this article traces how the once-darling Babylon Health became an “unmitigated disaster”, for which the UK’s National Health Services (NHS) has paid a significant price.
Babylon used its vision for a privatized NHS with slashed wait times and AI-powered treatment to boost its public offering, via a special-purpose acquisition company, with a $4.2B valuation in June 2021. Many of its promises have been revealed to be overly ambitious, if not doomed from the start, with its AI-powered diagnostics and funding model proving especially flawed.
A pivot to managed care in the US failed to stem a tide of mounting losses, and the company announced plans to go private last week.
The Gist: There are myriad lessons from the demise of Babylon, a marquis example of a “digital-first” healthcare startup that burned through capital and crashed with the end of the era of cheap money:
virtual care isn’t a magic wand to reduce wait times, and healthcare startups (and their investors) should think as much about the path to profitability as they do about rapid growth.
While Babylon did have its finger on the pulse of promising technologies, it applied them irresponsibly: for patients, inaccurate AI diagnoses could be worse than no care at all.
Amid the current AI frenzy, healthcare would benefit from more “slow AI”, developed with clinical and scientific collaboration and rigorous academic study design and testing, over “fast AI”, with pressure to generate returns for private investors pushing entrepreneurs to rapidly develop and deploy technology.
Value-based care is widely accepted as key to the health system’s transformation. Changing provider incentives from volume to value and engaging provider organizations in risk-sharing models with payers (including Medicare) are means to that end. But implementation vis a vis value-based models has produced mixed results thus far and current financial pressures facing providers (esp. hospitals) have stymied momentum in pursuit of value in healthcare. Last week, CMS indicated it intends to continue its value-based insurance design (VBID) model which targets insurers, and last month announced continued commitment to its bundled payment and ACO models. But they’re considered ‘works in process’ that, to date, have attracted early adopters with mixed results.
Questions:
What’s ahead for the value agenda in healthcare? Is it here to stay or will something replace it? How is your organization adapting?
Key takeaways from Discussion:
‘Not-for-profit hospitals and health systems are fighting to survive: near-term investments in value-based models are unlikely unless they’re associated with meaningful near-term savings that hospitals and physicians realize. Unlike investor-owned systems and private-equity backed providers, NFP systems face unique regulatory constraints, increasingly limited access to capital hostile treatment in media coverage and heavy-handed treatment by health insurers.’
‘Demonstrating value in healthcare remains its most important issue but implementing policies that advance a system-wide definition of value and business models that create a fair return on investment for risk-taking organizations are lacking. The value agenda must be adopted by commercial payers, employers and Medicaid and not limited to/driven by Medicare-alone.’
‘The ACO REACH model is promising but hospitals are hesitant to invest in its implementation unless compelled by direct competitive threats and/or market share leakage. It involves a high level of financial risk and relationship stress with physicians if not implemented effectively.’
‘Health insurers are advantaged over provider organizations in implementing value-strategies: they have data, control of provider networks and premium dollars.’
‘Any and all value models must directly benefit physicians: burnout and frustration are palpable, and concern about income erosion is widespread.’
‘Value in healthcare is a long-term aspirational goal: getting there will be tough.’
My take:
Hospitals, health systems, medical groups and other traditional providers are limited in their abilities to respond to opportunities in AI and value-based models by near-term operating margin pressures and uncertainty about their finances longer-term. Risk avoidance is reality in most settings, so investments in AI-solutions and value-based models must produce near-term ROI: that’s reality. Outsiders that operate in less-regulated environments with unlimited access to capital are advantaged in accessing and deploying AI and value-based model pursuits. Thus, partnerships with these may be necessary for most traditional providers.
AI is tricky for providers:
Integration of AI capabilities in hospitals and medical practices will produce added regulator and media scrutiny about data security and added concern for operational transparency. It will also prompt added tension in the workforce as new operational protocols are implemented and budgets adapted. And cooperation with EHR platforms—EPIC, Meditech, Cerner et al—will be essential to implementation. But many think that unlikely without ‘forced’ compliance.
Value-based models:
Participation in value-based models is a strategic imperative: in the near term, it adds competencies necessary to network design and performance monitoring, care coordination, risk and data management. Longer-term, it enables contracting directly with commercial payers and employers—Medicare alone will not drive the value-imperative in US healthcare successfully. Self-insured employers, private health insurers, and consumers will intensify pressure on providers for appropriate utilization, lower costs, transparent pricing, guaranteed outcome and satisfying user experiences. They’ll force consumerism and value into the system and reward those that respond effectively.
The immediate implications for all traditional provider organizations, especially not-for-profit health systems like the 11 who participated in Chicago last week, are 4:
Education: Boards, managers and affiliated clinicians need ongoing insight about generative AI and value-based models as they gain traction in the industry.
Strategy Development: Strategic planning models must assess the impacts of AI and value-based models in future-state scenario plans.
Capital: Whether through strategic partnerships with solution providers or capital reserves, investing in both of these is necessary in the near-term. A wait-and-see strategy is a recipe for long-term irrelevance.
Stakeholder Communication: Community leaders, regulators, trading partners, health system employees and media will require better messaging that’s supported by verifiable facts (data). Playing victim is not a sustainable communications strategy.
Generative AI and value-based models are the two most compelling changes in U.S. healthcare’s future. They’re not a matter of IF, but how and how soon.
Although Artificial intelligence has been around for 50 years and has experienced several starts and stops, the last 5 to 10 years have seen a considerable uptick in adoption, especially in healthcare. It’s embedded now in machine learning that enables faster and more precise imaging studies, clinical decision support tools in electronic medical records systems and many more. In recent months, its potential to play a bigger role, possibly replacing physician judgement among others, has received added attention.
