the future health ecosystem today

The Future Health Ecosystem Today

@chasedave

1 | @chasedave

> The Future Health Ecosystem Today

> Current Problems

> Clinical Care

> Patient-Centric Care

> Wellness & Prevention

> Credits & Contact Information

CONTENTS

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 & 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

4 | @chasedave

Vector 2: Evidence-Based Decisions

Vector 3: B2C Health

Improvement Programs

Vector 1: Next Generation Primary Care

Sleep Tracking/ Testing: Wearables/Hardware

Personalized Medicine/Genomics

Health Information

Care Navigation

Disease Management

Peer Networks

Health Coaching

Decision-Making Tools

Care Access

Remote Patient Monitoring

Patient Engagement

Wellness Programs

GENETICS DIET & EXERCISE TOBACCO USE ALCOHOL & DRUG USE SLEEP SEXUAL ACTIVITY

Family Support and Self-Help

Patient Groups

Source: RWJF/UWPHI.

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


Retail Clinics, DPC

Care Coordination

Patient Engagement Big Data

Personalized Medicine

Medication Management

Nanotechnology

House Calls

Practice Management, EMRs, Pharmacy Management

ACCESS TO CARE

QUALITY OF CARE

Tech-Enabled Services

Knowledge Sharing

Source: RWJF/UWPHI.

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 Programs Wellness Programs

EDUCATION

EMPLOYMENT

INCOME

FAMILY/SOCIAL SUPPORT

COMMUNITY SAFETY

Early ID and Prevention Programs

Source: RWJF/UWPHI.

7 | @chasedave

GPS-Enabled Sensors Vector 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.

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

CURRENT PROBLEMS

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

Collateral Damage Chronic Disease

Obesity

Wasted Spending Overtreatment

11 | @chasedave

THE SWANS ARE IN THE WATER, BUT WHAT COLOR ARE THEY?

Cadillac Tax 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?

12 | @chasedave

HEALTHCARE’S COLLATERAL DAMAGE IS SIGNIFICANT

> State budgets for healthcare coverage vs other priorities

Mental Health Public Health Education Human Services Infrastructure

& Housing Law &

Public Safety Local Aid

$0 B

$3 B

$6 B

$9 B

$12 B

$15 B

-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

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.

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%

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

1 in 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.

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)

17 | @chasedave

AND TOTAL HEALTHCARE SPENDING IS SEVERELY DISPROPORTIONATE

Adjusting for relative wealth, the US

spends >2.5x the OECD average per

capita

5% of patients

50% of dollars

Source: U.S. Agency for Healthcare Research and Quality.

18 | @chasedave

Angiogram

CT scan, head

Cost per hospital 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.

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

20 | @chasedave

22

Knee Replacements 1st

Tonsillectomy 1st

MRI Exams 2rd

CT Exams 3rd

VOLUME INCENTIVE = OVERTREATMENT AND SPECIALTY-RICH CARE

0 100 200 300

MRI Exams (per

1k)

CT Exams (per 1k)

Tonsillectomy (per

100k)

Knee

Replacements…

OECD Average USA

87.5% of U.S.

physicians are specialists

61.3% OECD

average

According to the NACHC, 62mm Americans have no or inadequate access to primary care as a result of physician shortages, and demand for care will increase (expanded coverage, premium subsidies, state health insurance exchanges)

> 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

Average hospital stay (days)

28k

Prostate Cancer

41k

Breast Cancer

99k

HAIs

68% of visits for colds resulted in antibiotic

prescriptions

> USA winning the race for most procedures

Source: GE, JESS3; OECD Health Data 2012.

Color of greater than sign?

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

Medical billing paperwork and insurance-related red tape cost the United States economy approximately $471 billion in 2012, 80% of which was wasted due to inefficiency

Source: Medscape’s 2014 Physician Compensation Report; 2014 Survey of America’s Physicians.

