Presentation delivered by Noel J. Guillama
January 23, 2018
Good Morning everyone.
Thank you for coming to hear our presentation on IoT Healthcare Collaboration and The Connected Patient of 2020.
Before I get too deep, please allow me to share my perspective, as it may make a difference. I am here, not just as technology person. I am a healthcare operator that has been responsible for care and the coordination of care for over 30,000 Medicare and Medicaid beneficiaries.
I have been granted numerous patents, all around the use of technology, data management and communications in healthcare.
The reason I share that with you is to that you will know what I share with you today is not theoretical.
My passion for 27 years has been in in a small way, helping the healthcare industry become more efficient and to help provide better systems and/or tools to help that efficiency translate to better quality of care to patients.
We know from other industries that better quality, nearly always, also produces lower cost in the long run.
Healthcare is very different, until now. Some people are talking about the 4th industrial revolution with IoT devices, I am confident that healthcare is a few generations behind.
Over the last 50 years, healthcare seems have gotten more expensive, and not more efficient.
Cost have been going up, quality of care, and face time with providers has been going down.
To be fair, providers today have huge burdens, both in using mandated EHR platforms / e-Prescriptions; while at the same time physician compensation, based on care, when adjusted for inflation.
Normal business and personnel costs have been going up as with the rest of the economy.
Let’s look at the big picture.
Healthcare as of 2017, was not only the largest industry in the US, but also the largest employer.
U.S. Healthcare costs have a high of $3.4 trillion dollars, and this number is expected to continue to increase to well over $5 trillion per year in the next decade.
To give you another perspective, when I entered healthcare as an investor/operator in 1991, it was around $900 billion in annualized expenditures. Healthcare, accounts for nearly 1 of 5 of every dollars of GDP.
This problem is about to get worse.
However, I hope to share with you, maybe this is an inflection point and it could better, IF we use the technology we have at hand today.
The biggest of cost of healthcare today are chronic health conditions.
77 million baby-boomers getting older, we are also bringing with us more chronic conditions.
Those chronic conditions are the problem, as we note later in this presentation.
Boomers are entering the high consumption years of healthcare, and we have two huge generations right behind us.
Nationwide, and in particular here in FLORIDA, we have had serious talks about a pending physician shortage on the horizon. I believe that without changes in how we use technology, we will have a shortage of doctors.
We have the technology today, using next generation integrated patient centered EHR, IoT devices, and Telemedicine to change our future, promoting better collaboration, among all the interested parties. To address the issue of healthcare beyond generational, we must go back to the real problem first.
50% of all adults in America have chronic healthcare conditions, and of the entire $3.3 trillion cost of healthcare annually, economist note that 80% of the cost are for chronic conditions. The top 6 conditions are conditions account for 80% of that 80%. Experts also tell us that 50% of the determinants of health are our behaviors; 20 % environmental factors; 20% genetics; and 10% percent having access to medical care.
Yet, as a country we spend around 90% of health expenditures on medical services, and only 10% percent on preventing disease and promoting wellness. Most of the costliest health conditions are preventable. For example- the JAMA recently reported that 1/3 of American’s are overweight.
I am one of those statistics, and we can improve materially.
At the time we need them most, medical societies are forecasting that with the retiring of Baby-Boomer physicians, we could have a material shortage of physician beginning as soon as 2020.
I was part of team that working aggressively, to bringing a Medical School to South Florida. I was convinced that we faced an unpresented shortage of physicians nationwide, but it was going to be even worse here in Florida. Two new medical schools opened in Florida 10 years ago, and another is set to open next year.
We have a great state that for generations has attracted retires.
In 2016…the Greater Orlando region alone attracted 70,000 new residents.
The doctor shortage will have impact nationwide, unless something changes.
I am still optimistic! Why?
Well, we have the technology at hand, and a very technology savvy consumer. Not just generation X and Y but we Boomers grew up with technology and are very comfortable in using it every day in our lives.
The foundation of any healthcare technology revolution will always have to be based around the Electronic Health Record. The reason is that all medical information sooner or later must get there.
85% of all healthcare required a doctor’s signature, be in manual or electronic.
The U.S. government alone invested $30 billion dollars over the last 8 years to make EHR a standard of care. However, the total investment was much bigger. Maybe, including time invested, lost opportunity, plus cost paid by providers, hospitals and health payors, the total invested in EHR over the last 8 years, was likely $100 billion dollars.
This does not include what is likely to be $10+ billions to modernize the Veterans Administration’s EHR system over the next decade.
What do we have for it?
To be frank, a good foundation to build on. Today, very few consumers have been given access to their own patient portal. Where they have, preliminary studies have not shown any material improvement, the care of those with access versus those that did not.
Can we extrapolate as to why?
Well, how many doctors does the average user of chronic conditions have?
PCP, Internist, Orthopedic, Dermatologist, ENT, cardiologist, etc. Even if you had access to all the records, you would have to use different systems, and log in an out repeatedly. This is not a sustainable model, and that is likely why it has not had any material difference.
