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3 Ways Robotics are Advancing the Healthcare and Life Sciences Industry

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Robots like the healthcare companion Baymax in Disney’s animated film Big Hero 6 are not too far from reality. In fact, the inspiration for the inflated robot physician came from the robotics lab of Pittsburgh’s Carnegie Mellon University. As more industries converge with one another, robotics innovations like Baymax are becoming more and more common in the healthcare and life sciences sectors. Innovators are creating new robotics technologies that could transform the way that we provide health care, treat diseases, conduct research and approach a number of other life science procedures.

The market for medical robotics is opening up too. A recent report estimates that the market for surgical medical robots alone will be over $20 billion by 2021. And in 2014, venture capitalists (VCs) invested over $341 million in robotics, $77 million of that went to medical robotics startups. How will robotics continue to make a mark in healthcare and life science innovation?

Assisting In Surgery

According to the Princeton Journal of Science and Technology,the first robot-assisted surgery actually took place over 30 years ago, in 1985. Medical robotics have come a long way since then. In recent years, robotics have assisted in a number of surgeries in gynecological, gastrointestinal, urological, and other areas. They have been most helpful with highly precise and minimally invasive surgery.

Robotics has allowed surgeons to visualize certain areas of the body more clearly. One of Pittsburgh Life Sciences Greenhouse’s portfolio companies, Medrobotics, is one company that is using robotics to improve how surgical procedures are conducted. Its Flex® System uses surgical robotics with a flexible endoscope technology to enable surgeons to visualize hard-to-see anatomy and perform surgery.

Catalyzing Life Science Research

Robotics have helped life science research companies and other scientists handle and study hazardous materials more efficiently and safely. For instance, a team of scientists from the University of Manchester have developed a robot called Eve that is helping to accelerate the drug discovery process. Eve’s design aims to automate early-stage drug development to make testing new treatments faster and more economical. At a screening rate of over 10,000 compounds per day, the robotic system could help identify new drug candidates for diseases like malaria and Chagas’ disease in record-breaking time.

Advancing Telehealth

Interest in telemedicine has surged in recent years. Studies have shown that there is a high level of interest amongst both consumers and healthcare providers and organizations seeking telehealth innovations. According toSoftware Advice, 75 percent of patients express at least a moderate interest in using telemedicine solutions. When it comes to providers, a 2013 study by Healthcare Intelligence Network found that 67 percent of providers have used telehealth, and 74 percent of them are planning a telemedicine initiative in the next 12 months.

The need for robotics in telemedicine exists now and will likely continue to grow with the market expected to increase at a compound annual growth rate of 18.5 percent through 2018.

But how these robotics technologies are used in healthcare will continue to evolve. Telemedicine robots have been used to help physicians diagnose concussions, increase the productivity of staff in hospitals and clinics and have even helped in slowing the spread of deadly diseases like Ebola. As the technology and automation behind them gets more sophisticated, their possible applications in healthcare are expanding.

Now more than ever before, the healthcare and life science industry is converging with other sectors like technology and robotics. Patients and providers are showing more interest in high-tech tools that have the potential to improve healthcare and life sciences. Both of these factors are igniting a growing entrepreneurial interest in robotics technologies that will ultimately revolutionize the way the current system operates.

Examining the Cost of Drugs and Big Pharma Profits

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In a previous blog post, I discussed the complicated nature of drug pricing and the public relations issues that the biotech and pharma industries face. Issues include high-priced drugs and accusations of price gouging as well as unusually or unnecessarily high profits stemming from supposed greed within the biotech and pharma industries. In this blog, I want to provide a few examples of profits, how these profit margins compare to other industries, and the ethics of profiting from potentially life-saving and necessary therapies.

As I pointed out previously, drug pricing is unusually complex. While it is true that manufacturer pricing tends to be a black box, that is, pharma companies closely guard how they price their products, this price is rarely passed on, in full, to the patient. Instead, insurers cover what co-pays do not which is typically a fraction of the whole cost. The involvement of insurance companies as well as government entities (Medicare and Medicaid) are also undoubtedly taken into consideration for drug pricing. Other complicating factors such as intellectual property, foreign market pricing, and drug development costs must be factored in to how drugs are priced by the manufacturer.

In large part due to this lack of transparency, consumers have griped about drug pricing and pointed to pharma profits as being too high, excessive, or, perhaps, unethical.   

An article posted by the BBC [1] in 2014 took the pharma industry to task by highlighting Pfizer’s 2013 profit margin of 42% as evidence of their greed and profiteering. However, as stated in the same article, this figure is inflated due to Pfizer’s spin-off and profit from their animal health branch, Zoetis, which netted Pfizer $10.5B that year. Neglecting this influx of cash, their profit margin came in at 24% which the author claims as “spectacular”. While higher than some industry peers, or other biotech/pharma companies, this is not atypical from profit margins of other industries according to BusinessInsider [2] listing “Software and Tech” at 26.9% and “Beverage and Tobacco” at 29.2%. In terms of industry peers, BI lists pharma and biotech’s average profit margin at 19.3% which is generally in line with most other S&P500 sectors.