Do not feel fairly compensated 50% Would not choose medicine as their career today 42%

Plan to accelerate retirement 39% 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%

CLINICAL CARE

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

24 | @chasedave

GOVERNMENT INTERVENTION = CATALYST

2009 2010 2011 2012 2013 2014 2015 2016 2017 2020

Add these pending Telehealth bills: Medicare Telehealth Parity Act: Phase 1 works to expand coverage for real-time and store-and-forward services. Phase 2 extends telehealth access to metropolitan areas and coverage of home health services. Telehealth Enhancement Act of 2014: The act aims to greatly expand Medicaid coverage by removing geographic eligibility for critical access and sole-community hospitals. It may also include coverage for home-based video care services at hospices, home dialysis patients and homebound seniors, and telehealth services for women with high-risk pregnancies. TELE-MED Act: Allows Medicare providers to treat patients across state lines without needing to obtain multiple state medical licenses. Patients would have access to their doctor of choice, regardless of geographic location. 21st Century Cure Act: The act would require telemedicine services to prove cost neutrality, if not savings, in order to seek reimbursement from CMS. With this additional time-consuming hurdle, this could greatly deter and slow the expansion of telemedicine.

King v. Burwell: Supreme Court upholds subsidies for plans purchased on federal exchange February 2015: ONC Annual Meeting; agency’s focus moving beyond MU toward interoperability and outcomes April 2015: MACRA signed by President Obama Medicare Telehealth Parity Act: Expand coverage for real-time and store-and-forward, and relieve access restrictions TELE-MED Act: Medicare providers would not need multiple state licenses to treat virtually 21st Century Care Act: Consolidate MU and VBP; Telemedicine must prove cost neutrality to seek CMS reimbursement Flex-IT 2 Act to delay Stage 3 of MU introduced in Congress

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: Cadillac Tax

> ACA driving shift from volume to value

> Cadillac Tax: a bonanza for health innovators

GOALS

> Access > Standardization > Affordability

https://www.congress.gov/bill/113th-congress/house-bill/5380




https://www.congress.gov/bill/113th-congress/senate-bill/2662




http://energycommerce.house.gov/sites/republicans.energycommerce.house.gov/files/114/Analysis/Cures/20150127-Cures-Discussion-Document-Section-by-Section.pdf

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

Purchaser Context Market Dynamics

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

Guaranteed issue and renewability

3

MLR Requirements

4

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 Premium Dollars 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-Based Marketplace (8 states reporting)

191

2014

248

2015

61

2014

67

2015

80%

Individual and Small-Group Markets

Large Group Market

85%

5%

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

AC TIVE EM PLOYEES

(MEDICARE ADVANTAGE, MEDIGAP PLANS)

RETIREES

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)

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%

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 OUTCOMES OF CARE PATIENT EXPERIENCE CLINICAL PROCESS

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

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)

32 146 253 253 109

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 ACO 17%

Earned Shared Savings

25%

Reduced Spending But Did Not Earn

Shared Savings 22%

Did Not Reduce

Spending 53%

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 range of out-of-pocket health cost limits

63%

Don’t have savings to cover a $1,000

ER visit 62%

Americans struggling with medical debt are insured

70%

Patients becoming price-sensitive...

…and more likely to shop

Forgoing care when sick or injured because of cost 15%

Patients report using home remedies

instead of seeking medical attention

33%

Large employers now offer a price transparency tool 77%

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

33 | @chasedave

PAYERS

CLAIMS COSTS/FINANCE UTILIZATION EMR

PROCEDURES OUTCOMES

PRESCRIPTIONS

SUPPLY CHAIN

• Coordinated care • Improved outcomes • Interoperability • Population health

• Lower costs • Disease prevention • Adherence

SATISFACTION

THE ERA OF OPEN INFORMATION IN HEALTHCARE IS UNDERWAY

Trends Towards Solutions

TRIAL RESULTS AND EFFICACY SALES AND DRUG HISTORY

• R&D productivity • Trial improvement

• Improving efficacy • Care access • Price transparency

• Convenience and cost • Good health

EXERCISE DATA PURCHASES BEHAVIORS, SOCIAL

DA

TA

PROVIDERS

GO

AL

S

PATIENTS

DA

TA

G

OA

LS

PHARMA

DA

TA

G

OA

LS

D

AT

A

GO

AL

S

CLAIMS COSTS

• Payment innovation • Data acquisition • Provider-performance

transparency

• Lowering costs • Reducing claims paid • Winning share • Wellness & prevention

34 | @chasedave

TRADITIONAL PAYERS ARE RESPONDING IN NUMEROUS WAYS

CONSOLIDATION

Trends

Source: The Advisory Board Company.