The November 2022, the announcement of OpenAI’s ChatGPT platform drew widespread attention with speculation it might displace clinicians in diagnosing and treatment planning for patients. On March 22, 2023, tech moguls Elon Musk, Steve Wozniak and Andrew Yang called for a 6-month moratorium on generative AI stating: “Should we develop nonhuman minds that might eventually outnumber, outsmart, obsolete and replace us? Should we risk loss of control of our civilization? We call on all AI labs to immediately pause for at least 6 months the training of AI systems more powerful than GPT-4.” (1) To date, more than 13,000 have signed on to their appeal. Per Lumeris CTO Jean-Claude Saghbini “Putting aside our own opinions as to whether or not a moratorium should be implemented, our recent experience of the last three years in the inability to have effective cross-governmental alignment on policy to fight the COVID pandemic suggests that global alignment on AI policy will be impossible”.
There’s widespread belief generative AI and GPT-4 are game changers in healthcare.
How, what, when and how much ($$$) are the big questions. The near-term issues associated with implementation–data-security, workforce usefulness, regulation, investment costs—are expected to be resolved eventually. Thus, it is highly likely that health systems, medical groups, health insurers and retail and digital health solution providers will operate in a widely-expanded AI-enabled world in the next 3-5 years.
Questions:
What role will AI and ChatGPT play in hospitals/health systems and other provider settings? Will development of AI systems more powerful than GPT-4 be suspended in response to the appeal? How is your organization preparing for the next wave of AI?
Key Takeaways from Discussion:
‘Generative AI will not take the place of clinician judgement anytime soon. The processes of diagnosing and treating patients, especially complex conditions, will not be displaced. However, in primary and preventive health where standardization is more attainable, it will have profound impact perhaps sooner than in other areas.’
‘GPT-4 et al will have profound impact on the delivery of healthcare and hospital operations, but there are many unknowns and risks associated with its use beyond routine tasks that can be standardized based on pattern recognition. ‘
‘Continued development of platform solutions using GPT-4 and others in healthcare and other industries will accelerate. The moratorium will not happen. There’s too much at stake for investors and users.’
‘Non-profit hospitals and health systems are struggling financially as a result of the supply and labor cost increases, declining reimbursement from payers and negative returns on investing activities (non-operating income). Caution is key, so AI-related investing will be conservative in the near-term. An exception would be AI solutions that mitigate workforce shortages or reduce administrative costs for documentation.’
In a matter of months, ChatGPT has radically altered our nation’s views on artificial intelligence—uprooting old assumptions about AI’s limitations and kicking the door wide open for exciting new possibilities.
One aspect of our lives sure to be touched by this rapid acceleration in technology is U.S. healthcare. But the extent to which tech will improve our nation’s health depends on whether regulators embrace the future or cling stubbornly to the past.
Why our minds live in the past
In the 1760s, Scottish inventor James Watt revolutionized the steam engine, marking an extraordinary leap in engineering. But Watt knew that if he wanted to sell his innovation, he needed to convince potential buyers of its unprecedented power. With a stroke of marketing genius, he began telling people that his steam engine could replace 10 cart-pulling horses. People at time immediately understood that a machine with 10 “horsepower” must be a worthy investment. Watt’s sales took off. And his long-since-antiquated meaurement of power remains with us today.
Even now, people struggle to grasp the breakthrough potential of revolutionary innovations. When faced with a new and powerful technology, people feel more comfortable with what they know. Rather than embracing an entirely different mindset, they remain stuck in the past, making it difficult to harness the full potential of future opportunities.
Too often, that’s exactly how U.S. government agencies go about regulating advances in healthcare. In medicine, the consequences of applying 20th-century assumptions to 21st-century innovations prove fatal.
Here are three ways regulators do damage by failing to keep up with the times:
1. Devaluing ‘virtual visits’
Established in 1973 to combat drug abuse, the Drug Enforcement Administration (DEA) now faces an opioid epidemic that claims more than 100,000 lives a year.
One solution to this deadly problem, according to public health advocates, combines modern information technology with an effective form of addiction treatment.
Thanks to the Covid-19 Public Health Emergency (PHE) declaration, telehealth use skyrocketed during the pandemic. Out of necessity, regulators relaxed previous telemedicine restrictions, allowing more patients to access medical services remotely while enabling doctors to prescribe controlled substances, including buprenorphine, via video visits.
For people battling drug addiction, buprenorphine is a “Goldilocks” medication with just enough efficacy to prevent withdrawal yet not enough to result in severe respiratory depression, overdose or death. Research from the National Institutes of Health (NIH) found that buprenorphine improves retention in drug-treatment programs. It has helped thousands of people reclaim their lives.
But because this opiate produces slight euphoria, drug officials worry it could be abused and that telemedicine prescribing will make it easier for bad actors to push buprenorphine onto the black market. Now with the PHE declaration set to expire, the DEA has laid out plans to limit telehealth prescribing of buprenorphine.
The proposed regulations would let doctors prescribe a 30-day course of the drug via telehealth, but would mandate an in-person visit with a doctor for any renewals. The agency believes this will “prevent the online overprescribing of controlled medications that can cause harm.”
The DEA’s assumption that an in-person visit is safer and less corruptible than a virtual visit is outdated and contradicted by clinical research. A recent NIH study, for example, found that overdose deaths involving buprenorphine did not proportionally increase during the pandemic. Likewise, a Harvard study found that telemedicine is as effective as in-person care for opioid use disorder.
Of course, regulators need to monitor the prescribing frequency of controlled substances and conduct audits to weed out fraud. Furthermore, they should demand that prescribing physicians receive proper training and document their patient-education efforts concerning medical risks.
But these requirements should apply to all clinicians, regardless of whether the patient is physically present. After all, abuses can happen as easily and readily in person as online.
The DEA needs to move its mindset into the 21st century because our nation’s outdated approach to addiction treatment isn’t working. More than 100,000 deaths a year prove it.
2. Restricting an unrestrainable new technology
Technologists predict that generative AI, like ChatGPT, will transform American life, drastically altering our economy and workforce. I’m confident it also will transform medicine, giving patients greater (a) access to medical information and (b) control over their own health.
So far, the rate of progress in generative AI has been staggering. Just months ago, the original version of ChatGPT passed the U.S. medical licensing exam, but barely. Weeks ago, Google’s Med-PaLM 2 achieved an impressive 85% on the same exam, placing it in the realm of expert doctors.
