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In Nashville, a History of Collaboration is Spurring Healthcare Innovation at an Accelerated Pace

June 22, 2018
by Heather Landi
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While Nashville may be well known as “Music City” for its rich history of country music, the city also has gained recognition as an incubator of healthcare innovation and services.

Nashville is home to 400 healthcare companies, with 18 publicly traded healthcare companies headquartered there, generating more than $84 billion in annual revenue and more than 500,000 jobs. According to a study by the Nashville Health Care Council and Nashville Capital Network, the city is in the midst of a venture capital boom, with healthcare IT leading this surge in investment.

More than $940 million was invested in Nashville healthcare companies by venture capital firms from 2005 to 2015; that amounts to 60 percent of Nashville’s total venture capital investment dollars over that time period, according to the study. Venture capital investment in health IT companies has grown from $2 million in 2009 to a peak of $62.5 million in 2014. Health IT venture capital investment surpassed that of healthcare services companies in 2012, and now represents the largest share of VC investment in the Nashville healthcare market.

With the dynamic changes occurring in health care, new health care companies are being founded in Nashville at an accelerated pace. These innovative new companies are forming partnerships with the city’s healthcare community to address the new and evolving challenges brought about by the transforming regulatory landscape and the pressing need for cost and quality improvements in the U.S. healthcare system, according to Hayley Hovious, president of the Nashville Health Care Council.

Nashville has a legacy of healthcare leadership, entrepreneurship and innovation, Hovious says, and this has helped to foster collaboration and connectivity. The city has been making its mark on the national healthcare landscape since the founding of the Hospital Corporation of America (HCA) in 1968, and now companies such as Acadia Healthcare, Community Health Systems and LifePoint Health are headquartered in Nashville as well.

“Nashville is called the Silicon Valley of healthcare just because of the number of companies that have developed here. There is a really deep well of talent and knowledge about the delivery of healthcare here,” she says.

Hayley Hovious

The health IT innovation happening in Nashville, and around the country, will be explored during the upcoming Nashville Health IT Summit, sponsored by Healthcare Informatics, June 28-29. Learn more here.

The Nashville Health Care Council, which was founded in 1995, is helping to drive interdisciplinary collaboration within the healthcare market by serving as a catalyst for leadership and innovation. The council has an annual budget of $3.3 million and brings together top-level healthcare executives for meetings, public forums and networking events. The council’s membership includes leaders in hospital management, outpatient services, population health, behavioral health, senior living, pharmaceutical services, academic medicine, health IT as well as professional services firms.

The council also focuses heavily on leadership development through its Fellows program that aims to bring together select industry executives to explore new solutions that meet the challenges facing the U.S. healthcare system.

“In the Fellows program, we pair senior executives with other executives across the industry with the goal being to really break down silos and get them to think differently about healthcare,” she says. “We’re bringing people together who wouldn’t normally sit down next to each other and have a conversation on how we can change things. People who get together and say, ‘I’ve got an idea for how we can work together to change things.’ And, we’re starting to see that happen.”

Healthcare leaders in other cities are trying to replicate the success that Nashville has seen in its efforts to foster collaboration and advance technology development. In Austin, Texas, the Austin Healthcare Council launched in early 2017 to bring together executives in the medical and biotech fields to communicate and collaborate. In October 2016, the Health Care Council of Chicago was formed to foster connectivity in the Chicago-area health care community.

Hovious says the growth in healthcare-focused councils points to the recognition that there needs to be more collaboration in healthcare. “There is a growing awareness that there is a lot of value in bringing people together and convening the industry experts,” she says.

While the Nashville Health Care Council can serve as a model to other cities, Hovious contends that Nashville has a unique healthcare ecosystem that spurs innovation. “There is a long history of entrepreneurship here, and the market here has a long history of investing in itself. We’ve had the fastest growth in venture capital investment, while the rest of the nation is seeing growth of 40 percent, we’re at 400 percent growth,” she says.

