AI, data, and new partnerships could define the future of medtech

My Take

AI, data, and new partnerships could define the future of medtech

By Mike DeLone, vice chairman, US life sciences leader, Deloitte LLP

As the health ecosystem increasingly focuses on prevention and early detection, medtech companies will likely need to forge relationships with companies from inside and outside the health ecosystem. Beyond devices that treat illnesses and injuries, we expect medtech companies will focus on the entire patient journey—from prevention and early detection, to diagnosis and treatment, to ongoing monitoring for years after an ailment is cured.

At AdvaMed’s annual conference in Boston yesterday (September 23), my colleague Pedro Arboleda moderated a session on medtech’s likely role in the future of health. During the panel discussion, two medtech strategy executives and a health system CEO outlined the role medtech might play in the health ecosystem 10 or 20 years from now.

We expect medtech companies will continue to play a significant role in reducing medical costs, optimizing provider performance, and improving patient outcomes. In the future, however, the most successful companies will be those that are able to advance health and wellness with the help of emerging technologies. These companies will leverage the evidence and data generated by their digitally enabled and connected devices, and forge partnerships that enhance and extend their capabilities.

The Deloitte Center for Health Solutions recently conducted a crowdsourcing simulation with 38 experts representing digital health startups, medtech companies, technology companies, health plans, health systems, and researchers for our new paper: Winning in the future of medtech. We asked participants which technologies they thought could help transform health quality. Nearly 80 percent of them suggested that artificial intelligence (AI)—followed by robotics (53 percent), and nanotechnology (47 percent)—would be most transformative in medtech. AI (specifically machine learning) could help medtech companies leverage massive amounts of device-generated data to help improve devices and treatment decisions in real time. Augmented intelligence, which can offer real-time information based on comprehensive reviews and analyses of a patient’s health information, could give clinicians deep insight to improve clinical decisions.

Mastering data, forging partnerships could be key

As I noted in last week’s My Take, the life sciences companies that are most likely to drive change in the future of health will be those that are willing to reach outside of their own walls to transform. Part of that transformation will require new types of partnerships with stakeholders from inside and outside the health ecosystem.

Take Royal Phillips, for example. The medtech company recently ended the first year of an 11-year partnership with Jackson Health System in Miami.¹ The enterprise monitoring as a service (EMaaS) deal was the first strategic agreement of its kind. Philips will have access to data which will be used to enhance its understanding of the patient journey, refine products, and expand on service offerings based on needs. The health system will have access to regularly updated monitoring technology without having to purchase any equipment. Philips says it has since signed similar agreements with eight other institutions.

Medtech companies might also consider partnering with organizations from outside the sector that have expertise in AI. Microsoft, for example, recently announced a $1 billion partnership with OpenAI to enhance the capabilities of its Azure AI and cloud platform, and to help build the next generation of AI applications.² To date, few medtech companies have made this significant of an investment in AI. However, many of them do have differentiated expertise in the development of medical algorithms, such as translating data from an EKG lead into meaningful output. This expertise could be attractive to potential consumer tech partners.

Partnerships between medtech companies, health systems and technology companies could help benefit both partners and patients. During our simulation, our experts identified which services medtech companies should consider to maximize sales and market share and to help their partners reduce costs and improve outcomes. The top three services they identified were:

1. Remote patient monitoring: The market for patient monitoring equipment, now valued at more than $5 billion³, could grow significantly as interest in—and acceptance of—virtual care and remote monitoring increase. More than 70 percent of our crowd participants cited this as an added-value service that medtech companies should offer. The data that comes from wearables and other connected devices could prevent the progression of disease and move patients to lower-cost care settings. Remote patient monitoring could also revolutionize the way medtech companies conduct clinical trials and develop products. Always-on digital sensors could be incorporated into joint implants, for example, and provide ongoing product performance data in real time. These findings could then be used to improve products that are in the development pipeline as well as treatment techniques and improved long-term outcomes.
2. Data storage and integration: Most of our participants said the ability to store and integrate data will be a key service for medtech companies in the future. Integrated data could help clinicians make more informed decisions about how to improve patient care. Rich datasets could also help fuel innovation by mapping the patient journey in much greater detail. This could lead to better patient outcomes, reduce health care costs, and help build stronger relationships between medtech companies and providers.
3. Clinical efficiencies: Nearly half of our crowd (45 percent) said medtech companies could help generate better outcomes by improving clinical efficiency. Augmented reality (AR) and virtual reality (VR), for example, are already being used to train physicians, nurses, and other health professionals. Some medtech companies are using 3D printing to create realistic anatomical models that can be customized for virtually any clinical situation. These technologies could be combined to create a true-to-life environment for learning or surgical planning, which can reduce training time and improve overall patient satisfaction and safety.

