Who Is Hubbub Health?

“Hubbub is a technology-driven online playground and mobile wellness solution that uses social circles and gamification to motivate and engage people in healthy behaviors.”

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Several people have suggested I take a look at what Hubbub Health is doing so I did.  At first glance, there were several things that caught my attention (beyond the interesting teaser description of the company):

  • Lots of unconventional language in how they talk (reminds me of the Wellpoint Tonik Healthcare business from years ago)
  • A direct to consumer model where you can download the app and use their tool AND a $3 PMPM (per member per month) model for employers which includes additional services like health coaching (most people aren’t in both markets)

Of course the question is whether this is just another one of many mobile companies making a play in healthcare or whether they’ll actually survive for a few years and get traction.  

But, Hubbub isn’t just another one of the many wellness vendors out there.  They’re part of Cambia Health.  You’ve probably still never heard of them, but Cambia is Regence which is a BCBS plan operating in Oregon, Idaho, Utah, and some counties in Washington.  Additionally, they own and/or invest in lots of companies – e.g., HealthSparq, GNS Healthcare, OmedaRx, and Wellero (plus Hubbub).

So, this gives them some instant credibility.  And, it’s an interesting time in the market.  The Population Health Alliance (which used to be the Care Continuum Alliance) recently put out a post looking for contributions around “Return on Value” or VOI (Value on Investment) which is the focus these days in Population Health Management. 

This sounds a lot like what you see in the presentation and white paper by Hubbub.

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What was more interesting was some of the foundational elements upon which Hubbub was built like:

Cognitive Evaluation Theory (CET) concerns intrinsic motivation, motivation that is based on the satisfactions of behaving “for its own sake.”  Prototypes of intrinsic motivation are children’s exploration and play, but intrinsic motivation is a lifelong creative wellspring. CET specifically addresses the effects of social contexts on intrinsic motivation, or how factors such as rewards, interpersonal controls, and ego-involvements impact intrinsic motivation and interest. CET highlights the critical roles played by competence and autonomy supports in fostering intrinsic motivation, which is critical in education, arts, sport, and many other domains. (source)

 

Self-Determination Theory (SDT) represents a broad framework for the study of human motivation and personality. SDT articulates a meta-theory for framing motivational studies, a formal theory that defines intrinsic and varied extrinsic sources of motivation, and a description of the respective roles of intrinsic and types of extrinsic motivation in cognitive and social development and in individual differences. Perhaps more importantly SDT propositions also focus on how social and cultural factors facilitate or undermine people’s sense of volition and initiative, in addition to their well-being and the quality of their performance.  Conditions supporting the individual’s experience of autonomy, competence, and relatedness are argued to foster the most volitional and high quality forms of motivation and engagement for activities, including enhanced performance, persistence, and creativity. In addition SDT proposes that the degree to which any of these three psychological needs is unsupported or thwarted within a social context will have a robust detrimental impact on wellness in that setting. (source)

Those are foundational for a lot of the work in healthcare, and I liked this graphic about motivation. 

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Whether the app works and captures my attention is still TBD.  I did download it and register, but I didn’t really get engaged upon registration.  And, the website seemed better than the mobile app, but it still had a few issues in terms of how the large top image dominated most of my screen on my laptop.  

At the end of the day, their key role like anyone in this space is to figure out how to engage the consumer (or patient or member or individual) as validated in a study they use.

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A Great Health Add-on To Your HVAC System

In the spirit of the Internet of Things and the Smart Home, I was intrigued by a short article I read about Menssana Research which can identify 2,000 chemical compounds from our breadth…including signs of cancer and radiation exposure.  Pretty cool!

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I guess this explains how dogs can detect diseases in humans. 

Of course, my mind jumped to the idea of how you could use existing devices (like Nest) which would be tied into our HVAC system and could monitor the overall air in an entire house and look for risks based on the air.  (like my idea of the smart toilet)  Maybe that’s a little too scary like why an underwriter wants your cell phone data or too much like the Snapshot from Progressive.  And, while on the one hand it’s cool, I’m not always sure we’re ready to know things too much in advance so the question would really be how early is the device identifying people and how accurate is it.  

Innovative Ideas For A Weight Loss Company

As I’m enjoying my time thinking about what’s next, one of the things that I’ve thought a lot about key problem areas in our healthcare system.  Obviously obesity is one of them.  And, you have lots of companies trying to figure out what to do here.  

So, I was thinking about what I would do if I were at a Weight Watchers or Jenny Craig or Vree Health

  1. Build an assessment tool (like Milliman or InterQual) which could be used for assessing patients and creating an evidence-based care plan.
  2. Work with KitchenAid or others to create a branded line of smart devices which used the Internet of Things to do things like re-order healthy foods and suggest menus.
  3. Work with Jiff’s assessment tool or with Newtopia to study the ability to take data and create personalized diet plans.
  4. Work with FitBit or other device company and a gamification company to create a kid’s device linked to a game where the key player got fat tied to their activity level and where they opened up new levels tied to their behavior (e.g., eating healthy).
  5. Create online communities for people to share stories and experiences (like PatientsLikeMe but moderated).
  6. Move from physical locations to a virtual site using American Well technology blended with Withings scales.
  7. Incorporate stress management and sleep management into the overall program.
  8. Work with Healthways and the Blue Zones effort to create a family centric option tied into the schools and focused on getting everyone healthy across generations.
  9. Create a mobile coach using embodied conversational agents (similar to avatars) to drive behavior change and create a location-based prompts (i.e., as I pull into McDonalds).
  10. Work with manufacturers to create a “beyond the pill” approach to obesity drugs that incorporates coaching and behavior change with the pill being the final mile which should drive greater formulary coverage.
  11. Create a detailed patient journey map based on ethnographic research for weight loss with different triggers and create a “Coach certification” that can be used with coaches to certify that they are following best practices.
  12. Work with biometrics companies (e.g., LabCorp, Quest) or clinics (e.g., MinuteClinic) to create an early identification process for obesity and/or metabolic syndrome with a process for them to “prescribe” a specific program.
  13. Research and design ethnic specific obesity related programs for sub-populations within the US.  For example, partner with the large Hispanic groups to create a Spanish (language, experience, culturally relevant) programs.
  14. Partner with the ADA and NKF to jointly address metabolic syndrome together.
  15. Work with the AMA and medical schools to teach MDs how to treat and talk with obese patients (something they don’t do well today).
  16. Work with a grocery store or food company to create an augmented reality process for smart phones or Google Glass that would highlight healthy foods on the shelf and help people shop better.
  17. Work with Medicaid to create a process by which people earned cell phone minutes or lower copays based on activity and participation.  

Just some ideas that I thought I’d share.  

Reconciling Legal Marijuana With Drug Prevention

As the parent of kids, I’m obviously concerned about what they do as they grow up.  On the one hand you want them to learn to make decisions.  On the other hand, you don’t want to endanger them.  That requires helping them to understand right from wrong.  That requires helping them to make smart decisions and understand the long-term implications of them.

This is where I struggle with the modern attitude towards the legalization of marijuana.  While it may not be a “gateway drug” according to science, it is certainly highly correlated with future drug use, and it has a negative impact on health.  Additionally, it’s addictive for about 10% of people and more addictive when you’re younger.

As someone who has watched people throw away their life on drugs and the son of someone who worked in drug and gang rehabilitation centers, I personally see it as a slippery path.  I agree that alcohol may be the gateway “drug” when not used appropriately and can be very dangerous for kids and for many adults who can’t control themselves.  You can find lots of research on alcohol related deaths due to increased disease burden or simply drunk driving.

So, like many health related topics, the information out there is very confusing for our kids.  On the one hand, we point out what your brain looks like on drugs (if you remember the PSA from the 80s and 90s).

brain-on-drugs

On the other hand, we talk about medical marijuana, and we have states where it’s now legal to buy marijuana like Colorado.  But, the idea of walking down the street and seeing cannabis stores is crazy to me.

recreational-marijuana-in-colorado.9434820.87-thumb-250x219

Perhaps a sad sign of this issue is the spike in travel to Colorado especially around Spring Break.  They’ve also seen an enormous jump in applications to go to college in Colorado.  (I think I’ll bet on causality not just correlation here.)

At the end of the day, I think we want to keep our kids safe and help them avoid anything addictive – tobacco, drugs, and alcohol.  (And, yes…you could take this further to look at caffeine or sugars or other things that impact their health.)  At a minimum, we want to help them understand the facts and make sure they know the risks and determine if they fit the addictive profile or not.  They already have a hard time navigating childhood and adolescence…let’s be careful not to make it too easy for them to fall off track.   Unfortunately, decisions like this  have broader implications on our next generation even if they don’t actually use marijuana.