In terms of sales, from 2010 to 2013, Pfizer’s sales revenue dropped from $67B all the way to $52B, a drop of over 22% [3]. Since 2013, Pfizer’s profit margin has dipped as low as 9.4% in the 4th quarter of 2014 [4]. In fact, by their financials, in addition to the cash influx from Zoetis, Pfizer cut roughly $5B from their liabilities in 2013 by reducing “Unusual Expense” which inflated their net income for the year, thus boosting their profit margin. So, while their overall revenue was declining, their net income shot up for one year, and the BBC decided to pick this anomaly as their benchmark.  

In terms of increasing profits year over year, a recent article from Forbes [5] suggested that biotech and pharma companies are facing an uphill battle to increase yearly profits. From their calculations, the top 15 biotech companies only posted a year over year profit increase of 2.4%; dramatically lower than annual profits Apple posted between 2010 and 2012 at 78.5% 66%, 44.6%, and 9.2%, respectively [6]. So, while their sales and revenues are in the billions of dollars, their revenues, over a yearly basis, are not increasing as dramatically as the public may perceive them to be.

The underlying issue here, however, is the ethicality of profiting, no matter to what extent, at the expense of patients in need. The argument boils down to if an average profit margin of 19.3% for the biotech/pharma industry is too high and ethical to do so. On one hand, cutting-edge therapeutics should be provided to patients in need at the lowest cost possible. Therapies should never be a burden to the patients that require them. After all, if the cost is too prohibitive to even get it to a patient, what is the point of developing a therapy? On the other hand, these industries are still composed of businesses that rely on profits to continue to develop innovative technologies, attract the best qualified, most intelligent talent to the their organization, and deliver on the promise to save lives and improve global health.

Of course there’s always room for criticism and room for improvement. Non-profit entities have shown promise for reducing costs associated with drug development and reducing risk for larger companies, but their effectiveness has yet to be proven as the number of non-profit companies remains low. Also, many companies such as Pfizer and Abbvie participate in prescription assistance programs that provide their drugs for free to needy patients unable to afford them.[7,8] In these cases, the drug industry has provided ways to reduce the price burden on the patient.

The Center for Healthcare Innovation remains unbiased, objective and neutral. In future posts, I will continue to look at drug pricing and focus on the issue of high-priced drugs and how this affects public perception of pharma as well as increases costs throughout the healthcare system.


  1. http://www.bbc.com/news/business-28212223
  2. http://www.businessinsider.com/sector-profit-margins-sp-500-2012-8
  3. http://www.marketwatch.com/investing/stock/pfe/financials
  4. https://ycharts.com/companies/PFE/profit_margin
  5. http://www.forbes.com/sites/johnlamattina/2015/03/23/big-pharma-but-not-such-big-money/
  6. http://www.wikinvest.com/stock/Apple_(AAPL)/Data/Revenue_Growth/2012
  7. http://www.pfizer.com/health/financial_assistance_programs/patient_assistance_programs
  8. https://www.pparx.org/prescription_assistance_programs/list_of_participating_programs

How Can We Boost Patient Engagement?

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Young smiling doctor consoling patient sitting on wheel chair outdoor

Many industries today focus on strengthening consumer engagement with their products and services. Whether it’s via social media, websites, mobile apps, video media, or televised commercials, companies across the globe know the importance of marketing their products, services, and technological advances in maintaining profit margins and consumer satisfaction levels. The healthcare industry would be wise to follow similar industry strategies in order to strengthen patient engagement.

There are a numerous views on what exactly defines patient engagement. Broadly speaking, patient engagement is defined as the degree to which patients are involved in their own care. A generally accepted, comprehensive definition provided by HIMSS Analytics states “An organization’s strategy to get patients involved in actively and knowledgeably managing their own health and wellness and that of family members and others for whom they have responsibility. This includes reviewing and managing care records, learning about conditions, adopting healthy behaviors, making informed healthcare purchases, and interacting with care providers as a partner.1 Essentially, patient engagement refers to the tools and technologies healthcare organizations use to engage patients before or after acute episodes of care and during the time between in-person visits.

The time between visits is a particular challenge in patient engagement. During provider-patient visits, discussions with care providers and increased involvement with the patient tends to lead to higher levels of engagement. As months pass after visits, active participation is no longer necessary and engagement becomes less of a priority. The result is often forgotten instructions provided during the visit. The effectiveness of continuous engagement with patients after their treatment was tested with a program that delivered text messages three days a week to 700 gastroenterology patients who were trying to lose weight during a six month period from November 2012 to April 2013. The objective was to analyze the effectiveness of prolonged engagement by comparing the success of the treatment between those who received texts and remained engaged with a control group who was left alone. The results showed that patients who received the text messages dropped 0.5 more on the Body Mass Index (BMI) than patients who did not participate.2 This simple example of increased communication depicts the drastic impact that engagement can have on the patient’s long-term, perceived value of the treatment and instructions given.

