Strategic Review of Healthcare Information Technology€¦ · Strategic Review of Healthcare...
Transcript of Strategic Review of Healthcare Information Technology€¦ · Strategic Review of Healthcare...
All Materials copyrighted and can not be used without explicit permission
Strategic Review of Healthcare Information Technology
Opportunities and threats associated with accelerating HIT adoption
By Scientia Advisors
November 2009
Scientia Advisors, LLC
Boston ■ Palo Alto
Scientia Advisors LLC
One Main Street, 7th Floor
Cambridge, MA 02142
www.scientiaadv.com
All materials copyrighted and can not be used without explicit permission2Scientia Advisors LLC
Agenda
Geography Review3
Market Overview2
The Electronic Health Record Market4
Clinical Decision Support Systems5
Conclusion6
About Scientia1
All materials copyrighted and can not be used without explicit permission3Scientia Advisors LLC
Scientia Advisors: A Global Strategy Consulting FirmScientia combines superior strategic process, scientific knowledge, business savvy,
and extensive resources to deliver actionable results for clients
TECHNICAL KNOWLEDGE
MARKET & OPERATIONS EXPERIENCESTRATEGY PROCESSES
GLOBAL NETWORK OF KOLS
A Global Strategy Consulting Firm
Growth Strategy Specialists
» PROPRIETARY TOOLS
» DETAILED ANALYSIS
» INTERACTIVE DECISION-MAKING
» CLOSE CLIENT COLLABORATION
» 60+ YEARS COMBINED INDUSTRY EXPERIENCE
» UP-TO DATE MARKET INSIGHTS
» REGULATORY & POLICY CHANGES
» REIMBURSEMENT LANDSCAPE
» TEAMS ENTIRELY OF SCIENCE & BUSINESS
EXPERTS
» PUBLISHED THOUGHT LEADERS
» NETWORK OF KEY OPINION LEADERS &
SUBJECT MATTER EXPERTS
» 25,000+ SCIENTISTS, MEDICAL
PRACTITIONERS, & INDUSTRY PARTICIPANTS
All materials copyrighted and can not be used without explicit permission4Scientia Advisors LLC
Scientia Advisors: Global Strategy ConsultingUtilizing its continuously expanding network of experts, Scientia has helped
clients across the globe realize new opportunities in the life sciences
WHERE WE WORK
Obstetrics & Gynecology
Renal Oncology PsychiatryEndocrinologyCritical Care
MedicinePharmacology
Neurology Otolaryngology Urology HematologyRespiratory/Pulmonary
Dermatology Ophthalmology
Infectious Disease Cardiovascular Gastroenterology AnesthesiologyRheumatology Surgery Pediatrics
Our clients
Our offices
North America 17,700+experts
South America100 +
experts
Europe6,100+ experts
Rest of World500 +
experts
Africa
100 +
experts
Australia100 +
experts
…And Constantly Expanding into New Areas of Functional Strategic Expertise
All materials copyrighted and can not be used without explicit permission5Scientia Advisors LLC
“The What”Industry Characterization &
Screening
Strategy Process: Scientia’s Proprietary ToolsOur process has been designed to develop growth strategy in a bottom-up and
fact-driven manner and customized for each client’s needs
Timeline
“The Why”Opportunity Assessment &
Competency Fit“The How”
Strategy Development
All materials copyrighted and can not be used without explicit permission6Scientia Advisors LLC
Technical Knowledge: Expertise Across Health & WellnessScientia’s technical knowledge is readily applied in our analyses to help clients
uncover potential for new opportunities
Life Science Expertise Including: Target Markets Including:
Diagnostics
Medical Devices
Biological Sciences
Therapeutics
Clinical Practice
Physical Sciences
Drug Delivery
•Cardiovascular/Metabolic•Oncology•Infectious Disease
Life Science Tools•DNA Sequencing•Microarrays•Cell Biology
•Oncology•Infectious Disease•Genetic
•Cardiovascular•Orthopedic•Neurological
•Excipients•Services•Delivery Technologies
Examples:
Conferences Webinars20+ talks at industry conferences» Mass High Tech » Intl Molecular Medicine Tri-Conference» Partners Healthcare Personalized Med.» Stem Cell Biomanufacturing
Articles & References» Medical Device Daily» Wall Street Journal» Science» Pharmaceutical Executive
Industry & Market Reviews» Vascular Disease» Future of Cancer Diagnostics» Cell Therapy» Pharmacogenomics
PublicationsAttended by 500+ healthcare execs» Vaccines» High Value Diagnostics» Functional Foods» Point of Care
Life Science Thought Leadership, 2008-2009
All materials copyrighted and can not be used without explicit permission7Scientia Advisors LLC
Market Understanding: Scientia’s Creative OutlookScientia looks at a broad range of markets through many different view points;
by technology, patient care continuum, market channel, etc.