Of course years ago, we used opium, cocaine, and herion as medicine also…but we outgrew that phase of “modern healthcare” so maybe this too will pass.

As Demand For Healthcare Services Goes Up, Satisfaction Goes Down

This statement alone should scare anyone as you think about all the new consumers coming into the healthcare system.  That will only stress the system more leading me to believe we’ll see bigger drops in satisfaction in the years to come.  

This data is from the latest American Customer Satisfaction Index (ACSI).  You can see a blurb on them below along with the full ranking of different industries.  Not surprising, healthcare isn’t at the top, but let me highlight a few of the categories:

  • Ambulatory Care = 79
  • Health and Personal Care Stores = 79
  • Hospitals = 76
  • Health Insurance = 73

In general, I found the industries to be very tightly clustered.  I’m going to reach out to them to see how to interpret that.  

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About ACSI

The American Customer Satisfaction Index (ACSI) is a national economic indicator of customer evaluations of the quality of products and services available to household consumers in the United States. The ACSI uses data from interviews with roughly 70,000 customers annually as inputs to an econometric model for analyzing customer satisfaction with more than 230 companies in 43 industries and 10 economic sectors, as well as over 100 services, programs, and websites of federal government agencies.

ACSI results are released throughout the year, with all measures reported on a scale of 0 to 100. ACSI data have proven to be strongly related to a number of essential indicators of micro and macroeconomic performance. For example, firms with higher levels of customer satisfaction tend to have higher earnings and stock returns relative to competitors. Stock portfolios based on companies that show strong performance in ACSI deliver excess returns in up markets as well as down markets. And, at the macro level, customer satisfaction has been shown to be predictive of both consumer spending and GDP growth.

 

The Similarities Between Consultants And Entrepreneurs

I’ve been thinking a lot about the excitement of being an entrepreneur or an innovator and how that compares with being a consultant.  While I could find a few articles out there comparing these two career paths, I thought I would share my observations.  

I think the two have some of the same fundamentals:

  1. Self-motivator – In both cases, you have to able to drive yourself.  You’re responsible for your career and your success.  You’re always under pressure to perform, and you’re typically part of a small, core team.  It’s important that you can motivate yourself to push past the finish line.  I think of both like running a marathon.  
  2. Quick learner – Your role in both types of organizations is constantly changing.  You’re adapting with the business and the market.  This requires the ability to understand and see trends.  It requires the ability to connect with clients and monitor the market.  It requires the ability to learn new things and to have a desire to learn new things.  
  3. Able to pivot quickly – Change is a constant in almost any role in business today, but the pace of change in the start-up world is amazing.  You need to understand this pace of change and how to be a change agent in both these roles.  How do you help people with the organizational change that’s required to make your project a success.  
  4. PPTS – No…this isn’t being an expert at PowerPoint although that may be an important skills.  PPTS stands for People, Process, Technology, and Strategy.  You need to understand all four of these areas of the business.  You don’t have to code to be a great consultant or entrepreneur, but you need to understand technology and its impact on business.  
  5. Think and do – While there are a few opportunities to just develop strategy and move on or to simply operate an outsourced project, I think you need to understand how to take ideas from concept through implementation.  This means that you understand how to work with the CEO and how to work with the call center agent.  
  6. Motivational – Most entrepreneurs and consultants are somewhat evangelistic and they’re always involved in the selling process (in any role).  They are selling and building ahead of the curve which means they have to compel people to act.  They are also working with multiple vendors and cross-functional teams that don’t report to them.  Success is dependent on their people skills and the ability to motivate these different groups.  

Agree?  Disagree?  Thoughts?

 

Getting Back Into The Pharmacy Industry

After working at Express Scripts for almost 5 years and then selling into the PBM industry for almost 5 years, I’ve had the chance to lead and work on a ton of very interesting projects:

  • Electronic prescribing
  • Generic sampling
  • Generic promotion – DTC, plan design, utilization management
  • Formulary support programs
  • Mail order promotion – mandatory mail, retail-to-mail, 90-day
  • Prilosec and Claritin going from Rx to OTC
  • Adherence
  • Pill splitting
  • $0 copay / VBID

I’ve found that I love business development (working with clients and vendors).  I enjoy bringing ideas from concept through pilots and then determining how to scale them.  I love doing research and presenting.  I enjoy working cross functionally.  I enjoy leading teams and pushing the envelope to get people to think different.  Ultimately, I enjoy solving problems.  I like being the person who’s brought in with a business challenge and can then figure out the solution – do the research, evaluate the options, create a plan, implement the plan, and create a process of continuous improvement.

So, after spending 2 years working in the care management side of healthcare and learning about case management, disease management, claims code editing, and other solutions to manage complex patients with cancer or chronic kidney disease, I’m ready to jump back into the pharmacy industry (specialty, PBM, retail, pharma, payers or related companies).  (And, I’ll be bringing a lot of lessons learned with me.)

I think the industry is going through another inflection point which is what Mark Merritt from PCMA pointed out a few years ago is the core skill – adaptability.  If you think about the trends, I think there are several key things that make this an interesting time to be in the industry.  And, everyone is fighting commoditization by trying to differentiate themselves.

And, the fundamentals are good for the industry.

  1. The PBMs are big and need to grow so they’ll have to do some creative things.
  2. People continue to get older and take more medications.
  3. Health reform is forecasted to grow the market by over $200B in the next 10 years.  (from recent CatamaranRx presentation on their investor website)Image

Of course the question is what to do…

All of these things sound interesting, but here’s what I’m going to focus on:

  • A company with an entrepreneurial (or intrapreneurial culture).
  • A role working directly with clients (no Ivory Tower role).
  • A mission driven organization which wants to change the world and improve outcomes.
  • A passionate leader and team that I can learn from.
  • A leadership role where I can help a PBM or payer (or a group of them as a consultant) help make this transformation.  Some of the roles that would interest me would be:
    • MD strategy
      • Adherence
      • ACOs
      • Shared risk
      • Evidence-based care
    • Consumer experience
      • Journey mapping
      • Consumer advocate
      • Incentives
      • Gamification
      • Plain language
      • Patient Activation
    • Consumer engagement
      • Multi-channel coordination (print, web, IVR, mobile, SMS, F2F, telehealth)
      • Big data
      • Segmentation
      • A-B testing
      • Social media
    • mHealth / Care coordination
      • Risk and segmentation algorithms
      • Coordination with caregivers and providers
      • Remote monitoring
      • Working with clinics and telehealth
    • Beyond The Pill
      • Obesity
      • Chronic Kidney Disease
      • Oncology
      • Diabetes
    • Innovation and business development

(If you know of something interesting, let me know.)

Care Is Coming To Your PBM

The creation of the “softer, gentler” PBM is one of my predictions driven by the rise in specialty pharmacy. While generic fill rates and mail order penetration still matter to earnings, the focus across the industry is on specialty. 

  • What can we expect in terms of pipeline?
  • How and when will genetic tests be required? (i.e., companion diagnostics)
  • How can we treat the patient not just fill the drug?

This will bring back a focus on how pharma and the PBMs work together which has had a bumpy past. Initially the two were very close. Then, with the rise of generics and more trend programs like prior authorization and step therapy, the PBMs and pharma butted heads frequently.

Of course, the situation for pharma has changed also. They are trying to figure out how to go “beyond the pill” and create new consumer relationship and make money. (Here’s a good article about pharma and digital from the other day.)

In case you missed them, here’s a few other things that are relevant:

And, I think this screenshot from the Barclays Global Healthcare Conference Presentation given by Express Scripts shows that they are focused on this care and delivery intersection by continuing to show the success from the Therapeutic Resource Centers.

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So, what do you think?  Will the PBMs become more care management focused?  Will they integrate with the other care providers?  Will this be the beginning of their focus on working with ACOs and PCMHs?  Will this change their approach?  Will we see PBMs differentiating around key, chronic diseases like the specialty pharmacies have done?  Will this create an opportunity for integrated PBMs (i.e., Humana, Cigna, Aetna) to differentiate?  

CVS Caremark 2013 Drug Trend Report (Insights 2014)

The CVS Caremark publication Insights 2014: Advancing The Science Of Pharmacy Care came out the other day. They took a different approach than the detailed trend report which Express Scripts put out.  Their document is more of a white paper about “7 Sure Things”.

The 7 Sure Things are to help you know what to do with your pharmacy benefit and cover:

  1. Prescription trend is on the rise.
  2. Generics have peaked…and you’re going to feel the difference.
  3. Specialty drives trend.  But do you know how much?
  4. Price is King…Not much of a surprise there.
  5. Money matters to members.  Cost share does influence behavior.
  6. Adherence is the answer.  No one said it was going to be easy.
  7. Past performance is no guarantee of future results.

