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Is the digital transformation of MedTech companies a choice or a necessity?
 
Will 2019 see medical technology (MedTech) companies begin to digitally transform their strategies and business models to improve their commercial prospects?
 
We describe some of the changing market conditions that drive such transformations. We also briefly report the findings of two research papers on corporate digital transformations published in recent editions of the Harvard Business Review. These suggest that there are two “must haves” if company transformations are to be successful: leadership with the appropriate mindset and access to talented data scientists.
 
A bull market encouraging a business-as-usual mindset
 
MedTech is a large growing industrial sector (see below), which has benefitted significantly from the bull market in equities over the past decade but is one of the least equipped to prosper over the next decade in a radically changing healthcare ecosystem and a more uncertain global economy.

For the past decade equity markets have outperformed global economic growth and protected a conservative, production-orientated business-as-usual mindset in MedTech C-suites and boards of directors. This has made organizations either slow or reluctant to transform their strategies and business models, which define how they create and capture value. As we enter 2019 the protection that the MedTech industry enjoyed for years has been weakened by more uncertain markets, the tightening of monetary policy, slower global economic growth and disruptive technological change.

In this new and rapidly evolving environment MedTech markets are expected to continue growing but at a slower rate, operating margins are expected to decline as unit prices erode and companies will no longer be able to earn premium margins by business-as-usual strategies. Building a prosperous organization in a more uneven future is an important challenge facing MedTech leaders and will require a significant shift in their mindset and the talent they engage and develop.  
 

Medical technology

MedTech represents a significant sector of global healthcare, which has been relatively stable for decades. It has a market size of some US$430bn and has consistently experienced high margins and significant sales growth. For example, over the past decade the sector has grown at an annual compound growth rate of about 5%, with operating margins between 23% and 25%. The sector includes most medical devices, which prevent, diagnose and treat diseases. The most well-known include in vitro diagnostics, medical imaging equipment, dialysis machines, orthopaedic implants and pacemakers. The US and Western Europe are established centres for the sector, but trends suggest that China and India will grow in significance over the next decade. The sector is dominated by about 10 giant companies, which account for nearly 40% of the global market in sales revenues. All MedTech companies have significant R&D programs and the global spend on R&D is expected to grow from US$27bn in 2017 to US$34bn by 2022. An indication of how far developments in medical technology have come is robot-assisted surgery, which employs artificial intelligence (AI) for more precise and efficacious procedures. Robot-assisted surgery is expected to become a US$13bn global market by 2025. In the US the repeal of the medical device excise tax was not included in the recent tax reform. The industry believes the tax has a negative impact on innovation, and the rate of R&D spending by US MedTech companies is expected to fall by 0.5% over the next five years.
 
Resistance to change

For the past decade a substantial proportion of MedTech companies either have resisted or been slow to transform their strategies and business models despite increasing pressure from rapidly evolving technologies, changing reimbursement and regulatory environments and a chorus of Industry observers calling for MedTech companies to become less product-centric and more solutions orientated. This reluctance to change can be explained by a bull market in equities, which began in March 2009, outperformed economic growth, delivered some of the best risk-adjusted returns in modern market history and encouraged a conservative mindset among corporate leaders, who were reluctant to change and developed a “if it’s not broken why fix it” mindset.

Because the MedTech sector has been stable for years, established players have been able to compete successfully across the device spectrum, applying common business models and processes without much need for differentiation. MedTech’s strategy has been to market high priced sophisticated product offerings in a few wealthy regions of the world; mainly the US, Western Europe and Japan, which although representing only 13% of the world’s population account for more than 86% of the global MedTech market share (US: 42%, Europe: 33%, Japan: 11%). It seems reasonable to assume that in the future, as markets become more turbulent and uncertain, this undifferentiated strategy and business model will need to transform into ones that are far more distinctive and proprietary.

 
M&A has been MedTech’s principal response to market headwinds

MedTech’s principal adjustment to market headwinds over the past decade has been to increase its M&A activity rather than transform its strategies and business models. M&A’s increased companies scale and leverage, drove stronger financial performance, allowed companies to obtain a broader portfolio of product offerings and increased their international footprints. Some recent high-profile examples of M&A activity in the sector include Abbott’s acquisition of St. Jude’s Medical in January 2017, which led to Abbott holding some 20% of the US$40bn global cardiovascular market. Johnson & Johnson’s US$4bn buyout of Abbott Medical Optics Inc in February 2017, and the “mother of all M&A activity” was Becton Dickinson’s 2017 acquisition of C.R. Bard for US$24bn, which is expected to generate annual revenues of US$15bn.

According to a January 2018 McKinsey report between 2011 and 2016, 60% of the growth of the 30 largest MedTech companies was due to M&A’s, and between 2006 and 2016, only 20% of 54 pure-play publicly traded MedTech companies, “mostly relied on organic growth”. 
As MedTech leaders return to their desks in early 2019 after the worst December in stock market recent memory, they might begin to reflect on their past all-consuming M&A activity, which resulted in bigger but not necessarily better companies. After such a prolonged period of M&A’s, there is likely to be a period of portfolio optimization. Divestitures and spin-outs allow companies to capture additional value by improving capital efficiency, reducing operational complexity and reallocating capital to higher-growth businesses as the industry invests more in R&D to develop innovative product offerings that demonstrate value in an increasing volatile era and increasing price pressures. But divestitures are not necessarily changing strategies and business models, so MedTech’s vulnerabilities remain.
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The IoT and healthcare


 
Black December 2018 for equities
 
It is too early to say whether “Black December 2018” represents the end of the longest equity market bull-run in recent history, but it is worth noting that on Friday 21st December the Nasdaq composite index closed at 6,332.99, which was a drop of 21.9% from an all-time high of 8,109.69 on August 29th. The generally accepted definition of a bear market is a drop of at least 20% from a recent peak. World markets followed Wall Street. Japan’s Topix Index fell to its lowest level for 18 months and the pan European Stoxx 600 Index hit a two-year low. However, seasoned market observers suggest that although the average bull market tends to last for about 10 years, it does not simply die of old age, and the December 2018 market behaviour is consistent with a “maturing cycle” in which there is still room for stocks to grow. This note of optimism could encourage a continuation of a “business-as-usual” mindset in MedTech C-suites and boards of directors.
 