The ability to remain in contact with patients through text messaging is an example of how changes in technology offer new opportunities to increase patient engagement. Yet, despite numerous new systems used today, raising patient engagement remains a challenge. In part, this is due to the complexity and scope of effective long-term engagement. According to Dan Housman, Director at Deloitte, the biggest challenges of the historically accepted model of provider and patient relationships stem from assumptions which fail to account for the uniqueness of the individuals involved. These assumptions include that a patient must be obedient and that a physician should act with authority.3 This way of thinking undermines patient-centricity and fails to develop a healthy relationship which promotes patient engagement. By addressing the flaws in the traditional model and revising those to better reflect trending patient-focused values, healthcare providers can more effective communicate the value of continued patient engagement, which ultimately results in its increase.

IBM Watson Health is an example of one of the countless companies in healthcare making efforts to change this model and enhance patient engagement initiatives. This September, they launched a population health program, expanding their online cloud capabilities to provide a more accessible, relevant platform for accessing industry-specific trends and innovations. It is staffed with a team of professionals that engage with users, answering any questions very quickly. This results in more informed patients and addresses the issues with the assumptions in the traditional provider-patient relationship model. Furthermore, the program promotes and records user feedback on treatment which can be used to further improve the methods of care and provide tangible results in healthcare outcomes. Michael Rhodin, Senior Vice President of IBM Watson Group, stated in a press release “This newest expansion of the IBM Watson Health Cloud makes it an even more robust and flexible platform for the life sciences and healthcare industries and explains its rapid adoption among leading organizations in these fields.4 The value added to the interaction helps to promote further patient engagement over time.

Patient engagement is an important aspect the healthcare. It leads to better health outcomes for patients by increasing their understanding of the value in instructions from providers and promotes adhering to suggested preventative measures. Healthcare providers must continuously reach out to patients, keeping them motivated and increasing both parties understanding of the other. CHI will be further exploring patient engagement and its challenges in today’s dynamic healthcare industry at its upcoming Healthcare Executive Roundtable on October 15, 2015 in Manhattan. For more information, please visit http://www.chisite.org/education/healthcare-executive-roundtable.


  1. Noteboom, Michelle Ronan. “From Patient Engagement to Telehealth, What Does It All Mean?” Healthcare   IT News. 18 Sept. 2015. Web. 2 Oct. 2015
  2. Fellows, Jacqueline. “Meeting the Challenge of Patient Engagement.” HealthLeaders Media. 26 Aug. 2015. Web. 2 Oct. 2015
  3. Gruessner,Vera. “What Obstacles Stand in the Way of Patient Engagement? ” MHealth Intelligence. 16 Sept. 2015. Web. 2 Oct. 2015
  4. Gruessner, Vera. “Could a Population Health System Improve Patient Engagement?” MHealth Intelligence. 14 Sept. 2015. Web. 2 Oct. 2015.

How Do You Define and Measure Patient Experience?

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Happy senior citizen having a casual small talk with the friendly doctor

In today’s dynamic healthcare industry, with fundamental policy changes and ground-breaking technological advances occurring more than ever, it is vital to reevaluate the metrics used in determining the quality of care given to patients. Determining and measuring healthcare quality is a multi-faceted challenge, which must consider all aspects of care from patient treatment to administration and policy. The patient experience is among the core metrics used today, which is considered the sum of all interactions, shaped by an organization’s culture, that influence patient perceptions across the continuum of care.1 The continuum of care considers every step in the healthcare process from arrival to outcome. As trending healthcare values continuously place a heavier focus around patient-centricity in all aspects of care, accurately measuring the patient experience is increasingly vital. This begins with addressing value discrepancies between provider and patient perspectives, assessing limitations in traditional data gathering methods, and better understanding patient standards of evaluation. A higher level of patient experience has shown yield direct benefits in long-term recovery, compliance with recommended treatment, and many other care outcomes dependent on trust and acceptance from the patient.2

The patient experience is influenced heavily by the culture and policies set by the provider. Whether a county hospital or day clinic, the success of various patient-centric initiatives and, in turn, impact of the overall atmosphere determined by administrators contributes directly into how personnel view and interact with patients. Yet these are a reflection of the staff’s values, which are not necessarily aligned with the values of the patients they treat.3 Therefore, it is imperative to give proper consideration to patients’ perspectives. The healthcare industry’s recent policy changes reflect this ever-growing necessity by offering new reimbursement programs for providers based on metrics that evaluate the patient experience.4 Yet, policy changes at the top can take a long time to trickle down and to patients. By continuously working to understand the difference between the patient’s and provider’s perspective, and its value in relation to patient experience, all healthcare providers can begin to bridge the gap by providing a higher quality level of care that is focused on the patient’s needs.

Understanding the value of the patient’s perspective in the quality of healthcare is limited to the effectiveness of the means used to gather the data. The Consumer Assessment of Healthcare Providers and Systems (CAHPS) survey stands as the current standard in gathering data on patient experience. However, the data gathered is greatly dependent upon the level of patient satisfaction; which, while important, does not consider all the elements of the continuum such as quality, safety, and service outcomes.5 This results in a skewed assessment of the current level of patient experience and leads to new initiatives and corrective actions that do not properly address the needs of the patient. To address this disconnect, providers are encouraged to create patient advisory councils that add power to the voice of the patients, adjust CAHPS analysis techniques to account for known limitations, and increase the frequency of leadership rounds that prompt patient interaction.6 These suggestions are based on current efforts that have been implemented based on patient-centricity and represent just a few of the countless possibilities.