With great technological capability comes great fear, especially from U.S. regulators. At the Health Datapalooza conference in February, Food and Drug Administration (FDA) Commissioner Robert M. Califf emphasized his concern when he pointed out that ChatGPT and similar technologies can either aid or exacerbate the challenge of helping patients make informed health decisions.
Worried comments also came from Federal Trade Commission, thanks in part to a letter signed by billionaires like Elon Musk and Steve Wozniak. They posited that the new technology “poses profound risks to society and humanity.” In response, FTC chair Lina Khan pledged to pay close attention to the growing AI industry.
Attempts to regulate generative AI will almost certainly happen and likely soon. But agencies will struggle to accomplish it.
To date, U.S. regulators have evaluated hundreds of AI applications as medical devices or “digital therapeutics.” In 2022, for example, Apple received premarket clearance from the FDA for a new smartwatch feature that lets users know if their heart rhythm shows signs of atrial fibrillation (AFib). For each AI product that undergoes FDA scrutiny, the agency tests the embedded algorithms for effectiveness and safety, similar to a medication.
ChatGPT is different. It’s not a medical device or digital therapy programmed to address a specific or measurable medical problem. And it doesn’t contain a simple algorithm that regulators can evaluate for efficacy and safety. The reality is that any GPT-4 user today can type in a query and receive detailed medical advice in seconds. ChatGPT is a broad facilitator of information, not a narrowly focused, clinical tool. Therefore, it defies the types of analysis regulators traditionally apply.
In that way, ChatGPT is similar to the telephone. Regulators can evaluate the safety of smartphones, measuring how much electromagnetic radiation it gives off or whether the device, itself, poses a fire hazard. But they can’t regulate the safety of how people use it. Friends can and often do give each other terrible advice by phone.
Therefore, aside from blocking ChatGPT outright, there’s no way to stop individuals from asking it for a diagnosis, medication recommendation or help with deciding on alternative medical treatments. And while the technology has been temporarily banned in Italy, that’s unlikely to happen in the United States.
If we want to ensure the safety of ChatGPT, improve health and save lives, government agencies should focus on educating Americans on this technology rather than trying to restrict its usage.
3. Preventing doctors from helping more people
Doctors can apply for a medical license in any state, but the process is time-consuming and laborious. As a result, most physicians are licensed only where they live. That deprives patients in the other 49 states access to their medical expertise.
The reason for this approach dates back 240 years. When the Bill of Rights passed in 1791, the practice of medicine varied greatly by geography. So, states were granted the right to license physicians through their state boards.
In 1910, the Flexner report highlighted widespread failures of medical education and recommended a standard curriculum for all doctors. This process of standardization culminated in 1992 when all U.S. physicians were required to take and pass a set of national medical exams. And yet, 30 years later, fully trained and board-certified doctors still have to apply for a medical license in every state where they wish to practice medicine. Without a second license, a doctor in Chicago can’t provide care to a patient across a state border in Indiana, even if separated by mere miles.
The PHE declaration did allow doctors to provide virtual care to patients in other states. However, with that policy expiring in May, physicians will again face overly restrictive regulations held over from centuries past.
Given the advances in medicine, the availability of technology and growing shortage of skilled clinicians, these regulations are illogical and problematic. Heart attacks, strokes and cancer know no geographic boundaries. With air travel, people can contract medical illnesses far from home. Regulators could safely implement a common national licensing process—assuming states would recognize it and grant a medical license to any doctor without a history of professional impropriety.
But that’s unlikely to happen. The reason is financial. Licensing fees support state medical boards. And state-based restrictions limit competition from out of state, allowing local providers to drive up prices.
To address healthcare’s quality, access and affordability challenges, we need to achieve economies of scale. That would be best done by allowing all doctors in the U.S. to join one care-delivery pool, rather than retaining 50 separate ones.
Doing so would allow for a national mental-health service, giving people in underserved areas access to trained therapists and helping reduce the 46,000 suicides that take place in America each year.
Regulators need to catch up
Medicine is a complex profession in which errors kill people. That’s why we need healthcare regulations. Doctors and nurses need to be well trained, so that life-threatening medications can’t fall into the hands of people who will misuse them.
But when outdated thinking leads to deaths from drug overdoses, prevents patients from improving their own health and limits access to the nation’s best medical expertise, regulators need to recognize the harm they’re doing.
Healthcare is changing as technology races ahead. Regulators need to catch up.
The executives featured in this article are all speaking at the Becker’s Healthcare 13th Annual Meeting April 3-6, 2023, at the Hyatt Regency in Chicago.
Question: What will hospitals and health systems look like in 10 years? What will be different and what will be the same?
Michael A. Slubowski. President and CEO of Trinity Health (Livonia, Mich.): In 10 years, inpatient hospitals will be more focused on emergency care, intensive/complex care following surgery or complex medical conditions, and short-stay/observation units. Only the most complex surgical cases and complex medical cases will be inpatient status. Most elective surgery and diagnostic services will be done in freestanding surgery, procedural and imaging centers. Many patients with chronic medical conditions will be managed at home using digital monitoring. More seniors will be cared for in homes and/or in PACE programs versus skilled nursing facilities.
Mark A. Schuster, MD, PhD. Founding Dean and Chief Executive Officer of Kaiser Permanente Bernard J. Tyson School of Medicine (Pasadena, Calif.): The future of hospitals might not actually unfold in hospitals. I expect that more and more of what we now do in hospitals will move into the home. The technology that makes this transition possible is already out there: Remote monitoring of vital signs and lab tests, remote visual exams, and videoconferencing with patients. And all of this technology will improve even more over the next 10 years — turning at-home care from a dream into a reality.
Imagine no longer being kept awake all night by beeps and alarms coming from other patients’ rooms or kept away from family by limited visiting hours. The benefits are especially welcome for people who live in rural places and other areas with limited medical facilities. Who knows? Maybe robotics will make some in-home surgeries not so far off!