PREVENTION/ HEALTHY LIFESTYLE
HEALTHY ENVIRONMENT/ APPLIED MARKETS
IN VITRO DIAGNOSTICS
MEDICAL DEVICES / IT
THERAPEUTICS
DISCOVERY TECHNOLOGIES
DRUG PRODUCTION
Prevention
Diagnostics
Treatment and Monitoring
Source: Scientia Analysis, Datamonitor, SG Cowen Therapeutics Outlook 2007, Roche Investor Presentation 2002, Frost & Sullivan
Therapeutics
* Includes products and services revenue of suppliers such as Pharma, MedDevices and Diagnostics to the health care buyers (hospital, physicians offices or consumer); for functional foods the number shown is the revenue of consumer package good companies. This scope does not include healthcare delivery services (e.g. revenue from physician services, hospital charges)
Total: $1.2 Trillion
Global HealthcareScientia Estimates (2007)*
Med Devices
Functional Foods
Other^
Inf Ctrl/ Wound Care
IVDLife Sci Tools
HealthIT
Therapeutic
Patient Care Continuum
^ Includes services such as CRO, laboratory testing services. Also includes “Applied Markets”
All materials copyrighted and can not be used without explicit permission8Scientia Advisors LLC
Global Network of KOLS: ScientiaNETWe have access to 25,000 experts from industry, academia, and medical
practice that provide immediate insight and expertise to clients
We ask the right people the right questions to analyze, document, and presentresults in a time and cost efficient manner
• Execute surveys with experts in the field
• Collect, analyze, and report results
• Organize face-to-face meetings & interviews
• Organize and conduct telephone interviews
INTERVIEWS SURVEYS PANELS
ANALYSIS
All materials copyrighted and can not be used without explicit permission9Scientia Advisors LLC
Scientia Advisors: Client Testimonials Scientia’s clients tell it best…
TECHNICAL KNOWLEDGE
MARKET & OPERATIONS EXPERIENCESTRATEGY PROCESSES
GLOBAL NETWORK OF KOLS
A Global Strategy Consulting Firm
Growth Strategy Specialists
“Scientia’s ability to structure and visually
depict information helped us clarify our own
thoughts”Vice President Strategic Initiatives , Top 5 Indian
Pharmaceuticals Company
“They start with the critical domain expertise in
therapeutics and tools so that no time is wasted ‘getting up to speed’.”