If you’re managing a pharmacy program and you’re surprised by any of these, I would suggest you look for another job.

So, let’s drill down into the report to see what it shows us:

  • Their trend numbers were:

o   0.8% for traditional (non-specialty) drugs

o   15.6% for specialty drugs (down from 18.3% in 2012)

o   3.8% overall

  • While utilization was up 2.1%, the primary driver was price which increased 8.2%.  These factors were mitigated by a 6.0% change in mix.

o   They hint at an interesting question of whether utilization is growing due to an improving economy.  (correlation or causality?)

CVS Caremark Drug Trend 2013

  • Their GDR (generic dispensing rate) was 81.4% in 2013.  (I’d love their perspective on a maximum GDR since they say it’s peaked.)
  • I like the chart below which shows trend with and without generics coming to market.

CVS Caremark DTR 2013 -trend wo generics.jpg

  • Of course, specialty continues to be the real story in all the PBM reports.

CVS Caremark DTR 2013 -specialty.jpg

  • They claim that 53% of total specialty medication costs were paid under the medical benefit in 2012 which is in-line with most projections.  (While they give some perspective on what to do here, this would be one thing I would have liked to see broken out in more detail as this is a critical area for PBMs which hasn’t been cracked yet.)
  • They share the AWP trend broken out below and give some crazy examples of AWP price inflation (e.g., 573% for clomipramine) with some explanation for why this happens.

CVS Caremark DTR 2013 -awp trend.jpg

  • Here were their top 10 specialty drug categories.  The top 5 are the same as the CatamaranRx list, but the bottom 5 are in a different order.

CVS Caremark DTR 2013 -top 10 specialty.jpg

  • A scary statistic (in isolation) is that over the past 5 years patient out-of-pocket costs for prescriptions have climbed 250%.  (But, I think their percentage of cost share has stayed the same.  It would be interesting to show this in real dollars and compare this to both price and wage inflation just to hammer home the point.)
  • They talk about CDHPs (consumer driven health plans) and how that is impacting utilization and cost.  (These are often high deductible plans where consumers pay out of pocket until they reach a certain amount…which often really makes the point in early January to consumers.  And, can lead to dissatisfaction when that prescription that was $30 in December is now $350 in January.)
  • They talk about adherence, and they certainly have continued to publish a lot of studies in this space.  (They also know have Dr. Will Shrank on their staff full-time after working with him for years.  I think very highly of Will as one of the best adherence researchers in the country.)
  • They give a real high level mention of some of their new efforts around adherence:

o   Simpler labels

o   Synchronizing refill dates

o   Reminder devices

o   Digital / mobile tools

  • They also provide this nice summary of how costs go up and where the savings come from.  (Of course, the challenge is in drug classes other than these three and getting clients to give you any credit for the productivity savings and also netting out the program costs.)

CVS Caremark DTR 2013 - adherence value.jpg

  • On a scary note, they predict that Rx trends may jump back into the double digits for the next 4 years.

At the end, they give 5 sure strategies that clients should do.

  1. Double down on generics.  (To me, this means – step therapies, formularies, setting copays right, mandatory generic programs, and generic substitution programs.)
  2. Look across benefits at specialty.  (This is a key one as I mentioned above.  You need to think through how specialty drugs are filled and billed under medical.)
  3. Tackle price.  (They are focused on distribution channel here, but I’d also think about copay levels, plan design, and value-based programs.)
  4. Be strategic about cost share.  (They are focused on how cost share affects adherence which is important, but only one component of an adherence strategy.)
  5. Keep the big picture in mind.  (They allude to it here, but I think this is a key point that ultimately it’s about outcomes and prevention.)

Overall, this was certainly the easiest “trend report” to read. It tells a clear story which is probably great for the average client and would drive more discussion with your account manager.

Is Your PBM Really Different?

Every time I talk to a PBM, they want to convince me that they are unique.  And, that is important to me (and should be to you).  If they are simply driving generics, getting network discounts, and filling mail and specialty scripts, they’re clearly in a commodity space.  It’s a race to the bottom, and they’re fighting very large companies – Express Scripts, CVS Caremark, and CatamaranRx.  And, none of those companies are standing still.  Of course, the other PBMs that are part of United Healthcare, Humana, and Kaiser are all looking at how they leverage the care assets and broader solution which they can bring to the client.  (And, I’d put Prime Therapeutics somewhere in the middle based on their ownership by the Blues.)

But, as I’ve seen, value isn’t just about cost. That maybe one leg of the stool, but you need to improve outcomes and the consumer experience (i.e., The Triple Aim).  With that in mind, I created a checklist of what I want to know to see if a PBM is really different.

  1. Engagement – What channels do you use to engage the consumer? How do you integrate those channels? What percentage of members engage with you when you outreach to them?  What is your A-B testing strategy?  What consumer insights can you share with me?  How do you measure engagement (e.g., PAM score)?  What is your segmentation approach?  Do you have someone in charge of the consumer experience?  Can you show me your customer journey maps?
  2. Digital – What is your digital strategy? What percentage of your members have downloaded your app? How often do they use it? Why do they use it? How long do they keep it on their phone? What value do they get from it?  How are you using other channels?  Are you using social media with a purpose or just trying everything (see new whitepaper on digital transformation)?  Where do you members congregate online?  How does this vary by age, gender, condition, number of Rxs, etc.?  Does your involvement make a difference in engagement, outcomes, adherence?
  3. Innovation – What’s your biggest innovation?  Are you making money off it?  How does it help you sell?  How does it help your customers to differentiate themselves?  Do you have a budget?  Resources?  Is it just an ivory tower exercise?  How do you sustain it?  How are you using crowdsourcing?  Are you working with any VC firms or incubators to develop new ideas?  What percentage of ideas come from your clients?  From your employees?  What’s your innovation funnel look like?  How many ideas die after a pilot?  Are you able to scale pilots that are successful?
  4. Big Data – What types of data do you get – medical, lab, EMR, patient reported, device? Do you buy data? How do you integrate this data? Do you have predictive models? How are they used? Do you have published studies on the results?  What insights have you gained from the data?  How have you integrated the data into your solutions?  How do you move things from data to insights to action?
  5. Integration - What type of integration do you have – with POS systems and retailers, with physicians and practice management systems, with providers and EMRs, with mobile solutions, with remote monitoring companies?  How do you create a simplified consumer experience across the care continuum?  Are you working with wellness and disease management companies?  Are you coordinating care for complex patients?  Do you provide support for cancer survivors?  How do you work with pallative care companies?  How do you support the family or the caregivers?
  6. Partnerships – Who are your partners?  How does 1+1=3?  What’s unique about the relationship?  How do customers benefit by your relationship?  How do consumers benefit?  How do providers and pharmacies benefit?
  7. Physician Strategy – How do you work with physicians?  What data do you give them about their patients?  What insights do you give them?  Do they just see you as a block or have you found a positive way to collaborate?  What do you do to influence physician’s prescribing habits?  How are you working with physicians to address adherence?  How are you using your data and predictive models to integrate them into providers evidence-based medicine algorithms?
  8. Outcomes - What programs do you offer to clients and consumers that are focused on an outcome that may reduce Rx utilization?  How do you work with dieticians or social workers?  What percentage of your members have a PDC of greater than 80%?  How do you track lab values and clinical values versus just an Rx count?  What are you doing to reduce readmissions?  How are you impacting all of the STARS measures (not just the pharmacy ones)?
  9. Pharma - How are you working with pharma?  Are you helping them to extend “beyond the pill”?  How early do you get involved in their pipeline?  For complex conditions, are you helping them to demonstrate outcomes?  Are you looking at how to collaborate with key medications – e.g., oncology?  Have you looked at how to blend care with prior auth with Rx for conditions like obesity?
  10. Payment - What’s your approach to transparency?  Is it just pass-through pricing?  Do you do risk based pricing?  How?  How do you contract with pharma?  Have you worked directly with any ACOs?  Have you taken risk?

This isn’t new…I’ve been talking about this for years.  Here’s my whitepaper on this from 3 years ago.

And, here’s a presentation that I’ve given on this topic at several conferences.

2013 CatamaranRx Drug Trend Report

I just finished reading the 2013 CatamaranRx Drug Trend Report (2014 Informed Trends: Moments of Opportunity) and wanted to share some of the things that caught my eye. (BTW – CatamaranRx was formed by the merger of SXC and CatalystRx.)

One of the early comments in the document caught my eye. While simple, it is still so true in healthcare.

“Bringing consistency through a national perspective on best practices, a “local” understanding of how health care is practiced and deep insights at the individual level, to promote the very best outcomes.”