Tren

ds

✚ Omni-Channel Understanding and Delivery Model for Reaching Out to and Engaging with Consumers

✚ Relationships and Partnerships with Providers That Support Value-Based Reimbursement Models

✚ Private Cloud Solutions to Better Manage Data Collection, Aggregation, and Analytical Efforts

✚ Data Management and Warehousing

Tech

nol

ogy

P

artn

ersh

ips

Health Matters

Co

nso

lidat

ion

$38 billion July 2015

$1.25bn cost savings $6.8 billion July 2015

$52 billion June 2015

$2bn cost savings $14 billion

March 2015

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.

36 | @chasedave

WHILE HOSPITALS FOCUS ON M&A, INNOVATORS ARE INNOVATING

2542 2626 2775

2921 3100

2000

2500

3000

3500

2000 2003 2006 2009 2012

And the # of hospitals that are part of a health system is rising

The shift from traditional mergers and acquisitions to affiliations, joint ventures and partnerships continues. There has also been a recent trend of for-profits and notfor-profits coming together as certain for-profits evaluate their current portfolios and determine the markets in which they want to devote resources

scale and synergies implemented through either M&A or partnership formation

Hospital M&A Activity has accelerated Partnerships and Affiliations on the rise

Heart & Vascular Center

Markey Cancer Center

0

20

40

60

80

100

120

2009 2010 2011 2012 2013 2014 1Q2015

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.

37 | @chasedave

PATIENT REGISTRATION CARE COORDINATION INSURANCE ELIGIBILITY VERIFICATION

CODING

SCHEDULING

PATIENT STATEMENTS

ANALYTICS RCM E-PRESCRIBING

ACCOUNT ALERTS REFERRAL MANAGEMENT DENIAL MANAGEMENT

PROVIDERS ARE BEGINNING TO EMBRACE TECHNOLOGY TO STREAMLINE WORKFLOWS

38 | @chasedave

EHR INCUMBENTS USING TRADITIONAL STRATEGIES TO PROTECT MARKET POSITION

"You really can't say anything without saying something about Epic," says Moore. "They have done a very good job on capitalizing on this. Their technology is fairly dated. But they've really focused on things that tend to be pretty important in this market: issues around workflow, and trying to have systems that are somewhat consistent. A lot of vendors have paid less attention to that and have suffered as a result." Cerner is another winner. "Ten years ago, they understood the perspective of the hospital but I think underestimated the complexity of the ambulatory environment," says Weiland. "And they figured that out. They also figured out the value of a single platform across inpatient, outpatient, clinical and billing. Over the past 10 years, Cerner has absolutely caught up with Epic. And so we've gone from "a six-horse race 10 years ago" – Epic, Cerner, Eclipsys, GE, McKesson and Siemens – to what "has consolidated now to a two-horse race," says Wieland. "I gotta throw Meditech in there, so call it a seven-horse race," he adds. "But in terms of competing for new marketshare today, I still think its a two-horse race." There have been stumbles, too. "The first one that comes to mind is Allscripts," says Wieland. The company's growth-by-acquisition strategy – most notably with its $1.3 billion merger with Eclipsys in 2010 – has not worked out as planned. "I don't think they truly appreciated the challenges of trying to make these systems interoperable," says Moore

Fragmented Players

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

http://www.healthcareitnews.com/directory/cerner

http://www.healthcareitnews.com/directory/mckesson

http://www.healthcareitnews.com/directory/siemens

http://www.healthcareitnews.com/directory/allscripts

39 | @chasedave

VENDORS THAT RESPOND TO POPULATION HEALTH-FOCUSED CUSTOMER NEEDS WILL WIN

http://www.healthcareitnews.com/blog/what-look-population-health-himss15

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

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 public HIE is at least 10 years away

92% PHYSICIANS

81% HOSPITALS

94% INSURERS/PAYERS

remain meaningfully unconnected in regards to intelligent interoperability

POPULATION HEALTH REQUIRES CHANGES IN THE BUSINESS 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 coordinate care, private exchanges will outpace public efforts

Cerner wins DoD contract with interoperability capabilities and partnerships

Epic launches Care Everywhere

Source: Healthcare IT News; HIMSS Analytics.