General Partner, Leading Healthcare Venture Capital Firm
“A unique access to industry experts for relevant insights
combined with solid financial analysis ensures
the recommended opportunities and strategies
are well grounded.”General Manager - Health &
Wellness, Fortune 50 Company
“They are a firm that can assist with big thinking
and they have substantive experience with the
practical constraints of execution…”
President & CEO, Startup Life Science Informatics Company
All materials copyrighted and can not be used without explicit permission10Scientia Advisors LLC
Agenda
Geography Review3
Market Overview2
The Electronic Health Record Market4
Clinical Decision Support Systems5
Conclusion6
About Scientia1
All materials copyrighted and can not be used without explicit permission11Scientia Advisors LLC
Source: Scientia Analysis, Datamonitor, SG Cowen Therapeutics Outlook 2007, Frost & Sullivan
• Healthcare IT will be a greater share of healthcare spending in the future:
» Interventional products - therapeutics and
medical devices – have historically captured
~90% of sales
» As the healthcare system experiences
declining marginal benefit from new drugs and
medical devices, the growth of these markets
will slow
» Increasing emphasis on the appropriate use of
existing interventions is shifting the focus to
the Healthcare IT market
» This shift in focus underlies the HIT growth
opportunity
Therapeutics
2008 Total: $1 Trillion
WW Healthcare Market
Therapeutics, ~<5% CAGR
Medical Devices,
~9-10% CAGR
HIT, ~11% CAGR
IVD, ~10% CAGR
The Scientia Healthcare Thesis
HIT and the WW Healthcare MarketOver time, healthcare IT will expand its share of sales; Scientia’s view is that
healthcare markets are shifting to enable better use of existing cures
All materials copyrighted and can not be used without explicit permission12Scientia Advisors LLC
Healthcare Information Technology (HIT) DefinitionThe definition in the ARRA1 is a useful definition given the bill’s importance;
Scientia establishes alignment with well selected definitions
Healthcare Information Technology (HIT):
“Healthcare Information Technology” is defined as “hardware, software, integrated technologies or related licenses, intellectual property, upgrades, or packaged solutions sold as services that are designed for or support the use by health care entities or patients for the electronic creation, maintenance, access, or exchange of health information1.”
Source: Scientia analysis; 1The American Recovery and Reinvestment Act of 2009
Includes Clinical and Non-Clinical Hospital Information Systems (HIS), Laboratory Information Systems (LIS), Hospital Information Systems (HIS), Certified Electronic Health Records (EHR) Technology, Multiparameter Bedside Monitors, Point-of-Care Testing Data Management Solutions (POCS EDS), Remote Patient Monitoring Services
Excludes any and all networking infrastructure (such as switches, wireless routers, etc.), computer equipment (laptops, etc.) and software that is not included in a packaged HIT solution; subscriptions to electronic medical journal publications; advertising revenue generated from websites; any and all R&D applications such as bioinformatics (including infrastructure, workflow solutions, analysis and content); software used in the context of therapeutic or medical device manufacturing; any devices or software used outside of healthcare; in vitro diagnostics including software and/or algorithms; medical devices
All materials copyrighted and can not be used without explicit permission13Scientia Advisors LLC
HIT Market Segmentation and Sub-SegmentationHIT sub-segmentation provides solution-level resolution; Scientia cuts through
ambiguity through rigorous sub-segment definition work
HIT
Sources: Scientia analysis; HIMSS Analytics, Triple Tree; Frost & Sullivan; Kalorama Information
Segments
Hospital
• Middleware
• Hospital Point-of-Care Testing Data Management Systems (POCT DMS)
• Central Patient Monitoring Stations
• Hospital Multiparameter Patient Monitors (bedside)
• Non-Clinical HIS
» Administrative
» Accounting & Financial
» Management
• Clinical HIS (Inpatient Certified EHR Technology)
Specialty
• Infection Control Systems
• Oncology IS (OIS)
• Cardiology IS (CIS)
• Emergency Department IS (EDIS)
• Perioperative & Anesthesiology IS (P&AIS)
• Intensive Care Unit IS (ICUIS)
• Lab IS (LIS)
• Radiology IS (RIS)
