Health Wonk Review is up at Boston Health News

Check out the latest edition of the Health Wonk Review over at Boston Health News. Tinker Ready has a great collection of posts about insurance, HIT, report cards, LGBT health and cancer.

And you won’t want to miss the beautiful collection of photos of the Sant Rafael Pavilion in Barcelona.

The false link between mental illness and gun violence

It would be nice if we could eliminate mass shootings by improving the mental health system, coaxing (or forcing) potential shooters into treatment before they have a chance to wreak havoc.  As the Washington Post (Most mass shooters aren’t mentally ill. So why push better treatment as the answer?) reports:

“It would be ridiculous to hope that doing something about the mental-health system will stop these mass murders,” said Michael Stone, a forensic psychiatrist at the Columbia College of Physicians and Surgeons and author of “The Anatomy of Evil,” which examines the personalities of brutal killers. “It’s really folly.”

This seems pretty obvious, and yet Republican and Democratic leaders, along with the general public and the media seem to think mental illness is the root cause of shooting sprees and that improving the mental health system can fix the problem.

After mass shootings, reporters often jump quickly to mental illness as the cause. Remember after the Sandy Hook shooting when there was speculation that the shooter’s Asperger’s diagnosis was to blame?

Asperger’s? Are you kidding me?

The danger of our fixation on mental illness as the root cause of violence is that we end up stigmatizing people with mental illness –and developmental disorders– while ignoring more direct causes of gun violence, such as ready access to guns.

Mass shootings are rare outside the US. Is there someone who can tell me with a straight face that the difference is due to better mental health systems abroad?

Meanwhile, Australia has seen a major decrease in gun violence over the past 20 years since adopting strong gun control after a mass murder. That seems like a more evidence and logic based response than what we’ve tried here.

By healthcare business consultant David E. Williams, president of Health Business Group.

 

Biosimilars are “me-too” drugs, not generics

ID-100261456

Time to take off the blinders

Generic drugs are the biggest success story in healthcare cost containment. This great success has fooled policymakers, journalists, health plans and others into thinking that the same model will tame spending on biologic drugs the way it has for traditional, chemical based products.

The latest example can be found in the Wall Street Journal (Knockoffs of Biotech Drugs Bring Paltry Savings). The article blames the lack of savings on price increases by makers of the original products in the run-up to the introduction of competing products. That is happening, but it doesn’t get to the root cause of the situation.

The traditional generic market is about as close as the healthcare industry gets to economists’ fantasy world of perfect competition where there is no differentiation among products, there are a large number of producers, and buyers understand that the products are all the same. As a result, prices trend toward marginal cost and it is not uncommon to see price reductions of 90 percent or more. Sometimes it’s 99 percent.

Biotech is very different. The “generic” products are not generic at all, rather they are close but not exact copies that cannot be freely substituted for one another. The number of producers will be small because they must go through the expense of clinical trials. And if the companies are smart (they are) they will do their best to make sure buyers realize there are differences among the products. One clue is that the products are referred to as biosimilars not biogenerics.

As I’ve been writing for ten years, this doesn’t sound like the market for generic drugs. Rather it’s much more like the “me-too” phenomenon we saw in the 90s with blockbuster categories such as statins. When Lipitor came in as the fifth statin on the market it didn’t advertise itself as cheaper and undifferentiated. Rather it used clever trial design and sales and marketing tactics to climb to the top of the pile.

Why wouldn’t a biosimilar try the same approach if possible? So far new entrants are pricing themselves a bit lower than the original product but if they can come up with better data from a trial why not make the price higher instead?

If we take off our generics blinders we can come up with ways to control costs while encouraging innovation. Since 2006 (A better idea than biogenerics) I’ve suggested regulating the price of biotech drugs once their patents expire. I still think it’s a good idea.

Image courtesy of iosphere at FreeDigitalPhotos.net

By healthcare business consultant David E. Williams, president of Health Business Group.

Due diligence in middle market healthcare investing

ID-10088144

Due diligence

Private equity firms investing in middle market healthcare deals face serious challenges in commercial due diligence. There are many companies that appear attractive, with $5M+ EBITDA, increasing revenues and enticing stories of how industry dynamics, customer relationships, technology differentiation and management excellence will take them to the next level. In the $3 trillion US healthcare industry, there are numerous billion dollar niches offering strong returns to companies that ride the wave of transformation.

Generalist investors and even healthcare specialists need support when performing due diligence in the middle market. The companies are large enough that their businesses are often complex, but small enough that there is little public information about them. Often the management team and prior investors may not have a good sense of customer demand and competitors. In addition, investors face information asymmetry, making it difficult to discern whether the management team is as confident as they seem or whether they have sensed a peak and are trying to bail out at the top.

