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	Healthcare executives are interested in telemedicine. In fact, for the majority, it is high on their radar, according to a new survey.

Defining Telemedicine's Role: The View From the C-Suite

 (SGP), a Baltimore-based healthcare research, strategy, and marketing firm, 86% of healthcare executives say telemedicine is a priority, but they’re cautious about committing their limited budgets to it, likely due to the complex regulatory environment and reimbursement challenges.

	Conducted in May 2017, the report surveyed nearly 100 healthcare executives alongside additional quantitative and qualitative research. Nearly two thirds (59%) were C-suite executives, and 41% were service line leaders or department chiefs. Respondents represented integrated delivery networks (30%), community hospitals (30%), specialty hospitals (25%), and academic medical centers (16%).

	“In conducting the research that went into this report, we were really interested in understanding what was happening on the ground. Our new survey findings that explore healthcare executives’ application and adoption of telemedicine technology,” says Dan D’Orazio, CEO, Sage Growth Partners. “Budgets are growing, albeit modestly. Sixty-six percent of respondents reported budgets of $250,000 or less. When you break that down, 41% have budgets of $100,000 or less and 26% have budgets from $100,000 to $250,000.”

	With so many vendors in the market, another finding is the growing friction for telemedicine applications across settings of care, D’Orazio says.

	“There’s a divide between the direct-to-consumer (DTC) telemedicine players and their inability to fit with acute care needs,” he explains.

	According to the report 36% of the respondents say consumer-based technologies (Skype, Vidyo, iPhone, etc.) are appropriate for telemedicine in acute care settings; though 20% express concern regarding these solutions’ HIPAA compliance. A majority (64%) say these DTC solutions are not appropriate or dangerous.

	“It’s clear that telemedicine applications may not fit into a ‘one size solution’ fits all,” D’Orazio says.

	“Operationally, we explored the telemedicine’s use across the continuum of care,” he says. More than half of respondents said they would tolerate only 1-2 telemedicine vendors at most-they’re seeking an enterprise solution. Only 15% believe three or more vendors are acceptable. Connectivity is another critical factor, with 70% asserting that extremely reliable connectivity is a must-have, but nearly half say their connection fails up to 15% of the time. This points to a market that is still maturing, according to D’Orazio.

We view telemedicine as much more than a technology if adopted strategically-we believe it can serve as a powerful access point through the enablement of virtual care, remote visits etc. Increased primary care and mental health access can keep patients out of the ED, while more access to specialty care can help manage chronic conditions and prevent crises that would result in costlier treatment,” he says. “Telemedicine can also help optimize settings of care, as physicians can continue to monitor and provide remote care to patients in post-acute care facilities and in the home.”

	Healthcare executives agree that telemedicine can help drive patient health and appropriately manage total cost of care across care settings, according to D’Orazio.

	“Despite market immaturity, executives should seriously consider telemedicine’s potential and invest accordingly to stay competitive,” he says. “We know that there are many factors beyond a clinical visit that impact a members' well-being, and telemedicine can be an important engagement solution.”

	D’Orazio offers four new perspectives on telemedicine:

View telemedicine as an opportunity to position your organization as the provider of choice and build your brand.

 “We see from our conversations across the industry and the research we’ve conducted that patients and members increasingly want new methods to connect with care delivery, outside of the normal brick and mortar care settings,” he says.

The telemedicine journey is just that, a journey

. “Most organizations are not adopting telemedicine across all settings of care at once,” D’Orazio says. “A stepwise approach seems very wise. For those healthcare executives selecting a single telemedicine solution, they should ensure that the vendor can truly meet their needs across the care spectrum.”

Clearly articulate the goals of telemedicine

. “Approaching this as just another technology buy that you think you may need will likely lead to sub-par results,” he says. “It is more important to first understand your overall business strategy then identify how telemedicine can support your overall objectives.”

Figure out how you will measure success with your telemedicine endeavors

. Applying traditional metrics to a burgeoning solution like telemedicine may require measuring success with a new yardstick, according to D’Orazio.

Articles

A new survey from Sage Growth Partners offers new ideas on executives’ application and adoption of telemedicine technology.

Four Fresh New Perspectives on Telemedicine for Health Execs

 that it will pay $11.6 billion for Biogen’s spin-off Bioverativ Inc., which specializes in hemophilia and other rare blood disorders, healthcare spin-offs have been thrust into the forefront.