• Picture Archiving & Communications Solutions (PACS)
Ambulatory
• Alternative MultiparameterPatient Monitors (bedside)
• ePrescribing Systems
• Ambulatory Certified EHR Technology
• Physicians Practice Management Solutions (PPMS)
Home & Other
• Personal Health Records (PHRs)
• Home Health Agency IT
• Remote Patient Monitoring
All materials copyrighted and can not be used without explicit permission14Scientia Advisors LLC
Worldwide Healthcare IT MarketHIT is expected to grow at an impressive rate, particularly given its size
• In the near term, government incentives in the US and abroad will catalyze hospitals’ and physicians’ adoption of clinical HIT applications
• Adoption by smaller, more risk averse and more cost sensitive hospitals with less experience in HIT implementation and use will have a profound impact on market dynamics
» Leading players with large installed bases, proven
products and a streamlined route to “meaningful use of
EHRs” are likely to gain share
» Lower risk, lower cost approaches such as remote hosting
may become popular for certain small hospitals
» HIT companies will lend hospitals the capital required to
finance IT investments given difficulties in financial
markets and the fact that stimulus incentives do not kick
in for several years
• Longer term, the market is a target for disruptive innovations
that may be made available at dramatically lower price points
» Frustration with existing solutions and vendors has lead
to increasing interest in the development of freely
available open source solutions that could handle
applications from patient registration to CPOE
WW HIT Market
Source: Scientia analysis; HIMSS Analytics; Triple Tree; Frost & Sullivan; Kalorama Information; CIBC Capital Markets; The Congressional Budget Office; The Healthcare Blog
2008 2013
Home and Other
Ambulatory
Departmental / Specialty
Hospital
~$35 B
~$60+ B
11%
Key Trends and Growth Drivers
All materials copyrighted and can not be used without explicit permission15Scientia Advisors LLC
The Healthcare Information ChainAn understanding of how information flows to and from the patient
environment is critical for identifying opportunities in HIT
HIS: Hospital Information System; PPMS: Physician’s Practice Management Solutions; POCT DMS: Point-of-Care Testing Data Management Solutions; MW: Laboratory Middleware; LIS: Laboratory Information Systems; OIS: Oncology Information Systems; PIS: Pharmacy Information System; CPOE: Computerized Physician Order Entry
Clinical Diagnostics Healthcare ITLegend:
Non-Clinical
Clinical
Non-Clinical
Clinical
FRONT OFFICE BACK OFFICE
HIS: Administrative Solutions (Hospital) and Front-End PPMS (Ambulatory):• Patient registration• Scheduling
Dx FOCUS Rx FOCUSPOC IVD
POCT DMS
MW
LIS
Imaging Modality
RIS/ PACS
PIS
HIS: Financial & Accounting Solutions (Hospital) and Back-End PPMS (Ambulatory)
HIS: Management Solutions (Hospital) and Back-Office PPMS (Ambulatory)
• Claims Management• Supply Chain Management
Inpatient or Ambulatory
EHR
Patient Monitors
Lab IVD
Source: Scientia Analysis; ScientiaNET
All materials copyrighted and can not be used without explicit permission16Scientia Advisors LLC
Agenda
Geography Review3
Market Overview2
The Electronic Health Record Market4
Clinical Decision Support Systems5
Conclusion6
About Scientia1
All materials copyrighted and can not be used without explicit permission17Scientia Advisors LLC
EU:
• Germany – Better IT for Better Health, ~$1B, began 1993
• Norway – More Health for Each bIT, ~50MM, began 1997
• U.K. – National Programme for IT, ~$12B, began 2002
North America:
• US - HITECH, ~$20B, began 2009
• Canada –Health Infoway, ~$1B, began 1997
ROW:
• China - Golden Health Project (1985), HIT spending mandates (2004), Health Informatization Plan, (2006)
• Australia – Health Connect, $100MM, began 2000
Government Sponsored HIT InitiativesGovernment mandates to improve healthcare efficiency are driving the WW
HIT opportunity; Scientia closely monitors government initiatives
Source: Scientia Analysis, Anderson GF, Frogner BK, Johns RA, Reinhardt UE. Health care spending and use of information technology in OECD countries. Health Aff (Millwood) 2006;25:819-31.
All materials copyrighted and can not be used without explicit permission18Scientia Advisors LLC
HIT Segmentation by GeographyHIT players may be missing opportunities by adopting a single region focus.