Regardless of the accuracy of the data gathered, properly evaluating the level of the patient experience requires understanding what quality of care is to the patient. An extensive research initiative in 2014, led by the Patient Experience Journal, highlighted six key performance indicators patients used when assessing the quality of their care. These were the level of provider participation in care, staff courtesy, self-reported health status, staff follow-up, waiting, and medical explanations.7 Based on these findings, it is apparent that patients place a much higher value on interpersonal interaction than the provider. This is understandable considering the limited knowledge they often possess regarding healthcare services coupled with stress and anxiety that come with health issues. Given an a greater appreciation of these key performance indicators used by patients in evaluating their experience, researchers can better differentiate between patient experience and patient satisfaction while properly aligning efforts to reflect a more accurate picture of patient values.

As the healthcare industry continues to drastically evolve, the challenge of effectively keeping the focus on the patient has grown equally complex. Factors and metrics long since accepted as industry standards have come into question at the same time that industry innovation has created entire new directions to consider. Regardless, the patient experience remains as important as ever. It serves as an essential gauge of quality, that when properly managed, can have profound effects on long-term recovery, patient follow-through, and overall care success. CHI will be further exploring the issues and values associated with the patient experience and many other related topics at our upcoming Healthcare Executive Roundtable on October 15, 2015 in Manhattan. The Roundtable will discuss what patient-centric healthcare value means in the 21st century. This consumer-focused Roundtable Discussion brings the best and brightest healthcare leaders from around the globe together to share their ideas and expertise on the intersection of healthcare value and patient-centricity. Please visit chisite.org/education/healthcare-executive-roundtable for more information.


  1. The Beryl Institute. “Defining Patient Experience.” The Beryl Institute. 28 Sept. 2015.
  2. Beattie, Michelle, Douglas J. Murphy, and Iain Atherton. “Instruments to Measure Patient Experience of Healthcare Quality in Hospitals: A Systematic Review.” National Center for Biotechnology. US National Library of Medicine National Institutes of Health, 23 July 2015. Web. 28 Sept. 2015.
  3. Brown, Claire R. “Where are the Patients in the Quality of Health Care?” International Journal for Quality in Health Care3 (2007): 125-26. Oxford University Press. Web. 28 Sept. 2015.
  4. “Consumer Assessment of Healthcare Providers & Systems (CAHPS).” Centers for Medicare & Medicaid Services. 8 June 2015. Web. 28 Sept. 2015.
  5. Wolf, Jason A. “Patient Experience, Satisfaction Not One and the Same.” Hospital Impact. 24 July 2014. Web. 28 Sept. 2015.
  6. Merlino, James I., and Ananth Raman. “Understanding the Drivers of the Patient Experience.” Harvard Business Review. 17 Sept. 2013. Web. 28 Sept. 2015.
  7. Van De Ven, Andrew H. “What Matters Most to Patients? Participative Provider Care and Staff Courtesy.” Patient Experience Journal1 (2014): 131-39. Print.

Drug Pricing Debate Heats Up as Turing Pharma Raises Price 5,000%

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Drug pricing continues to be a prevalent issue affecting many Americans’ daily lives. In fact, high drug costs are one of the most important issues affecting Americans. This issue recently made headlines after Turing Pharmaceuticals acquired the rights of Daraprim and raised prices from $13.50 a tablet to $750 overnight. That’s a 5,000% increase – Imagine if the price of a $4 gallon of gasoline rose to $222 per gallon. Daraprim is used to treat a parasitic infection called toxoplasmosis that can be life-threatening for people with weakened immune systems like newborns and those with cancer or AIDS. The drug has been on the market and approved by the FDA since 1953, so many are outraged that, after six decades, a drug price suddenly surges more than 5,000%. Even with insurance, people could be paying around $150 per pill, according to the HIV Medicine Association.

Two Democrat presidential hopefuls, Bernie Sanders and Hillary Clinton, both expressed outrage over this sharp drug price hike and have proposed plans to reduce drug costs and to prevent seemingly drastic arbitrary drug price increases if elected.  Sanders drew Turing into an ongoing congressional investigation of drug price increases as Daraprim is not an isolated case of drug price spikes. Sanders along with his colleague, Elijah E. Cummings, stated that “Americans should not have to live in fear that they will die or go bankrupt because they cannot afford to take the life-saving medication they need.” Clinton echoed this sentiment by stating, “nobody in America should have to choose between buying their medicine and paying their rent.” Even industry representatives showed outrage.  In what was perhaps one of the most stinging criticisms, John J. Castellani, President and CEO of the Pharmaceutical Research and Manufacturers of America (PhRMA), the drug industry’s trade group, disavowed the company and Shkreli.  “PhRMA typically does not comment on matters related to individual company products or product pricing decisions,” he said in a statement. But, “Turing Pharmaceutical is not a member of PhRMA and we do not embrace either their recent actions or the conduct of their CEO.”

