AND ENGAGEMENT/REMOTE PATIENT MONITORING
  72. 72. 71 | @chasedave PATIENT-CENTRIC CARE INNOVATORS CONSUMER-FRONTING PAYER PRODUCTS THAT HELP MANAGE BENEFITS AND PAYMENT CARE ACCESS/RETAIL CLINICS/DIRECT PRIMARY CARE/HOUSE CALLS/CARE ANYWHERE
  73. 73. 72 | @chasedave NOTABLE RECENT FINANCINGS PRIVATE PLACEMENTS 2013 ENGAGEMENT INFORMATION CARE ACCESS $10mm $8mm $68mm $40mm $24mm $15mm $6mm $15mm $10mm $14mm $14mm 2014 ENGAGEMENT INFORMATION CARE ACCESS $82mm $26mm $110mm $17mm $11mm $81mm $50mm $32mm $25mm $15mm $27mm $24mm $21mm 2015 ENGAGEMENT INFORMATION CARE ACCESS $500mm $20mm $178mm $130mm $20mm $63mm $50mm $28mm $35mm $13mm $13mm $20mm $16mm $15mm $16mm s
  74. 74. 73 | @chasedave $91mm $178mm $100mm CARE ACCESS INFORMATION INFORMATION JAN. 2014 MARCH 2014 MARCH 2014 NOTABLE RECENT FINANCINGS IPOs
  75. 75. 74 | @chasedave WELLNESS & PREVENTION
  76. 76. 75 | @chasedave 1. The era of open information in healthcare is underway 2. Wearables show promise, but not perfected 3. The life science industry’s “transistor moment” has the potential to revolutionize medicine 4. Large pharma can’t resist for long 5. America’s growing culture of wellness is beginning to penetrate the workplace, but are the results real? 6. The race to build a healthcare data platform is on WELLNESS & PREVENTION OVERVIEW
  77. 77. 76 | @chasedave PAYERS CLAIMS COSTS/FINANCE UTILIZATION EMR PROCEDURES OUTCOMES PRESCRIPTIONS SUPPLYCHAIN • Coordinated care • Improved outcomes • Interoperability • Population health • Lowercosts • Disease prevention • Adherence SATISFACTION THE ERA OF OPEN INFORMATION IN HEALTHCARE IS UNDERWAY TRIALRESULTSAND EFFICACY SALESAND DRUGHISTORY • R&D productivity • Trial improvement • Improving efficacy• Careaccess • Price transparency • Convenienceandcost • Good health EXERCISEDATA PURCHASES BEHAVIORS,SOCIAL DATA PROVIDERS GOALS PATIENTS DATAGOALS PHARMA DATAGOALSDATAGOALS CLAIMS COSTS • Payment innovation • Data acquisition • Provider-performance transparency • Lowering costs • Reducingclaimspaid • Winningshare • Wellness & prevention
  78. 78. 77 | @chasedave WEARABLES SHOW PROMISE 65% WEIGHT 61% BLOOD SUGAR 57% BLOOD PRESSURE 54% EXERCISE 36% NUTRITION 36% PAIN 35% SLEEP 2012 2013 2014E 2015E 2016E 2017E 2018E 2019E EXPENSE PRIVACY LOOK COMFORT HEALTHRISK Leading barriers to purchase cited by U.S. consumers Source: IMS Research, MeMD, ABI Research, Deloitte, Rackspace; TNS Global, October 2013. > 88% of physicians want patients to monitor health parameters at home. Their top priorities include: While wearable technology in healthcare is expected to triple in size by 2019, there are major consumer impediments to purchase. > Fitness and medical wearables were 60% of the wearables market in 2013 10% 13% 13% 31% 54% $2.0bn $2.7bn 100m units $5.8bn
  79. 79. 78 | @chasedave > Declining rate of sustained activity tracker use over ownership BUT COULD BE A FAD AND ARE TARGETING THE WRONG POPULATION 0% 25% 50% 75% 100% 0 3 6 9 12 15 18 21 24 RateofSustained Utilization Time (months) Daily engagement falls below 50% within 18 months of purchase 0% 10% 20% 30% 18-24 25-34 35-44 45-54 55-64 65+ % of activity tracker owners % of U.S. population Americans own a wearable1 in 5 1 in 10 Wear it daily > Activity tracker ownership age demographic Ages 25-34 Goal: Fitness Optimization Ages 55-64 Goal: Overall health improvement and longevity Source: Endeavour Partners, September 2013; PwC.