Medtech companies that successfully incorporate some or all of these services can help move care outside of the acute-hospital setting and transition the health sector toward prevention and early intervention, a key shift expected in the future of health.

Potential partnerships between medtech companies and other stakeholders just might begin casually over coffee at industry conferences such as AdvaMed. Representatives from consumer-technology companies regularly attend these conferences, which could create an organic opportunity to begin this important dialogue.

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¹ Philips and Jackson Health System sign groundbreaking 11-year agreement for Enterprise Monitoring as a Service, press release, June 27, 2018
² Microsoft to invest $1bn in OpenAI to build Azure AI supercomputing technologies, Data Economy, July 29, 2019
³ Innovation in Telehealth and Patient Monitoring Driving Success for Medtech Companies MD+DI, August 30, 2019

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In the News

Researchers find urban hospital markets are becoming more concentrated

Metropolitan hospital markets have become increasingly concentrated, according to the Healthy Marketplace Index report by the Health Care Cost Institute (HCCI). The study, which was conducted from 2012 to 2016, used the Herfindahl-Hirschman Index (HHI) to measure concentration levels among hospital systems in 112 metropolitan areas. Researchers determined the number of highly concentrated markets in urban areas increased from 67 percent in 2012 to 72 percent in 2016. The report highlights several factors that might have contributed to this trend, with the most common being consolidation from hospital mergers or acquisitions.

(Source: Health Care Cost Institute, Healthy Marketplace Index, 2019)

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House launches investigation into private-equity firms, surprise medical bills

House Energy & Commerce Chairman Frank Pallone (D-N.J.) and ranking member Greg Walden (R-Ore.) launched a bipartisan investigation into the role private equity firms play in surprise medical billing. On September 16, the lawmakers wrote to three private-equity firms—which own physician-staffing and emergency-transport companies—to ask about the role equity firms have in staffing hospitals and how this might impact health care costs. Specifically, the lawmakers asked the firms to identify the physician-staffing and emergency-transport companies they owned. They asked how much money the firms collect from in-network and out-of-network staffing and transport companies, how much influence the equity firms have in staffing those companies, and what role the firms play in negotiating contracts with health plans.

During a televised interview that same day, Pallone and Walden discussed how some private-equity firms determine participation in provider networks. The lawmakers also discussed recent reports connecting private-equity-backed companies to televised advertisements opposing the No Surprises Act and similar proposed legislation to prevent surprise medical bills (see the June 4, 2019 Health Care Current).

(Sources: House Committee on Energy & Commerce, Pallone and Walden launch bipartisan investigation into private equity firms’ role in surprise billing practices, September 16, 2019; E&C Republicans, E&C Begin Bipartisan Investigation into Private Equity Practices Surrounding Surprise Medical Billing, September 17, 2019)

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Some states find it challenging to meet the social determinants needs of Medicaid enrollees

Some states are experiencing increased difficulty in addressing social determinants of health for high-cost Medicaid beneficiaries, according to a recent report by the Government Accountability Office (GAO). Medicaid spending continues to rise, and nearly half of all spending is attributed to a small percentage (5 percent) of beneficiaries who have the most complex, expensive health needs. GAO found that some states are turning to managed care organizations to contain costs for this population.

Despite efforts to improve care coordination for high-cost Medicaid beneficiaries, some states are finding it difficult to address the diverse health and social needs of this group. Common challenges for addressing social determinants include:

• Difficulty obtaining valid contact information or having a means to get in touch with beneficiaries—especially if the beneficiaries are homeless.
• Determining best practices around a wide array of social determinants, such as food insecurity, housing inaccessibility, and no transportation options for traveling to and from doctor appointments.
  

In addition, staff shortages in rural areas can make it difficult for high-cost Medicaid beneficiaries to receive sustainable care management.

(Source: Government Accountability Office, Efforts to Identify, Predict, or Manage High-Expenditure Beneficiaries, September 12, 2019)

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House Speaker releases drug-pricing negotiation bill

On September 19, House Speaker Nancy Pelosi (D-Calif.) released her proposed drug-pricing legislation, which would allow the US Department of Health and Human Services (HHS) to negotiate drug prices for all health plans, including Medicare and commercial health insurance, if enacted. The “Lower Drug Costs Now Act” directs HHS to negotiate prices for 250 drugs that do not have generic or biosimilar competition. This differs from the bill’s recently leaked draft version, which would have directed negotiation for drugs that have fewer than two generic variants (see the September 17, 2019 Health Care Current). Additional provisions to the bill include:

• Requiring HHS to negotiate a minimum of 25 drugs per year
• Setting the maximum negotiated price of a drug at 120 percent of the average price of the drug in six countries—Australia, Canada, France, Germany, Japan, and the United Kingdom
• Imposing a fee totaling 65 percent of a drug’s gross sale—with a 10 percent increase for each quarter of noncompliance—onto drug manufacturers that do not participate in negotiations or fail to reach a price agreement with the government
• Setting a retroactive penalty requiring drug makers to pay back the government for price hikes that exceeded the rate of inflation, indexed to 2016 prices
• Limiting Medicare beneficiaries’ out-of-pocket costs for prescription drugs to $2,000 a year

Some Democratic lawmakers have expressed concern that the bill does not go far enough, and some Republican lawmakers have opposed the lack of bipartisan solutions in the bill. This bill differs from the bipartisan Prescription Drug Pricing Reduction Act (PDPRA), which the Senate Finance Committee passed in July (see the July 30, 2019 Health Care Current). It is unclear when the latest version of the bill might be introduced or marked up in the committees of jurisdiction.

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AMA, CHIME ask HHS to delay information-blocking final rules

Seven groups representing health care industry stakeholders are urging the HHS Office of the National Coordinator for Health IT (ONC) to delay issuing the final version of its proposed rule to reduce information-blocking and promote electronic health record (EHR) interoperability (see the February 12, 2019 Health Care Current). During a Health IT Advisory Committee (HITAC) hearing on September 17, representatives from the College of Healthcare Information Management Executives (CHIME), the American Medical Association (AMA), and five other groups asked ONC to allocate more time to address questions regarding the definition and scope of the data-blocking proposals. In April, HHS extended the comment period for the proposed rules (see the April 23, 2019 Health Care Current).

During the HITAC meeting, the seven groups proposed five recommendations for ONC, which they said would help reduce provider and vendor burden from the proposed rules. In addition to delaying implementation of the final rule, the groups suggested that ONC:

• Stagger the deadlines for its final rule to prevent overlap with CMS’s information-blocking rule (see the February 19, 2019 Health Care Current).
• Create a new version of its health IT certification instead of updating the 2015 version. According to the groups, creating a new version of the certification can help reduce confusion and improve the implementation process.
• Reduce the penalty of $1 million per individual data-blocking violation.
• Address patient privacy and data-security concerns.

The groups noted that the rules could create a significant industry shift and asked for a flexible timeline to allow for education and corrective action.

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Breaking Boundaries

Hospitals are using machine learning and AI to improve safety, predict patient needs

A medical center in Israel released the results of a study showing how machine learning can reduce prescribing errors and adverse drug events in hospitals. The results were published this summer in the Journal of American Medical Informatics Association (JAMIA).

In the US, preventable errors account for one out of every 131 outpatient deaths, one out of every 854 inpatient deaths, and more than $20 billion in direct costs, according to the article. These errors are often related to miscommunications and failures in electronic medical records and other health information systems. The study looked at a data from one ward in the medical center that had implemented a machine learning medication-safety platform in the organization’s electronic health record (EHR) system. The platform monitored all medical prescriptions issued over 16 months, with staff assessing all alerts for accuracy, clinical validity, and usefulness.

The system demonstrated a low alert burden—alerts were triggered for just 0.4 percent of all medication orders. Additional findings included:

• 60 percent of warnings were generated after a medication was already dispensed following changes in patient status
• 89 percent of all alerts were considered accurate
• 80 percent of all alerts were considered clinically useful
• 43 percent of alerts caused changes in subsequent medical orders

Which AI applications are most popular among US hospitals?

A recent analysis by Emerj Artificial Intelligence Research says predictive analytics, chatbots, and predictive health are the three most popular AI applications being used by the biggest hospitals in the US. Most of these applications are still in their early stages. Consider the following examples:

• Explorations in predictive analytics include molecular sequencing and analysis of cancer patients who are participating in immunotherapy studies. While currently in the research and development (R&D) phase, a potential goal is for results to inform customized treatment options.
• A large medical center is exploring the use of an AI digital assistant to help identify patients in the intensive care unit (ICU) who are at risk for cardiac arrest. The digital assistant is integrated into the center’s information technology command center, which monitors beds in the ICU.
• One hospital is testing out the use of Virtual Interventional Radiologists (sophisticated chatbots) that communicate with referring clinicians and provide evidence-based answers to common questions. This AI-driven application provides the referring physician with the ability to communicate information to the patient. This information might be an overview of an interventional radiology treatment or next steps in a treatment plan, in real-time.

(Sources: Bill Siwick, Sheba Medical Center validates machine learning-based meds decision support tech, Health IT News, August 21, 2019, Kumba Senaar, How America’s Top 5 Hospitals are Using Machine Learning Today, Emerj, February 19, 2019)

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