Anaemic economic growth forecasted

The outlook for the global economy in 2019 does not bring any comfort. In October 2018 the International Monetary Fund lowered its forecast for global economic growth for 2019, from 3.9% to 3.7%; citing rising trade protectionism and instability in emerging markets. In September 2018 the Organisation for Economic Cooperation and Development (OEDC) suggested that economic expansion may have peaked and projected global growth in 2019 to settle at 3.7%, “marginally below pre-crisis norms with downside risks intensifying.” The OECD also warned that the recovery since the 2008 recession had been slow and only possible with an exceptional degree of stimulus from central banks. And such support is ceasing.
 
Tightening of monetary policy

Global monetary policy is tightening as central banks retreat from their long-standing market support. After four years of quantitative easing (QE) the European Central Bank (ECB) has ended both its money printing program and its €2.6trn bond purchasing program. The Bank has done this just as the Eurozone growth is cooling and Europe seems to be destined for a slow relative decline, which raises concerns about the sustainability of the single currency area. Notwithstanding, some observers suggests that for the next few years capital can be reasonably safely deployed in the beer-drinking nations of northern Europe, but not in the wine-drinking countries of southern Europe; especially France and Italy, two countries at the centre of the Eurozone’s current challenges. France’s budget deficit exceeds that permitted by the EU and in the latter part of 2018 the nation’s anti-government gilets jaunes demonstrators led to President Macron promising more welfare spending than the nation can afford. This could suggest that France is on the cusp of an Italian-style debt crisis. Although these economic trends have been telegraphed for some time, after nearly a decade of a bull market and low interest rates, there seems to be some complacency in the equity markets about the risks from higher rates and elevated corporate debt. But this sentiment is expected to change in 2019.
 
Transformation is no longer a choice

This more uncertain global economic outlook, heightened US-China tensions, tighter monetary policy and a maturing global business cycle together with significantly changed and evolving healthcare ecosystems suggest that transformation of MedTech strategies and business models is no longer a choice but a necessity if they are to maintain and increase their market positions over the next decade.
 
A challenge for many MedTech companies is that they still work on dated and inappropriate systems or hierarchical processes, and too few leaders and board members fully comprehend the speed and potential impact of advanced digital technologies. Those organization with some appreciation of this are already looking to adjacent sectors for talent and knowhow that could help them evolve their strategies and business models. But such partnerships might not be as efficacious as expected. We explain why below.
 
Digital transformations

Let us turn now to consider digital transformations. Data scientists and machine learning engineers are critical to any digital transformation. One significant challenge for companies contemplating such change is talent shortage, which disproportionately affects companies not use to dealing with such talent. Data scientists are aware of their scarcity value and they tend not to work in IT silos of traditional hierarchical organizations but prefer working for giant tech companies in devolved networked teams, focusing on projects that interest them.

Companies that fail to engage talented data scientists will be at a disadvantage in any digital transformation. Mindful of such challenges some MedTech companies are beginning to partner with start-ups and smaller digitally orientated companies. But this is not necessarily an answer because talent shortage also affects start-ups. The answer lies in understanding how giant tech companies recruit talented individuals. Companies like Google and Facebook are more interested in “tech savvy” individuals and less interested in formal qualifications. They tend to catch such talent with attractive internships when they are seniors in high school and juniors at university. These companies understand digital technology and have seen enough interns that they can correlate their performance on coding tests and technical interviews with their raw ability and potential rather than relying on formal qualifications as a proxy for skill.
 
A new and more dynamic leadership mindsets

Future MedTech leaders will not only need to have a deep knowledge of disruptive digital technologies and AI systems, but will need to have the mindset of an “inclusive networked architect” with an ability to create and develop learning organizations around diverse technologies with dispersed talent. Traditional hierarchical production mindsets, which have benefitted from business-as-usual for the past decade are unlikely to be as effective in an environment which is experiencing the impact of a significant and rapid shift in technological innovation. Sensors, big data analytics, AI, real-world evidence (RWE), robotic and cognitive automation are converging with MedTech and encouraging companies to pivot from being product developers to solution providers. This requires leaders with mindsets that reward value instead of volume and are agile enough to meet increasing customer expectations, whether those customers are payers, providers or patients.

Without leaders with informed, forward-thinking mindsets, enthused about new models of organizational structures, culture and rewards that provide greater autonomy to talented teams and individuals, MedTech companies could remain at a disadvantage in competing with other technology companies for similar talent and expertise. Future MedTech leaders must understand how work is being redefined and the implications of this for talented individuals and devolved networked teams. It seems reasonable to assume that future MedTech leaders will be generalists: executives with more than one specialism with an ability to breakdown silos and bridge knowledge gaps across organizations and develop new models of organizational structure, culture, and rewards.
 
Successes and failures of digital transformations

We have focused on digital transformation of traditional companies as a means for them to prosper in radically changing market conditions. Although there has been a number of successful corporate digital transformations there has also been a significant number of failures. Understanding why some succeed and some fail is important.
 
Successful digital transformations

One notable successful digital transformation is Honeywell, a Fortune 100 diversified technology and manufacturing company, which overcame threats from market changes and disruptive digital technologies by transforming its strategies and business models. In 2016, Honeywell’s Process Solutions Division, a pioneer in automated control systems and services for the  oil, gas, chemical and mining industries, set up a new digital transformation unit to assist its customers to harness advantages from the Internet of Things (IoT) by increasing their connectivity to an ever-growing number of devices, sensors and people in order to improve the safety, reliability and efficiency of their operations.

The Unit’s primary focus is on outcomes, such as reducing costs and enabling faster and smarter business decisions. Honeywell’s IoT platform called Sentience, is considered a toolkit to collect, store and process data from connected assets, offering services to analyse these data and generate insights from them to enable data-based, value-added services. Unlike similar platforms developed by Siemens and General Electric (GE), Honeywell does not sell their platform as an app, but markets data-based services predicated on its platform, which enable its customers to optimize the performance of their connected assets and improve overall production efficiency. Other corporations that have set up similar transformation units to harness the benefits of disruptive technologies include Hitachi, Hewlett-Packard, SAP and UPS.