CatamaranRx Trend

  • They did a good job of tackling the impact of healthcare reform on the PBM marketplace and why this creates more opportunities.

“The looming pharmacy demand is also driving the healthcare market toward expanded cost containment and coordinated care measures. Industry estimates are projecting more than 30 million new PBM customers as a result of the ACA. This influx of new customers will stimulate creative cost management paradigms and entice new entrants into the PBM sector.”

  • 50% of the new drugs approved by the FDA in 2013 were specialty drugs.  (reiterating the fact that specialty is really the focus of the PBM today in terms of opportunity to influence trend)
  • 30% of the new drugs approved were oncology drugs.  (similar to years past)
  • Orphan drugs without competition were 2.6x more expensive than orphan drugs with competition.  (not too surprising)
  • They point out that no true biosimilar has been approved in the US (which I didn’t realize).  They also point out that international experience is that biosimilars will save 10-15% not the 40% projected by the CBO.
  • They have nice clean charts around price inflation (deflation) for brand and generic drugs.

2013 CatamaranRx Brand Rxs

2013 CatamaranRx Generic Rxs

  • The average cost of a specialty drug rose to $2,860 in their book-of-business.
  • The top 10 specialty drug classes represent 86% of specialty drug spend.

2013 CatamaranRx Top Specialty Classes

  • The report talks about medication adherence using PDC (proportion of days covered).  They show some good adherence rates in key classes (which always brings up questions about methodology).

o   Over what time period?

o   Is this all members prescribed an Rx?

o   Is this all members with one Rx?

o   What is the percentage of members with over 80% PDC (versus the average PDC)?

o   (Note: These are the same questions for every PBM that shows you adherence numbers.)

  • Here’s their forecast for the next few years in terms of trend.

2013 CatamaranRx Trend Forecast

  • They are projecting a generic fill rate of as high as 90% by the end of 2016!
  • I like that they break out their highly managed clients to show they got an overall trend of -0.1% even though they had higher specialty trend driven by oncology.  They shared a list of key things that those clients were doing:

o   Member risk scoring and personalized interventions.

o   Tailored clinical programs, including step therapy, quantity limits and prior authorization.

o   Aggressive management of controlled drugs to reduce misuse and abuse.

o   Formulary management tailored to address client-specific, high-cost medication classes.

o   Exclusive specialty through BriovaRx, a high-touch, patient-centric model.

o   Plan designs with copay differentials that promote cost-effective choices.

o   Multi-channel communications that engage members in their healthcare.

  • I was excited to see them dedicate a whole section talking about engagement.

o   The need for the right message.

o   The need for targeting algorithms.

o   The need to vary channel based on preference.

  • They share some details on their hospital discharge program which sounds right from a PBM perspective – focused on medication reconciliation and adherence.  My key question would be understanding if they address the other risks of re-admission while they have the patient on the phone (i.e., treating the patient not the Rx and not the disease).
  • I haven’t heard as much about MTM lately so it was nice to see them talk about it and see some results which seem really good.

2013 CatamaranRx MTM

Two miscellaneous comments here:

  1. This seems to be a much improved document than the one I reviewed years ago from SXC.
  2. My only challenge with the format was that it prints the two pages on one page in the PDF (but that could be user error).

Comparing the PBM Drug Trends – Corrected

This is the “exciting” time of year when the PBM Drug Trend Reports come out.  With the exception of last year, I’ve reviewed them every year.  I reviewed the 2013 Express Scripts Drug Trend Report the other day, and I’ll try to do both the CVS Caremark and the CatamaranRx reports this week.  The only one I’m still waiting to see is the Prime Therapeutics report.  And, as far as I know, there aren’t any other PBMs that publish reports annually.  (but please correct me if I’m wrong)

I’ll reiterate several points:

  • The methodologies used by each PBM can and may vary.  Therefore, these are not necessarily perfect comparisons.
  • I would question whether trend is the right metric in isolation to view the PBM.  (more to come in another post on PBM differentiation)
  • The client mix by PBM does matter (see chart below from the CVS Caremark report this year which shows the differences by client type).

CVS Caremark Drug Trend 2013

Here are the summaries from the 3 Drug Trend Reports showing the trend in PMPM costs based on traditional categories, specialty medications, and an overall trend.

PBM Drug Trend Comparisons 2013

Express Scripts 2013 Drug Trend Report

I always enjoy reviewing the PBM Drug Trend Reports.  Even though these past two years I’ve been focused more on the care management side of healthcare, I continue to see these two paths colliding in interesting ways in the near future. 

Here’s my big takeaways from the report some of which you can get in their Executive Summary

(I’d also encourage you to look at Adam Fein’s review…where he unfortunately beat me to the punch again.)

  • Overall trend was 5.4% which they did a nice job of breaking out according to different lines of business.
    ImageImageImage
  • They also showed the breakout of trend comparing specialty drug trend versus traditional oral solid medications. 

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  • Specialty trend was up 14.1% based on a 2.5% increase in utilization and an 11.6% increase in unit cost.
  • A key point is that specialty now makes up 27.7% of the total drug spend for a payer (and that doesn’t even count the ~50% of specialty drugs billed under the medical benefit).
  • Diabetes was the standout category within traditional drug classes with increased utilization and price increases.  [Which isn’t surprising to those of us working on the clinical side that see huge innovation and investment in the diabetes area – Omada Health, Telcare, and Welldoc (for example).]
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  • While they make a key point with data that member cost share is going down and actual out-of-pocket costs are only going up marginally, I think it ignores the reality that consumers are feeling the pain of out-of-pocket spending more especially with all the High Deductible plans out there.
    Image
  • They do reinforce their previous messaging around waste and also introduce their Health Decision ScienceTM approach.  (I personally would have liked to see more on this.  How is the blending of Consumerology and the Therapeutic Resource Centers impacting utilization, adherence, waste, clinical outcomes, patient satisfaction, or other key metrics?)
  • As always, you can dig into their forecasts by drug class.  I choose cancer as one area to look at.  (While this is focused on the basics, I would have loved more about what’s going on around cancer.  How are genetic tests impacting use?  What about survivorship?  How do Centers of Excellence affect outcomes, drug selection, pricing, and adherence?)
  • On top of being able to drill down on Medicare and Medicaid, you can also look at a Worker’s Compensation specific version of the drug trends.  This is interesting since that business is different than the traditional PBM market and is an area that Express Scripts has gone aggressively after in recent years. 
  • One thing I couldn’t find in the document (which is hard to read in the current format) is the average number of Rxs PMPM or PMPY which is just a good stat that I personally track. 
  • One note I will offer on methodology is the definition of specialty drugs.  This could lead to some differences between PBMs as we try to compare their trend numbers.  Here’s the definition Express Scripts offers:

“Specialty medications include injectable and noninjectable drugs that are typically used to treat chronic, complex conditions and may have one or more of the following qualities: frequent dosing adjustments or intensive clinical monitoring; intensive patient training and compliance assistance; limited distribution; and specialized handling or administration. – See more at: http://lab.express-scripts.com/drug-trend-report/appendix/methodology#sthash.dhJhFIZs.dpuf” 

 

#mHealth and Innovation – 2 Recent Reports

We all know that healthcare is clearly one of the darlings in the market right now.  One doesn’t have to look any further than these stories:

You can see companies building innovation teams and innovation labs within healthcare.  You see lots of new entrants trying to figure out how contribute in this space (e.g., Qualcomm Life).  But, some of these just become ivory towers where they pontificate and put out cool ideas.  Others disappear because they can never be commercialized.  Others fall into the “fast fail” bucket of companies, and only a portion of those actually innovate well.

Of course, it begs the question of “What is innovation?”  Is it:

  • Something completely new
  • Something re-engineered
  • The same thing delivered differently
  • Combining of multiple things (i.e., product with services)
  • Solving old problems with new technology

With that in mind, I was reading two reports which I thought I’d share with some initial reactions.

The Boston Consulting Group report “Fulfilling the Promise of mHealth Through Business Model Innovation”.