82%

REALITY TAKEAWAY/RESPONSE

REALITY TAKEAWAY/RESPONSE

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%

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.” -- David Feinberg, CEO Geisinger Health System

2013 3mm units Connected

Medical Devices: 77%

2018

19mm units mHealth: 40%

Key Market Segments: Cardiac rhythm management: Accounted for 2/3 of remote monitoring Sleep apnea Telehealth mHealth connectivity COPD, diabetes, asthma

Connected medical monitoring devices expected to grow 4x from 2015-2018

Source: HIMSS Analytics; Allied Market Research; Berg Insight.

REMOTE PATIENT MONITORING

2014

26%

of providers utilized some form of RPM

4m

Units

2020

>20m

Units Blood 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-risk patients

• 911 callers offered options besides ER • Nurse health line for non-emergency situations

RE-THINKING OPERATIONS

Admissions 43%

ER Visits 54%

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

Telehealth Enhancement Act of 2013

Medicare TeleHealth Parity Act of 2015 ?

Medicare Health Parity Act of 2014

STATE LEVEL

State Medicaid programs that reimburse for:

Live Video

Store-and-forward


47 9 16 29 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

44 | @chasedave

BUT THIS HASN’T SLOWED THE BATTLE TO BUILD A NETWORK

Service Value Prop Business Model Example

Video Telemedicine See a doc, whenever, wherever

B2C: $40/visit B2B2C: Contracts with

employers

Doctor on Demand

Telemedicine Kiosks Self-diagnose simple conditions

B2B2C: Payers include service in coverage for

members

HealthSpot

Text-based Telemedicine Text a physician B2C (freemium): Free texts, option to upgrade to

$9/month subscription

First Opinion

Specialty Direct access to a specialist B2C: $40/visit Spruce

Store-and-forward Upload photos and a description for review and

diagnosis by a physician

B2C: $59/review B2B2C: Payers include service in coverage for

members

DermatologistOnCall

Business Model

Delivery Method Freemium B2C B2B2C

Video/Phone

Kiosks

Text

Store-and-forward

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 PATIENT MONITORING

CARE COORDINATION / NEW ENTRANTS

47 | @chasedave

CLINICAL CARE INNOVATORS

DATA ANALYTICS AND POPULATION HEALTH PRACTICE MANAGEMENT/RCM/PRODUCTIVITY

TOOLS AND POC MANAGEMENT/EHR

48 | @chasedave

$63mm

$50mm

$16mm

$70mm

$58mm

$40mm

2 0 1 3

WORKFLOWS ANALYTICS/PH TELEHEALTH OTHER

2 0 1 4


2 0 1 5


$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

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

IPOs Teladoc (Tele IPO) Imprivata (Workflow IPO) MindBody (Workflow IPO) IMS Health (Analytics IPO) BenefitFocus (Benefits IPO) Evolent Health (Analytics IPO) Connecture (Benefits IPO) Inovalon (Analytics IPO) Press Ganey (Workflow IPO) Veeva Systems (Workflow IPO) Health Equity (Benefits IPO)


Imprivata Veeva Health Equity Press Ganey MindBody

50 | @chasedave

PATIENT-CENTRIC CARE

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

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

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

2014

2012

2010

2008

2006

Conventional HMO PPO POS HDHP/SO

$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.

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)

Market Dynamics

<$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%

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.

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?

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%

Sav

ing

s ($

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).

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 visits shifted to other care sites

132mm 47mm Annual PCP

Visits Visits Eligible 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.

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

COMMON DIAGNOSES 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

Pat

ien

ts

Tra

nsa

ctio

n V

olu

me

($m

m)

Monthly Transaction Volume ($) Patients

41% HOSPITALIZATIONS

25% OUTPATIENT UTILIZATION

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


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 site doctor in 1 hour

$200 for urgent care $75-100 for wellness

NA $50: NP video consult

$200: in-person $150

REGION Los Angeles

San Francisco NYC

San Francisco NA Minneapolis Atlanta

TARGET CUSTOMER

Adults & Kids Adults & Kids Health Systems Adults & Kids Pediatric Care

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 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 remote patient

monitoring

73% 62%

57% 49%

7 in 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

63 | @chasedave

Compared to those not enrolled in the study, coordinated care “patients have an 88 percent reduced risk of dying of a cardiac-related cause when enrolled within 90 days of a heart attack, compared to those not in the program.” And, “clinical care teams reduced overall mortality by 76 percent and cardiac mortality by 73 percent. Rather than reflexively denying claims and building up a mountain of ill will, insurance companies should

invest resources in helping their customers get engaged in their health. Their customers would, in effect,

“self-deny” their own claims.