Turing CEO Martin Shkreli defended the new pricing of the drug by stating that the increase in revenue will be used to further research treatments for toxoplasmosis with fewer side effects, as well as allowing the company to invest in marketing and education to raise awareness of the disease. “This isn’t the greedy drug company trying to gouge patients, it is us trying to stay in business. This is still one of the smallest pharmaceutical products in the world,” he said. “It really doesn’t make sense to get any criticism for this.” He went on to say that Daraprim only has about an 80% success rate for treating toxoplasmosis, with also some possible toxic side effects. With increased funding for research and development, he believes that Turing can make a better drug with a higher success rate.  He went on to argue in an interview with CBS News that there “hasn’t been one pharmaceutical company focused on [the disease] for 70 years,” and this increase in funding will help the company dedicate itself to finding a cure to toxoplasmosis. He further stated that it would be losing money if it didn’t raise the drug price and now at the current price they are making “a reasonable profit, not excessive at all.”

Other professionals in the industry vehemently disagree. “Patients shouldn’t be taxed and charged for future research and development. Patients should pay for the drug they’re getting and what they need in the situation that they are” Oncologist Dr. David Agus said. He further added that “it’s predatory practice and it’s inappropriate.”

Shkreli emphasized the importance of the profitability success of his drug company which can be applied to other companies as well. “There’s no doubt, I’m a capitalist. I’m trying to create a big drug company, a successful drug company, a profitable drug company,” he said. “We’re trying to flourish, but we’re also — our first and primary stakeholders are patients, there’s no doubt about that.” However, the NASDAQ biotech index went down 4.41 percent on Monday September, 21st after headlines regarding this issue spread.

Questions of how the patients using the life-saving drug before or new users can obtain it if they cannot afford the new prices were prevalent immediately following Shkreli’s decision. After facing backlash, Shkreli made an announcement that if someone cannot afford the drug, the company will “give it away totally for free,” according to Bloomberg. He went on to state that the company would not deny someone a drug based on their inability to pay for it.

Dr. Judith Aberg, Chief of the Division of Infectious Diseases at Mount Sinai, raised concerns that hospitals may find the drug too expensive now after the price increase to keep in stock, which could result in treatment delays. She went further to say that “this seems to be all profit-driven for somebody and I just think it’s a very dangerous process.”

The case of Turing demonstrates that drug pricing still remains a hot bed issue. In December 2013, the FDA approved a new drug, Sofosbuvir, for the treatment of Chronic Hepatitis C.  The drug, commonly known as Sovaldi, was developed by Gilead Sciences, a U.S. biotechnology company.  The initial price tag of a 12-week treatment of Sovaldi was reported as approximately $84,000, or nearly $1,000 per pill.  This resulted in considerable media attention and an ensuing pricing controversy.  Editorials and op-eds sprung up around the country debating Sovaldi’s price tag and the broader debate over fair drug pricing.  Some politicians expressed outrage over the cost of new drugs, while others argued for free market pricing and rewards for the considerable R&D costs that biopharmaceutical companies incur when bringing a new drug to market.  The often niche drug pricing debate had officially spilled over into the mainstream conversation.  Payers, policymakers, pharma, patients, and providers all voiced strong— and sometimes contrasting— opinions.

To be sure, the issue of drug pricing is a hotbed issue that won’t go away anytime soon.

Patient-Focused Healthcare Trends

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A little girl at the doctors office sitting on the examining table with a doctor checking her heartbeat with a stethascope with a nurse in the background.

The patient-centric era of healthcare is not only possible – it’s happening now, as the landscape shifts towards a consumer-driven model of care delivery.  Recent examples are abound.

For instance, Novant Health, a leading healthcare provider with 15 hospitals and more than 350 physician practices, started an electronic medical records project called Dimensions in July 2011.  Later in May 2013, Novant began providing email visits and video visits with patients via MyChart, an electronic health records portal for nonemergency health issues.(1) Patients can interface with their physicians through computers and mobile devices.  This program substantially increased the efficiency and quality of healthcare.  Patients without emergency situations no longer needed to wait for appointments and pay high bills for treatments and medications. The integration of digital technologies is a breakthrough that enhances patients’ experiences.

In another case, Wake Forest Baptist also started to offer video visits in May for its 25,000 employees and their families.  Dr. Richard W. Lord, Wake Forest Baptist’s chairman of Family and Community Medicine, states, “There are a limit number of things that are allowed to be done through some of these platforms for video visits. So we wanted to go ahead and get that out and get it started so we could understand the demand for these types of video visits”(2).  These e-visits are redefining the patient-provider interface by reducing overall costs that are passed on to patients, and thus maximizing overall healthcare value for patients.