Scientia can assist with a global perspective
WW HIT Market, 2008
• North America
• EU
• ROW
Key Takeaways
• In the near term, North America will generate the majority of incremental revenues, but long term, international expansion will be key to top line revenue growth
• North American leaders may nearly double their addressable market by aggressively expanding internationally
» HIT firms, such as Cerner, are taking a lead in developing international business
• The ROW has the greatest potential for growth due to government mandates, low HIT saturation, and the opportunity to “leap frog” to modern systems:
» Siemens is currently the only top 10 Chinese HIT vendor
Total $36.5 B
Source: Scientia analysis; Kalorama Information; Frost & Sullivan; Philips Health Informatics
All materials copyrighted and can not be used without explicit permission19Scientia Advisors LLC
The Chinese HIT Market
Source: Scientia Analysis, Jiechen Jiang / Export HIS, IDC, Frost & Sullivan
Healthcare IT Market in ChinaThe accelerating Chinese HIT market is a clear example of opportunity in
foreign markets
Key Trends and Market Drivers
Top 10, ~43%
2003 2008 2013
~$0.5 B
~$1.5 B
~20%
~$4.0 B
~25%
• Chinese healthcare modernization began in
1985 with the Golden Health Project
• In 2004, the Chinese government mandated
that hospitals spend 5% of revenues on HIT. In
2006, the Health Informatization Plan 2006 –
2010 was released, further driving the HIT
market
• Despite these government efforts, the current
state of HIT adoption in China is relatively low:
»The Ministry of Health concludes that 70
– 80% of hospitals need HIT upgrades,
particularly digital medical records, PACS
and clinical decision support systems
»Only 31% of hospitals have an
established HIS
HIS: Hospital Information System
All materials copyrighted and can not be used without explicit permission20Scientia Advisors LLC
Agenda
Geography Review3
Market Overview2
The Electronic Health Record Market4
Clinical Decision Support Systems5
Conclusion6
About Scientia1
All materials copyrighted and can not be used without explicit permission21Scientia Advisors LLC
Certified Electronic Health Record (cEHR) TechnologyThe stimulus bill’s definition of “certified EHR technology” drives EHR
product features
Source: Scientia analysis, 1American Recovery and Reinvestment Act of 2009
(Certified) Electronic Health Record Technology1:
An electronic record of health-related information on an individual that-A. includes patient demographic and clinical health information, such as medical history
and problem lists; andB. has the capacity—
i. to provide clinical decision support;ii. to support physician order entry;iii. to capture and query information relevant to health care quality; andiv. to exchange electronic health information with, and integrate such information from other source
Includes High quality ambulatory and inpatient EHR technology (such as those certified by the Certification Commission for Health Information Technology)
Excludes low quality ambulatory and inpatient EHR technology that does not allow “meaningful use of certified EHR technology,” specialty EHRs that are embedded in acute care, cardiology, oncology and other specialty information systems
All materials copyrighted and can not be used without explicit permission22Scientia Advisors LLC
2008 2013Inpatient (Clinical Hospital Information Systems) Ambulatory
Electronic Health RecordsThe US stimulus package is driving rapid adoption of EHR technology
Source: Scientia analysis; American Recovery and Reinvestment Act of 2009; Frost & Sullivan; Kalorama Information; CIBC Capital Markets; The CBO
cEHR Definition1
• The US stimulus package is driving a shift in
spending towards EHR technology, driving growth
» Hospitals and physicians that fail to become meaningful
users in the allotted time will be penalized with lower
reimbursement rates
• Inpatient EHRs (Clinical HIS) will continue to be the
larger of the two markets
» The high complexity of individual hospitals requires
significant customization, driving up the cost of
implementation and maintenance
• The inclusion of CDS in the definition of a certified
EHR technology will lead to the widespread
adoption and use of this important application
» CDS has implications for other healthcare markets such
as pharmaceuticals and IVD
Key Trends and Growth Drivers
$14 B
14%
Clinical Decision Support (CDS)
Capture of Information Relevant
for Health Care Quality
Patient Demographic and
Clinical Information
Healthcare Information
Exchange (HIE)
Computerized Physician Order
Entry (CPOE)
$27 B
WW cEHR Market
All materials copyrighted and can not be used without explicit permission23Scientia Advisors LLC
Agenda
Geography Review3
Market Overview2
The Electronic Health Record Market4
Clinical Decision Support Systems5
Conclusion6
About Scientia1
All materials copyrighted and can not be used without explicit permission24Scientia Advisors LLC
Clinical Decision Support System DefinitionCDSS draws from available information and makes recommendations
Clinical Decision Support Systems (CDSS):
“Clinical Decision Support systems link health observations with health knowledge to influence health choices by clinicians for improved health care.”
