Chartis Top Reads – Week of January 17 - 23, 2021

Our research team breaks down this week’s top healthcare news.


Top Reads Overview

In an age of unprecedented change, staying current has never been more important. Our team at Chartis is curating news most relevant to the healthcare industry and tracking the topics that are trending on seven key issues: high reliability care, digital and advanced technology, financial sustainability, health disparities, the health ecosystem of the future, partnerships, and the provider enterprise. Each week, we break down what’s happening and why it matters.

The State of COVID-19

The Buzz This Week

This week, nearly one year to the day after the first COVID-19 case in the United States was confirmed, another grim milestone was reached as the country surpassed 400,000 COVID deaths. Although the United States makes up only 4 percent of the world’s population, 20 percent of worldwide COVID deaths were in the United States, with the majority of those deaths coming this fall and winter after it was already clear social distancing and masking could help to prevent the spread.

How did we get here? The second surge happened soon after the rush to reopen last spring against medical advice and without full knowledge of how to keep our communities safe through reopening. In the summer, COVID cases surged and never again dropped below 20,000 cases per day. The United States has also been harmed by vastly different state and local government responses with no clear federal response plan. Even once it was clear masks and social distancing would diminish the spread, state leaders took different approaches on restrictions, and the outcomes have reflected the disparities in policy. Washington state, the location of the first COVID outbreak, and Vermont have some of the strictest mitigation measures and are among states with the fewest deaths per capita.

Why It Matters

As we move into Year Two of the global pandemic, at least three different virus mutations have been found in the U.K., South Africa, and Brazil. When evaluating mutation impact, scientists consider three factors: severity, protection, and transmissibility. Severity does not appear to be different in the variants than the original virus. Protection may be slightly impacted, but there is optimism the current vaccines could still provide defense or be easily modified (potentially as quickly as six weeks) to be efficacious against the variants, much like the flu shot is each year. The final factor, transmissibility, is the biggest cause for concern — it does appear that these variants spread more easily. Because of this, experts believe it is possible that one of the new variants could be the dominant form of COVID by March, making it all the more imperative that precautions are taken now and the vaccine rollout continues as efficiently and equitably as possible.

Thus far, the rollout has not been very successful on either metric. Data was released this week, showing that the country is already falling behind on equitable distribution. Currently, 3 percent of Americans have been vaccinated, but in the 16 states that have released data, white residents are being vaccinated at two to three times the rate of Black residents. Initial vaccinations were mostly focused on healthcare and frontline workers, a group that is more racially diverse than the overall population, begging the question, “Why the discrepancy?” Some of the difference has come from a lack of public health resources and trustworthy experts providing education, answering questions, and correcting misinformation. Another issue is lack of access to the vaccine. At one health system, janitorial staff did not have access to hospital email and so could not sign up for their vaccination, despite being eligible. In most locations, sign-up for the vaccine is done online, and many of the vaccination locations are drive-throughs. Lack of access to technology and transportation is a huge barrier. It is vital we determine how to equitably vaccinate the population to ensure all communities are protected.

Digital and Advanced Technology

The Buzz This Week

The digital transformation of healthcare, often touted as a key ingredient in improving health and healthcare, lagged for years as it faced a variety of headwinds. For example, the Food and Drug Administration didn’t have an approach to evaluate and approve digital diagnostic and therapeutic solutions until 2018 (via The Digital Health Innovation Action Plan) and is still piloting an approval and certification process. Busy practitioners and administrators had little time to learn new technologies and incorporate them into already complex workflows. Many consumers — eagerly adopting other new technology, like smartphones — appeared overwhelmed by the multitude of available healthcare-related tech devices and platforms and didn’t see much value in them. For providers and consumers, the lack of financial incentives further hindered adoption.

However, the hurdles are lowering, particularly this past year. Health insurers and employers are increasingly providing incentives to adopt technologies to track fitness, help with smoking cessation, manage chronic conditions, and support medication adherence. Consumer and healthcare provider willingness to use some technologies is increasing — telehealth adoption skyrocketed to a high in April 2020 because of the COVID-19 pandemic, and though overall usage has dropped since then, exposure to and experience with the technology supports the likelihood of an enduring role in our health and healthcare.

Technological advances have allowed a growth in hospital-at-home programs, supporting the need to keep patients out of hospitals through the pandemic and accommodating patients’ increasing desire to receive acute care at home. Dubbed “connected health at home” by the American Hospital Association, valuable monitoring devices that track key vital signs (such as a biosticker to monitor respiratory rates) are also proliferating.

In addition, while our economy has suffered in many ways during the pandemic, venture investment in health tech start-ups reached a record $14.1 billion — 1.7 times the previous record set in 2018, according to Rock Health. There doesn’t appear to be a lack of resources for continued development in digital health applications, such as virtual care and physician consults, self-service diagnostic tools, remote patient monitoring, medication adherence, and wellness applications.