Failed digital transformations

Perhaps the biggest digital transformational failure is General Electric (GE). In 2011, the then CEO Jeff Immelt became an advocate for the company’s digital transformation. GE created and developed a significant portfolio of digital capabilities including a new platform for the IoTs, which collected and processed data used to enhance sales processes and supplier relationships. Immelt suggested that GE had become a “digital industrial company”. The company’s new digital technology reported outcomes of a number of indices, which over time improved and attracted a significant amount of positive press. Notwithstanding, activist investors were not so enamoured, GE’s stock price languished, Immelt was replaced and the company’s digital ambitions came to a grinding halt. Other notable corporates, which tried and failed to harness the commercial benefits from disruptive technologies include Lego, Nike, Procter & Gamble and Burberry.  

Digitally transformed companies outperform those that resist change

Notwithstanding, research findings published in the January 2017 edition of the Harvard Business Review suggest that digitally transformed companies outperform those that lag behind. Findings were derived from 344 US public companies drawn from manufacturing, consumer packaging, financial services and retail industries with median revenues of some US$3.4bn. Conclusions suggest that digitally transformed companies reported better gross margins, enhanced earnings and increased net income compared to similar companies, which lagged behind in digital change. “Digital technology changes the way an organization can create value: digital value creation stems from new, network-centric ways your business connects with partners and customers offering new business combinations,” say the authors of the study. Critically, the mindset of leaders is significantly linked to successful digital transitions. According to the study’s authors, “Our research indicates that these leaders approach the digital opportunity with a different strategic mindset and execute on the opportunity with a different operating model.”

Reasons for failing to transform

According to a paper published in the March 2018 edition of the Harvard Business Review there are four reasons why digital transformations fail.
  • Leaders’ narrow understanding of “digital”, which is not just technology but a blend of talented people, organizational culture, appropriate machines and effective business processes
  • Poor economic conditions and depressed demand for product offerings
  • Bad timing. It is important that your market sector is prepared for the changes your company is proposing
  • Paying insufficient attention to legacy business. “The allure of digital can become all-consuming, causing executives to pay too much attention to the new and not enough to the old”. 
 
Takeaways
 
Business history has shown that large and established companies, which fail to respond to disruptive technologies in a timely and appropriate fashion can fail and disappear. Notable examples include America Online, Barnes & Noble, Borders, Compaq, HMV, Kodak, Netscape, Nokia, Pan Am, Polaroid, Radio Shack, Tower Records, Toys R Us and Xerox. MedTech leaders might be mindful of Charles Darwin’s hypothesis, which he describes in his book, On the Origin of Species published in 1859. Darwin suggests that “in the struggle for survival, the fittest win out at the expense of their rivals because they succeed in adapting themselves best to their environment”. Such a statement would not be out of place in a modern boardroom. It suggests that all industrial sectors need to develop to keep abreast of innovations and evolving trends. The main difference is that Darwin’s natural selection processes take millions of years, while significant changes that effect commercial businesses can take a matter of months.
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The Mexican Connection
A Special Report 

 
  • People are eating themselves to death and our healthcare systems and governments are failing to stop it
  • Obesity and type-2 diabetes (diabesity) kills thousands unnecessarily, and threatens the stability of healthcare systems around the world
  • In the UK there is mounting frustration with the diabetes establishment’s failure to make inroads into the prevention and management of diabesity
  • Mexico is re-engineering the way primary care delivers its services in order to prevent and reduce the burden of diabesity
  • There are lessons from Mexico for healthcare systems challenged by the diabesity epidemic
 

Breaking the cycle of ineffective diabesity services
 
People are eating themselves to death, and our healthcare systems are failing to stop it. Not more so than in Mexico, where 70% of the population is overweight and 33% obese; both risk factors of type-2 diabetes (T2DM), which kills 70,000 Mexicans each year.
 
The situation is not that different in the UK, which has the highest levels of obesity in Western Europe: 64% of adults in the UK are either overweight or obese, and the incidence rates of diabetes have more than trebled over the past 30 years. Each year, in the UK diabetes kills 22,000 people unnecessarily, and leads to 7,000 avoidable lower limb amputations.
 
The two countries differ however in their respective responses to the epidemic of obesity and diabetes (diabesity), which is the subject of this Commentary. While the UK’s diabetes establishment appears to be locked into a cycle of ineffectiveness, the Fundación Carlos Slim (FCS), is re-engineering the way Mexico’s primary healthcare system delivers its services in order to prevent and reduce the vast and escalating burden of diabesity. The FCS’s endeavours have important lessons for the UK, and indeed other countries battling with a similar epidemic.  
Diabesity a global challenge
Diabesity is no longer a disease of rich countries; it is increasing everywhere. An estimated 422m adults were living with diabetes in 2014, compared to 108m in 1980. The global prevalence (age-standardized) of diabetes has nearly doubled since 1980, rising from 4.7% to 8.5% in the adult population. This reflects an increase in associated risk factors such as being overweight or obese. Uncontrolled diabesity has devastating consequences for health and wellbeing, and it also impacts harshly on the finances of individuals and their families, and the economies of nations.


Mounting frustration with the UK’s diabetes establishment

Although there is consensus about what needs to be done to prevent and enhance the management of obesity and T2DM, and although each year NHS England spends £10.3bn on diabetes care, and £4bn to treat obesity, the prevalence rates of the conditions continue to rise, and the UK’s diabetes establishment seem unable to do anything about it.
 
This ineffectiveness has caused mounting frustration with the diabetes establishment on the part of the UK government’s National Audit Office (NAO) and the Public Accounts Committee (PAC). Numerous official inquiries into adult diabetes services have found no evidence to suggest that T2DM prevention and care are effectively managed, and failure to do so leads to higher costs to the NHS as well as less than adequate support for at risk people and those with the condition.
 