, an investment banking data provider, 14 spin-offs were completed in the U.S. last year, of which two were healthcare: Bioverativ and Varex Imaging Corp.’s spin-off from Varian Medical Systems. 

	A spinoff occurs when a company, the parent, distributes a subsidiary or an operating division to its shareholders, according to John R. Washlick, shareholder with Buchanan, Ingersoll & Rooney, and a member of its healthcare division. “The distribution is proportionate to the shareholder’s equity interest in the parent,” Washlick says. “One significant benefit to the parent company and its shareholders is that the transaction is generally treated as a tax-free transaction under the Internal Revenue Code.” 

) talked with Washlick, who specializes in healthcare system transactions and market consolidation, about healthcare spin-offs, what the trend means for the future of mergers and acquisitions, and what advice he has for healthcare executives.

What do healthcare spin-offs signal for the industry?

: Most spin-offs in healthcare occur in the life science space rather than the provider side that is hospitals and health systems. This is because most hospital and health systems are not publicly traded and in fact most are nonprofit, tax-exempt institutions. With the most notable exception in recent years being 

Community Health System (CHS) when it spun-off Quorum Health Resources in 2016

. Quorum Health Resources was a hospital management company that CHS spun-off to its shareholder along with 38 hospitals in 16 states. The result of the spin-off was to permit CHS to concentrate its business efforts in larger markets, while Quorum focused on smaller markets and mostly rural areas with a population less than 50,000. Both Community Health System and Quorum are public companies traded on the stock exchange.



What should healthcare execs know about spin-offs?

 While in many cases the parent experiences an uptick in trading value and both companies may experience significant value as a result of the spinoff for up to three years, over time each company must sustain its growth independently and often the value resulting from the spin-off hangover will disappear over time. Therefore, management should not look at a spin-off as some silver bullet to increase its stock value for the long term.

	Second, a sale of a subsidiary or business unit will result in a taxable event. A spin-off is tax free.

	Third, a spin-off is an opportunity to improve the parent’s balance sheet and income statement if a division has significant debt or is eroding the parent’s profit margin. 

	Finally, a spin-off does not come about quickly. They can take a couple of years to fully develop so boards and management must be patient and deliberate.

: How will spin-offs reshape future M&A deals?

: Again, I do not see spin-offs becoming all that common anytime soon with hospital and health system providers because few are publicly traded. However, the trend should continue in the life science space. Where the saying, “the whole is greater than its individual parts” may be true in most cases, companies may take a second look before they enter into any M&A negotiations to determine if the inverse may be true, that is “the individual parts are greater than the whole.” If so, board may spin off certain subsidiaries or operating units before an M&A transaction so they will survive independently post transaction. 

: Why would a company consider a spin-off?

: There are a number or reasons a company may consider a spin-off. First, the parent and division/sub may be two distinct types of business, for instance pharmaceutical manufacturer and a consumer healthcare division, like Pfizer. A spin-off allows each corporation and its management to focus on its core business activities, including building the right management team with the appropriate niche and expertise specific to each company’s business model, addressing capital needs, and identifying market expansion and targeting market opportunities. When bundled under one enterprise, management resources may get stretched and diluted; unintentionally neglecting one side of the business for lacking the management expertise to take a particular division to the next level. Second, there is always a buzz when there is a spin-off, or even a rumor of one. This excitement often results in a bump in the parent’s stock price and attracts potential new investors to both the parent company and the spun-off company.  




: What is your top advice for healthcare executives looking to do a spin-off? 

: First, review operations and subsidiary activities to determine if a spin-off makes sense versus an outright sale. Whereas a sale might bring needed cash to an organization’s operations, a spin-off may yield greater returns down the road. Second, will the spun-off company have the right management team out of the starting blocks or will a new management team with skills unique to the business core off the spun-off company need to be recruited? If so, that will require significant time and resources to complete before any public announcement of a potential spin-off. Finally, will the spin-off result in both companies being better situated to position themselves to take advantage of market opportunities, separately?

John R. Washlick, Buchanan, Ingersoll & Rooney, and expert in healthcare system transactions and market consolidation, talks to Managed Healthcare Executive about healthcare spin-offs, what that means for the future of mergers and acquisitions, and advice for healthcare executives.

How Healthcare Spin-Offs are Affecting the Industry

	Most healthcare delivery organizations have dedicated resources for telehealth services and most consider telehealth a top technology investment, according to a new survey.

, “2018 Trends in Telemedicine,” from Vidyo, shows that the rates at which providers are adding video services will make 2018 the year that ‘telemedicine’ becomes standard medicine, and mobile or remote access becomes the new normal. 