Why It Matters

Will all these changes collectively shift the tide of digital health adoption by consumers and healthcare providers and positively impact health and healthcare? While many barriers to adoption have been removed, several fundamental elements also must be in place to increase health tech adoption and realize its full value:

1. Health tech solutions must meet a need and add value. When fitness wearables first emerged, there was much excitement over how the data could not only encourage health behaviors but also help physicians track their patients’ activity and somehow support clinical decision-making. However, the trackers were initially only shown to offer marginal benefit to consumers, and consistent, long-term usage was lower than expected. Furthermore, many physicians didn’t see the value or applicability in their clinical practice. Michael Hodgkins, Chief Medical Information Officer for the American Medical Association, said in 2019 with regard to fitness wearables in an interview published by Repertoire, “The predicate for innovation is to always ask ‘What problem am I trying to solve?' Many well-meaning entrepreneurs develop a passion for an idea but don’t necessarily have the background in healthcare to really understand if that idea is something that addresses a real need.” Fitness trackers and wearables may not be a total flop in medicine, though — advances in some have enabled the detection of atrial fibrillation, and results from a large study suggest that information collected from wearables can predict the onset of COVID.

2. Health tech must be user-friendly. We have seen provider and consumer adoption of virtual care rise in all age cohorts during the pandemic. But for some other digital tools and the related data collected, "we haven't really told doctors how to use this information. Doctors weren't trained on this in medical school," as Neel Chokshi, Medical Director of the Sports Cardiology and Fitness Program at Penn Medicine, has observed.

3. Customization is key. In other industries where tech solutions have been widely adopted, consumer preferences and behaviors are carefully tracked, and the technology adjusts to the end user. Amazon makes suggestions for products based on past purchasing patterns or searches. iPhones can be customized to include only apps the user selects, organized in a manner of their choosing, and new apps are suggested based on past downloads and purchasing patterns. In an article recently published in Harvard Business Review, the authors explain, “These companies track individual attributes, including behaviors, preferences, and experiences to create a ‘behavioral phenotype’ that is then used to predict how to tailor information so it provides a better experience.” One-size-fits-all is not applied in other industries and will not work in healthcare either.

4. Data security is paramount. Without airtight privacy and data security measures, health tech companies will face regulatory penalties and will reduce consumer confidence in their products.

With the record-breaking investment in health tech start-ups in combination with providers and consumers warming to the idea of health tech incorporation into health and healthcare, it is certain that there will be some digital health solutions that meet the criteria above and will succeed. However, the market for these start-ups is currently crowded, and we will likely see a consolidation or contraction over the next few years.

Partnerships

Recent Buzz

Healthcare merger and acquisition activity stalled due to COVID-19, producing an 11-year annual low in 2020, per Irving Levin Associates. However, deal activity appears to be rebounding: 339 healthcare services deals were announced in the fourth quarter of 2020 — a 30 percent increase over the third quarter – and 139 deals have already been announced as of January 15, 2021.

Amidst this flurry of deal activity, federal regulatory agencies are imposing a higher degree of scrutiny, particularly for hospital and health system mergers. The Federal Trade Commission (FTC) opposed the Tenet-Methodist Le Bonheur deal, causing the organizations to drop it in December of 2020. In the same month, the FTC opposed through a lawsuit Hackensack Meridian Health’s proposed acquisition of Englewood Health — that deal was also abandoned. And this month, Massachusetts General Hospital, part of Mass General Brigham (formerly Partners Healthcare) has halted its plans to acquire Exeter Hospital in New Hampshire after opposition from the New Hampshire Attorney General.

Why It Matters

With constrained margins and challenges posed in typical M&A deals, health systems are looking to produce margins or lower costs in other ways. They are also looking to diversify their portfolios, forming collaborations for purposes other than to grow scale, serve a broader population, or capture efficiencies. For example, Heritage Group, a large private equity firm, recently closed a new $300 million fund, 70 percent of which is supported by capital from Intermountain Healthcare, Memorial Hermann, and Trinity Health. Advocate Aurora Health, Banner Health, Community Health Systems, Northwestern Memorial Healthcare, and Spectrum Health, among others, are also investors. The executive director of Spectrum Health Ventures was quoted in Modern Healthcare recently, underscoring that expanding its investment portfolio and lowering the health system’s internal costs through the companies Heritage funds are just as important as getting a financial return.

In a unique collaboration brought on by the pandemic, a group of big tech companies — including Epic, Cerner, Change Healthcare (recently acquired by UnitedHealth Group’s Optum), and Oracle, among others — have partnered with the Mayo Clinic to develop a COVID-19 “passport.” This would allow people to show they have received the COVID-19 vaccine on a platform that is digital, accessible, interoperable, and trusted. It is anticipated that vaccination will be a requirement for flying on major airlines and potentially returning to some work environments.

While healthcare services M&A is not expected to dwindle, the increase in alternative and creative partnerships may have an impact on the healthcare landscape and ecosystem.


Contributors

Roger A. Ray. MD
Chief Physician Executive
[email protected]

Alexandra Schumm
Principal, Vice President of Research
[email protected]

Abigail Arnold
Senior Research Manager
[email protected]


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Past Top Reads

JANUARY 2021
Week 2
Week 1

DECEMBER 2020
Week 2
Week 1

NOVEMBER 2020
Week 3
Week 2
Week 1

OCTOBER 2020
Week 5
Week 4
Week 3
Week 2
Week 1

SEPTEMBER 2020
Week 4
Week 3
Week 2
Week 1

AUGUST 2020
Week 4

Chartis Top Reads - Week of January 17 - 23, 2021 - The Chartis Group