Damning official inquires into adult diabetes services
A 2015 NAO report into adult diabetes services found, “that performance in delivering key care processes and achieving treatment standards [recommended by the National Institute for Health and Care Excellence (NICE)], which help to minimise the risk of diabetes patients developing complications in the future, is no longer improving . . . . There are significant variations across England in delivering key care processes, achieving treatment standards and improving outcomes for diabetes patients, (and)  . . . There are still 22,000 people estimated to be dying each year from diabetes-related causes that could potentially be avoided”. 
The 9 basic processes for diabetes care
The nine NICE recommended basic processes of diabetes care are: (i) blood glucose level measurement (HbA1c), (ii) blood pressure measurement, (iii) cholesterol level measurement, (iv) retinal screening, (v) foot and leg checks, (vi) kidney function testing (urine),  (vii) kidney function testing (blood), (viii) weight check, and (ix) smoking status check.
No strong national leadership and depressingly poor progress
When the Public Accounts Committee (PAC) reported on adult diabetes services in 2012 it found that, "progress in delivering the (NICE) recommended standards of care and in achieving treatment targets has been depressingly poor. There is no strong national leadership, no effective accountability arrangements for commissioners (local healthcare providers), and no appropriate performance incentives for providers." Four years later, a 2016 PAC inquiry into adult diabetes services reported that nothing of significance had changed. The Committee was concerned, “that performance in delivering key care processes and achieving treatment standards is no longer improving”, and it challenged, “the Department of Health, the NHS and Public Health England on their lack of progress in improving patient care and support”.
 
The UK’s cycle of ineffective diabesity services
The NAO and the PAC inquiries appear to have identified a cycle of ineffectiveness among the UK’s diabetes establishment, which manifests itself in a familiar scenario. Here is a stereotypical picture.
 
Each year, after the publication of the latest prevalence data for obesity and diabetes, Diabetes UK, a leading charity, “calls on the government to do more”, the National Clinical Director for Obesity and Diabetes at NHS England makes a defensive statement usually emphasising the positive aspects of diabetes services. NHS England continues to spend £14.3bn each year on the treatment of diabesity. There continues to be little improvement in the 20,000 plus unnecessary annual diabetes-related deaths, and 7,000 avoidable amputations. Diabesity services continue to be inflexible and process, rather than outcomes driven. Nothing of substance changes, prevalence rates and eye-watering costs continue to rise, and no one is accountable.
 
This cycle of ineffectiveness reflects a dearth of national leadership among the diabetes establishment.
 
The Fundación Carlos Slim (FCS) appears successfully to have broken a similar cycle of ineffectiveness for the prevention and treatment of diabesity in Mexico. The Fundación used the weaknesses in Mexico’s primary healthcare system as an opportunity to re-engineer the prevention and treatment of diabesity with an innovative program called Casalud. The name is derived from two Spanish words: “casa” (house) and “salud” (health): ‘Homehealth’.
 
In 2008, when the FCS launched the Casalud program, the primary care services of both the UK and Mexico were similar in in their inflexibility, and in emphasising treatment processes and service delivery rather than value-based healthcare. This emphasis results in weak primary care systems, which contribute to the increased prevalence of diabesity.
 
We will draw lessons from the Casalud program, but before doing so let us consider the grounds for a comparison between the healthcare systems of the UK and Mexico.
 


UK and Mexico compared

In both countries the prevalence of obesity and T2DM are high and increasing. Both governments’ healthcare systems are struggling to effectively cope with the vast and growing burden of diabesity. Mexico’s Seguro Popular, which is roughly equivalent to NHS England, serves about 57m people: which includes 60% - 34m - of Mexico’s poorest non-salaried workers employed in the informal sector. Mexico’s population is younger than the UK’s. The median age of Mexico’s 129m citizens is 29 years, whereas in the UK, which has a population of 65m, the median age is 40 years.
 
Both the UK and Mexico struggle with structural challenges associated with the supply and competence levels of health professionals. These manifest themselves in significant local variations in the effectiveness of diabesity prevention and treatment, and in lengthy waiting times for GP consultations.
 
Annual foot checks in the UK and Mexico
In England for instance, standard annual recommended foot checks for people with diabetes vary as much as 4Xs depending on where you live. Each year 415,000 or 13.3% of people with T2DM do not receive foot checks, which increases their risk of amputation, and fuels the 7,000 avoidable lower limb amputations carried out each year. Similarly in Mexico, 60% of people with diabetes fail to have their feet examined during primary care consultations, and between 86,000 and 134,000 diabetes-related amputations occur each year.
 
Responding to the recent English findings, Professor Jonathan Valabhji, the National Clinical Director for Obesity and Diabetes at NHS England said; “It is very important as many people as possible receive their foot checks at the right time – currently each year 85% of people with diabetes receive these foot checks.”
 

Leadership to break the cycle of ineffective healthcare services
In contrast to the UK’s diabetes establishment, the Casalud program provides strong, well-coordinated national leadership, and effective accountability and performance incentives for local healthcare providers. It does not however, deliver direct healthcare services; these are provided by the state. Instead Casalud concentrates on fostering the implementation and use of innovative technology, which it has designed to enhance patient centred primary care, extend healthcare into communities and homes, encourage self-management, engage in prevention programs, and enhance the competence and capacity of healthcare professionals within Seguro Popular.
 
For the Casalud program to stand a chance of being supported by the Mexican government, and implemented nationally, the FCS understood that it was essential to collect convincing performance data in its pilot program. From its inception therefore, the Casalud program developed and agreed with the relevant healthcare agencies a suite of performance measures, data collection protocols and reporting systems. This helped the Fundación to secure the backing of key national and regional healthcare agencies.
 
The FCS chose a social franchising model for the Casalud program, which uses commercial best practice to achieve socially beneficial ends, rather than profit. This makes the program significantly different to the endeavours of some UK public and non-profit bureaucracies, which provide diabesity services.
Some common aspects of bureaucracies
Here we briefly describe some common aspects of bureaucracies, which suggest that over time, bureaucratic organizations may become ineffective diabesity service providers. Bureaucracies are machine-like organizations characterised by hierarchical authority, a detailed division of labour, and a set of rules and standard procedures, which staff are obliged to follow. Rules provide a means for achieving organisational goals, but the following of the rules sometimes displaces the actual objective of the organisation, and organisational objectives become secondary. This is encouraged by the fact that people in bureaucracies tend to be judged on the basis of observance of rules and not results. For example, in an organisation, say committed to diabetes services, performance may be judged on the basis of whether expenditure has been incurred according to rules and regulations. Thus, expenditure becomes the criterion of performance measurement, and not the results achieved through expenditure. Bureaucracies almost completely avoid public discussion of its techniques, although there may be some discussion of its policies. This secrecy is believed to be necessary to prevent “valuable information” from leaking out, and going to competitors. “Trained incapacity” is a term sometimes applied to bureaucracies to describe training and skills, which have been successful in the past, but are unsuccessful under present changed conditions. Inadequate flexibility, in an evolving environment such as healthcare, will result in ineffectiveness.
 mHealth platform embedded with bespoke tools
The Casalud program avoided bureaucratic traps that result in ineffectiveness by developing a flexible mHeath platform (the use of mobile phones and other wireless technology in medical care) with an embedded suite of proprietary software, which connects patients to health providers, nudges people to self-manage their own health, and to become integral members of local care teams. The platform is used for mobile screening, providing patients with their own individual healthcare dashboards, online healthcare education, supply chain monitoring, standardizing electronic patient records, and big data strategies. It also acts as an entry point for patients, support for health professionals to identify at-risk people, make early diagnosis, and quickly begin diabesity management, and structure follow-up with patients over time.
 