Additionally, the pharmaceutical industry is also starting to shift its marketing strategy from products to patients. Today’s increasingly well-informed patients are more involved in the processes of selecting and switching therapies.  This paradigm shift drives industry to increasingly focus on patients.  Marketers have already learned that it is essential to educate, communicate, and engage patients throughout their experiences with a disease. (3) They not only need to provide the highest quality of healthcare products for patients, but they also must focus on enhancing patients’ experience with their products throughout the entire therapeutic process.

To make medical research more patient-centric, top journals such as British Medical Journal, Research Engagement and Involvement, and Journal of Participatory Medicine recently introduced patient reviewers.  This trend gives patients a platform and opportunity to speak about their experiences. Patient involvement in all aspects of healthcare is to be welcomed, and patient perspective can play a much larger role in the development of future healthcare product and services.(4)

These are just a few of the many examples of the trend toward focusing on patient experiences and maximizing healthcare value for patients. CHI’s Healthcare Executive Roundtable will further discuss what patient-centric healthcare value means in the 21st century. This consumer-focused Roundtable Discussion brings the best and brightest healthcare leaders from around the globe together to share their ideas and expertise on the intersection of healthcare value and patient-centricity.  Please visit chisite.org/education/healthcare-executive-roundtable for more information.


  1. http://www.journalnow.com/business/business_news/local/local-healthcare-providers-offer-video-doctor-visits/article_b64176f1-f67f-5849-a546-832149a39080.html
  2. http://www.journalnow.com/business/business_news/local/local-healthcare-providers-offer-video-doctor-visits/article_b64176f1-f67f-5849-a546-832149a39080.html
  3. http://www.prnewswire.com/news-releases/consumers-forcing-pharmaceutical-industry-to-shift-its-marketing-focus-from-products-to-patients-300122018.html
  4. http://timesofindia.indiatimes.com/india/Patients-can-contribute-to-medical-studies-now/articleshow/48536349.cms

ACOs and the Affordable Care Act

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The transition period from any old, familiar system to a new one is difficult. Providers, pharma, patients, payers, and policymakers on all sides of the healthcare industry have encountered hurdles originating from the transition from the old and inefficient healthcare system to the new system born from the Affordable Care Act (ACA). Accountable Care Organizations (ACOs) were designed for healthcare organizations and providers that are already experienced in coordinating care for patients across care settings(1) and to help these providers transition from the past fee-for-service model to the new value-based healthcare model.

The ACA aims to provide healthcare for the U.S. population through expansion of public and private insurance coverage, coverage mandates, subsidies, and creation of insurance exchanges(2). But, in order to do so, the American healthcare system must transition from the fee-for-service model to the value-based model. The fee-for-service-model is an approach to healthcare in which providers are paid for each service (i.e. an office visit, test, or procedure)(3), whereas the value-based model is an approach in which a portion of the provider’s (i.e. hospitals, providers etc.) potential payment is tied to a provider’s performance on cost-efficiency and quality performance measures. While providers may still be paid fee-for-service for a portion of their payments, they may also be paid a bonus or have payments withheld. For value-based contracts, this bonus is not paid unless the provider meets cost efficiency and/or quality targets(4). The new model is now more patient-centric and the previous implicit and explicit costs, which previously fell on the patients, now fall on the providers of healthcare.

The implicit price, or the non-financial costs of transitioning, a challenge facing the ACA, is derived from incentives. Prior to the ACA legislation, the private insurance market allowed patients, providers, and payers to select the best fit for one another. This was a major component of the fee-for service-model. Patients had the incentive to stay healthy, so they did not have to pay money to the providers for treatment (this excludes the cost of medication, etc.). Providers had the incentive to treat as many patients as possible and order more tests to boost their incomes.

However, with the new value-based model, the incentives are shifted. Under the new value-based model, providers have the incentive to keep patients healthier. In fact, providers would prefer to treat only the healthy patients as providers are reimbursed with a set amount. This set amount comes from the ACOs, per patient, based on the old fee-for-service basis(5). Thus, providers want to treat healthy patients to maximize their revenues. Alternatively, the more patients a hospital or member of an ACO treats, the more the entity can counterbalance its revenue loss. Likewise, there is power that comes from belonging to an ACO: The ACO can earn extra revenue through gain sharing, sharing of savings resulting from collaborative efforts to provide care cost-effectively, with Medicare if the overall costs of care for the beneficiaries attributed to it are lower than predicted. This only applies if the ACO also meets stringent conditions of governance (clinicians, not insurers, run them), transparency, and quality performance.(6)

But, much like privatization, this leads to the problem of most providers not wanting to take on the costs of caring for the unhealthy portion of the population. The government purposely created ACOs to address such problems with the ACA. This is why ACOs are a necessary tool to help transition from the old to new model to counterbalance this incentive side-effect.

ACOs are groups of medical providers (i.e. physicians, hospitals, insurance companies) that accept payments based on quality under the Medicare Shared Savings Program (MSSP).(7) They were created in part by the ACA to aid hospitals and providers in providing value-based healthcare treatment. If providers do not spend all the money of the allotted subsidiary, then they are permitted to keep that extra revenue. However, if not, then the ACOs can owe money to Medicare.

