Health Care Connectivity & Alliances Healthcare Information Technology (HIT ) Transforming US Healthcare and Pharmaceutical Business HIT Summit, 10/21/2004.

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Presentation transcript:

Health Care Connectivity & Alliances Healthcare Information Technology (HIT ) Transforming US Healthcare and Pharmaceutical Business HIT Summit, 10/21/2004 Craig Richardson, Vice President Johnson & Johnson Health Care Systems

1 Drivers For Change External/Environmental Pressure  Rising healthcare cost  Re-importation  Uninsured  Medical errors New Healthcare Outcomes/ Evidence-based Medicine Electronic Health Information/Data Pharma Internal Pressure  Pricing  Diminishing rate of return on marketing and sales  R&D: high cost & long cycle time

2 Pressure Is On… “The 21st century health care system is using a 19th century paperwork system…. These old methods of keeping records are real threats to patients and their safety and are incredibly costly.... Within 10 years, every American must have a personal electronic medical record.” --- President George W. Bush, American Association of Community Colleges Annual Convention, 4/26/2004 “In healthcare, if we adopt a technology that’s 20 years old, we call it ‘forward thinking’… If we were serious, in 3 years, we should have a completely information technology-based medical system… You can’t have a free market without information” --- Newt Gingrich, former Speaker of the House

Health Care Connectivity & Alliances Developing the New Approach Incentives, Standards, Interoperability

4 Developing the New Approach: Incentives External/Environmental Pressure  Rising healthcare cost  Re-importation  Uninsured  Medical errors 1. Incentives  Funding for public infrastructure  Align stakeholder interests New Healthcare Outcomes/ Evidence-based Medicine Electronic Health Information/Data Pharma Internal Pressure  Pricing  Diminishing rate of return on marketing and sales  R&D: high cost & long cycle time 2014?2004

5 Incentives: Unprecedented Progress July 2004: The Foundation for eHealth Initiative announces the selection of 9 community awards totaling $2 million to improve connectivity, reduce medical errors, and create more efficient healthcare for patients July 2004: The Foundation for eHealth Initiative announces the selection of 9 community awards totaling $2 million to improve connectivity, reduce medical errors, and create more efficient healthcare for patients April 2004: Tommy Thompson announces that Medicare disease management fees will be contingent on outcomes and cost savings measurements April 2004: Tommy Thompson announces that Medicare disease management fees will be contingent on outcomes and cost savings measurements January 2004: WellPoint unveils $40M plan to furnish 19,000 doctors with free computers and handheld PDAs to do electronic prescribing and claims submission January 2004: WellPoint unveils $40M plan to furnish 19,000 doctors with free computers and handheld PDAs to do electronic prescribing and claims submission November 2003: American Academy of Family Physicians (AAFP) forms alliances with major Electronic Medical Record (EMR) vendors to make EMR affordable to their members November 2003: American Academy of Family Physicians (AAFP) forms alliances with major Electronic Medical Record (EMR) vendors to make EMR affordable to their members November 2003: AHRQ announced a $41 million grant program, "Transforming Healthcare Through Information Technology" November 2003: AHRQ announced a $41 million grant program, "Transforming Healthcare Through Information Technology" June 2003: NAHIT joins HealthTech in urging feds to finance health IT infrastructure via revolving loan fund program June 2003: NAHIT joins HealthTech in urging feds to finance health IT infrastructure via revolving loan fund program November 2002: Integrated Healthcare Association of California launches a statewide pay-for- performance initiative that rewards physicians based on clinical quality, patient satisfaction and investment in IT November 2002: Integrated Healthcare Association of California launches a statewide pay-for- performance initiative that rewards physicians based on clinical quality, patient satisfaction and investment in IT