The Casalud program’s successful pilot

In 2009, the FCS began a 3-year pilot of its Casalud program in 7 Mexican states, which resulted in improved patient knowledge about diabesity, enhanced self-management among people with the condition, increased clinician knowledge of diabesity prevention and management, and improved clinical decision-making.
 
The FCS used performance data from its pilot to secure a partnership with the Mexican Ministry of Health to extend the Casalud program to 120 primary care clinics serving 1.3m people across 20 Mexican states - 4 to 10 clinics in each state. Also, the performance data was successful in getting the Casalud program adopted as an integral component of the National Strategy for the Prevention and Control of Pre-obesity, Obesity and Diabetes. So, within three years the Casalud program went from a relatively small charity-backed start-up to a significant component in a nationally supported healthcare system.
 
It is reasonable to assume that this was partly due to the leadership provided by the FCS, and partly due to setting, collecting and reporting appropriate performance indicators. The FCS acted similarly to a lead institution in a commercial endeavour, and successfully recruited key contributing partners who were prepared to share the costs of the program’s national rollout. The FCS covers the cost of all the software development, and the training of healthcare professionals for the Casalud program. All the software is owned by the FCS, and licensed free-of-charge to the Mexican government. The federal government covers the cost of all computer hardware used in participating clinics, and local state governments cover the cost of Casalud’s operations, which include such things as laboratory tests and medications.
 


The 5 components of the Casalud program

To better understand the Casalud program and its contribution to enhanced diabesity services we review its five components: (i) proactive prevention and detection of diabesity, (ii) evidence-based management of diabesity, (iii) supply chain improvements, (iv) capacity-building of healthcare professionals, and (v) patient engagement and empowerment. Each component has an on-going monitoring system associated with it, which informs the FCS on the status of the program’s implementation.
 
1. Proactive prevention and detection of diabesity
Previous attempts in Mexico at community based screening for diabesity have failed. However, the FCS insisted that a national screening strategy was important for reducing the burden of diabesity, but understood its case would need to be supported by appropriate performance data, which would require systematic collection and reporting. To help achieve this the FCS developed two online risk assessment tools, which capture, assess and report data on peoples’ risk factors of diabesity.
 
One of these tools is used in clinics, and the other, which is portable, used in homes and communities. Both screen and categorise people as, (i) healthy, (ii) at risk of diabesity, and (iii) already diagnosed as obese or with T2DM. Screening allows local healthcare professionals to suggest personalised lifestyle changes to individuals either to help them reduce their risk of diabesity or to improve their management of the condition. Each participating clinic has a screening goal. Screening data are collated and reported weekly on a pubic system, which incentivizes the clinics in their screening endeavours.
 
Having a portable device means that populations, which previously did not have access to healthcare are included in the screening. While this increased the number of reported people with diabesity, over time it lowered healthcare costs because early detection reduced the use of urgent care facilities. This proactive component of the Casalud program and the performance data resulted in the support of federal healthcare officials who saw the advantages of using technology to integrate communities, families, and patients into a continuum of care. The tools also extended care to people and communities that previously had little access to healthcare, and encouraged patients to use technology to manage their own health, which health authorities appreciated.
 
2. Evidence-based diabesity management
The second component of the Casalud program is an evidence-based diabesity management system, which is supported by more software developed by the FCS. This includes agreed international best practice protocols for diabesity prevention and management, a digital portfolio for health professionals, electronic monitoring of patients in order to improve the accuracy and reliability of performance measurements and patient data. Such data are used to improve the quality of clinical decision-making.

Examples of the data collected and reported are the percentages of people with T2DM and their corresponding laboratory test results. Casalud’s study found that out of 961,733 patients with T2DM, only 20% had an HbA1c (blood glucose) measurement. Further, only 40.7% of patients with an HbA1c measurement had their HbA1c levels under control (below 7%).  All data are made available at the national, state and clinic levels, and are thereby expected to empower healthcare providers to base their health policy decisions on the areas of most need.
 
3. Supply chain improvement
Mexico like other emerging countries suffers from an inconsistent supply of medicines and laboratory tests, which is a significant obstacle to optimal disease prevention and management. Drug supply decisions in Mexico are centralized and made at a state or federal level. This is different to the UK, and other developed countries.
 
This component of the Casalud program uses a proprietary online information system that standardizes metrics for stock management at the clinic level to improve the supply of medicines and laboratory tests. The software is made available on mobile phones to make it easy for health professionals to ensure that stock levels are adequate for clinics to provide a quality service. In addition, Casalud uses these data to raise awareness with federal and state healthcare officials of inefficiencies in supply chains, which could fuel complications and increase healthcare costs. Prior to Casalud there was no accurate and systematic way to assess and report on the supply of medicines and laboratory tests.
 
4. Capacity building for healthcare professionals
Casalud’s forth component is an interactive platform to develop the capacity of healthcare professionals through online education, which leads to diplomas conferred by national and foreign universities. The FCS partnered with Harvard University’s Joslin Diabetes Center, and Mexico’s National Institute of Medical Sciences and Nutrition to develop courses that certify competence in key areas of diabesity prevention, diagnosis and management. One course is designed to update doctors’ knowledge of diabesity, and the other is a practical course developed by faculty of the Joslin Diabetes Center in which health professionals solve real-life cases to test their knowledge in practical settings.
 
Certificates act as non-monetary incentives for health professionals, and to promote competition between clinics and health professionals. This helps to increase participation in the program, improve the quality of care, encourage openness and transparency, and increase collaboration between clinics.
 
