Shift from fee for service to outcomes- driven care will drive opportunities for SIs and solution providers Smart VAR Healthcare Summit May 2014 Shahid N. Shah, CEO

NETSPECTIVE www.netspective.com 2 Who is Shahid? • Serial healthcare IT entrepreneur, advisor to numerous startups, blogger, healthcare futurist • 20+ years of software engineering and multi-site healthcare system deployment experience in Fortune 50 and Government sectors. • 12+ years of healthcare IT and medical devices experience (blog at http://healthcareguy.com) • 15+ years of technology management experience (government, non-profit, commercial) • 10+ years as architect, engineer, and implementation manager on various EMR and EHR initiatives (commercial and non-profit) Author of Chapter 13, “You’re the CIO of your Own Office”

NETSPECTIVE www.netspective.com 3 What’s this talk about? Questions answered • Is disruptive innovation in healthcare possible? • What does innovation in healthcare mean and how do you help customers make it happen? • Where are the major areas in healthcare where innovation is required and can you grow your business by helping your customers achieve them? Key takeaways • Go narrow, specialize, dive deep • Understand PBU: Payer vs. Benefiter vs. User • Understand why healthcare businesses buy stuff so you can serve them in ways they find you indispensable

NETSPECTIVE www.netspective.com 4 What does “disrupting healthcare” mean? This is $1 Trillion and the Healthcare Market is about $3 Trillion This is $1 Billion

www.netspective.com 5 No, your innovation will not disrupt healthcare. I promise. The good news is that doesn’t have to.

www.netspective.com 6 No, your big data or mobile ideas will not disrupt healthcare. But if you can use them to add or extract value from the existing system, you’ll do just fine.

www.netspective.com 7 No, your EHR/PHR or app will not be used by enough doctors or patients to disrupt healthcare. But if you can get even a fraction of them to use your software, you’ll do just fine.

www.netspective.com 8 No, your innovation will not be accepted by permissions-oriented institutions. Find customers with a problem-solving culture willing to accept risks and reward failures.

www.netspective.com 9 No, your innovation will not be easily integrated into regulated device-focused clinical workflows. Incumbent vendors will not entertain the potential of new legal liabilities without someone to share it with or new competition without direct compensation.

NETSPECTIVE www.netspective.com 10 You have made the job of identifying, diagnosing, treating, or curing diseases faster, better, or cheaper for clinicians through the use of information technology (IT) or business models. You have made the job of self-diagnosing, self- treating, or preventing diseases and improving overall wellness of patients through the use of new incentives, business models, or IT. What I mean by “actionable innovation” You can help your customers achieve practical, relevant, actionable solutions

NETSPECTIVE www.netspective.com 11 Life expectancy is increasing… …but the rate of growth is slowing

NETSPECTIVE www.netspective.com 12 Bacteria used to kill us the most… Per 100k population, Historical Statistics of the United States, Millennial Edition

NETSPECTIVE www.netspective.com 13 We’ve got most infections beat… …except the flu and pneumonia Per 100k population, Historical Statistics of the United States, Millennial Edition

NETSPECTIVE www.netspective.com 14 Top killers today Heart disease Cancer Chronic lower respiratory diseases Top killers in 1900 Pneumonia and influenza TB Diarrhea and enteritis Infectious diseases used to kill us… …but what’s left seem only to be “manageable” not easily “curable” Per 100k population, Historical Statistics of the United States, Millennial Edition

NETSPECTIVE www.netspective.com 15 Death by age group, 1900 Death by age group, Today From cures to management… …young people don’t dye of diseases often now http://siteresources.worldbank.org/INTHSD/Resources/topics/Health-Financing/HFRChap1.pdf

NETSPECTIVE www.netspective.com 16 What Is the Business of Health Care? • It's always better to define a business by what consumers want than by what you can produce or build – For example, whereas doctors and hospitals focus on producing health care, what people really want is health • In the future, successful doctors, hospitals, and health systems will shift their activities from delivering health services within their walls toward a broader range of approaches that deliver health – how will you be able to help them achieve those goals? What business are you in? The Emergence of Health as the Business of Health Care Source: http://www.nejm.org/doi/full/10.1056/NEJMp1206862

NETSPECTIVE www.netspective.com 17 PBU: Payer vs. Benefiter vs. User Payer Benefiter User If you don’t understand the exact interplay between PBU your product will fail The payer is the person/entity that writes the check for your product. The person or group that benefits most from the use of the product. The person or group that actually uses the product.