  80. 80. 79 | @chasedave 86% wearables would make users vulnerable to security breaches 82% feared wearables would invade their privacy 72% wearables would hurt our ability to relate to each other CONSUMER AND DOCTOR SENTIMENT ON WEARABLES IS MIXED 46% employer should fund wearable technology for employees 72% would use a smartwatch if employer paid 63% would use a fitness band if employer paid > “Doctors would love to be excited about wearables — they’re gadget guys at heart — but their day-to- day is spent battling 30 year old fax machines to get your last lab report.” - Jeff Tangney, CEO of Doximity Source: PricewaterhouseCoopers. > “We can't make the leap that just because the data from these low-risk devices is coming in digitally doesn't mean that it's accurate.” - Dr. Michael Blum, UCSF
  81. 81. 80 | @chasedave Rapidly declining cost of sequencing the human genome THE LIFE SCIENCE INDUSTRY’S “TRANSISTOR MOMENT” Allows previously unthinkable questions to be answered What is my unique physiology? What can I metabolize? What drugs would not interact well for me? What is the best dosage for me? What is unique about my cancer? What is my pre-disposition to disease? Source: PricewaterhouseCoopers. 2009 $100k 2015 $1k
  82. 82. 81 | @chasedave HAS THE POTENTIAL TO REVOLUTIONIZE MEDICINE TRADITIONAL MEDICINE One size does not fit all PERSONALIZED MEDICINE: The application of genomics, pharmacogenomics, and proteomics for improved efficacy HIGH FAILURE RATES LOW FAILURE Source: Brian Spear, Margo Heath-Chiozzi, Jeffrey Hugg, “Clinical Trends in Molecular Medicine”. BIOMARKER DIAGNOSTICS (Blood, DNA, Tissue) THERAPY SSRIS 38% ASTHMA 40% DIABETES 43% ARTHRITIS 50% ALZHEIMER’S 70% CANCER 75% TARGETED THERAPY
  83. 83. 82 | @chasedave LARGE PHARMA CAN’T RESIST FOR LONG 3 Include diagnostics in development, trial design, and treatment Payers are beginning to recognize the real and increasing cost of administering ineffective drugs and treating side effects, and pharma must respond or face a frustrating future of declining sales and profits 1 Forge alliances with diagnostic companies 2 Communicate safety and efficacy advantages of targeted therapies BLOCKBUSTER TARGETED Mass Phenotype TargetedGenotypeMarkets Disease State Disease Life CycleFocus 1 Drug – 1 Disease State Numerous StatesTreatments/Drugs Scale KnowledgeEconomics Large Runs Small RunsManufacturing Few, Large Multiple, SmallSales Force Few ManyProduct Portfolio BUSINESS MODEL TRANSITION Source: The Changing Face of R&D in the Future Pharmaceutical Landscape, Deloitte.
  84. 84. 83 | @chasedave 0 2,000 4,000 6,000 8,000 10,000 1996 2000 2004 2008 2012 2013 AMERICA’S GROWING CULTURE OF WELLNESS OrganicFarms 20022012 7,323 17,281 266% Organic market sales growth (2002-2011), totaling $31.5 billion in 2011 # of farmers markets per USDA 78% of families buy organic THE TASTES OF A NEW GENERATION... When asked if they will increase or decrease their spending in 50 different categories over the next 12 months, the proportion of millennials answered: 1 FRESH FRUITS AND VEGETABLES ⬆37% And the organic movement is showing rapid growth 3x growthin farmers markets 2 ORGANIC FOOD ⬆25% 3 NATURAL PRODUCTS ⬆23% Source: Boston Consulting Group 2013 Global Consumer Sentiment Survey of U.S. Millennials’ Saving and Spending Intentions; USDA; Organic Trade Association.