Of course, not all patients have a safe or stable home environment where they could receive care, so hospitals aren’t going away anytime soon. I’m not suggesting that most current patients could be cared for remotely in a decade — but I do think we’re moving in that direction. So those of us who work in education will need to train medical, nursing, and other students for a healthcare future that looks quite different from the healthcare present and takes place in settings we couldn’t imagine 10 years ago.
Shireen Ahmad. System Director, Operations and Finance of CommonSpirit Health (Chicago): The biggest change I anticipate is a continuation in the decentralization of health services delivery that has typically been provided by hospitals. This will result in a reduction of hospitals with fewer services performed in acute settings and with more services provided in non-acute ones.
With recent reimbursement changes, CMS is helping to set the tone of where care is delivered. Hospitals are beginning to rationalize services, including who and where care is delivered. For example, pharmacies often carry clinics that provide vaccinations, but in France, one can go to a pharmacy for care and sterilization of minor wounds while only paying for bandages, medication and other supplies used in the visit. I would not be surprised if, in 10 years, one could get an MRI at their local Walmart or schedule routine screenings and tests at the grocery store with faster, more accurate results as they check out their produce.
If the pandemic has taught us anything, there will always be a need for acute care and our society will always need hospitals to provide care to sick patients. This is not something I would anticipate changing. However, the need to provide most care in a hospital will change with the result leading to fewer hospitals in total. Far from being a bleak outlook, however, I believe that healthier, sustainable health systems will prevail if they are able to provide a greater spectrum of care in broader settings focussing on quality and convenience.
Gerard Brogan. Senior Vice President and Chief Revenue Officer of Northwell Health (New Hyde Park, N.Y.): Operationally, hospitals and health systems will be more designed around the patient experience rather than the patient accommodating to the hospital design and operations. Specifically, more geared toward patient choice, shopping for services, and price competition for out-of-pocket expenses. In order to bring costs down, rational control of utilization will be more important than ever. Hopefully, we will be able to shrink the administrative costs of delivering care. Structurally, more care will continue to be done ambulatory, with hospitals having a greater proportion of beds having critical care capability and single rooms for infection control, putting pressure on the cost per square foot to operate. Sustainable funding strategies for safety net hospitals will be needed.
Mike Gentry. Executive Vice President and COO of Sentara Healthcare (Norfolk, Va.): During the next 10 years, more rural hospitals will become critical assessment facilities. The legislation will be passed to facilitate this transition. Relationships with larger sponsoring health systems will support easy transitions to higher acuity services as required. In urban areas, fewer hospitals with greater acuity and market share will often match the 50 percent plus market share of health plans. The ambulatory transition will have moved beyond only surgical procedures into outpatient but expanded historical medical inpatient status in ED/observation hubs.
The consumer/patient experience will be vastly improved. Investments in mobile digital applications will provide greatly enhanced communication, transparency of clinical status, timelines, the likelihood of expected outcomes and cost. Patients will proactively select from a menu of treatment options provided by predictive AI. The largest 10 health systems will represent 25 percent of the total U.S. acute care market share, largely due to consumer-centric strategic investments that have outpaced their competitors. Health systems will have vastly larger pharma operations/footprints.
Ketul J. Patel. CEO of Virginia Mason Franciscan Health (Seattle) and Division President, Pacific Northwest of CommonSpirit Health (Chicago): This is a transformative time in the healthcare industry, as hospitals and healthcare systems are evolving and innovating to meet the growing and changing needs of the communities we serve. The pandemic accelerated the digital transformation of healthcare. We have seen the proliferation of new technologies — telemedicine, artificial intelligence, robotics, and precision medicine — becoming an integral part of everyday clinical care. Healthcare consumers have become empowered through technology, with greater control and access to care than ever before.
Against this backdrop, in the next decade we’ll see healthcare consumerism influencing how health systems transform their hospitals. We will continue incorporating new technologies to improve healthcare delivery, offering more convenient ways to access high-quality care, and lowering the overall cost of care.
SMART hospitals, including at Virginia Mason Franciscan Health, are utilizing AI to harness real-time data and analysis to revolutionize patient and provider experiences and improve the quality of care. VMFH was the first health system in the Pacific Northwest to introduce a virtual hospital nearly a decade ago, which provides virtual services in the hospital across the continuum of care to improve quality and safety through remote patient monitoring and care delivery.
As hospitals become more high-tech, more nimble, and more efficient over the next 10 years, there will be less emphasis on brick-and-mortar buildings as we continue to move care away from the hospital toward more convenient settings for the patient. We recently launched VMFH Home Recovery Care, which brings all the essential elements of hospital-level care into the comfort and convenience of patients’ homes, offering a safe and effective alternative to the traditional inpatient stay.
Health systems and hospitals must simplify the care experience while reducing the overall cost of care. VMFH is building Washington state’s first hybrid emergency room/urgent care center, which eliminates the guesswork for patients unsure of where to go for care. By offering emergent and urgent care in a single location, patients get the appropriate level of care, at the right price, in one convenient location.
As healthcare delivery becomes more sophisticated in this digital age, we must not lose sight of why we do this work: our patients. There is no device or innovation that can truly replace the care and human intelligence provided by our nurses, APPs and physicians. So, while hospitals and health systems might look and feel different in 2033, our mission will remain the same: to provide exceptional, compassionate care to all — especially the most vulnerable.
David Sylvan. President of University Hospitals Ventures (Cleveland): American healthcare is facing an imperative. It’s clear that incremental improvements alone won’t manifest the structural outcomes that are largely overdue. The good news is that the healthcare industry itself has already initiated the disruption and self-disintermediation. I would hope that in the next 10 years, our offerings in healthcare truly reflect our efforts to adopt consumerism and patient choice, alleviate equity barriers and harness efficiencies while reducing time waste.
We know that some of this will come about through technology design, build and adoption, especially in the areas of generative artificial intelligence. But we also know that some of this will require a process overhaul, with learnings gleaned from other industries that have already solved adjacent challenges. What won’t change in 10 years will be the empathy and quality of care that the nation’s clinicians provide to patients and their caregivers daily.