There is a strong collaborative spirit among healthcare organizations in Nashville as well, she notes, particularly around sharing clinical best practices to improve patient care. “When we bring in executives, they are struck by how much people are willing to work together here, and that’s not necessarily the case in other cities. Even the hospitals that are providing care at the local level are far more willing to talk to each other and work with each other; it’s just a different kind of environment.”

And, she notes, “There are also vast quantities of data that reside here. As a data repository for healthcare, particularly on the clinical side, you can image having the headquarter companies here that have a national reach, like an HCA, a LifePoint Health, a CHS, and Acadia.” She adds, “Vanderbilt (University Medical Center) alone has one of the largest genomic sets in the NIH (National Institutes of Health), and that’s in addition to their clinical data.”

As a result, there are many healthcare companies in the Nashville market working on data-driven initiatives, she says. “They are using AI (artificial intelligence) and pairing it with natural language processing to go back through doctor’s records and start to identify problems at the point of care. We have a number of other companies that are taking data around opioids and working to be able to predict and prevent opioid abuse using this data.”

Hovious also points to the Center for Medical Interoperability, which opened its headquarters in April 2017. The center is a cooperative research and development lab founded by health systems to simplify and advance data sharing among medical technologies and systems. In an interview with the Nashville Business Journal, the center’s CEO Ed Cantwell said Nashville was the ideal location for the center due to the proximity of the area’s major health systems, namely HCA Holdings, Inc., Community Health Systems, LifePoint Health, Vanderbilt University Medical Center and Ascension Health (represented here by its local system, Saint Thomas Health).

“The ‘procurement power’ of those groups makes it more likely they can influence vendors to work with the center to achieve its goal of solving the interoperability problem, Cantwell said in the article.

Looking ahead, with the unprecedented pace of change occurring in healthcare, the need to break down silos and to spur collaborative thinking and innovation will only continue to grow, Hovious says. Among the health IT and digital health companies in the Nashville market, Hovious is seeing a growing focus on the patient experience. She points to healthcare startups such as Narus Health and Aspire Health which are both focused on providing a personalized approach to palliative care through a digital platform.

“We’re starting to see more of that patient focus. How do you give people access to their data? How do you help people have a more personalized path in the system? How do you make sure their care treatment paths are tailored to them?” she says, adding, “The problem we struggle with in healthcare is always that the pace of change in technology is exponential. Everyone sees all this potential happening, and the question is, ‘How are companies focusing on the really important things?’”

“What we’re seeing In Nashville certainly is a focus on the consumer, and also a focus on how you use data. The great thing is that we have so much of it, but how do you make that data something that you can harness and use to improve care?” she says. “There is so much healthcare delivered out of Nashville. I do think we have an opportunity to work with others, such as Silicon Valley, because there is such a deep well of knowledge here on how to drive efficiencies and improvements at scale to actually affect patients and make care better.”


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Take the Lead to Deploy Emerging Technologies for Improved Outcomes

December 14, 2018
by Brad Wilson, Industry Voice, former CEO of Blue Cross and Blue Shield of North Carolina
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It is a thrilling time to work in healthcare. As the former CEO of Blue Cross and Blue Shield of North Carolina (Blue Cross N.C.), I have had the opportunity to be at the forefront of using new technologies to improve outcomes for our members. Now as a member of the CitiusTech advisory board, I continue that focus on emerging technologies, such as artificial intelligence (AI), and the potential to accelerate the shift to value-based care and improve the healthcare system in material ways.

AI is starting to make a distinct impact in helping providers deliver more effective care, lower costs and create a more consumer-friendly healthcare system. Blue Cross NC recently piloted the use machine learning, a type of AI, to identify spikes in prescriptions for a costly medication. The company reached out to doctors who had been prescribing the medicine in significant numbers. Alerting just one particular physician practice to a generic equivalent brought estimated annual savings of $750,000 for Blue Cross NC customers. The potential of AI is not measured only in dollars, but cost savings are an important consideration.

Machine learning works by applying sophisticated algorithms to rich datasets from electronic medical records (EMRs), patient-reported data, claims and a host of other sources. To be successful, this requires both access to data and significant investment to support the depth and breadth of data analytics capacity and capability.