This is a nice report, but it’s a little too high level for me.  It has some great frameworks about what to do and some nice graphics, but it’s not operationally practical (although that may not have been the purpose).  Here’s a few things I highlighted:

  • “Mobile Health – The use of mobile applications and devices to deliver medical information, access or record data, or provide clinical services – has the potential to revolutionize patient care.”  [good definition]
  • “The gap between the current market size and five-year projections is significant.”  [so is it a warranted gap or will it get closed…I think it will be a challenge to meet expectations.]
  • Their big example of success is Welldoc’s BlueStar “mobile prescription therapy”.  [it’s an interesting product with some interesting studies, but I’m not sold yet…will the Rx process work for a device?  Can they justify their price?  Will buyers do more than pilot?]
  • They hold out 3 barriers – entrenched behaviors, reluctance to pay, and fragmented infrastructure.  [I would agree but how do I work through these...they provide some thoughts.]
  • They talk about creating a “must-have app” that would consolidate multiple offerings into a single solution.  [I don’t even think this silver bullet approach should be considered…It won’t happen.]
  • They seem to fall into the traditional trap that people other than the payers and employers will fund these programs (telcos, pharma, device companies).  [Everyone wants that, but I think that’s the wrong framework.]
  • They talk about an option of creating and charging a premium for mHealth offerings because some of them “deliver objectively better outcomes or lower costs compared with traditional health-care offerings”.  [Really?  That’s great news, but I wouldn’t consider that a fact.  I’d say we’re seeing some promising studies.]
  • They talk about “an orchestrated ecosystem” and integration of data.  [This would have been a perfect time to highlight what Vladic is doing or what Dossia is doing.]

There were some things missing that I personally would have called out.

  • What about learnings from prior models like electronic prescribing?
  • What about things like EMR integration and the difficulties there?
  • What about the issue of privacy and security?
  • What about the fact that people abandon devices and apps very quickly?
  • What about learnings from gamification or incentive management?
  • What about prescribing apps to patients? (like Happtique or IMS)
  • What about the whole issue of FDA approval of apps and devices?
  • What about what the large companies are doing – Aetna, Cigna, CVS, Walgreens, WalMart?  I think understanding their view of this market is so critical.

Triple Tree report “Connected Health”. 

It starts with a great tag line from IBM – “Does Your Kid Have Better Technology Than Your Business?”  They reference Steve Case’s framework from a presentation he made (see below):

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What I liked about this report is that it’s based on lots of real world examples.  (It’s still not operationally helpful, but these are investors not consultants so it met my expectation.)  They certainly could have gone deeper to explain why certain companies they highlight got acquired such as Diversinet, Epocrates, BodyMedia, CardioCom, Healthagen, Vitality, and ConsultADoc.  But, if I look at their list of companies, I see a lot of the innovative companies that I would have on my list – Proteus Digital Health, Healthrageous, iTriage, TelaDoc, Telcare, Eviti, Change Healthcare, and Asthmapolis.  (I know Healthrageous shut down – see postmortem – but I think they had some great vision.)

I also think they’re list of major inhibitors to growth was very believable:

  • Physician adoption
  • ROI
  • Regulatory hurdles
  • Security and governance
  • Lack of standards

The report shares an interesting stat that 45% of the companies that applied for their rewards were led by MDs in 2009 while it’s only 21% now.  To me that shows the movement of IT and business executives into the healthcare space.

Triple Tree does talk about remote monitoring and CMS which I think is important.  While the Veteran’s Administration was mentioned in the BCG report, I think that the government efforts here and influence was generally overlooked.

Overall, two interesting reports.  Worth a read although I would choose the Triple Tree report over the BCG one if I had time to only read one.

Two other places that I would recommend going if this topic is interesting are:

Why Should Grocery Stores (and Retailers) Be In The Healthcare Business

Short answer = they appear to understand the customer experience.

Obviously some companies like CVS and Walgreens are both retailers and pharmacies.  They are clearly in the healthcare business and with CVS stopping selling cigarettes, they are clearly trying to show their commitment to healthcare.  

Other retailers like Walmart are clearly in the pharmacy business.  They’ve also done lots of different programs around healthcare, and there are always rumors of more.  And, they are also in the grocery business.

Target is an example of a retailer that has gotten into the pharmacy and clinic business and now in the grocery business.

Kroger is a very traditional grocery store company who has had pharmacies (like about 50% of grocery stores) and has made several steps to get into the healthcare space.  

I tee this up because whenever I see the Temkin Experience Ratings I’m always amazed that the grocery chain with the worst experience rating is similar in value to the best healthplan experience.  

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I think by now we all understand that the healthcare experience actually matters…and will matter even more in an exchange world where they have more freedom to find a plan that works for them.  

We’ve  seen some companies focus on this (e.g., Cigna with their Chief Experience Officer who is now the Chief Experience Officer at Prime Therapeutics).  You can see PWC’s report on this and also compare different industries to healthcare.  You can go and visit this deck on 13 great healthcare experiences.  At the end of the day, the healthcare experience is one leg of the Triple Aim and is a key opportunity for differentiation.    

My Interpretation of the RiteAid and Walgreens news from this past week

If you’re like me, you were probably surprised by both of these articles:

  1. RiteAid acquires Health Dialog
  2. Walgreens to merge Take Care Clinics with CHS in new company

So, let me share my thoughts.  

The RiteAid acquisition of Health Dialog symbolizes several things for me:

  • BUPA (who bought Health Dialog) probably realized that coming into the US market is harder than they thought.
  • Health Dialog which was once one of the big leaders in condition management has probably seen a lot of competition in the past 5 years as big payers were insourcing their business and smaller start-ups were pulling business away from them.
  • RiteAid likely saw a unique opportunity to act more like a health services company and less like a pharmacy (making them a better acquisition target).  [see my presentation from the CBI conference on this]

At first, when I read the Walgreens headline, I thought they were getting out of the clinic business which I thought would be a huge mistake.  I think the future role for clinics and kiosks like SoloHealth is huge.  But, as I read the press release, here were my takeaways:

  • Walgreens is getting out of the onsite clinic business (i.e., not in the stores) but yet gets minority ownership and a board seat in the new company.  This is likely a focus back on the core business.
  • On the flipside, Walgreens has invested a lot in getting outside the core into readmissions, ACOs, and selling direct to employers.  Will those areas lose focus also?

I think what you’re seeing is lots of moving pieces in healthcare today.  This is great opportunity for people to make moves.  The market is shifting.  New technologies continue to evolve.  New players are entering the market with lots of money to spend (e.g., NantHealth).  More consumers are entering the healthcare market thanks to the exchanges, and more companies are becoming patient centric (e.g., Sanofi’s new Chief Patient Officer).  

The Case For Beyond The Pill Strategies In Pharma

You’ll hear this buzzword – “beyond the pill” – come up every once in a while in a discussion with a pharmaceutical manufacturer.  As the drug pipeline has dried up and generics have become the norm for oral solid medications, the question is how do these behemoth companies “pivot” to leverage their massive global footprints, their feet on the street, their deep disease specific insights, and their medications. 

“In population health, what once drove revenue becomes a source of cost. If products, services, and therapeutics don’t lower costs, meaningfully improve outcomes, and help better patient experience, population health managers simply won’t use them.” Jerry Cacciotti, Partner, Health & Life Sciences, Oliver Wyman (source)

I’m a big believer in this strategy.  Imagine what they could do in terms of services to wrap around obesity drugs.  Imagine how they could support patients with diabetes or with cancer.  While the short-term view is that these actions might help differentiate them from a formulary or specialty pharmacy perspective, I would argue that they might actually come out with new business models like Merck is doing with Vree Health.

Ultimately, it all begins with an understanding of several issues from the outside-in:

  • What is the patient journey?
    • How do they experience the healthcare system? (e.g., clinics, MDs, pharmacists, family)
    • How or what influences their experience? (e.g., Dr. Google)
    • How do their experiences change over time? (e.g., newly diagnosed versus chronically sick)
    • Which experiences do they remember? (or as one of my clients call it – the Golden Moments)
  • What does the patient really want or need?  (think about Maslow’s hierarchy of needs)
  • Where is the patient (especially from a digital perspective)?
  • What are the patient’s expectations for you (pharma) or another entity?
    • How do they feel about you?
    • Do they trust you?
  • How do the other constituents in the care team interact with you?  With the patient?
  • How do you create a culture of empowerment, consumer focus, and transparency to really understand the needs of different constituents, react to them internally, and embrace issues dynamically?

In this consumer experience space, I often look to Bruce Temkin’s work and research.  He does a great job at a cross-industry perspective.  In healthcare, I’ve been very motivated by the work of Ingrid Lindbergh who was at Cigna and then moved to Prime Therapeutics.  She’s my role model for what I want to do in a large healthcare company. 

Two things got me thinking about this topic.  First, I was struck this weekend that there was research showing that people who struggle to buy food for their families are non-adherent.  I really hope that anyone in this field wasn’t surprised by that fact.  Of course, the struggle is that everyone working in the field is often constrained by their view of the world which often doesn’t include much experience with poverty. 

Second, I was sent a new research piece by Accenture called “Great Expectations: Why Pharma Companies Can’t Ignore Patient Services”.  It made me think about Dennis Urbaniak’s move from Sanofi where he was leading a lot of innovation to a Managing Director at Accenture.  Perhaps, he will bring some of this type of innovative thinking to more pharma companies. 