Joseph Webb. CEO of Nashville (Tenn.) General Hospital: The United States healthcare industry operates within a culture that embraces capitalism as an economic system. The practice of capitalism facilitates a framework that is supported by the theory of consumerism. This theory posits that the more goods and services are purchased and consumed, the stronger an economy will be. With that in mind, healthcare is clearly a driver in the U.S. economy, and therefore, major capital and technology are continuously infused into healthcare systems. Healthcare is currently approaching 20 percent of the U.S. gross domestic product and will continue to escalate over the next 10 years.
Also, in 10 years, there will be major shifts in ownership structures, e.g., mergers, acquisitions, and consolidations. Many healthcare organizations/hospitals will be unable to sustain operations due to shrinking profit margins. This will lead to a higher likelihood of increasing closures among rural hospitals due to a lack of adequate reimbursement and rising costs associated with salaries for nurses, respiratory therapists, etc., as well as purchasing pharmaceuticals.
Aging baby boomers with chronic medical conditions will continue to dominate healthcare demand as a cohort group. To mitigate the rising costs of care, healthcare systems and providers will begin to rely even more heavily on artificial intelligence and smart devices. Population health initiatives will become more prevalent as the cost to support fragmented care becomes cost-prohibitive and payers such as CMS will continue to lead the way toward value-based care.
Because of structural and social conditions that tend to drive social determinants of health, which are fundamental causes of health disparities, achieving health equity will continue to be a major challenge in the U.S. Health equity is an elusive goal that can only be achieved when there is a more equitable distribution of SDOH.
Gary Baker. CEO, Hospital Division of HonorHealth (Scottsdale, Ariz.): In 10 years, I would expect hospitals in health systems to become more specialized for higher acuity service lines. Providing similar acute services at multiple locations will become difficult to maintain. Recruiting and retaining specialty clinical talent and adopting new technologies will require some redistribution of services to improve clinical quality and efficiency. Your local hospital may not provide a service and will be a navigator to the specialty facilities. Many services will be provided in ambulatory settings as technology and reimbursement allow/require. Investment in ambulatory services will continue for the next 10 years.
Michael Connelly. CEO Emeritus of Bon Secours Mercy Health (Cincinnati): Our society will be forced to embrace economic limits on healthcare services. The exploding elderly population, in combination with a shrinking workforce to fund Medicare/Medicaid and Social Security, will force our health system to ration care in new ways. These realities will increase the role of primary care as the needed coordinator of health services for patients. Diminishing fragmented healthcare and redundant care will become an increasing focus for health policy.
David Rahija. President of Skokie Hospital, NorthShore University HealthSystem (Evanston, Ill.): Health systems will evolve from being just a collection of hospitals, providers, and services to providing and coordinating care across a longitudinal care continuum. Health systems that are indispensable health partners to patients and communities by providing excellent outcomes through seamless, coordinated, and personalized care across a disease episode and a life span will thrive. Providers that only provide transactional care without a holistic, longitudinal relationship will either close or be consolidated. Care tailored to the personalized needs of patients and communities using team care models, technology, genomics, and analytics will be key to executing a personalized, seamless, and coordinated model of care.
Alexa Kimball, MD. President and CEO of Harvard Medical Faculty Physicians at Beth Israel Deaconess Medical Center (Boston): Ten years from now, hospitals will largely look the same — at least from the outside. Brick-and-mortar buildings aren’t going away anytime soon. What will differ is how care is delivered beyond the traditional four walls. Expect to see a more patient-centered and responsive system organized around what individuals need — when and where they need it.
Telehealth and remote patient monitoring will enable greater accessibility for patients in underserved areas and those who cannot get to a doctor’s office. Technology will not only enable doctors to deliver more personalized treatment plans but will also dramatically reshape physician workflows and processes. These digital tools will streamline administrative tasks, integrate voice commands, and provide more conducive work environments. I also envision greater access to data for both providers and patients. New self-service solutions for care management, scheduling, pricing, shopping for services, etc., will deliver a more proactive patient experience and make it easier to navigate their healthcare journey.
Ronda Lehman, PharmD. President of Mercy Health – Lima (Ohio):
This is a highly challenging question to address as we continue to reevaluate how healthcare is being delivered following several difficult years and knowing that financial challenges still loom. That said, when I am asked what it will look like, I am keenly aware of the fact that it only will look that way if we can envision a better way to improve the health of our communities. So 10 years from now, we need to have easier and more patient-driven access to care.
We will need to stop doing ‘to people’ and start caring ‘with people.’ Artificial intelligence and proliferous information that is readily available to consumers will continue to pave the way to patients being more empowered and educated about their options. So what will differentiate healthcare of the future? Enabling patients to make informed decisions.
Undoubtedly, technology will continue to advance, and along with it, the associated costs of research and development, but healthcare can only truly change if providers fundamentally shift their approach to how we care for patients. It is imperative that we need to transform from being the gatekeepers of valuable resources and services to being partners with patients on their journey. If that is what needs to be different, then what needs to be the same? We need the same highly motivated, highly skilled and perhaps most importantly, highly compassionate caregivers selflessly caring for one another and their communities.
Mike Young. President and CEO of Temple University Health System (Philadelphia): Cell therapy, gene therapy, and immunotherapy will continue to rapidly improve and evolve, replacing many traditional procedures with precise therapies to restore normal human function — either through cell transfer, altering of genetic information, or harnessing the body’s natural immune system to attack a particular disease like cancer, cystic fibrosis, heart disease, or diabetes. As a result, hospitals will decrease in footprint, while the labs dedicated to defining precision medicine will multiply in size to support individual- and disease-specific infusion, drug, and manipulative therapies.
Hospitals will continue to shepherd the patient journey through these therapies and also will continue to handle the most complex cases requiring high-tech medical and surgical procedures. Medical education will likely evolve in parallel, focusing more on genetic causation and treatment of disease, as well as proficiency with increasingly sophisticated AI diagnostic technologies to provide adaptive care on a patient-by-patient basis.