Yet, historically, one of the biggest barriers to value-based models has been providers’ and payers’ possessiveness of their own data. There is a good business reason for that possessiveness: competitive advantage. The different parts of the healthcare system do not want competitors to use shared data to steal business. But the guarding of data drives healthcare costs higher and, more importantly, makes delivering better, more personalized healthcare more difficult. In the past, power came from hoarding information; today, there is power in serving as an information hub.  Healthcare providers and payers are starting to understand this and there is more willingness to work together in sharing what has traditionally been closely held information.

As consumers’ voices gain in numbers and decibels, it’s clear that analytics technologies that can lead to better care at lower cost are desperately needed, particularly for payers. But the entire healthcare industry needs to move more rapidly. Health plans need to enrich, deepen and widen their analytics capabilities as quickly as possible. If they don’t, we will continue to see disruptors like Google, Apple, and Amazon enter the healthcare market—companies that have a demonstrated ability to be nimble and maximize the impact of their data.

For both providers and payers, forward-thinking organizations recognize that building their own data analytics solutions is not always the answer. Often there is not enough time, resources or enough of the right talent to deliver the capacity and capability required. Fortunately, robust turnkey solutions coupled with deployment expertise are available to efficiently and cost-effectively integrate data and analytics within an organization’s clinical, financial and administrative processes.

As health plan executives map out their strategic plans, look to these emerging technologies as accelerators for leveraging data to manage risk, optimize performance, engage consumers, enhance population care, and improve clinical outcomes to reduce readmissions and further drive evidence-based medicine. The opportunity is here to transform healthcare delivery in significant ways. Success will go to those organizations that understand the potential of these new technologies and take the lead to deploy them effectively—today. 

Brad Wilson is former CEO at Blue Cross and Blue Shield of North Carolina and as a member of the new CitiusTech Advisory Board. Mr. Wilson joined Blue Cross NC in 1995 as General Counsel and held a variety of senior-level positions before being named CEO in 2010. Under his leadership, Blue Cross NC grew to a $9 billion company serving over 3.8 million customers. Mr. Wilson has also served as Director of the BCBS Association, AHIP and numerous other national and state healthcare organizations.

 


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Investors Have Strong Interest in HIT Sector, Despite Valuation Concerns

December 13, 2018
by Heather Landi, Associate Editor
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Healthcare IT remains a hot investment sector despite concerns about these companies being overvalued, according to KPMG-Leavitt Partners 2019 Investment Outlook, a survey of health care investment professionals.

Looking ahead to 2019, more than a third of respondents (34 percent) said they were most interested in investing in health care IT, followed by care management (31 percent), home health (23 percent), retail-centric medical groups (22 percent) and primary care practices (21 percent).

New York City-based KPMG and Leavitt Partners, based in Salt Lake City, surveyed 175 respondents online from corporations, health systems, investment banks, venture capital and private equity firms between September 17, 2018 and October 21, 2018. Of those surveyed 32 percent were C-suite executives; 29 percent were principal, partner or managing director; 32 percent were vice president or director; 6 percent were analysts/associates and 2 percent held other titles.

“We are not surprised by the great deal of interest in health care IT and care delivery outside the hospital,” Governor Mike Leavitt, founder of Salt Lake City-based Leavitt Partners and former Utah Governor and U.S. Health & Human Services Secretary said in a statement. “As health care continues to march toward value, the emphasis on moving care to lower cost sites and enhanced coordination will continue, and those who can increase quality and lower cost will win.”

According to an October report from Rock Health, 2018 is already the most-funded year ever for digital health startups. Digital health funding in this past third quarter soared to $3.3 billion across 93 deals, pushing 2018 funding to $6.8 billion, already exceeding last year’s annual funding total, which was $5.7 billion, by more than a billion dollars.

Drilling down into respondents’ predictions for investment activity in 2019, in the health care and life sciences market, 96 percent of respondents see either a lot or a moderate amount of investment in health IT and data next year, while a similar percentage (90 percent) see significant or moderate investment in outpatient services. Forty-four percent forecast a lot of investment in post-acute care services, 39 percent predict significant investment in provider services and about a quarter of respondents believe there will be a lot of investment in managed public programs, payer service providers and pharmaceutical and biotech manufacturers. Eighteen percent believe there will be significant investment in medical device and diagnostics and medical equipment.