	Vidyo conducted an online survey (with support from a third-party market research firm) of more than 300 clinical and IT professionals in the US and Canada who have decision-making authority over telemedicine and telehealth investments and practices, and focused on the use (and planned use) of telemedicine and telehealth technologies by healthcare delivery organizations. The survey was administered by Hanover Research in September 2017, and then Hanover analyzed the results from 337 healthcare professionals in total, from both Canada (37%) and the U.S. (63%). Professionals surveyed were representative of all types of medical practices and facilities, staff counts (1-5,000+) and bed counts (1-500+). 

	“Given that and the legislative momentum that we are seeing, we are declaring 2018 the year that telehealth becomes mainstream,” says Elana Anderson, chief marketing officer at Vidyo.

		75% of healthcare delivery organizations are investing in telehealth.

		Telehealth ranks in as one of the top four investment priorities for providers across all healthcare domains.

		More than 60% of those surveyed reported better-than-expected results from current telehealth solutions-noting improvements in efficiency, timeliness of care, ROI and patient health.

		Satisfaction scores for video-enabled solutions were excellent-hitting 83% for virtual visits, 84% for acute care management, and 90% for chronic health support.

	Another one of the key findings from the research is that more healthcare delivery organizations anticipate issues than actually experience them (issues include things such as cost and complexity of implementations, disadvantages compared to face-to-face interactions and problems with their existing infrastructure).

	“It’s increasingly important to recognize the value and convenience of video in telehealth,” Anderson says. “Video helps build personal connections and relationships between patients, families and care team members, and gives them access to virtual care from any place, at any time. It’s face-to-video care that meets patients where they are, and can improve patients’ willingness to seek help. The kinds of use cases that we are seeing healthcare delivery organizations implement range across the healthcare continuum from home-based care to specialist consults in emergency scenarios to post-acute care. Based on the survey findings, the video element creates significant value for the top telehealth uses and clinician satisfaction around the value delivered in these scenarios is extremely high.”

	Based on the survey, Anderson offers five tips to help healthcare executives prioritize telehealth:

		Allocate funds to your IT budget for telehealth (survey findings indicate at least 20% is a good planning assumption).

		Create dedicated telehealth resources (creating a strategic partnership between technical/IT and clinical teams).

		Create telehealth adoption roadmap (what will the next five years look like).

		Partner with a technology provider to deploy telehealth solutions, and prioritize video when launching or growing telehealth services.

		Use patients’ outcomes and sentiment from clinicians to measure your telehealth impact and ROI.

Survey reveals why 2018 will be the year for telemedicine

Five Ways to Prioritize Telehealth

	Executives know the importance of landing the best talent to help navigate the unpredictable waters of healthcare. Understanding where top talent is looking for jobs in healthcare can be the first step.

	“Studies about job opportunity can impact salary, total compensation, and employee satisfaction,” says Sam Radbil, senior communications manager at ABODO Apartments. “Job seekers in healthcare are always on the move and if execs at major healthcare companies can become more aware of the top landing spots for job seekers, perhaps they can pursue talent in those areas or create more alluring job opportunities in their cities.”

“Best Cities for Job Seekers: Where To Move For The Fastest Growing Careers,”

 a new report from ABODO Apartments, identified the top five occupations (which included healthcare practitioners), the 50 most populous Metropolitan Statistical Areas, and ranked each for each occupation by their 2016 location quotient from the Bureau of Labor Statistics (BLS) Occupational Employment Statistics from 2012 to 2016. The 22 major occupation groups, as identified by the BLS, were first ranked by the percent change in number of employees from 2012 to 2016 according to BLS Current Population Survey.

	“Our analysis of job concentrations shows that for four of the five fastest-growing jobs, chances are, job-seekers won’t necessarily need to relocate in order to find opportunities in their field, but they might want to in order to chase the perfect position or pursue growth,” Radbil says. “The coasts, especially, are ripe with opportunity, but even Midwestern and inland areas, like Minneapolis and Austin, offer ample opportunity in these popular careers-and often with cheaper housing and a lower general cost of living.”

	When it comes to healthcare specifically, Radbil says that it's clear that those jobs must exist everywhere for people to remain healthy. “Jobs such as physicians, surgeons, lab technicians, dentists, physical therapists, and support technologists are extremely important and can often be found in any major or mid-major city.”