The Affordable Care Act has set off a tremendous era of change in the industry, and diligence needs to reflect the latest understanding of how the ecosystem is changing. For example, the shift from fee-for-service to value based payments upends many business models but enables new ones. Provider consolidation can dramatically change buying dynamics as sales move to the enterprise level. The growth of public health insurance exchanges increases health plans’ appetites for cost-saving approaches.

Middle market investors have to be savvy about how they invest resources in diligence, so they often turn to boutique consulting firms that provide high value at a moderate price. In our consulting practice at Health Business Group, some of my favorite work is helping middle market private equity firms and strategic buyers test investment hypotheses and improve clarity about a company’s prospects through commercial due diligence. We interview the company’s customers and competitors, consult with industry analysts, and leverage our internal knowledge base and expert network.

Over the years we’ve worked with private equity firms and strategic acquirers, performing diligence on everything from wound care to medical benefits management to teleradiology to medical cost containment to pharma sales and marketing to healthcare information technology.  Many of these deals have been completed and have resulted in long-term success. But we are unafraid to speak up and advise when a deal does not make sense, even when that’s not what our client wants to hear. Our closest relationships are with clients that we’ve steered away from bad deals.

Want to learn more? Please contact us.

Image courtesy of Stuart Miles at FreeDigitalPhotos.net

By healthcare business consultant David E. Williams, president of Health Business Group.

 

Surgeons and truck drivers may soon have something in common

ID-10065522

Climbing into the future

Many Americans feel economically insecure.  Donald Trump and Bernie Sanders have latched on to these feelings, and both fault free trade agreements for stripping the country of good, steady jobs. Trade agreements are a convenient scapegoat, but the big threat to jobs is technology, not trade.

Over the past decades, technology has reduced the need for labor in many fields. Robots can perform repetitive, manual work like welding cars. Enterprise software and databases have replaced paralegals and bookkeepers. Computers can answer the phone and provide customer service.

As great as these dislocations have been, much bigger change is on the horizon. For example, there are more than 3 million professional truck drivers in the US; the industry pays pretty well, especially for a job that doesn’t require a college education. But often lost in the discussion of driverless cars is the concept of driverless trucks. It might take 10 or even 20 years, but driverless trucks will eventually be the norm, lowering costs while putting millions of truck drivers out of work. (Driverless cars will throw all the Uber drivers out of work as well.)

Believe it or not, surgeons face a similar threat. Surgeons have long used robotic tools to assist them, but historically the tools relied on surgeons’ manual skills. That’s changing, even for challenging procedures.

A new study demonstrates that robots can be used for soft tissue surgeries, even though these are tricky compared with surgeries on solid structures such as bones.

From Johns Hopkins University:

The researchers developed a robotic surgical system called the Smart Tissue Autonomous Robot, or STAR. It features a 3D imaging system and a near-infrared sensor to spot fluorescent markers along the edges of the tissue to keep the robotic suture needle on track. Unlike other robot-assisted surgical systems, it operates under the surgeon’s supervision, but without hands-on guidance. (emphasis mine)

The researchers compared STAR with expert surgeons using various methods:

“No significant differences in erroneous needle placement were noted among all surgical techniques,” the researchers wrote, “suggesting that STAR was as dexterous as expert surgeons in needle placement.”

The researchers say that the tools won’t replace humans but will “expand human capacity and capability.” How do they know that? I predict that in fact these robotic tools will cut down on the need for human surgeons.

Furthermore, once surgery robots get better than surgeons, robotic surgery will become the standard of care. It will be unethical to use a human surgeon when a safer, better alternative is available.

 

As a middle-aged management consultant with specialized knowledge and strong relationships, I’m not worried that robots are going to take my livelihood away. But I do worry a lot about the younger generation and wonder what will happen to their career prospects, economic growth, and our society.

Image courtesy of Salvatore Vuono at FreeDigitalPhotos.net

By healthcare business consultant David E. Williams, president of Health Business Group.

 

Health Wonk Review is up at Wright on Health

Wright on Health hosts the latest incarnation of the Health Wonk Review blog carnival. It’s the Pivoting Toward the General Election edition. Interestingly, multiple posts focus on the same topic as mine: United Healthcare’s exit from the Obamacare marketplaces.

But beyond those posts you’ll see a lot of variety, along with a striking gallery of candidate photos!

Listen app: ResApp diagnoses respiratory ailments

ResApp-Logo-50px

I’m intrigued by an Australian company, ResApp that has developed a smartphone app to diagnose respiratory diseases by analyzing the sound signatures of coughs. The company has just completed an oversubscribed fundraising round, so I guess I’m not the only one who finds it interesting.

I interviewed the CEO, Dr. Tony Keating via email, and his answers are below. Meanwhile, check out the demo for their consumer-facing product.