Tom Siemers. Chief Executive Officer of Wilbarger General Hospital (Vernon, Texas): My predictions include the national healthcare landscape will be dominated by a dozen or so large systems. ‘Consolidation’ will be the word that describes the healthcare industry over the next 10 years. Regional systems will merge into large, national systems. Independent and rural hospitals will become increasingly rare. They simply won’t be able to make the capital investments necessary to replace outdated facilities and equipment while vying with other organizations for scarce, licensed personnel.
Jim Heilsberg. CFO of Tri-State Memorial Hospital & Medical Campus (Clarkston, Wash.): Tri-State Hospital continues to expand services for outpatient services while maintaining traditionally needed inpatient services. In 10 years, there will be expanded outpatient services that include leveraged technology that will allow the patient to be cared for in a yet-to-be-seen care model, including traditional hospital settings and increasing home care setting solutions.
Jennifer Olson. COO of Children’s Minnesota (St. Paul, Minn.): I believe we will see more and better access to healthcare over the next 10 years. Advances in diagnostics, monitoring, and artificial intelligence will allow patients to access services at more convenient times and locations, including much more frequently at home, thereby extending health systems’ reach well beyond their walls.
What I don’t think will ever change is the heart our healthcare professionals bring with them to work every day. I see it here at Children’s Minnesota and across our industry: the unwavering commitment our caregivers have to help people live healthier lives.
If I had one wish for the future, it would be that we become better equipped to address the social determinants of health: all of the factors outside the walls of our hospitals and clinics that affect our patients’ well-being. Part of that means relaxing regulations to allow better communication and sharing of information among healthcare providers and public and private entities, so we can take a more holistic approach to improve health and decrease disparities. It also will require a fundamental shift in how health and healthcare are paid for.
Stonish Pierce. COO of Holy Cross Health, Trinity Health Florida: Over the next decade, many health systems will pivot from being ‘hospital’ systems to true ‘health’ systems. Based largely on responding to The Joint Commission’s New Requirements to Reduce Health Care Disparities, many health systems will place greater emphasis on reducing health disparities, enhanced attention to providing culturally competent care, addressing social determinants of health (including, but not limited to food, housing and transportation) and health equity. I’m proud to work for Trinity Health, a system that has already directed attention toward addressing health disparities, cultural competency and health equity.
Many systems will pivot from offering the full continuum of services at each hospital and instead focus on the core services for their respective communities, which enables long-term financial sustainability. At the same time, we will witness the proliferation of partnerships as adept health systems realize that they cannot fulfill every community’s needs alone. Depending upon the specialty and region of the country, we may see some transitioning away from the RVU physician compensation model to base salaries and value-based compensation to ensure health systems can serve their communities in the long term.
Driven largely by continued workforce supply shortages, we will also see innovation achieve its full potential. This will include, but not be limited to, virtual care models, robots to address functions currently performed by humans, and increased adoption of artificial intelligence and remote monitoring. Healthcare overall will achieve parity in technological adoption and innovation that we take for granted and have grown accustomed to in industries such as banking and the consumer service industries.
For what will remain the same, we can anticipate that government reimbursement will still not cover the cost of providing care, although systems will transition to offering care models and services that enable the best long-term financial sustainability. We will continue to see payers and retail pharmacies continue to evolve as consumer-friendly providers. We will continue to see systems make investments in ambulatory care and the most critically ill patients will remain in our hospitals.
Jamie Davis. Executive Director, Revenue Cycle Management of Banner Health (Phoenix): I think that we will see a continued shift in places of service to lower-cost delivery sources and unfavorable payer mix movement to Medicare Advantage and health exchange plans, degrading the value of gross revenue. The increased focus on cost containment, value-based care, inflation, and pricing transparency will hopefully push payers and providers to move to a more symbiotic relationship versus the adversarial one today. Additionally, we may see disruption in the technology space as the venture capital and private equity purchase boom that happened from 2019 to 2021 will mature and those entities come up for sale. If we want to continue to provide the best quality health outcomes to our patients and maintain profitability, we cannot look the same in 10 years as we do today.
James Lynn. System Vice President, Facilities and Support Services of Marshfield Clinic Health System (Wis.): There will be some aspects that will be different. For instance, there will be more players in the market and they will begin capturing a higher percentage of primary care patients. Walmart, Walgreens, CVS, Amazon, Google and others will begin to make inroads into primary care by utilizing VR and AI platforms. More and more procedures will be the same day. Fewer hospital stays will be needed for recovery as procedures become less invasive and faster. There will be increasing pressure on the federal government to make healthcare a right for all legal residents and it will be decoupled from employment status. On the other hand, what will stay the same is even though hospital stays will become shorter for some, we will also be experiencing an ever-aging population, so the same number of inpatient beds will likely be needed.
We expect 2023 to be a pivotal year for the industry, as the accelerated acceptance of virtual care and demographic trends, such as an aging population, increasing chronic illnesses and healthcare worker shortages, sustain demand for medtech-enabled solutions.
The combination of rapid developments in novel healthcare technology and heightened demand for integrated tech-enabled care has continued to fuel innovation in the medtech industry. At the same time, medtech innovators – whether in digital health, wearables and AI-driven offerings in healthcare, or diagnostics, telemedicine and health IT solutions – continue to face a patchwork of laws, rules and norms across the world. Life sciences and healthcare innovators and regulators are also looking to medtech to increase access to care and health equity. Here are ten global medtech themes we are tracking in the coming year:
Focus on digital tuck-in acquisitions in medtech M&A
Despite continued uncertainty in the overall financial market, medtech M&A activity continued at a steady pace in 2022. This year witnessed a rise in tuck-in acquisitions of smaller companies that can be easily integrated into buyers’ existing infrastructure and product offerings, as opposed to significantly sized takeovers of businesses that aren’t squarely aligned with buyers’ existing businesses lines. Medtech acquirers have been particularly focused on developing their digital capabilities to innovate and reach customers in new ways. As digitization continues to transform the industry, we expect acquirers to continue to prioritize the value of digital and data assets as they evaluate potential targets.