NETSPECTIVE www.netspective.com 18 What kinds of users are your customers targeting? Help your customers go narrow and deep not wide and shallow • Obesity Management • Wellness Management • Assessment – HRA • Stratification • Dietary • Physical Activity • Physician Coordination • Social Network • Behavior Modification • Education • Health Promotions • Healthy Lifestyle Choices • Health Risk Assessment • Diabetes • COPD • CHF • Stratification & Enrollment • Disease Management • Care Coordination • MD Pay-for-Performance • Patient Coaching • Physicians Office • Hospital • Other sites • Pharmacology • Catastrophic Case Management • Utilization Management • Care Coordination • Co-morbidities Prevention Management 26% of Population 4% of Costs 35% of Population 22% of Costs 35% of Population 37% of Costs 4% of Population 36% of Costs Source: Amir Jafri, PrescribeWell

NETSPECTIVE www.netspective.com 19 Shift from Fees for Service (FFS) to Value (FFV) The Shift The clinical model is shifting away from treatment of chronic conditions and focusing more on prevention, wellness, obesity intervention, behavior and lifestyle modification. Implications Clinical operations are shifting to hospital and physician ‘centered’ services that will rely heavily on health information technologies to monitor, coordinate, and manage care. • Successful Transition in Care resulting in Reduced Hospital Readmission Rates • Proactive population management • Patient engagement and collaboration • Disease prevention through wellness and obesity management • Chronic disease management • Care coordination and collaboration • Metrics and analytics

NETSPECTIVE www.netspective.com 20 How Digital Health helps in shift Successful Transitions of Care Reduced Hospital Readmissions Innovative Practice Models like Patient Centered Medical Homes Prevention, Wellness, Obesity intervention Behavior adjustments and modification Physician Marketing Personalized Concierge-Like Medicine Total Population Management

NETSPECTIVE www.netspective.com 21 How to best identify your customers FFS vs. FFV? Target health sector? Number of employees? Annual sales volume? Geography? Number of hospital beds? Number of patients? Type of patients? The list goes on and on…be specific! Help them stay away from market segmentation, focus on identifying PBU particpants Identifying your customers will depend on helping your customers identify theirs

NETSPECTIVE www.netspective.com 22 How will your customers get paid for innovation? Direct Payment • Your best option • Very few truly disruptive technologies can be directly paid for by providers within the USA • Limited adoption of ‘traditional’ pay for service reimbursement for next generation technology Direct Reimbursement • Second best option • Improvements in technology are outpacing payer adoption • Reimbursement will come but its time consuming and difficult Indirect Reimbursement • Emerging option • Payer requirements for improved quality and efficiency are creating indirect incentives to adopt innovative solutions • Solutions targeting new value-based reimbursement incentives are highly useful to medical providers If you haven’t figured it out for them, customers will not figure it out for themselves

NETSPECTIVE www.netspective.com 23 Your customers’ innovation fit determines your opportunities Therapies Therapeutic Tools Diagnostic Tools Patient Administration Patient Education Most Regulation Least Regulation Be aware of regulations, don’t fear them, use them as a competitive advantage

NETSPECTIVE www.netspective.com 24 Problems your customers looking to solve Improve medical science? Improve access to care? Reduce costs? Improve therapies? Improve diagnostics? Improve drug design? Improve drug delivery? Create better payment models? Focus on jobs that customers need to be done, not what you want to build

NETSPECTIVE www.netspective.com 25 What you need to know these days Consumer Health, mHealth, eHealth Health IT Product Development Wireless & Mobile Strategies Collaboration, Social Technologies Cloud Computing Strategies MedTech Product Development Content & Document Management (CMS/DM) Enterprise Architecture, SOA Regulated Product Management Trust Models & Regulated Privacy, Security Planning Technology Due Diligence