THE PATIENT WILL BE AT THE CENTER OF THE FUTURE HEALTHCARE SYSTEM

FUTURE FOCI:

Primary Physician

Consulting Physician

Lab Insurance

Pharmacy

Non-Clinical Activity

Family

Hospital

Post-Acute and Home Care

Ancillary Sites

Personalized treatment

1

Controls method and venue of care delivery

2

Shops for quality and cost

3

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


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

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.

66 | @chasedave

PAYERS WERE FIRST TO DO SO WITH MIXED RESULTS

Health Matters

GOLDWALKER COLORFALL

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

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 forwarded to all members of care team

A Medicare healthcare company based in Southern California providing care to an exclusively Medicare Advantage population

Acquired by Wellpoint in 2011 for $800 million

Source: Oliver Wyman.

70 | @chasedave

PATIENT-CENTRIC CARE INNOVATORS

HEALTH INFORMATION, TRANSPARENCY, AND PLAN INFORMATION

PATIENT RELATIONSHIP MANAGEMENT AND ENGAGEMENT/REMOTE PATIENT MONITORING

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

72 | @chasedave


PRIVATE PLACEMENTS

2 0 1 3

ENGAGEMENT INFORMATION CARE ACCESS

$10mm $8mm $68mm $40mm $24mm $15mm

$6mm $15mm $10mm $14mm $14mm

2 0 1 4


$82mm $26mm

$110mm $17mm $11mm

$81mm $50mm $32mm

$25mm $15mm $27mm $24mm $21mm

2 0 1 5


$500mm $20mm

$178mm $130mm $20mm $63mm $50mm $28mm

$35mm $13mm $13mm $20mm $16mm $15mm

$16mm s

73 | @chasedave

$91mm $178mm $100mm

CARE ACCESS INFORMATION INFORMATION

JAN. 2014 MARCH 2014 MARCH 2014


IPOs

74 | @chasedave

WELLNESS & PREVENTION

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

76 | @chasedave

PAYERS

CLAIMS COSTS/FINANCE UTILIZATION EMR

PROCEDURES OUTCOMES

PRESCRIPTIONS

SUPPLY CHAIN

• Coordinated care • Improved outcomes • Interoperability • Population health

• Lower costs • Disease prevention • Adherence

SATISFACTION

THE ERA OF OPEN INFORMATION IN HEALTHCARE IS UNDERWAY


TRIAL RESULTS AND EFFICACY SALES AND DRUG HISTORY

• R&D productivity • Trial improvement

• Improving efficacy • Care access • Price transparency

• Convenience and cost • Good health

EXERCISE DATA PURCHASES BEHAVIORS, SOCIAL

DA

TA

PROVIDERS

GO

AL

S

PATIENTS

DA

TA

G

OA

LS

PHARMA

DA

TA

G

OA

LS

D

AT

A

GO

AL

S

CLAIMS COSTS

• Payment innovation • Data acquisition • Provider-performance

transparency

• Lowering costs • Reducing claims paid • Winning share • Wellness & prevention

77 | @chasedave

WEARABLES SHOW PROMISE

0

50

100

150

Wristwear Modular Clothing Eyewear Earwear Other

Un

its

(mm

)

2014 2015 2019

Source: IDC

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

HEALTH RISK

54%

31%

13%

13%

10%

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.

$2

.0 b

illi

on

$2

.7 b

illi

on

10

0 m

illi

on

un

its

$5

.8 b

illi

on

> 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

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

Rat

e o

f S

ust

ain

ed

U

tiliz

atio

n

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 wearable 1 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.

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

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

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

82 | @chasedave

LARGE PHARMA CAN’T RESIST FOR LONG

• Focusing clinical trials on targeted subpopulations would slash their size, duration, and cost

• Large pharmaceutical companies have little choice but to change. Those that stick with the blockbuster model face a frustrating future of declining sales and profits

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 Targeted Genotype Markets

Disease State Disease Life Cycle Focus

1 Drug – 1 Disease State Numerous States Treatments/Drugs

Scale Knowledge Economics

Large Runs Small Runs Manufacturing

Few, Large Multiple, Small Sales Force

Few Many Product Portfolio

BUSINESS MODEL TRANSITION

Source: The Changing Face of R&D in the Future Pharmaceutical Landscape, Deloitte.