Software developed by the FCS assists local clinics to capture data on the characteristics of the participating healthcare professionals, their baseline knowledge, and improvements after each course. These data are aggregated to choose a clinic of excellence for each state, and a national clinic of excellence; both of which are publicly recognised awards, and help with Casalud’s national rollout strategy.
 
Further, performance data are contributed to the National Strategy for Improving Skills and Capacity of Healthcare Personnel, which obliges all Mexican healthcare institutions to engage in formal online training that is, personalized, linked to a continuing education program, validated by academic institutions and independently monitored. Casalud’s capacity building component fulfils all of these criteria.
 
5. Patient engagement and empowerment
With the help of the Joslin Diabetes Center, the Mayo Clinic, and Mexico’s National Nutrition Institute, this component has two mobile applications, which assess patient engagement, knowledge of diabesity, and confidence and skills in order to help them understand their health, begin to self-monitor their condition, interpret their own results, and implement beneficial lifestyle changes. A specific app for people with T2DM allows them to schedule medicines and appointment reminders, input glucose and weight measurements, and receive immediate personalized feedback and educational messages from health professionals.

However, the FCS changed its approach following evidence from the program’s pilot, which suggested that due to the characteristics of the patient population – elderly, rural, and with limited access to and familiarity with technology – mobile technology alone would not lead to a high percentage of patient engagement. So, Casalud implemented a suite of in-person interactions and activities, which are thought to be more appropriate for the specific patient population.

Such a change may not be necessary in the UK and other developed countries. In the UK for instance, the growth trend in smartphone ownership is present in all age groups, and fastest among 55-64 year olds, which jumped from 39% in 2014 to 50% in 2015. While those aged over 55 are more likely to own a laptop the gap is closing. Among younger age groups, 90% of those aged 16-24 now owns a smartphone.
 


Takeaways

Although the Casalud program has encountered challenges associated with Mexico’s patchy technological infrastructure, entrenched attitudes of some health professionals, and fragmentation and lack of uniformity of its primary healthcare system; the program has been successful; not least because of its flexibility and speed of adjusting to prevailing conditions. In 2015 a Brookings Institution research paper concluded that, “Casalud has made significant strides in transforming care delivery in Mexico”. 

Casalud’s development and implementation continues. It is an innovative program, which employs appropriate technology and evidence-based knowledge to re-engineer Mexico’s public sector primary healthcare system by encouraging patient self-management to reduce the country’s vast and increasing diabesity burden.
 
Casalud provided leadership and seed money to secure financial support from and create consensus between the federal and state governments, and obtain local support from clinics, healthcare professionals and patients. The program is on-going and warrants consideration from the UK’s diabetes establishment, and those of other countries wrestling with the burden of diabesity.
 
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  • It is one of the most serious global health challenges of the 21st century
  • It causes high incidence of morbidity, disability and premature mortality
  • It affects 30% of children and 62% of adults in the UK
  • It costs the UK £47bn a year
  • For 40 years official statistics have under-reported its main cause
  • Doctors have neither been able to reduce nor prevent it
  • Behavioural scientists are well positioned to reduce it
  
A major 21st century health challenge is under-reported for 40 years
 
A 2016 study by the UK’s Behavioural Insight Team (BIT) found that, for the past 40 years, official UK statistics have under-reported the main cause of it. The Office for National Statistics failed to pick up the fact that people consistently under-report the principal cause of it. “Such a large underestimate has misinformed policy debates, and led to less effective strategies to combat it,” says Michael Hallsworth, co-author of the study. Jamie Jenkins, head of health analysis at the Office for National Statistics, replied, “We are actively investigating a range of alternative data sources to improve our understanding of the causes of obesity”.
  
Obesity should be treated like terrorism

Although we know how to prevent obesity, it devastates the lives of millions and costs billions. In the UK obesity affects 33% of primary school children, and 62% of adults. Its prevalence among adults rose from 15% to 26% between 1993 and 2014. In 20 years, obese adults are expected to increase to 73%.
 
The UK spends £640m on programs to prevent obesity. Each year, the NHS spends £8bn treating it, and obesity has the second-largest overall economic impact on the UK; generating an annual loss equivalent to 3% of GDP. 
 
The World Health Organization warns that obesity is, “one of the most serious global public health challenges of the 21st century”. The UK’s Health Secretary says obesity is a “national emergency”, and the UK’s Chief Medical Officer argues that obesity should be treated similarly to “terrorism”.
 
Here we suggest how behavioural science rather than doctors can help to reduce and prevent obesity.
 

Vast, persistent and growing

Although we know how to address obesity, there are few effective interventions in place to reduce it. According to a 2014 McKinsey Global Institute study, the UK Government’s efforts to tackle obesity are, ''too fragmented to be effective'', while investment in its prevention is, ''low given the scale of obesity''. Being obese in childhood has both short and long-term consequences. Once established, obesity is notoriously difficult to treat. This raises the importance of prevention. Obese children are more likely to become obese adults, and thereby have a significantly higher risk of morbidity, disability and premature mortality. The global rise in obesity has led to an urgent call for action, but still its prevalence, which is significant, is rapidly increasing.
 

The incidence of certain cancers is significantly higher in obese people, and is expected to increase 45% in the next two decades. Professor Karol Sikora, a leading cancer expert, describes the association, but says we do not know the reasons why, and Dr Seth Rankin, Founder and CEO of the London Doctors Clinicsuggests that virtually every health problem known to mankind is made worse by obesity:

 

Prof. Karol Sikora - Cancer linked to obesity


Dr Seth Rankin - Can being overweight lead to health problems?
 
 The success and growth of Nudge Units

A previous Commentary drew attention to the fact that obesity is connected with a relationship between the gut and brain. Gut microbiota are important in the development of the brain, and research suggests that an increasing number of different gut microbial species regulate brain functions to cause obesity. Notwithstanding, the UK’s Behavioural Insight Team (BIT), which started life in 2010 as a government policy group known as the "Nudge Unit", revolutionized the way we get people to change their entrenched behaviours, and this has important implications for public policy strategies to reduce and prevent obesity.
 