Here’s two infographics from the Accenture report which I think help hammer home the point of why beyond the pill is necessary:

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International Differences In Wellness Programs

I was looking for a statistic today on wellness programs when I came across this 2010 survey on global wellness from Buck Consultants.  I found the geographic differences really interesting, and I thought I’d share a few of the charts here.

Intl Drivers of Wellness strategy Buck

Top wellness programs by region buck

Wellness Program Objectives - Buck

If you want to see their 2012 report on what’s next for wellness, you can go here.

Several Great Presentations To Share

I try not to do a lot of promotion of things within the company.  (This is not a corporate blog.)  But, I’m always happy to share cool things that are in the public domain that catch my eye. 

Our sister company – GSW Worldwide - has been putting out a lot of new things on a blog, through their innovation lab, and through their SlideShare channel.  I thought I would highlight a few of those here.  Leigh Householder, Chief Innovation Officer, along with Ritesh Patel, Global Head of Digital, are driving a lot of this along with others on their teams. 

 

Internet Turns 25 – Looking Back And Forward

happy birthday

Wow!  The Internet turned 25.  Do you remember when you started using computers and technology?  I can.

I think my first computer was the Commodore 64 which we plugged into our home TV for a monitor and used a tape recorder to store files and access programs.

commodore 64

I can remember when we got 3 Macintosh computers to use at school.

first Mac

I can remember when we got our IBM PC Jr.

IBM PC Jr

After that, computers started being a little more common where we had them in high school for typing, but at the same time, people were using electric typewriters more than computers.  (I can’t believe that they still sell electric typewriters – see Wal-Mart ad.)

I can then remember being at the University of Michigan with massive computer labs of Apple computers.  At that time, I still remember using the Gopher technology that had been developed out of the University of Minnesota and pre-dated today’s Internet and HTML.

gopher

This eventually led to all the excitement about physical companies having websites and being able to do amazing things like order pizza online…the rise of e-commerce and eventually the dotcom bubble.

I still smile when I think that one of my first assignments in healthcare was to convince managed care companies to build a website.  I flew all around the country as a consultant with Ernst & Young LLP meeting with teams to convince them of what the Internet could do, why they should build a website, what functionality to put on it, and how to drive members to the website.

And, now, our kids grow up with this as normal.  Everything can be “googled”.  There is no card catalog to look things up or waiting to figure out why someone is late.  Things are instantly available.  (If you’ve never seen the list of what graduates will never remember, here’s a link to their 2017 graduate list.  Always interesting.)

So, I’ll wrap this up with a look at the future from a new report by PEW.  Here’s 15 predictions from their report:

1) Information sharing over the Internet will be so effortlessly interwoven into daily life that it will become invisible, flowing like electricity, often through machine intermediaries.

2) The spread of the Internet will enhance global connectivity that fosters more planetary relationships and less ignorance.

3) The Internet of Things, artificial intelligence, and big data will make people more aware of their world and their own behavior.

4) Augmented reality and wearable devices will be implemented to monitor and give quick feedback on daily life, especially tied to personal health.

5) Political awareness and action will be facilitated and more peaceful change and public uprisings like the Arab Spring will emerge.

6) The spread of the ‘Ubernet’ will diminish the meaning of borders, and new ‘nations’ of those with shared interests may emerge and exist beyond the capacity of current nation-states to control.

7) The Internet will become ‘the Internets’ as access, systems, and principles are renegotiated

8) An Internet-enabled revolution in education will spread more opportunities, with less money spent on real estate and teachers.

9) Dangerous divides between haves and have-nots may expand, resulting in resentment and possible violence.

10) Abuses and abusers will ‘evolve and scale.’ Human nature isn’t changing; there’s laziness, bullying, stalking, stupidity, pornography, dirty tricks, crime, and those who practice them have new capacity to make life miserable for others.

11) Pressured by these changes, governments and corporations will try to assert power — and at times succeed — as they invoke security and cultural norms.

12) People will continue — sometimes grudgingly — to make tradeoffs favoring convenience and perceived immediate gains over privacy; and privacy will be something only the upscale will enjoy.

13) Humans and their current organizations may not respond quickly enough to challenges presented by complex networks.

14) Most people are not yet noticing the profound changes today’s communications networks are already bringing about; these networks will be even more disruptive in the future.

15) Foresight and accurate predictions can make a difference; ‘The best way to predict the future is to invent it.’

 

Why Do We Let People Pick The Wrong Health Plan?

I was reading some of the research by McKinsey this morning on the individual market enrollment and the overall exchange product benefit design.  It got me thinking about the issue where consumers choose the wrong plan design based on their personal utilization of healthcare.  Why do we let that happen?

I know some of you are thinking “let that happen”…we don’t do that.  Others who work in the industry may be thinking that consumers can make good decisions. 

But, we know that consumers don’t spend enough time evaluating their options.  We know that consumers are overwhelmed by all the information they get about healthcare.  We know that consumers don’t have access to all their data.  And, we know that consumers can’t understand all the healthcare mumbo-jumbo that we use to explain what we do. 

“The ACA deals with the problem of consumer misunderstanding by requiring insurance companies to publish standardized and simplified information about insurance plans, including what consumers would pay for four basic services,” noted lead author Loewenstein. “However, presenting simplified information about something that is inherently complex introduces a risk of ‘smoothing over’ real complexities. A better approach, in my view, would be to require insurance companies to offer truly simplified insurance products that consumers are capable of understanding.” (source of this study)

This study from a few months ago predicted that over half of consumers would choose the wrong plan thereby causing them to spend more money out-of-pocket annually for their healthcare.  Companies understand this.  There is an initiative called Putting Patients First which created a cost estimation tool – http://www.puttingpatientsfirst.net/.  This conceptually helps.

But, the reason I say “let” is because the healthcare companies all have our data.  They know our medical claims.  They know our pharmacy claims.  They have our lab values.  Everyone has predictive risk models now.  If that data could be downloaded to a Personal Health Record (PHR) and then used to model our costs under each of the benefit plan options, we could make an informed decision. 

And, no…this isn’t just a healthcare.gov issue.  Most employees have had access to multiple plan options at their employer for years.  Sometimes all under the same health plan and sometimes with multiple health plans.  I’ve talked about this for a long time.  This would be relatively simple for an IT team to build and deploy.  It could also be a huge catalyst for the PHR movement to get data into the hands of the consumers and give them a reason to do this.  If I knew I could save $500+ per year by tracking and using my data, that should be a great reason to take action. 

Fail Fast To Succeed Sooner – The Big Company Challenge

I was reading an article this morning about asking the question “are you afraid to fail?”  It’s an article about innovation which reminded me of one of my favorite quotes from David Kelley at IDEO.

Fail Faster

It also reminded me of another article from 2006 in Business Week about How Failure Breeds Success which was when I left Express Scripts to pursue several entrepreneurial opportunities.

Stefan H. Thomke, a professor at Harvard Business School and author of Experimentation Matters, says that when he talks to business groups, “I try to be provocative and say: ‘Failure is not a bad thing.’ I always have lots of people staring at me, [thinking] ‘Have you lost your mind?’ That’s O.K. It gets their attention. [Failure] is so important to the experimental process.”

BW Failure Cover

It also got me thinking about success rates in companies.  We all hear so much about the success of entrepreneurs and these 20 year old billionaires.  Is that reality?  Here’s a few stats from an article in the WSJ and a study by the Census Bureau.

  • 80% of companies make it to year one
  • 60% of companies make it to year three
  • 50% of companies make it to year five
  • 35% of companies make it to year ten

Sounds pretty depressing.  What about the fact that according to the WSJ article, only 5% of them achieve the projected ROI and 30-40% of them liquidate all their assets returning nothing.

“People are embarrassed to talk about their failures, but the truth is that if you don’t have a lot of failures, then you’re just not doing it right, because that means that you’re not investing in risky ventures.  I believe failure is an option for entrepreneurs and if you don’t believe that, then you can bang your head against the wall trying to make it work.” (David Cowan – Bessemer Venture Partners in WSJ article)

Just watch the show Shark Tank sometime.  There are amazing entrepreneurs with interesting ideas who have sacrificed so much to try to make it work.  I always try to tell people that it’s not just about passion and hard work otherwise people would succeed all the time.  Some things you do learn from Shark Tank along with the book The Art of the Start is how to frame and present your ideas.

So, why is this so important?  We’re on the the verge of huge transformation in the healthcare industry.  I think Oliver Wyman did a good job of discussing this in a whitepaper last year.  You can read article after article about mHealth, telemedicine, and remote monitoring.  (I’ll point you to Rock Health or The Center For Connected Health as two starting points.)