Another reason why ACOs are crucial to a smooth transition from the new to old models results from the payment models, which cannot be separated from changes in care delivery. They require increasingly tight hospital-physician alignment, which can be achieved through physician employment, entering into service line co-management arrangements, clinical integration, or other methods. Thus, to operate effectively, there must be better communication and fewer occurrences of asymmetrical information under the value-based model in order to provide the best quality of healthcare possible throughout the transition.

Although hospitals are required to keep track of the number of patients treated for certain physical ailments under the ACA, all hospitals participating in ACOs are required to supply additional metrics to improve clarity. For example, the ACA will require Medicare ACOs to report 33 different quality metrics.(8) This, along with other incentives to keep better track of patient records and become more organized, helps improve clarity and transparency of the healthcare system.(9) Hospitals will have to become very efficient and become very familiar with their cost structure in order to reduce costs as the losses have now shifted from the patient to the ACO infrastructure. With this clarity, it will be easier for consumers, producers, and the government to track changes, learn from mistakes, correct tweaks, and smooth the transition from the past model to the value-based model.

In the end, there appears to be both pros and cons to ACOs as a method of helping the providers, pharma, patients, payers, and policymakers transition from one model to another. With proper implementation, time, and further research, the Affordable Care Act will be improved so it can improve the quality of healthcare for all Americans.

However, a new problem with ACOs has not been addressed yet: How will this affect the patient-centric value-based model? The Center for Healthcare Innovation’s Healthcare Executive Roundtable on October 15, 2015 will address new questions in this uncertain transition period. This consumer-focused Roundtable Discussion brings the best and brightest healthcare leaders from around the globe together to share their ideas and expertise on the intersection of healthcare value and patient-centricity.  Please visit http://www.chisite.org/events/healthcareValueRoundtable for more information.


  1. https://www.cms.gov/Newsroom/MediaReleaseDatabase/Fact-sheets/2015-Fact-sheets-items/2015-01-26.html
  2.  https://en.wikipedia.org/wiki/Accountable_care_organization#In_the_Affordable_Care_Act
  3. http://www.medicaid.gov/medicaid-chip-program-information/by-topics/delivery-systems/fee-for-service.html
  4. https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&ved=0CB0QFjAAahUKEwienIGUuvzHAhVMEZIKHXyvBes&url=http%3A%2F%2Fconsultant.uhc.com%2Fassets%2Fvbc_overview_flier.pdf&usg=AFQjCNEN-MYB3U7OdqU8OSch5T5HZXZNYg&bvm=bv.102829193,d.aWw&cad=rja
  5. https://www.healthcatalyst.com/hospital-transitioning-fee-for-service-value-based-reimbursements
  6. http://www.fiercehealthcare.com/story/will-acos-show-financial-returns/2012-01-23
  7. http://www.hhs.gov/news/press/2014pres/09/20140916a.html
  8. http://www.wsj.com/articles/SB10001424052970204720204577128901714576054
  9. http://www.wsj.com/articles/SB10001424052970204720204577128901714576054

Complications in International Drug Pricing

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Drug pricing in the United States is a complicated issue that has recently been the focus of healthcare legislation and oft contention between pharma, providers, and patients. Major sticking points for the consumer are typically the most visible: lower comparative prices internationally, high priced drugs for high-profile indications like cancer, and the perception of large yearly pharma and biotech revenues. One such example is the coverage of drugs for orphan diseases that have skyrocketed, in some cases reaching over $250K for a single treatment.  While these may be off-putting at first glance, there are many social and economic factors that play into the cost of, what may seem to be, unnecessarily high drug pricing. Here, I seek to identify several of the contributing factors to drug pricing and address concerns relating to lower comparative prices overseas.

A major reason for the costing complexities is the overwhelming fact that the drug industry in the United States is simply complicated. In terms of competitive market economics, the consumer and producer of an entity will traditionally set the supply and demand curves. However, in the drug market, payers and government regulation are thrown into the mix and will act to modulate and complicate market pricing. There are other such considerations that affect pricing, such as the amount of money that pharma companies pour into research and development, money spent on clinical trials and the approval process, and costs associated with infrastructure.

That said, many Americans point to international drug prices being cheaper – most notably in Canada and Mexico – as a reason for high relative healthcare spending. Current estimates suggest that roughly 1 to 10 million Americans have purchased drugs from Canada alone. Access to Canadian pharmacies via the internet has likely increased and helped to keep them relevant in the American healthcare dialogue. Further, in the years since 2004, Americans have also turned to purchasing relatively cheap prescription drugs from other countries such as Thailand and India, despite increased risks of these drugs being counterfeit.  It is interesting to note that while Canadians do generally have cheaper brand name drugs, the prices of their generic medications typically run higher than other countries.

A major reason why drugs are cheaper internationally is due to government intervention either setting price caps or negotiating prices with manufacturers. Typically the government only intervenes when they sense that competition within a market does not exist, or they suspect price gouging by participants in the market. Further, government participation within a market, especially as complex as the Pharma industry, would only serve to complicate issues further, as was seen in the Netherlands when generic manufacturers were actually incentivized to increase prices to meet the reimbursement limit rather than letting the competitive market dictate prices. To this extent, Canadian prices are artificially cheaper due to a compulsory licensing period when generics were actually encouraged, contributing to their relatively higher price today.