6 Developing the New Approach: Standards External/Environmental Pressure  Rising healthcare cost  Re-importation  Uninsured  Medical errors 1. Incentives  Fund public infrastructure  Align stakeholder interests 1 2. Standards  Building block for common infrastructure  Facilitate adoption New Healthcare Outcomes/ Evidence-based Medicine Electronic Health Information/Data  Pharma Internal Pressure  Pricing  Diminishing rate of return on marketing and sales  R&D: high cost & long cycle time 2014? 1-3 Years 2004

7 July 2004: Tommy Thompson and CMS commit to accelerating e- prescribing standard (EOY ’04 vs. Sept. ’05 in MMA) Standards: Unprecedented Progress April 2004: Electronic Health Record Functional Model passes HL7 second ballot only nine months after HHS commissioned IOM and HL7 to develop the standard December 2003: AHRQ 2004 budget includes $12 million for data standards development and adoption December 2003: President Bush signs into law the Medicare Modernization Act, which establishes e- prescribing and chronic care improvement programs, requires the development of a uniform e-prescribing standard and provides grants to physicians to implement related technology November 2003: IOM publishes its third report that calls for data standards & national health information infrastructure; recommends federal leadership and funding June 2003: National Library of Medicine (NLM) licensed SNOMED CT ($32.4 million) for free distribution in the US March 2003: HHS, DoD and VA announces first set of health care standards to be adopted across the federal government

8 Developing the New Approach: Interoperability External/Environmental Pressure  Rising healthcare cost  Re-importation  Uninsured  Medical errors 1. Incentives  Fund public infrastructure  Align stakeholder interests 1 2. Standards  Building block for common infrastructure  Facilitate adoption 2 3. Interoperability  Data sharing and comparability builds evidence and tracks outcomes New Healthcare Outcomes/ Evidence-based Medicine Electronic Health Information/Data  Pharma Internal Pressure  Pricing  Diminishing rate of return on marketing and sales  R&D: high cost & long cycle time 2014? 1-3 Years Years

9 Interoperability: Data Sharing National Health Informatics Infrastructure EHR Repository – RainingData Registries – NIST Secure Messaging – Kryptiq, Zix Standards – HL7, SNOMED,CCR Patient Patient Health Record – CapMed Disease Information – American Cancer Society self care routine care Patient Health Record – CapMed Disease Information – American Cancer Society PMS – Misys EMR – Berdy Primary Care Physician self care PMS – Misys EMR – Berdy routine care Specialist PMS – Medical Manager EMR – Impac specialty care PMS – Medical Manager EMR – Impac specialty care Hospital Lab Inpatient CIS – Epic Order Entry – Eclipsys PACS – Philips Lab System – Misys acute care lab testing Cancel Treatment Guidelines – National Cancer Institute Inpatient CIS – Epic Order Entry – Eclipsys PACS – Philips Professional Society Lab System – Misys acute care lab testing domain expertise Cancer Treatment Guidelines – National Cancer Institute Pharmaceutical Co. e-Clinical Trial Outcomes Studies clinical trial, outcomes domain expertise e-Clinical Trial Outcomes Studies clinical trial, outcomes Disease Management Cancer Registries – NAACCR, DocSite chronic care, registries CDC/FDA Adverse Event Database – FDA Public Health Information Network – CDC Standards & Guidelines – CDC public health surveillance Sally In 2015 Payer Payer System – Trizetto claims, eligibility, formulary

10 Developing the New Approach External/Environmental Pressure  Rising healthcare cost  Re-importation  Uninsured  Medical errors 1. Incentives  Fund public infrastructure  Align stakeholder interests 1 2. Standards  Building block for common infrastructure  Facilitate adoption 2 3. Interoperability  Data sharing and comparability builds evidence and tracks outcomes New Healthcare Outcomes/ Evidence-based Medicine Electronic Health Information/Data  3  Pharma Internal Pressure  Pricing  Diminishing rate of return on marketing and sales  R&D: high cost & long cycle time 2014? 1-3 Years Years1-5 Years

Health Care Connectivity & Alliances Pharma Implications R&D, Outcomes, Sales & Marketing