Under the leadership of David Halpern, the BIT has been very successful and has quadrupled in size since it was spun out of government in 2014. Now a private company with some 60 people, the Nudge Unit permeates almost every area of government policy, and also is working with Bloomberg Philanthropies on a US$42m project to help solve some of the biggest problems facing US cities. The UK’s Revenue and Customs (HMRC) has set up its own nudge unit, and nudge teams are being established throughout the world.
 
The genesis of Nudge Units

It all started in 2008 with the ground-breaking publication on behavioral economics, Nudge: Improving Decisions About Health, Wealth and Happiness, written by US academics Cass Sunstein and Richard Thaler. Their thesis suggests that simply making small changes to the way options are framed and presented to people “nudges” them to change their lifestyles without actually restricting their personal freedoms. Politicians loved the thesis, not least because it was cheap and easy to implement, and ‘Nudge’ became compulsory reading among politicians and civil servants. “Nudge Units” were set up in the White House and in 10 Downing Street to improve public services and save money by tackling previously intractable policy issues.
 
Nudging people to change

The UK’s Nudge Unit has, among other things, signed up an extra 100,000 organ donors a year, persuaded 20% more people to consider switching energy provider, and doubled the number of army applicants. Now it is turning its attention to health and healthcare, and already has implemented behavior change strategies that motivate individuals to initiate and maintain healthier lifestyles. The Unit’s strategies that have demonstrated self-efficacy and self management are examples that can be further incorporated into lifestyle change programs, which help people maintain healthy habits even after a program ends and thereby be a significant factor in reducing and preventing obesity.
 
Takeaway
 
Doctors understand the physiology of obesity, but they do not understand the psychology of people living with it. Doctors are equipped to treat the morbidities and disabilities associated with obesity, but ill-equipped to reduce and prevent it. The sooner the Nudge Unit is tasked with reducing and preventing obesity the better.
 
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4 years ago

In 2015 expect increasing healthcare challenges from (i) aging populations and rising chronic illnesses, (ii) escalating costs and patchy quality, (iii) access, (iv) changing technologies, and (v) security.

Aging populations and chronic illness
Aging populations and the escalating prevalence of chronic lifelong diseases, will drive demand for healthcare in 2015, and impose significant burdens on healthcare systems.

Europe has the world’s highest proportion of people over 60. By 2017, 20% of Europeans will be over 65. By 2050 about 40% will be over 60. The US has similar trends. This aging and the increasing prevalence of chronic lifestyle diseases will continue to drive healthcare expansion, and pressure to reduce healthcare costs.

Read more

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4 years, 2 months ago

Was the UK Department of Health (DH) right to axe its telehealth project?

Telehealth
Telehealth is a combination of medical devices and communication technology used to monitor diseases and symptoms, and support health and social care remotely. It represents a solution to the challenges of rising healthcare costs, an aging population, and the increasing prevalence of chronic diseases.

The Whole Systems Demonstrator Project
The DH’s Whole Systems Demonstrator (WSD) project was an ill-conceived top-down endeavour doomed to fail. It cost £31m, and was the world’s largest randomised control trial of telehealth involving 7,000 patients, 240 primary care practices across three UK sites.

3millionpeople
In 2011 an interim evaluation concluded that the WSD project could achieve a 45% reduction in mortality rates, a 15% drop in A&E visits, a 14% reduction in bed-days, and an 8% reduction in tariff costs.

These estimates are in line with international findings. Based on a review of some 2,000 studies, GlobalMed concludes that telehealth has reduced hospital re-admissions by 83%, decreased home nursing visits by 66%, and lowered overall costs by more than 30%. Nothing else has worked to reduce such costs.

It was projected that by 2017 three million people in England with long term conditions would be recording their medical data and vital signs remotely, and sending them, via email and text, directly to GPs. This could save the NHS £1.2 billion a year, and significantly enhance the quality of patient care.

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4 years, 3 months ago

London heart attack sufferers taken to a specialist cardiac centre have a 60% chance of survival, whereas those taken to an A&E unit only have, at best, a 26% chance of survival: according to unpublished information from the London Ambulance Service.

Experts say that the current provision of cardiac services in north and east London have, "relatively poor patient outcomes in comparison to the rest of England", and suggest that St Bartholomew's Hospital in central London should be transformed into a huge cardiovascular surgery unit, and a hub for a comprehensive network of care, which would embrace GPs and local hospitals.

For years, world-renowned heart surgeon and philanthropist Devi Shetty, has argued that, “One hundred or 200 bed hospitals are not the solution.” Shetty is the founder and chairman of Narayana Health, which boasts Asia’s largest cardiac centre providing world-class cardiac care at affordable prices. “Large specialist cardiac centres, treating high volumes of patients, staffed by specialists and equipped with the latest technology, save lives, reduce complications, lower costs, and are the hospitals of the future,” says Shetty.

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Gordon Moore
Professor, Harvard University Medical School and world renowned authority on the design and implementation of healthcare delivery systems 
 

'Instead of throwing more manpower at their problems, multiple industries are using information technology to offload work to the consumer, connect the participants up in real time, and create smart, real-time process support.'

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Curing the Problems of General Practice

The Royal College of General Practice (RCGP) and the Centre for Workforce Intelligence (CFWI) agree: too small a supply of GPs will meet a rising tide of demand.  In the UK, spotty shortages exist now, but will become widespread over the next decade.

The causes of rising clinical demand are well known:
  • Continued growth of the things medicine can do
  • Surge of lifestyle diseases
  • Burgeoning patient devices that collect data and require monitoring by clinicians
  • Increased public expectations for access to GPs 
  • Aging of the population
  • Emergence of multiple, complex chronic illness
  • Diversion of GPs to management activities such as commissioning

Little analysis of root causes
Less is known about the underlying causes of the shortfall of supply in GPs.   The RCGP cites lagging GP incomes as a source of dissatisfaction, with consequent dampening effects on medical student choices of general practice specialist careers.   The CFWI models GP supply, but offers little analysis of the root causes of the declining intake to GP careers.  

While both the RCGP and the CFWI repeatedly emphasize the need to make general practice more attractive and increase its uptake, they have few suggestions about how to do so other than promoting it better.  In the meantime, they advocate, as does the NHS, that larger, multi-skilled teams must grow to service the increasing need, and that the key barrier to effective teamwork is lack of integration.