Continued interest by private equity and other financial sponsors
Private equity firms, healthcare-focused funds and other financial sponsors have continued to display a strong appetite for investing in Medtech companies, with top targets in subsectors such as diagnostics and healthcare IT solutions. Later-stage medtech companies in particular are gaining a larger share of venture capital funding, as later-stage investments allow financial sponsors to focus on businesses with higher yields, as well as less time to market and capital reimbursement. Demographic trends, including an aging population and the increasing prevalence of chronic diseases, coupled with healthcare technology advancements have created robust demand for medtech-enabled solutions. Additionally, medtech offerings have broad applications that can extend beyond stakeholders in a specific therapy area, product category or care setting, offering the ability to satisfy unmet needs with large patient bases.
Strategic medtech collaborations as the new norm
Strategic medtech collaborations and partnerships have become the new norm in our increasingly connected digital healthcare ecosystem. In response to heightened consumer demand for tech-enabled care, pharmaceutical and medtech companies are collaborating to use digital technologies to engage with consumers, unlocking a vast range of treatments such as personalized medicine. Additionally, as the market rapidly evolves towards data-driven healthcare, we expect medtech companies to continue to work collaboratively to address existing barriers to data sharing and promote interoperability of healthcare data.
Continued scrutiny by antitrust and competition authorities
As expected, global antitrust and competition authorities continued to focus on the tech, life sciences and medtech sectors in 2022. The US, UK and EU authorities have stepped up efforts to investigate and challenge conduct by large pharma and technology companies pursuing mergers and acquisitions. We expect these authorities to assess similar concerns in the digital health context in an effort to account for the value of combined datasets and the interoperability of various offerings that could be derived from digital health mergers and acquisitions. Furthermore, geopolitical tensions have resulted in new and expanded foreign investment regimes to improve the resilience of domestic healthcare systems. Notably this year, the UK government implemented the National Security and Investment Act that allows it to restrict transactions that may threaten national security, including in the AI and data infrastructure sectors. Sensitive data continues to be a recurring theme for foreign investment review for Committee on Foreign Investment in the US and that of the EU as well.
Growing importance of data privacy and security
Increasing regulatory attention to sensitive health data and the escalating rise of ransomware attacks has made data privacy and security more important than ever for medtech innovators. The Federal Trade Commission has issued several statements about its willingness to “fully” enforce the law against the illegal use and sharing of highly sensitive data. Additionally, several state privacy laws coming into effect in 2023 create new categories of sensitive personal data, including health data, and impose novel obligations on innovators to obtain data-related consents. As ransomware continues to pose security-related threats, the US Department of Health and Human Services renewed calls for all covered entities and business associates to prioritize cybersecurity. New standards, such as cybersecurity label rating programs for connected devices, aim to address security risks. In the EU, medtech providers will need to consider how the launch of the European Health Data Space and newly proposed data regulation, such as the Data Act and AI Act, could impact their data use and sharing practices.
More active engagement with FDA/EMA/MHRA
We expect companies active in the medtech sector, particularly those that make use of AI and other advanced technologies, to continue their conversations with the U.S. Food and Drug Administration (“FDA”), the European Medicines Agency (“EMA”), the Medicines and Healthcare Products Regulatory Agency (“MHRA”) and other regulators as such companies grow their medtech business lines and establish their associated regulatory compliance infrastructure. Given the unique regulatory issues arising from the implementation of digital health technologies, we expect the FDA, EMA and MHRA to provide additional guidance on AI/ML-based software-as-a-medical device and the remote management of clinical trials. 2022 saw stakeholders in the life sciences and medtech industries collaborate with regulatory authorities to push forward the acceptance of digital endpoints that rely on sensor-generated data collected outside of a clinical setting. As the industry shifts to decentralized clinical trials, we expect both innovators and regulators to work together to evaluate the associated clinical, privacy and safety risks in the development and use of such digital endpoints.
Increasing medtech localization in the Asia Pacific region
2022 saw multinational companies (“MNCs”), including American pharma/device makers make an active effort to expand their medtech business lines in the Asia Pacific region. At the same time, government authorities in the region have been increasingly focused on incentivizing local innovation, approving government grants and prohibiting the importation of non-approved medical equipment. In light of MNCs’ market share of the medical device market in the Asia Pacific region, especially in China, we expect the emergence of the domestic medtech industry to prompt discussions among MNCs, local innovators and government authorities over the long-term development of the global market for medical technology.
Long-term adoption of telehealth and remote patient monitoring technologies
The Covid-19 pandemic saw the rise of telehealth and remote patient monitoring technologies as key modes of healthcare delivery. The telehealth industry remains focused on enabling remote consultations and long-term patient management for patients with chronic conditions. Looking forward, we expect to see increased innovation in non-invasive technologies that can provide early diagnostics and ongoing disease management in a low-friction manner. At the same time, we anticipate telehealth companies to face increasing scrutiny from regulatory authorities around the world for fraud and abuse by patients and providers. Consumer and patient data privacy and security in connection with telehealth and remote patient monitoring continue to remain top of mind for regulators as well.
Women’s health and privacy concerns for medtech
We expect to see increased consumer health tech adoption for reproductive care, especially in light of the U.S. Supreme Court’s decision to overturn Roe v. Wade. Following the Dobbs decision, a number of states introduced or passed legislation that prohibits or restricts access to reproductive health services beyond abortion. In response, women’s health-focused companies are expanding their virtual fertility and pregnancy, telemedicine and other services to patients. At the same time, such companies need to assess the legal risks stemming from the collection and storage of their customers’ personal health information, which could then be used as evidence to prosecute customers for obtaining illegal reproductive health services. We expect companies active in this space to take steps to navigate the patchwork of data privacy and security laws across jurisdictions while establishing clear digital health governance mechanisms to safeguard their customers’ data privacy and security.