Of course innovation has been the buzz for several years now.  I think Jim Collins does a good job of teeing up this issue in discussing churn in the Fortune 500 list.  With the technology and VC crowd, the more recent term for business model innovation is “pivot“.  I think you’ve seen a lot more Chief Innovation Officers and innovation labs in healthcare companies these days.

I came across an interesting blend of technology consulting, investing, and innovation last night in the BCG Digital Ventures group.  In watching part of a YouTube video by their CEO, I think he does a great job summarizing how consulting maps to the investment paradigm.

  • Innovation is like seed capital
  • Product development is like venture capital
  • Commercialization is like growth capital

Interestingly, I probably get 1-2 calls a week from people in big companies that really want to get out of the big company and come work in the exciting start-up space.  I always tell them that the grass always looks greener on the other side of the fence so be careful.  It can be great, but it can be really tough.  It’s just a different type of risk and not everyone can take the emotional and potentially financial risk.  On the flipside, I also get people that look at the different entrepreneurial things I’ve done and say “why?”  They want to know why I didn’t just stay in a F500 company.  Sometimes, I think of this 8 years as a boomerang where I’ll end up back in a F500 company, but I’ll be a much more valuable product development, strategy, and innovation executive.  [This idea of boomeranging was one that Gensler introduced me to years ago in architecture where they encouraged people to work at different companies and come back if relevant.]

Depending on the day, I also think about what I’ve learned since I’ve never had one of those huge exits that everyone talks about.  I’m not cashing in on all my options to make money.  I’ve summarized many of those learnings on the blog, but here’s a few that I’ll call out.

  1. Firepond was my first venture into this space.  It was a 20-year company that General Atlantic had invested in to turn around as a product configurator in the CRM space.
    • Learned about CRM (customer relationship management) technology.
    • Learned about how to develop, structure, and manage alliances.
    • Learned the importance and how to structure offshore deals.
    • Learned about global sales and embedding technology into different solutions.
    • Learned about evaluating and buying companies.
  2. CentralScript was my second venture I started it from an idea I tried to sell at Express Scripts (and later was suggested to them by Clayton Christensen).
    • Learned about writing a business plan and financial modeling and projections.
    • Learned about the legal structure of businesses.
    • Learned about raising money and how to work with and evaluate angels and VCs.
    • Learned about building a team and structuring contracts with them.
    • Learned about selling and evaluating partners.
  3. Talisen Technologies was my third venture which was another turnaround where I worked with a friend of mine who had raise some private equity to do a technology services consulting roll-up.
    • Learned about Business Process Management technology.
    • Learned about how to build support companies around a technology platform.  (The opposite of Firepond where I was the technology company.)
    • Learned about the difficulties of transforming an existing company and evaluating new companies.
    • Learned about how to use blogging and create exposure using social media.
  4. Silverlink was my fourth venture (and most successful experience) and first real start-up where it wasn’t trying to turnaround an existing asset but building off what the founders had built.
    • Learned about how to present to and work with the Board of Directors.
    • Learned about managing a sales force.
    • Learned about product development, training, documentation, and product lifecycle.
    • Learned about sales and marketing and being responsible for growth and a team.
    • Learned about account management.
    • Learned the value of using thought leadership, social media, and the press to drive awareness and pipeline.
    • Learned how to develop competitive analysis and differentiation.
    • Leraned about pricing and analytics.
  5. inVentiv Medical Management is my current venture which is part of a broader entity, but it’s still the same concept which is a 20-year old company that we’re transforming into a new platform and new business model.
    • Still in-progress so more to come…

So, I wrote all this to make the point that innovation is difficult.  You have to take some risks.  Like the article said upfront, you have to believe you can fail.  You have to have a plan for what to do if you do fail.  Big companies should provide a safety net to people to fail fast.  I think I’ve learned a ton that I wouldn’t have learned staying in the big company.  At the right time, that will be a huge asset as I look to help drive the transformation and pivoting of a larger entity!

Gimme My Damn Data Win – Labs; Will Clinical Trials Be Next

It’s been really interesting over the past few years to watch the discussion about who should get data and when should they get it (see ePatient Dave post).  Lab data has been the perfect case study. 

In the traditional model:

  • We (consumers/members/patients) go to a physician who writes up a lab order.
  • The physician may draw the blood or send you to a hospital lab or you might go to a LabCorp or Quest facility.
  • The lab values are returned to your physician.
  • You may or may not ever hear about your results especially if they’re normal.

This traditional model begs two questions:

  1. What should you do to get access to the results? (see Trisha Torrey post on this)
  2. If the physician doesn’t have time to get to them and call you, should you get them directly? (see KevinMD post on this)

Fortunately, HHS made a decision last month to require lab data be available to patients directly without the physician gatekeeper.  Of course, they have 30-days to comply with the patient request, and it still requires the patient to request it.  But, it’s a start. 

This is like the Open Notes project that made physician notes available to patients. 

“They found that when patients have access to their doctors’ notes, they feel more in control of their health care, better understand their medical issues, and report they are more likely to take their medications as prescribed.”

As we think about patient engagement, this type of transparency is important. 

The next area of discussion might be around clinical trials.  The people over at PatientsLikeMe just published an article discussing this topic and sharing how patients are working around clinical trials to identify themselves.  I’m sure that most pharma companies and clinical trial companies will view this as heresy.  But, it’s a modern day reality in terms of mobile and social technology.  The question is how will this change clinical trials and will it improve results. 

I certainly think that the data coming out of P2P (peer-to-peer) companies like PatientsLikeMe or CureTogether is really interesting. 

9 Lessons Learned About Gamification

As I was writing the post about gamification in healthcare, it got me thinking about what I’ve learned about gaming especially in today’s device centric world.  [As a side note, I certainly wouldn't take advice on gaming strategy from someone who doesn't play games.]

Whenever I go on vacation, I always pick a new game to download to my iPad and iPhone to play with.  My devices have things like:

  • Nuts
  • Tiny Wings
  • Temple Run
  • Doodle Jump
  • Jetpack
  • Tiny Tower
  • WipeOut
  • Subway Surfer
  • Sunday Lawn
  • Torpedo Run
  • Battle Nations
  • Clash of Clans
  • Candy Crush
  • Angry Birds

As I think about the games, they fall into several buckets:

  • Quick Hits – I play them a few times then delete them.
  • Interesting – I play them on and off when bored usually with a one week spike at the beginning.
  • Long-Term – I play them multiple times a week (or day) for months.

But, in the end, most games fail to keep you engaged long-term.  But, based on what gets the best engagement, here’s what I’ve learned:

  1. Games need to be relatively simple to understand and play.  There can’t be much to learn or read about them.
  2. Games have to constantly be upgrading and evolving – new levels, new upgrades, new things to earn, new challenges.
  3. Games should be able to be played online and offline.
  4. Games should offer you rewards to keep you coming back every day.
  5. Games need to be social so you can compare yourself to others, compete with people, and collaborate.
  6. Games can’t be too easy or they are boring.
  7. Games can’t be too hard or they are frustrating.
  8. Games that have you build things get you to come back and check status, but the build time can’t be too long (e.g., 6 days to wait for something to be ready).
  9. Good games will create a user community for sharing ideas and discussing success with challenges.

Healthcare Gamification

If you believe all the hype about digital health, you might think gamification was a natural solution.  Of course, if you’ve never heard of gamification, let me provide a basic definition from Wikipedia.

Gamification is the use of game thinking and game mechanics in non-game contexts to engage users in solving problems.

Here’s several articles for more information:

  1. Four Factors Driving Gamification in Healthcare
  2. From FitBit to Fitocracy
  3. The Wellness Game
  4. Gamification: Drugmakers And Health Campaigners Turn To Games To Promote Health

I think this quote from the Perficient white paper on this topic is a good one.

Gabe Zichermann, the author of Game-Based Marketing, speaks of balancing the fun and frivolity of gamification with the task of making life easier for cancer patients. He says, “I don’t presume to think that we can make having cancer into a purely fun experience. But, we have data to show that when we give cancer patients gamified experiences to help them manage their drug
prescriptions and manage chemotherapy, they improve their emotional state and also their adherence to their protocol.”

You can also look at a post by Jane Sarasohn-Kahn (one of my favorite bloggers) on this topic where she highlights several trends from a recent paper on gamification in healthcare.

Now, why should you care?

  1. Gamification should improve engagement which is critical to changing behavior.
  2. Gamification creates opportunities to make healthcare fun which can be difficult.
  3. People are different and respond to different “incentives”.  Competition and leader boards are concepts that excite lots of people to take action.

The forecasts for the gamification market are huge.  They show a nice hockey stick which gets every investor excited.

1

Of course, the important question is who uses games.  Is it just teenage boys?  It’s not.  Here’s a good report which shows you breakdown by age, gender, and many other stats.