The survey results indicate there is concern that health IT is overvalued, yet investors believe there is some room to climb.

The majority of investment professionals see health care IT investments as an overvalued sector (64 percent), yet 40 percent expect the valuations to increase in 2019 while 51 percent see them staying the same. About two-thirds of respondents (62 percent) think the health IT sector will grow faster than the market in 2019, and three quarters of investment professionals see increasing competition in the health IT market. Investors also estimate that the average purchase price multiple, in terms of EBITDA, will be 12.5 for the health IT sector in 2019. Survey respondents expect ongoing demand for tools to help with consumerism will impact investment and deal making in the sector, according to the survey.

About four in ten respondents believe the healthcare market is experiencing a “moderate bubble,” while 9 percent believe the bubble will likely burst.

Care management solutions for risk-bearing providers, a highly competitive sector which helps coordinate care of the chronically ill or seriously injured, are expected to be the second highest sector for investment behind health care IT, similarly driven by trends of consumerism and increased focus on early care interventions.

Looking at potential drivers of M&A activity in the health care and life sciences sector in the coming year, 64 percent of respondents cited cost consolidation and economies of scale, while 45 percent cited accretive acquisition strategies. Forty percent of respondents see changing payment models as a driver of M&A activity, and 38 percent cited pressure from competition. Other drivers cited by respondents include expansion/divestiture of service areas (25 percent), geographic expansion/contraction (24 percent), revenue synergies (22 percent), need to deploy cash on balance sheet (17 percent), and regulations and legislation (13 percent).

“Deals are largely being driven by the need for savings, economies of scale, and improving cash flow or accretive earnings per share,” Carole Streicher, Deal Advisory leader for healthcare & life sciences at New York City-based KPMG, said in a statement. “Secondarily, there is a bit of a defensive posture motivating investments as health care organizations contend with competition and reimbursement models connected to quality and efficiency, as well as the entrance of tech firms investing in the sector.”

 

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Report: Massachusetts General Hospital Targeting Various Blockchain Use Cases

December 7, 2018
by Rajiv Leventhal, Managing Editor
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Massachusetts General Hospital (MGH) researchers are partnering with MediBloc, a Korean healthcare blockchain company, with the aim to improve patient data sharing and storing, according to an article in CoinDesk.

Per the article, the Laboratory of Medical Imaging and Computation by MGH and Harvard Medical School will be escalating research in a variety of broad areas “from medical image analysis to health information exchange by leveraging our cutting-edge technologies such as blockchain, artificial intelligence and machine learning,” according to Synho Do who is the laboratory’s director.

Do specifically told CoinDesk, “In collaboration with MediBloc, we aim to explore potentials of blockchain technology to provide secure solutions for health information exchange, integrate healthcare AI applications into the day-to-day clinical workflow, and support [a] data sharing and labeling platform for machine learning model development.”

Interestingly, MGH won’t be using any real patient data for its research, but rather simulated data, according to officials, since the various institutions that have the real patient data keep it in a way “that can’t be shared securely and often is in various incompatible formats.”

MediBloc’s CEO noted that the company is not only developing a distributed ledger for storing and sharing medical data, but also working on a tool that would convert data now held by hospitals from existing formats to a universal one, per the article.

For this initiative, MediBloc has already gotten partners across Asia, including eight healthcare organizations and 14 technology companies, officials said.

Earlier this year, a testing environment version of the blockchain was launched, and the network is expected to go live before the end of the year before becoming fully functional in the second quarter of 2019. Furthermore, there are also apps in the works that are planning to go live next year, with one of them, currently in a beta testing phase, “designed for patients to sell the information about their symptoms and the prescriptions they get to MediBloc. After that MediBloc will analyze that data and sell the analysis to pharmaceutical and insurance companies,” according to the story.

In the end, the main goal of the blockchain project will be to let patients independently decide what to do with their information.

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