12 R&D and Outcomes Studies Study Design –Improve study design, site identification and investigator targeting Recruitment –Decision support systems at point of care check patient eligibility for trials and facilitate recruitment Documentation –Better integration with physicians’ regular work flow means no separate processes and reduces double entry and errors Data –Access to rich, real-time, standardized, HIPAA-compliant electronic patient data Improve quality of trials/studies; reduce cost and cycle time

13 Sales & Marketing Access to rich clinical and outcomes data allow pharma to –Support the transition to “value” selling –Become more strategic about pricing and more accurate in forecasting –Offer new services (product co.  service co.) Evidence, outcomes data and guidelines rapidly disseminated to point of care –Reduce dependency on large sales force –But require more collaborative approach in developing evidence, guidelines, etc. Electronic connectivity to physicians creates a channel that supplements traditional sales & marketing approaches Improve efficiency of sales & marketing

Health Care Connectivity & Alliances Reaching the Tipping Point What’s Different This Time Around?

15 Reaching the Tipping Point: Big Names! Large Investments! GAO reports that HHS has about 19 major health information technology initiatives, totaling about $228 million Kaiser Permanente invests $1.8 billion over next 3 years to implement electronic medical records (EMR) Sutter Health Network, a CA health system with 26 hospitals and 9 physician groups, plans to spend $1.2 billion in the next 10 years to create a patient database, an EMR system, electronic systems for prescription and lab information, as well as an electronic archive for digital pictures such as X-rays and CT scans IBM infuses an estimated $250 million of investments into its healthcare business over next 3 years WellPoint, partnering with Microsoft and CGEY, unveils a $40 million plan to furnish 19,000 doctors with free computers and handheld PDAs to do electronic prescribing and claims submission

16 Reaching the Tipping Point: Escalating Legislative Interest Medicare Modernization Act (MMA) –Establishes e-prescribing and requires the establishment of a uniform e-prescribing standard by 2008 and provides grants to physicians to implement related technology –Update: CMS will propose a regulation that requires the first set of e- prescribing standards in the implementation of the Medicare drug benefit in 2006; Plan sponsors (MCOs, PBMs) will be required to offer e-prescribing The Quality, Efficiency, Standards, Technology for Healthcare Transformation Act –Developed by Patrick Kennedy (D-RI) and former House Speaker Newt Gingrich (R-GA) The Health Information for Quality Improvement Act –Proposed by Hillary Rodham Clinton (D-NY)

17 Reaching the Tipping Point: Unprecedented Government Leadership President’s Support –Every American has a personal EMR in 10 years –Creates a new, sub-Cabinet level post at the HHS –Doubles demo project funding to $100 mil in his FY-'05 budget John Kerry’s Health Plan –All Americans have secure, private EMR by 2008 –Rewards healthcare providers’ investment in HIT –Provide economic incentives for e-prescribing Government Agencies –David Brailer, NHII Coordinator, developed HIT Strategic Framework in record 76 days and obtained support for the Framework from officials from government agencies (CMS, CDC, VA, DoD) and executives of key stakeholders (Cisco, GE, Leapfrog, BCBS, AMA, AAFP, AARP)

18 Reaching the Tipping Point: Accelerating Adoption Source: J&J Proprietary Research 7/21/04: CMS announced its intention to accelerate eRx standard and mandate payors to offer eRx (% of Physicians) AmbulatoryIn-Patient

19 External/Environmental Pressure  Rising healthcare cost  Re-importation  Uninsured  Medical errors Reaching the Tipping Point 1. Incentives  Fund public infrastructure  Align stakeholder interests 1 2. Standards  Building block for common infrastructure  Facilitate adoption 2 3. Interoperability  Data sharing and comparability builds evidence and tracks outcomes New Healthcare Outcomes/ Evidence-based Medicine Electronic Health Information/Data  3  Tipping Point Pharma Internal Pressure  Pricing  Diminishing rate of return on marketing and sales  R&D: high cost & long cycle time