What is ResApp? from ResApp Health on Vimeo.

Q1. What unmet need does ResApp serve? How big is the need?

ResApp is developing digital health solutions for the diagnosis and management of respiratory disease (e.g. pneumonia, bronchiolitis, asthma, COPD). We estimate that every year more than 700 million doctor visits result in the diagnosis of a respiratory disease within the OECD, in the US the number is 125 million visits. Pneumonia in particular costs the US hospital system $10.5 billion annually. The World Health Organization estimates that nearly 1 million children die of pneumonia in the developing world every year, with a large portion attributed to the lack of availability of a low cost diagnostic tool. 

Current diagnosis of these disease is costly and time consuming (consider that an x-ray for pneumonia diagnosis in the US costs more than $200 and can take up to an hour in an emergency department), and there are also many areas where current diagnostic tools are unavailable. Our initial focus is to provide an accurate remote diagnostic capability to telehealth where even the stethoscope is not available to physicians. 

Q2. How does the system work?

ResApp’s technology is based on the premise that cough and breathing sounds carry vital information on the state of the respiratory tract. We use machine learning algorithms that analyze the sound of a patient’s cough. Our algorithms are able to match signatures that are within a patient’s cough with a disease diagnosis. An analogy might be how speech recognition algorithms match speech to text, or how Shazam’s algorithms look for signatures in music to identify the artist and title. 

Q3. Who came up with the idea? How?

The technology was developed by Dr Udantha Abeyratne and his team at The University of Queensland. Dr Abeyratne and his team have been engaged in the R&D of the technology since 2009. They were initially funded by a grant from The Bill and Melinda Gates Foundation to investigate if mobile phones could be used to diagnose pneumonia in the developing world. The initial idea was to take the latest advances in speech recognition technology and couple them with physicians’ in-depth knowledge of cough and breathing sounds to develop a diagnostic test that could be delivered at low cost to patients in the developing world. 

Q4. You started as a telehealth app but are now looking to serve physicians for in-person visits, such as in the emergency room. Why?

Our focus remains on providing a remote diagnostic test to be used alongside a telehealth consultation. However we have seen great interest from physicians for use in in-person visits, such as in the ER. The potential of our technology to provide an instant and highly accurate differential diagnosis of respiratory disease is seen as a way to greatly improve the diagnosis and treatment of their patients. In addition, healthcare payers could potentially realize significant cost savings versus traditional diagnostic tests (such as chest x-ray). 

Q5. The app doesn’t require any additional hardware. Is a smartphone really good enough to serve as a medical device?

Our clinical study, run out of two major Australian hospitals, has demonstrated very high levels of accuracy (both sensitivity and specificity) in diagnosis from recordings taken using the microphone on the smartphone. We are simply using the smartphone as an efficient platform for delivering a clinical-quality medical diagnostic device. The FDA has approved over 100 mobile medical apps, including a number that diagnose a disease. 

Q6. Your initial focus is on diagnostics. Do you also plan to offer tools for ongoing management? 

Yes, our recent fundraising allows us to accelerate our plans to develop tools for ongoing management of the chronic respiratory diseases asthma and COPD. We see an opportunity to potentially measure the severity of these conditions on a more regular basis than what is done today. We also see the opportunity to deliver these management tools to all smartphone users who suffer from these conditions, without the need to purchase additional hardware (or perhaps also just as importantly, without the need to carry a second device). 

Q7. What geographic markets are you serving? Are you worried you are spreading yourself to thin?

Our focus is the US telehealth market, although our recent funding extends our US market into the in-person use by a physician. In both of these instances, we are still providing the diagnostic result to the physician, not directly to the patient, so our clinical studies and FDA submissions are essentially unchanged. We have recently seen growth in telehealth, in particular in Europe and Australia and will be working through the regulatory process in those regions in parallel to the US regulatory process.

Q8. What’s to prevent someone else from copying what you are doing?

The university has filed a patent application (which ResApp has a worldwide exclusive license to) describing the method and apparatus of respiratory disease diagnosis using sound. The machine learning algorithms that we use also require a significant amount of high quality clinical data, which we have generated from our multiple clinical studies. 

Q9. Anything else to add?

ResApp’s technology, originally developed by a world-class team at one of the world’s leading universities, provides an opportunity to deliver a clinical-quality medical diagnostic test for respiratory disease to everybody who has a smartphone in their pocket. While we’ve talked a lot about the opportunities in the US, Europe and Australia, we must remember that there are also billions of people in the developing world who do not have access to quality healthcare. We have recently partnered with a leading global humanitarian organization to help bring a high accuracy, low cost diagnostic test for pneumonia to those people and to try to reduce the number of children who die from pneumonia and other respiratory diseases every year in the developing world. 

By healthcare business consultant David E. Williams, president of Health Business Group.