We expect that in the next few years, the model will reverse, and doctors will access the patient’s comprehensive health record, and update that information found permanently on the patients record. Then you will see patient utilization explode, and quality improve.
Wait until that patient wellness record also aggregates IoT devices, and their telemedicine portal.
We think the choke point today are providers, and only a well determined in control consumer is going to change that. We are now in the U.S. witnessing an explosion of tele-medicine options. That is a great development, and we believe we are at the beginning of that major shift.
We all have smart phones and capacity to have a teleconference with our provider from anywhere.
Plus, with some to the IoT devices we will discuss later, many patients will be able to treated safely, quickly and at lower cost.
What telemedicine brings to the table is the ability to extend physicians care, provide for better management of most chronic diseases, and much better care coordination. A big problem we have in healthcare is care coordination. In most cases, the patient is the coordination point.
Not all patients can or should be treated in a telemedicine environment, but telemedicine is the perfect vehicle to have more and better communication with patients.
Going back to my experience, As CEO of multiple healthcare delivery systems, my companies have helped coordinate the patients. We used the best protocols and, yet, the best tools we could rely on was a centralized medical history, direct phone calls to patient’s, and the use of our own transportation service to get the patient back in front of care givers.
We justified time and cost as providing better monitoring, and that meant we could better control the wellness of the patient and, address conditions before they got very expensive or required visit to the ER.
Let me stop for a second and share with you more about the economic models we operated under, and why I feel the combination of EHR/IoT and Telemedicine is a game changed in improving outcomes.
When contracting with the largest HMOs in Florida, to specifically manage the care of patients, our model, was to accept capitated payments for a large number of patients. We had to provide the care management and coordinate the care with 100s of PCPs and 1,000s of specialist.
We were paid a flat sum of funds PER MEMBER PER MONTH, called PMPM, that was based on a percentage of the Medicare or Medicaid payments our contracted managed care companies received.
The final number was based on complex formulas that has many variables. The keys ones were age, location and healthcare status.
If we managed the care well, meet the quality measures established by the appropriate government agency, and maintained patient satisfaction, we were profitable, to the extend we did not, we had real financial and contract risk, and faced losses. This model compelled us to provide the best, fastest and most effective care, and do all in our power to keep patients healthy.
When we did it well, we made money.
In the late 1990s we assembled the most robust patient tracking, and electronic health record of the period. That helped us create a company that using technology could do our job better. Today, we have a better opportunity to track patient activities, seek collaborative EHR’s and use telemedicine to be more effective. That is where we see true transformation in the way we can improve outcomes.
We have had, in one form or another EHRs for 50 years, starting in the hospital environment and expanding from there to where we are today. I think we need to materially improve EHRs to reach their true potential. These EHRs will more patient centric vs facilities centric.
Until recently, doctors we were able to consult with patients via phone, but we really lacked was the way to see in-to the patient, beyond what they reported. We have something today that was not available 20 years ago, and with little use even 10 years ago, that is the IoT devices and wearables.
I can tell you that when we closed our extended hours medical offices, we went home knowing that some of our patients would get sick overnight, and they would end up in the emergency rooms, many times for issues treatable in our company’s medical facilities.
We had nurses on staff 24/7, BUT, we did not have even two years ago the tools we have today.
We believe that collectively these systems, will change the cost and quality curves. Reducing one and increasing the other.
Many companies are entering this health/wellness IoT, and it seems like not a business day passes that a new player outside of healthcare is talking about a new health or wellness product or application.
We think that is great news, for the industry, for providers, and for the consumers.
There are 100s of devises in the market today, and maybe 1,000s in development. I am bringing attention to three that were exhibited in the Consumer Electronics Show in Las Vegas, two weeks ago that I think are particularly promising. I am seeing a world where both single use, and multi-use devices can work, and they can be of clinical or wellness quality.
My medial directors have told me that “every bit of data” is of value to them, as it relates to a patient’s life, and conditions. Some doctors have shared with me that they think “wearables” are a game changer.
These doctors are speaking to me of devices that “having the ability to capture heart rate, sleep patterns, glucose level, oxygen level, can be awesome vs. a single data point, when the visit” their doctor’s office.
When I talk about IoT and wearables, I really should elaborate, that I see, and believe that many things we use today, can and could provide wellness information; to evaluate a patient.
We today have very smart homes, that can give information on healthcare status.
They can track how your habits are changing over time. Imagine soon when Alexa type device is used to help us interact with patients, by asking “are you ok”?
Trends are confirming that we Baby-boomers are not like our parents.
We are likely to will stay in our home longer, or as is now termed- “age in place”. With home delivery of food, Amazon delivering everything, and Uber available to many, the resources to stay in our homes, and age in place have never been better.