Addressing inequities in the implementation of digital healthcare technologies
Medtech innovators and regulators have been increasingly focused on addressing inequities in the healthcare system and the data used to train AI and ML-based digital healthcare technologies. In 2022, a number of medtech companies collaborated to provide technologies that result in improved patient outcomes across all populations, as well as boost participation of diverse populations in clinical trials. In parallel, we are seeing increased interest from regulators to reduce bias in digital health technologies and the accompanying datasets, as evidenced by the EU’s proposed AI Act and the UK’s health data strategy. In the US, which currently lacks comprehensive government regulation of AI in healthcare, there have been increasing calls for institutional commitments in the area of algorithmovigilance. Because of the inaccurate conclusions that may result from biased technologies and data, MedTech companies must prioritize health equity in the implementation of digital healthcare technologies so that everyone can benefit from the latest scientific advances.
In conclusion, the medtech industry has remained resilient amidst the challenging macroeconomic environment. We expect 2023 to be a pivotal year for the industry, as the accelerated acceptance of virtual care and demographic trends, such as an aging population, increasing chronic illnesses and healthcare worker shortages, sustain demand for medtech-enabled solutions. At the same time, the rapidly changing legal and regulatory landscape will continue to be a key issue for medtech innovators moving forward. Adopting a global, forward-thinking regulatory compliance strategy can help MedTech companies stay competitive and ultimately, achieve better outcomes for patients.
Oracle’s chairman Larry Ellison outlined a bold vision Thursday for the database giant to use the combined tech power of Oracle and Cerner to make access to medical records more seamless.
Days after closing its $28.3 billion acquisition of electronic health record company Cerner, Ellison said Oracle plans to build a national health record database that would pull data from thousands of hospital-centric EHRs.
In a virtual briefing Thursday, Ellison highlighted many long-standing problems with interoperability in healthcare. “Your electronic health data is scattered across a dozen or separate databases. One for every provider you’ve ever visited. This patient data fragmentation and EHR fragmentation causes tremendous problems,” he said.
“We’re going to solve this problem by putting a unified national health records database on top of all of these thousands of separate hospital databases. So we’re building a system where the health records all American citizens’ health records not only exist at the hospital level but also are in a unified national health records database.”
The concept of the national health records database, which would hold anonymized data, Ellison said, is to help doctors and clinicians have faster access to patient records when providing care. Anonymized health data in that national database could also be used to build artificial intelligence models to help diagnose diseases such as cancer.
“Better information is the key to transforming healthcare,” he said. “Better information will allow doctors to deliver better patient outcomes. Better information will allow public health officials to develop much better public health policy and it will fundamentally lower healthcare costs overall.”
Oracle also plans to modernize Cerner’s Millennium EHR platform with updated features such as voice interface, more telehealth capabilities and disease-specific AI models, Ellison said.
He highlighted a partnership between health tech company Ronin, a clinical decision support solution, and MD Anderson to create a disease-specific AI model that monitors cancer patients as they work through their treatments.
“The people at Oracle are not going to be developing these AI models. But our platform, Cerner Millennium, is an open system and allows medical professionals at MD Anderson, who are experts in treating cancer, to add these AI modules to help other doctors treat cancer patients,” Ellison said.
The purchase of Cerner, which marks Oracle’s biggest acquisition, gives the database giant a stronger foothold in healthcare. Ellison said the company’s enterprise resource planning (ERP) and HR software already is widely used in healthcare.
But the company will face the same long-standing barriers to sharing health data that have stymied other interoperability efforts. There also could be pushback from the industry to any effort by a tech giant to build a nationalized health database.
In March 2020, the federal government released rules laying the groundwork to give patients easier access to their digital health records through their smartphones. The regulation, which went into effect in April 2021, requires health IT vendors, providers and health information exchanges to enable patients to access and download their health records with third-party apps. Under the rule, providers can’t inhibit the access, exchange or use of health information unless the data fall within eight exceptions.
Interoperability experts point out there are already efforts underway to create a more unified database of health records, such Cerner competitor Epic’s Cosmos, which is a de-identified patient database combining the company’s EHR data of over 122 million patients.
Former U.K. Prime Minister Tony Blair is backing Ellison’s vision for building a unified health database. Blair, who leads the nonprofit Tony Blair Institute for Global Change, partners with Oracle to use its cloud technology to tackle health issues.
Speaking at the virtual event, Blair said a unified health records system will “empower citizens and provide clinicians and other care providers with immediate access to their health history and treatment without chasing it down from disparate sources.”
David Feinberg, M.D., who took the reins as Cerner CEO just four months before the acquisition was announced in December, said he was excited about the potential for Oracle and Cerner to advance data sharing.
“We’re bringing world-class technology coupled with a deep and long history of understanding how healthcare works. I don’t think anyone’s ever done that,” said Feinberg, now president and CEO of Oracle Cerner.
Hospital systems can employ artificial intelligence to reduce the types of health inequities that have made communities of color more vulnerable to COVID-19, the leader of one of the nation’s largest health systems says.
“At Northwell Health, New York’s largest health system, we know health disparities will only grow worse if we don’t move more quickly to identify and correct them,” Michael Dowling, president and CEO of New Hyde Park-based Northwell Health, wrote in a May 11 news release with Tom Manning, chair of Ascertain, an AI venture between Northwell and Aegis Ventures. “To do that, we have turned to AI to disrupt this future.”
For instance, health systems can utilize AI to forecast which expectant mothers could benefit from early intervention and specialized care to treat preeclampsia, a pregnancy complication characterized by high blood pressure that affects Black women at three times the rate of white women, the executives wrote.
Organizations can also use health screenings and predictive models to determine which patients are most likely to develop chronic health conditions such as obesity, diabetes and hypertension, the men wrote. In addition, systems should diligently research AI health care applications, such as the National Institutes of Health’s All of Us initiative, which seeks to obtain health data from a representative sample of the U.S. population.
Dowling and Manning noted that health systems must also commit to high standards of data integrity outlined by the U.S. Food and Drug Administration and apply the Hippocratic oath to AI to make sure it does not widen health inequities.
HENRY KOTULA 