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 O

rgan

ic F

arm

s

20

02

2

01

2

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%

2 Organic food

25%

And the organic movement is showing rapid growth

3x

growth in 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.

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

2015 2014 2010

$430

$595

$693

of U.S. employers with >50 employees offer wellness programs

50%

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 Insurance Thought Leadership.com

Source: RAND Group; HBR.org; Gallup.

> For every $1 spent on wellness, these studies showed healthcare savings of:

J&J DISEASE MANAGEMENT LIFESTYLE MANAGEMENT TOTAL MILANI/LAVIE

$2.71

$3.80

$0.50 $1.50

$6.00

12% strongly agree they have higher overall well-being

because of employer

> Prompting the “Wellness Prize”

$1 MILLION

86 | @chasedave

THE RACE TO BUILD A HEALTHCARE DATA PLATFORM IS ON

ACQUISITIONS INVESTMENTS PLATFORMS PARTNERSHIPS

INN

OV

AT

OR

S

34 Total Healthcare Investments

88 | @chasedave

PHYSICAL FITNESS DIET & NUTRITION

VITAL SIGN MONITORING & WEARABLE TECH WELLNESS & PREVENTION PROGRAMS

WELLNESS & PREVENTION INNOVATORS

89 | @chasedave

SOCIAL ENGAGEMENT, NETWORKS, COACHING MEDICATION MANAGEMENT AND ADHERENCE

GENOMICS/PRECISION MEDICINE BEHAVIORAL AND EMOTIONAL HEALTH

WELLNESS & PREVENTION INNOVATORS

90 | @chasedave

2 0 1 3

PRECISION/GENOMICS BEHAVIORIAL HEALTH WEARABLES WELLNESS

$40mm

$30mm $239mm $43mm $63mm $21mm

$12mm $35mm $30mm $19mm $18mm

2 0 1 4


$480mm $120mm

$40mm

$147mm $204mm $29mm

$70mm $62mm

$32mm $23mm $19mm $60mm $58mm

2 0 1 5


$200mm $100mm

$50mm

$300mm $92mm $58mm

$100mm $79mm $35mm $48mm $30mm

$30mm $55mm $50mm $19mm $23mm


PRIVATE PLACEMENTS

91 | @chasedave

$102mm $732mm

GENOMICS WEARABLES

FEB. 2015 JUNE 2015


IPOs

CREDITS & CONTACT INFORMATION

93 | @chasedave

P R O F E S S I O N A L P R I O R E X P . E D U C A T I O N

Kevin Cable Managing Director [email protected] (206) 696 - 7922

• Board Member (e.g., Innovate Washington, Technology Alliance, Washington Software Alliance)

• CEO, Numera Software • VP Corp. Dev., Molecular Simulations

BS, Cell & Molecular Biology, University of Washington

Dave Chase Senior Advisor @chasedave www.healthfundr.com/u/dave-chase

• Managing Partner, Healthfundr • Advisory Board, Oliver Wyman Health Innovation Center • Co-Author, 2014 Healthcare Book of the Year • Contributing Writer, TechCrunch, Forbes • SVP, WebMD • CEO, Co-Founder, Avado

BA, Business & Mathematics, University of Washington Executive Education, Northwestern University

Kurt Sheline Senior Associate [email protected] (206) 436 - 2542

• Pathway Capital • Lighter Capital • Merrill Lynch

MBA, UC Berkeley BA, Claremont McKenna College

Kate Nimmo Analyst [email protected] (206) 436 - 2510

• Tuck Business Bridge Program BA, Dartmouth College

CASCADIA CAPITAL HEALTHCARE & DIGITAL HEALTH TEAM

TE A MWIDE E X P ERI ENCE

• Originated / executed over $1 billion of M&A and financing transactions in the healthcare sector • Entrepreneurs/Co-founders with exits • Regular dialog with key industry players regarding “live” transactions • Unprecedented financial sponsor relationships