Components of a CDSS include:
• A medical knowledge base
• An inference mechanism (usually a set of expert-derived rules
Four key functions of a CDSS include:• Administrative: Supporting clinical coding and documentation, authorization, and referrals
• Managing clinical complexity and details: Keeping patients on research and chemotherapy protocols; tracking
orders, referrals follow-up, and preventive care
• Cost control: Monitoring medication orders; avoiding duplicate or unnecessary tests
• Decision Support: Supporting clinical diagnostic and treatment plan processes; promoting use of best practices,
condition-specific guidelines, and population-based management.”
Source: Scientia analysis; 1Dr. Robert Haywood, Centre for Health Evidence; 2Perreault L, Metzger J. A pragmatic framework for understanding clinical decision support. Journal of Healthcare Information Management. 1999;13(2):5-21.; Open Clinical (openclinical.org); Wikipedia
All materials copyrighted and can not be used without explicit permission25Scientia Advisors LLC
CDSS SegmentationCDSS can be a valuable add-on for a variety of products ranging from EHR
technology to patient monitors
Sources: Scientia analysis; company websites
cEHR Market Segments
Hospital Information
Systems (HIS)
Ambulatory EHR
Specialized EHR (e.g.
Oncology IS)
CDSS
Segments
Modality-Specific CDSS Tools
On-Modality Off-Modality
Modality-Agnostic CDSS Tools
cEHR CDSS Modules
• e.g. TheraDocfor infection control
Reference Tools
• e.g. DXplain
• e.g. Event Surveillance feature of IntellivueMonitors from Philips
• e.g. QTSM ECG analysis algorithms and services from iCardiac
Independent of cEHR technologycEHR: Certified Electronic Health Record
All materials copyrighted and can not be used without explicit permission26Scientia Advisors LLC
Example of a CDS Rule embedded in an EHRClinical decision support rules will catalyze meaningful standardization in
healthcare with significant consequences for healthcare market participants
Source: Scientia analysis, ScientiaNet, *Partners’ Healthcare
Screen Shot of the First Genetic Clinical Decision Support Rule at Partners*
Key Takeaways
• By reminding physicians of “easy to learn, easy to forget” information, CDSS tools can decrease variation in provider practices
All materials copyrighted and can not be used without explicit permission27Scientia Advisors LLC
Agenda
Geography Review3
Market Overview2
The Electronic Health Record Market4
Clinical Decision Support Systems5
Conclusion6
About Scientia1
All materials copyrighted and can not be used without explicit permission28Scientia Advisors LLC
Scientia’s Overall HIT ThesisAccelerated HIT adoption will create opportunities and threats for HIT
players and those in clinical diagnostics
Opportunities and Threats for the HIT Industry:
• Opportunity to sell more inpatient and outpatient EHR technology; threat of
declining specialty (departmental) information system sales
»The HITECH act will shift provider budgets towards enabling “meaningful use of EHR
technology” rather than specialty systems such as laboratory information systems (LIS),
radiology information systems (RIS), picture archiving and communications systems (PACS),
etc.
• Opportunity to expand internationally; threat posed by new entrants
»Emerging markets such as China are rapidly expanding their healthcare IT spending
»The entry of American HIT leaders, such as Cerner, may take share from international rivals
in European and ROW markets; HIT companies with disruptive cost basis from countries such
as India may disrupt the American market
• Opportunity to provide high value Clinical Decision Support Systems (CDSS)
»There is significant need in the US and abroad for greater standardization in healthcare
service provision; HIT companies can address this need by selling high value CDSS
implementations
All materials copyrighted and can not be used without explicit permission29Scientia Advisors LLC
CONTACT INFORMATION
Office: +1- 617-299-3000
Fax: +1-617-812-0315
One Main Street , 7th Floor
Cambridge, MA 02142
THIS PRESENTATION IS MEANT TO BE ACCOMPANIED BY COMMENTARY &
VIEWPOINTS BY SCIENTIA ADVISORS
THIS IS NOT MEANT TO BE A STANDALONE DOCUMENT ON WHICH TO BASE THE
FINAL VIEWPOINTS OF SCIENTIA ADVISORS OR ON WHICH TO BASE THE
FINAL AND DEFINITIVE GO-FORWARD DECISIONS