In time, a very short time, our home will be a technology driven system designed to monitor and alert to our wellness condition. The same could be done with our cars. My truck could easily monitor and transmit via the hot-spot, or my cell on my wellness.
Not only could it transmit my vitals, maybe, it will soon do one things that few other devices can do in a passive way; evaluate if I have some conative issues, by tracking my response time to certain event.
For example, it could be programed to monitor, IF I am out of character speeding, tail-gating, turning late, running red-lights etc. maybe I am having a bad day, or something COULD be wrong.
The questions are now –
How do we gather all that data?
How we process that data?
And how do we make that data -actionable by delivering it to their medical provider?
The doctor does not want to see a patient’s iPhone, or log-in to a website to see the consumers data. We can talk for hours about doctor fatigue, and stress of spending up to 30% of their work time documenting their activities. A subject for another conference.
Some doctors don’t want to talk about devices that they don’t control and have been proven to be “fail proof” in their mind. The FDA today is certifying many devices as meeting their “clinical standards”.
Using these types of devices for remote patient monitoring, are at infancy, and showing the promise to materially impact healthcare. Some of these types of IoT devices are being used to prevent readmission of patient to hospitals, that are now being penalized for Medicare for readmissions.
We have seen reports that using a combination of IoT devices, better monitoring, and more active care. Some hospitals have reduced readmissions of patient with Chronic Heart Failure by over 50%, plus with measurable reduction in ER visits, and even cardiologist visits.
CMS is paying attention, and conducting studies and pilot projects, but the investments remain a rounding error of their nearly $1 trillion-dollar annual budget. Yesterday, sadly they delayed a program that would have expedited fast track to new types of devices, including IoT.
The headline read: CMS cancels plans to expedite Medicare coverage on devices.
There is good news, though. For 2018, CMS is authoring doctors to bill for a new procedure 99091 (CPT code) for “collection and interpretation of physiological data”. In some cases, this could mean that a provider could receive up to @$60 per month for patient data monitoring and documenting.
With the right platform, and aggregation of multiple data points, that could not only be of value in treating the patient, it could also be profitable for the provider treating Medicare Patients. We believe this is just the beginning, of the potential that IoT devices can bring to the healthcare solution.
From my perspective, there is an issue that many of these innovative IoT start-up, and even large tech companies have not been analyzing well.
And that is “who is the customer” and who “pays”.
Healthcare is the only industry I can think of, that 80% of the time, the “customer” and the “payor” are not the same. I have consulted with numerous companies on products and devices, and they are providing great solutions, but are wrong in their expectation as who is going to pay for it.
The big opportunity are those payors I have mentioned before. They have an incentive to use new technology. They may be slow, yet, I see material and historic investments in new innovations and start-ups. IoT devices that are lifestyle choice, can and are being sold by the millions to consumers, but once you get in the wellness and clinical arena, I don’t see that direct to consumer plan work.
Remember the first slide on how much we spend on healthcare in the US? That divided to about $10,000 per year, for every person in the US today. At the same time, CNBC reported last week that 60% of Americans don’t have ready funds to handle a $1,000 ER visit.
How will those Americans, be able to pay for a $200, simple IoT device, or a $500 multi-function clinical device?
I also don’t see doctors; already strapped for cash make the purchases.
If you are a developer of a new healthcare IoT, you should seriously consider who is going to pay for it. I have no doubt we have the need for even more innovation.
We have noted with great interest the new investment in managed care, from Silicon Valley Venture Capital firms. Those new companies have focused on analytics, and predictive modeling, when maybe they should be working on behavior and access issues.
I noted that one California start-up HMO company has a horrible medical loss ratio (MLR) that effectively means that for every member they had, they lost money on the care of patients collectively, before accounting for any operational, systems, marketing and other corporate overhead. I would argue strongly that they could provide better outcomes, and lower cost by heavy use of integrated EHRs, IoT devices and Telemedicine.
If the systems, payors and providers don’t do it, the “Connected Consumer of 2020” will demand it.
We were able to do better managing risk, at the infancy of the EHR, with an emerging internet, well before we had today’s technology. If we had the technology available then, we would have clearly done even better.
In the title of this presentation, WE did not project out 10 or 20+ years like a futurist may have done. The future we are seeing is here today and will be mainstream in the next two or three years.
The technology dam has broken, and it will be a wash-out for those that don’t see it. Once the consumer gets control of their health information, everything is going to change.
We believe that the fastest adopters of technology innovations, will be those that pay for care, employers, and those with at risk-contracts.
By synchronizing EHRs, IoT devices, and telemedicine, the quality and cost curves will move in opposite directions, of this I have no doubt.
What is truly missing today, is to totally connect with the consumer, and maybe one last part, to make the patient/consumer part of the financial reward for improving their wellness. That is revolutionary.
Using the tools provided by today’s innovations, there is no doubt that we will be able to avoid the provider shortage, as provider will be more efficient; cost will go down, and the best of all….
We will ALL be healthier because of how we will interact with technology.