NETSPECTIVE www.netspective.com 26 Problems you can solve for your customers Patient Discovery •Website •Pre-Patient Provider Search •Patient Connect •Patient Scheduling •Reminder call, scheduling, Ensuring Patient show up •Patient Intake Practice Management •Patient Scheduling •Charge Capture •Practice Management / Billing Tools •Revenue Analytics •Claims Scrubing •Billing Services •Pricing Management (Aggregated Billing Data analytics) •Reviews / Feedback Infrastructure •DaaS •Network •Office Automation Clinical Management •MU2 Compliant EHR •eRX •Voice Recognition •Clinical Language Understanding Integration •Patient Connect integration to PM •HIE •Labs •Device Connectivity •Image storage / EMR Access •Clearing Houses •Gateways Consulting Services •ICD •HIPAA •Practice Consulting •Revenue Planning •Legal and Compliance •Clinical Workflow Optimization •Billing to Clearing House Integration •Records Management / Migration Focus on jobs that customers need to be done, not what you want to build

NETSPECTIVE www.netspective.com 27 The business needs • Quality and performance metrics • Patient stratification • Care coordination • Population management • Surveys and other direct- from-patient data collection • Evidence-based surveillance The technology strategy • Aggregated patient registries • Data warehouse / repository • Rules engines • Expert systems • Reporting tools • Dashboarding engines • Remote monitoring • Social engagement portal for patient/family Do you have ideas in payment design? Payment models going fee for service to outcomes-driven care

NETSPECTIVE www.netspective.com 28 Can you repurpose or enhance health data? Proteomics Genomics Biochemical Behavioral Phenotypics Economics Can you help customers use data to create new diagnostics or therapeutic solutions IOT sensors Administrative

NETSPECTIVE www.netspective.com 29 Some stuff not to focus on • Don’t go for simple incremental innovation if you can be bold and “disruptive” but make it look like you fit into the existing ecosystem nicely • Don’t look at mHealth, look at mobility in healthcare • Don’t look at apps, look at entire systems Incremental innovation is easier, disruptive innovation is probably more useful

NETSPECTIVE www.netspective.com 30 Forget mobile apps, focus on health IOT • With all the attention being paid to mHealth there’s been an useless focus on mobile apps • For the mobile apps, instead focus on mobility in healthcare through “health internet of things (IOT)” and self-care technologies

NETSPECTIVE www.netspective.com 31 Healthcare Industry Fallacies • Healthcare folks are neither technically challenged nor simple techno-phobes (they’re busy saving lives) • Most product decisions are no longer made by clinical folks alone, CIOs are fully involved • Complex, full-featured, products are not easier to sell than simple, stand alone tools that have the capability of interoperating with other solutions are • Hospitals will not buy unless one proves value. • Selling into doctors offices is not easy.

NETSPECTIVE www.netspective.com 32 What makes your products successful • Easy to explain • Defendable and differentiated • Attractive partnership opportunities • Word of mouth opportunity • Potential for PR • Scaleable staff and systems • Scaleable product — build once, sell many times • Uncomplicated • Focused • Sales model is scaleable and predictable • Own relationship with and information about customers

NETSPECTIVE www.netspective.com 33 Why healthcare businesses buy stuff Increase revenue (topline) Maintain capabilities Reduce costs (bottomline) Attract new patients Increase staff productivity Find your reason Healthcare businesses have complex buying processes – figure out why and what they buy

NETSPECTIVE www.netspective.com 34 The Customer Relationship Customer Gives You Get • Money • Time • Energy • Commitment • Referrals • Past experience • Expectations • Knowledge You Give Customer Gets • Product • Price • Value • Convenience • Selection • Service • Warranty • Brand If you can’t figure out why they buy, see if any of the things below make sense

NETSPECTIVE www.netspective.com 35 Health technology sector has many ups and downs Make sure you understand where your product fits in the hypecycle Source: Gartner; “Hype Cycle for Healthcare Provider Applications and Systems, 2010”

Thank You Visit http://www.netspective.com http://www.healthcareguy.com E-mail [email protected] Follow @ShahidNShah Call 202-713-5409