A very public manifestation of the rising cost of pharmaceuticals in the U.S. is the lower relative cost in other countries. While this is generally true, there are many factors that play into an already very complicated industry, complicated pricing system, and complicated approval processes. Another major factor is government intervention setting price caps or negotiating prices. The discussion of drug pricing is far too extensive for a short blog post, however, I wanted to point out the fact that simple benchmarks between American and foreign drug prices cannot necessarily be drawn. In such a complicated global industry, it is necessary to identify all of the things that go into drug pricing. In future posts, I will continue to look at drug pricing in the United States and identify, among other things, high orphan drug costs and seemingly ever-increasing drug company revenues. For further CHI Research on costing issues, see: http://www.chisite.org/research/costIssuesofNewInterventionsonHepatitisC


  1. Bhosle, M., & Balkrishnan, R. “Drug Reimportation Practices in the United States.” Ther Clin Risk Manag. 2007 Mar; 3(1): 41–46. http://www.cmaj.ca/content/170/6/945.full?etoc
  2. Schoonveld, Ed. The Price of Global Health. Burlington: Gower Publishing Company, 2015. Accessed: books.google.com

CHI Leads 3rd Annual Understanding Value in a Consumer-Oriented, Patient-Centric Era Roundtable

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The Center for Healthcare Innovation (CHI) is organizing our 3rd annual healthcare executive roundtable.  This year’s roundtable, entitled Understanding Value in a Consumer-Oriented, Patient-Centric Era, will take place on Thursday, October 15th, 2015 at 1:00PM EST in New York, NY, USA.

The healthcare executive roundtable an exclusive, intimate discussion that brings together the top thought-leaders, visionaries, and executives from the patient advocate, provider, payer, pharma, and pharmacy sectors to discuss and increase understanding of what patient-centric healthcare value means in the 21st century.  The healthcare landscape has rapidly shifted towards a consumer, patient-centric model of care delivery.  Today’s patients have become more empowered in their health and well-being, better informed, and more financially invested than ever before.  This paradigm shift has had dramatic implications not only for patients, but also for providers, pharma, and payers, as these latter groups attempt to define and deliver patient-centric healthcare value.  Furthermore, the roundtable explores the relationship between the definition of value and quality, access, and cost issues.  As healthcare costs continue to rise, capitation payment models become the new norm, and incentives shift as a result of moving to a value-based healthcare system, understanding and integrating patient-centricity into healthcare value will become more important than ever.  This consumer-focused discussion brings together the best and brightest healthcare leaders from around the globe to share their ideas and expertise on the intersection of healthcare value and patient-centricity.

Past years’ roundtables have featured executives from: Aetna, AstraZeneca, Bristol-Myers Squibb, Columbia University, GE Healthcare, Genzyme, Humana, inVentiv Health Clinical, Johnson & Johnson, Kaiser Permanente, Merck, Metropolitan Chicago Healthcare Council, Navigant Consulting, New York City Health & Hospitals Corporation, Novartis, NYU Medical Center, Otsuka, Owens & Minor, Pall Life Sciences, Pfizer, Princeton University, Quest Diagnostics, Stanford, TEDMED, Teva Pharmaceuticals, and the University of Pittsburgh Medical Center.

Please visit http://www.chisite.org/ for more information.

Video Recap of Diversity Symposium now Available

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The video recap of CHI’s 5th annual Diversity, Inclusion, & Life Sciences Symposium is now available at https://www.youtube.com/watch?v=6JgrJmOOSjA

The symposium is the world’s leading forum focused specifically on diversity, inclusion, healthcare, and the life sciences. It is an interactive and collaborative discussion for life science and healthcare executives, professionals, patient advocates, entrepreneurs, policymakers, researchers, scientists, technologists, and academics to discuss best practices, challenges, and opportunities of topics such as: Understanding Obstacles to Clinical Trials & Healthcare for Underrepresented Populations, Leveraging Employee Resource Groups (ERGs) for Success, and How to Recruit & Develop a Diverse, Talented Workforce. Attendees will gain valuable knowledge, information, and insights, as well as meet new colleagues and connections.

Just some of the organizations represented included: AbbVie, American Diabetes Association, American Medical Association, Astellas, Baxter, BlackDoctor.org, Dell, DePaul University, GE Healthcare, Genentech, Genzyme, GSK, Hospira, inVentiv Health Clinical, Lundbeck, Lurie Cancer Center, MCHC, Northwestern University, Novartis, Pfizer, Quest Diagnostics, Sanofi, Takeda, and the University of Chicago Medical Center.  The symposium was sponsored by Sanofi, Takeda, the Lurie Cancer Center of Northwestern University, and the Clinical Research Exchange. The symposium is hosted by the Chicago offices of Seyfarth Shaw.

Next year’s symposium will be Wednesday, June 8th, 2016.  For more information, please visit lifesciencesdiversity.org.


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