Gaming

Another quick article about gamification is from TEDMED.  The video is below, but it reminds me of some of my personal perspectives.  The sites also lists out several vendors and solutions in the obesity gamification space.

While one “easy” opportunity in my mind is to use gamification to address the rising number of kids with chronic diseases and to help address childhood obesity, there are many other opportunities like adherence.  A few examples of games out there include:

Companies like Ayogo, Mango Health, and Akili are ones that I’ve heard about, but I know there are a lot more out there.

One example I think of from watching my kids play games is from Webkinz which was a blend of real stuffed animals with online digital personas.  The animals could get sick if you didn’t nurture them and visit them.  It made me think of how an avatar could get fatter or slower based on their pedometer or eating habits.

NantHealth and Other Health Mashups

I’m always thinking about different ways to blend companies through acquisitions or partnerships.  The announcement by NantHealth the other day at HIMSS got me thinking more about it.  They are an interesting company from what I can tell although I don’t know anyone there.  

I’ve talked about Google and all their health assets although they’re not actively trying to integrate them.  I also think that there are some investment firms like Sandbox Industries that have their fingers in lots of interesting healthcare companies.  

So, what would some other interesting opportunities (M&A, partnership, JV) be (ignoring size, valuation, ownership, and likelihood):

Of course, I’ve talked about different PBM plays recently, and I think healthcare has become such a front page issue that companies like McKesson, GE, AT&T, Emdeon, Cisco, Apple, and others are waiting to figure out how and when to buy up some technology plays.  I could easily see McKesson jumping in to buy several of the adherence companies that I highlighted a few weeks ago like Proteus.  And, I’m sure there’s more from this list of fastest growing healthcare companies that will get snapped up or create some interesting partnerships.  

I also believe that health reform will drive some consolidation on the provider and payer side.  A friend on Wall Street predicted we’d get to 6 national health insurers.  I still think that’s possible – United, Aetna/Cigna, Wellpoint/BCBS, Kaiser, Humana, and ??

A Few Corporate Wellness Tips

While Al Lewis has become the industry antagonist (in a good way), he makes a lot of great points that anyone working in the industry should understand and consider.

If you haven’t read some of Al’s articles, let me point you to a few:

His writing reminds me of some of the things my former boss pointed out several years ago about the disease management industry.

In one of his posts, he makes several points that I wanted to discuss here:

  1. You should use a source like the US Preventative Services Task Force (USPSTF) as the evidence-based reference for appropriate screenings – frequency, age, gender.  Of course, I agree with this.  We need some common source that we all can use that’s based on best practices and evidence.
  2. He argues that you should stop weighing people.  I’d argue that knowing your numbers is important.  As a country and a world, we’re seeing massive growth rates in obesity which is linked to numerous diseases.  We need people to be more conscious of this risk factor especially in our sedentary work environments – see sitting disease infographic.
  3. His third point is about targeting and nudging the right population versus over-sampling everyone.  I couldn’t agree more.  This should be what the Big Data push in healthcare gets us.  How to build predictive algorithms to identify people with multiple risk factors.  How to identify people with gaps-in-care.  How to figure out what someone needs to take an action.  I always say there are 3 factors to consider:
    • Is there value in the intervention?
    • What channel / method is going to get the consumer’s attention?
    • What information is going to get the consumer to take an action?

To follow-up on my points above, here’s some information on obesity and it’s link to other diseases.

The CDC says that obesity is linked to:

  • Coronary heart disease, stroke, and high blood pressure.
  • Type 2 diabetes.
  • Cancers, such as endometrial, breast, and colon cancer.
  • High total cholesterol or high levels of triglycerides.
  • Liver and gallbladder disease.
  • Sleep apnea and respiratory problems.
  • Degeneration of cartilage and underlying bone within a joint (osteoarthritis).
  • Reproductive health complications such as infertility.
  • Mental health conditions.

And, for a fun video by Mayo Clinic on Knowing Your Numbers watch this:

Who Is The NetFlix Of Healthcare HR?

I was sent this deck a few weeks ago.  It’s been out there for a few years.  It’s the HR / Human Capital strategy for Netflix.  Netflix has been known for things like no vacation policy (i.e., take what you need).  This gives much more insight.

It’s not really an industry that I’m focused on, but I’d love to find a healthcare company with this approach to human capital.  That would be a company worth following and working with.

Forbes “Most Promising” Companies – Healthcare

Whenever I see lists like the Forbes list of America’s Most Promising Companies, I like to look through the list and pull out the healthcare companies.  They say these are private companies that standout because of their growth and outstanding management.

#4 – Evolent

#24 – 24HR HomeCare

#28 – CareCloud

#39 – Intersect ENT

#41 – Therapearl

#95 – Boston Heart Diagnostics

If healthcare is 20% of the GDP and with all the mHealth and HIT spending, I was hoping to see a few more companies on this list.

Interview With Michael Dermer – Chief Incentive Officer at Welltok

I had a chance the other day to interview Michael Dermer (@rewardforhealth) who is the Founder of IncentOne and currently the Chief Incentive Officer at Welltok.  I’ve known Michael for a while and wanted to learn more about how he saw the market now that he’s sold IncentOne and has launched his blog – www.michaeldermer.com

As the pioneering Social Health Management™ company, Welltok is revolutionizing the way population managers optimize consumer health by aligning activities and behaviors with the right incentives and rewards. CaféWell, the company’s Health Optimization Platform™, drives engagement and incentivizes healthy behaviors though a novel combination of social, gaming and personalized activities. Welltok provides population health managers with a Platform as a Service solution that enhances revenue growth, increases administrative efficiencies and delivers health care value.

The first thing we talked about was trends in the incentive market.  He said that incentives have become an accepted part of the strategic assets that a payer can use to drive behavior change.  That was validated by Obamacare where it allows for increased use of incentives tied to outcomes.  He also pointed out that you’re seeing a jump in dollars allocated to incentives with companies spending $500-$1,000 per employee on incentives. 

Another point he made is that you’re just starting to see more sophisticated incentive program design.  He estimated that we’re at a 2 out of 10 in terms of sophistication.  We traditionally saw companies providing incentives linked to actions like taking an HRA or participating in a wellness or disease management program.  Companies are now looking for a more immediate and predictable ROI which will likely lead to a mix of actions for which consumers can earn incentives. 

He made a really interesting point about the “retailing of healthcare” which we’re seeing even with the healthcare.gov debacle.  The reality is that healthcare is moving towards more consumer responsibility with HDHPs (high deductible health plans), CDHC (consumer driven health care), transparency, and exchanges. 

The big question is whether incentive will be a differentiation point in health plan selection.  For credit cards, we’ve certainly seen the value of the incentive program be a huge focus.  There are numerous TV ads pointing to this.  Michael sees incentives creating this differentiation over time. 

I asked Michael about mHealth since I’ve seen numerous mobile solutions and web vendors showing me how they’ve integrated incentives into their program.  In his view, mobile is simply a new channel, but it’s not a disruptive force for the incentive market.  It provides a way to track and view rewards, and it will generate data to provide rewards for (e.g., steps). 

We also talked about another topic that I always struggle with which is the challenge of sustained behavior change versus a one-time boost.  I think incentives are great to open the door and get people to take an action, but after I’ve gotten my incentive, what keeps me involved.  This is where he linked back to the complexity of the program.  He suggested that incentive programs need to be dynamic.  They need to evolve both over the years of the program, and they can’t be a big bang (i.e., $500 for your HRA and nothing else).  They need to link into activities and actions throughout the plan year. 

I asked him what tips he would give to someone new to incentives.  Here was his list:

  1. Reverse the traditional order of focus.  Create a program that gets “points” on the board quickly with an immediate ROI.  Focus on the outcome-based, long-term changes second. 
  2. Weave the incentive program into the company culture.  You need to communicate about the program and link it into the company brand. 
  3. Understand the theory of relativity…which means
    • The relative dollars year over year.
    • The relative dollars per activity.  (i.e., should you get the same incentive for taking an HRA as you do for reducing your BMI by 3 points?)
    • The relative dollars compared to the average employee’s salary.
    • The relative dollars compared to the level of effort and value. 

On the flipside, I asked him what to avoid.  He had two very straightforward points:

  1. Having too many activities for too few dollars.
  2. Having a great program with no awareness. 

So, in wrapping up, I asked him why did they sell to Welltok.  He pointed out several opportunities that he saw in the combined entity:

  • The combination of engagement and incentives is foundational to healthcare success.  This is true in social, mobile, gaming, and platforms. 
  • They offer a platform as a service where different programs can be combined in different configurations. 
  • They offer a Health Optimization Hub which will optimize the efficiency of programs and maximize incentives and engagement tools. 
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