  85. 85. 84 | @chasedave WELLNESS IS BEGINNING TO PENETRATE THE WORKPLACE WHAT THEY OFFER BIOMETRIC TESTING HEALTH RISK ASSESSMENT SUBSIDIZED GYM MEMBERSHIPS FREE FLU SHOTS WEIGHT LOSS GROUPS SMOKING CESSATION PROGRAMS LIFESTYLE COACHING 24-HOUR NURSE LINE HEALTH FAIRS PHYSICAL ACTIVITY PROGRAMS Source: Fidelity Investments and National Business Group on Health. And spending more per employee on wellness incentives 201520142010 $430 $595 $693 of U.S. employers with >50 employees offer wellness programs 50%
  86. 86. 85 | @chasedave BUT ARE THE RESULTS REAL? PEPSICO > Employee engagement is questionable 24% actually participate in employer wellness programs ...to whoever shows wellness works. -Al Lewis & Vik Khanna InsuranceThoughtLeadership.com Source: RAND Group; HBR.org; Gallup. > For every $1 spent on wellness, these studies showed healthcare savings of: J&J DISEASEMANAGEMENT LIFESTYLEMANAGEMENT TOTAL MILANI/LAVIE $2.71 $3.80 $0.50 $1.50 $6.00 12% strongly agreethey have higher overall well-being because of employer > Prompting the “Wellness Prize” $1 MILLION
  87. 87. 86 | @chasedave THE RACE TO BUILD A HEALTHCARE DATA PLATFORM IS ON ACQUISITIONSINVESTMENTSPLATFORMSPARTNERSHIPS INNOVATORS 34 Total Healthcare Investments
  88. 88. C O M P A N I E S / D E A L A C T I V I T Y / I N V E S T O R S
  89. 89. 88 | @chasedave PHYSICAL FITNESS DIET & NUTRITION VITAL SIGN MONITORING & WEARABLE TECH WELLNESS & PREVENTION PROGRAMS WELLNESS & PREVENTION INNOVATORS
  90. 90. 89 | @chasedave SOCIAL ENGAGEMENT, NETWORKS, COACHING MEDICATION MANAGEMENT AND ADHERENCE GENOMICS/PRECISION MEDICINE BEHAVIORAL AND EMOTIONAL HEALTH WELLNESS & PREVENTION INNOVATORS
  91. 91. 90 | @chasedave 2013 PRECISION/GENOMICS BEHAVIORIAL HEALTH WEARABLES WELLNESS $40mm $30mm $239mm $43mm $63mm $21mm $12mm $35mm $30mm $19mm $18mm 2014 PRECISION/GENOMICS BEHAVIORIALHEALTH WEARABLES WELLNESS $480mm $120mm $40mm $147mm $204mm $29mm $70mm $62mm $32mm $23mm $19mm$60mm $58mm 2015 PRECISION/GENOMICS BEHAVIORIAL HEALTH WEARABLES WELLNESS $200mm $100mm $50mm $300mm $92mm $58mm $100mm $79mm $35mm $48mm $30mm $30mm$55mm $50mm $19mm $23mm NOTABLE RECENT FINANCINGS PRIVATE PLACEMENTS
  92. 92. 91 | @chasedave $102mm $732mm GENOMICS WEARABLES FEB. 2015 JUNE 2015 NOTABLE RECENT FINANCINGS IPOs
  93. 93. CREDITS & CONTACT INFORMATION
  94. 94. 93 | @chasedave P R O F E S SI O N AL P R I O R E X P . E D U C A T I O N Kevin Cable ManagingDirector kcable@cascadiacapital.com (206) 696 - 7922 • BoardMember(e.g.,InnovateWashington,TechnologyAlliance, WashingtonSoftwareAlliance) • CEO,NumeraSoftware • VP Corp.Dev., MolecularSimulations BS,Cell& MolecularBiology,Universityof Washington Dave Chase Senior Advisor @chasedave www.healthfundr.com/u/dave-chase • Managing Partner, Healthfundr • AdvisoryBoard, OliverWymanHealthInnovationCenter • Co-Author,2014HealthcareBook of the Year • ContributingWriter,TechCrunch,Forbes • SVP,WebMD • CEO,Co-Founder,Avado BA,Business & Mathematics,Universityof Washington ExecutiveEducation,NorthwesternUniversity Kurt Sheline Senior Associate ksheline@cascadiacapital.com (206)436 - 2542 • PathwayCapital • LighterCapital • MerrillLynch MBA,UC Berkeley BA,ClaremontMcKenna College Kate Nimmo Analyst knimmo@cascadiacapital.com (206)436 - 2510 • TuckBusiness BridgeProgram BA,DartmouthCollege CASCADIA CAPITAL HEALTHCARE & DIGITAL HEALTH TEAM TEAMWIDE EXPERIENCE • Originated / executed over $1 billion of M&A and financingtransactionsin the healthcare sector • Entrepreneurs/Co-founders with exits • Regular dialog with key industry players regarding“live” transactions • Unprecedented financialsponsor relationships

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