Concerns
I want to raise two significant policy concerns about the direction that the UK is taking to mitigate the primary care “crisis”.  First, I postulate that the reason that medical students are not choosing general practice is less a matter of money than of increasing practice complexity and life style.   Second, I suggest that the “solution” of larger, better-integrated teams is unproven and, further, may actually diminish productivity, and worsen, rather than relieve, the stress of work on GPs while their satisfactions further diminish.  

Lifestyle challenges
There is little evidence that medical students will select GP careers if they earned more.  In fact, over the past five years, during the rapid upturn in GP incomes, dissatisfaction among GPs grew and fewer medical students, especially men, chose to enter general practice.  In the US, studies have shown that life style is an important factor in the diminishing number of medical students entering primary care.   At the same time, corporate primary care is growing, and larger practices with more salaried doctors are becoming the work choice of preference. 

This suggests that young doctors are put-off by the complexity, responsibility, the long hours, and the stress of general practice, and seek to transfer those risks to someone else.  Without fixing this, throwing more money at the problem is unlikely to reverse the trend.   Money, of course, is important, but it’s merely an enabler of career choice and a deterrent if too low. Compensation alone doesn't appear to be a sufficient incentive to chose primary care.   

Multi-purpose teams failing
The idea is seductive that integrated, multl-manpower teams are a solution to the GP shortfall. However, early evidence from America doesn’t suggest that the US-version of integrated, primary care teams (the patient-centered medical home) is achieving the efficiencies and improved care that they were touted to deliver.  Recent studies  (see: Friedberg M.W., 26th February 2014, Journal of the American Medical Association) show some small improvements in quality measures, but no change in cost-effectiveness in a group of enthusiastic early adopters.   

There are many reasons to doubt that simple team integration occurs by encouraging it among those working together, and much to suggest that the cost of integration is a major barrier to a cost-effective strategy to increase manpower.   Information technology, as a field, discovered years ago that taking complex tasks and dividing them among many different subgroups was dis-economic.

Additional manpower not the answer
As long ago as 1975, Frederick Brooks in The Mythical Man-Month argued convincingly that by, “adding manpower to a late project makes it later”.  No surprise then that when one counts the cost of personnel, the coordination mismatches, the communication time, the complexity of handoffs, and duplication of services, teamwork is more a theoretical concept than a practical working model. 

Adopt best practice
What, then, might one consider as a possible solution to the increasing stress, complexity, and uncertainty of life as a GP? What is needed to facilitate integration among and between team members and patients?  Surely, we can draw lessons from other industries.  Instead of throwing more manpower at their problems, multiple industries are using information technology to offload work to the consumer (think of Cash Points), connect the participants up in real time, and create smart, real-time process support. 

The role of technology
Digital infrastructure for general practice has failed to keep up with the rest of the world.  The electronic medical record documents what has been done but does little to help doctors and other health workers to do their work. There is no infrastructure to help patients. Information technology should be providing an infrastructure to make general practice easier and better to do. 

Merely throwing non-GP manpower at their problems will make the life of the GP more complicated and less satisfying.   It is time to invest in true infrastructure innovation in the NHS.  It won’t be cheap, but it is the only answer to the threat that general practice will fail to meet the needs of the population in future.    
 
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Gordon Moore
Professor of Population Medicine
 Harvard University  Medical School

'We must tap into the largest unused source of manpower: the patients themselves.'


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Meeting the challenges of affordable quality healthcare

Health care systems throughout the world are about to be hit by a tsunami.  Dramatically escalating GP demand is driven by the growth of life-style-related chronic illness, the surge of baby-boomers, a primary-care doctor shortage in some countries, and, in America, the surge of unmet needs now paid for by Obamacare. Either the current system will seize up, or new ways of caring for patients must be found.

Traditional responses unsustainable
Typically, healthcare systems respond to increased demand by adding manpower: usually nurses and other health workers. Increasing manpower reduces the potential for economies of scale in which increased volume reduces costs. Even worse, with additional workers added to a healthcare practice, efficiency actually decreases as downtime, communication costs, turnover, coverage, duplication and re-work increases. 

Healthcare systems must find a way to reduce the costs as they struggle to meet this surge of demand.  The old manpower-based responses, which at first seem attractive solutions, are unsustainable in the long run.

4 musts
What are the answers? 
  • First, we must tap into the largest unused source of manpower: the patients themselves.  Anyone who cares for patients with diabetes, smoking, or high blood pressure knows that the best plans of GPs often are not carried out despite many repeated visits to the doctor or nurse. 
  • Second, to activate patients, care support for them must be truly patient-centred.  Patients need help to gain confidence necessary to take control of their own therapeutic pathways. Such a system of support requires “having your doctor in your pocket”, which should be entertaining, engaging, educational, available 24/7, continuously helpful, personalized, and safe.
  • Third,having your doctor in your pocket,” can only be achieved if IT is used in new and innovative ways.  The most cost-effective avenue by which we can move patients with chronic illnesses to become more actively involved in their own care is through the Internet, where dramatic shifts in user interfaces, devices, and process interactions are taking place almost daily. By transferring expert knowledge to patients and thereby creating a truly patient-centred system, caring for ones’ own illness will be no more difficult than using a cash machine or mastering a smart phone.  
  • Finally, if the Internet can facilitate the transfer of knowledge from the medical system to the patient, then also it can facilitate the transfer of expert health knowledge to lower the cost of all clinical personnel from doctors to nurses to health coaches.  If guidelines, such as those produced by NICE in the UK, are built into the process of care that health professionals use, we would have developed a system that significantly extends the capacity of health professionals while maintaining the safety and quality aspects of care that increasingly people expect and demand.  An apt analogy is the way that today’s cockpit technology enables all pilots to be as good as the best.  Through the use of technology, we can do the same in medical care.
The past is no indication of the future
Today, healthcare is largely using IT to reproduce what doctors have done in the past. The electronic record is little different to paper records.  In the evolution of any new technology, its application development goes through this stage. However, we must put IT to use in doing new things, in innovation that reduces our dependence on expensive manpower and in producing more value for less money.

Making such a transition will not be easy or inexpensive.  But the costs of remaining the same and trying to meet escalating healthcare demands by adding more costly inputs are higher and more threatening in the long run.  We should be investing in the future, not tinkering with the present.  
 
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