	Still, he says, some cities rise to the top-and they’re probably not the cities you’d expect. Others, that you might expect to top the list, did not.

	“Some cities like Washington, D.C., Rochester, MN, Birmingham, AL, and Los Angeles have major healthcare operations, but are not the best places for job seekers in this field. Overall, job density compared to the rest of the country helped us determine the best cities for those jobs in healthcare.

	“We believe that technology and digital innovation is a massive driving force within the healthcare industry, much like in other industries we studied in this report,” Radbil says. “Technology will aid in the development of personal medicine, innovation in job performance, and overall performance of employees. Healthcare organizations will likely be able to increase in size and engage in nontraditional partnerships because of technology implementation. Overall, this will help healthcare operations increase revenue and overall efficiency. All of this will help to create more valuable jobs for job seekers throughout the country.”

	Here are the top 10 metro areas for healthcare jobs in 2018, according to the report:

	Louisville is home to the most "aging care" businesses in the country, making healthcare a very popular industry, according to Radbil.

	Providence is a national leader in non-profit health systems and the city is a leading authority in healthcare digital innovation.

	“Boston is one of the largest cities in the country and with numerous top-level universities nearby, healthcare students are staying close to home for jobs in the city,” says Radbil.

	Baltimore is a leader in healthcare innovation and technology, “making it a great place for healthcare technology jobs and students,” according to Radbil.

	Indianapolis, like New Orleans, has about 1.2x more job density in healthcare than the national average.

	Oklahoma City universities and colleges have some of the top-ranked healthcare programs in the country.

	New Orleans has about 1.2x more job density in healthcare than the national average.

	“Pittsburgh is home to the University of Pittsburgh Medical Center, which creates a ton of jobs for local healthcare pros,” Radbil says.

A new report reveals the top cities that rise to the top for healthcare-and they’re probably not the cities you’d expect.

Top 10 Cities for Healthcare Jobs in 2018

	The 340B Drug Discount program, designed to give discounted prescription drugs to poor Americans, has not been effective in serving its targeted population, according to a new report.

“Addressing the Problems of Abuse in the 340B Drug Pricing Program,”

 by the Pacific Research Institute, found that the 340B program is now an overpriced and inefficient way to provide important medications to low-income Americans, and it's in desperate need of reform.

	“The purpose of the 340B Drug Discount program is to enable healthcare providers that serve predominantly low-income patients without insurance to purchase medicines at steep discounts,” says study author Wayne Winegarden, senior fellow in Business and Economics at the Pacific Research Institute. “Unfortunately, the program has grown uncontrollably and now many 340B hospitals do not serve the targeted population. This is largely because the federal government does not provide enough oversight to ensure that the discounted drug program targets the Americans who need the assistance.”  

	The number of healthcare providers and hospitals that participate in 340B has increased significantly in recent years. In 1992 there were 50 hospitals participating in 340B. Now about one-third of all hospitals in the United States participate. Estimated drug sales to 340B-covered entities has also increased 

	This is in part because the ACA and Health Resources and Services Administration established guidelines that expanded eligibility for 340B discounts and created the contract pharmacy program, which further distributed discounted medications, according Winegarden. “Those pharmacies often do not pass on the savings to customers, continuing the chain of abuse and profiteering,” he says. “Considering the program's growing scale, it cannot continue to fail patients. Reforms to this program are necessary so it actually serves vulnerable Americans.”

		With little guidance from the federal government there is no requirement that hospitals provide the discounted drugs solely to people who are truly in need.

		In practice, hospitals can prescribe discounted medicines purchased through the 340B Program to any of their patients, including those who have insurance and can pay full price-and pocket the difference. “Hospitals that participate in 340B can sell the discounted medicines to any patient, regardless of their income or insurance status, according to Winegarden. “So many 340B providers actually sell the discounted medicines at market rates to patients and then pocket the difference. As a result, 340B entities have an incentive to prescribe the most expensive drugs to take advantage of this profit margin,” he says. 

		Neglecting the program’s mission to serve the most vulnerable, more 340B hospitals have been set up in recent years to serve higher-income patients and secure more profit.

		Exploiting this profit motive, the program encourages participating hospitals to prescribe high-priced medicines as discounts are based on a share of the drug’s costs. They earn more revenue when prescribing the most expensive drug possible.

	The program has also led to a rising trend of healthcare consolidation, as independent practices are not eligible for 340B discounts and losing patients. “Independent practices are not eligible for 340B, but hospital outpatient departments are. So, more hospitals have absorbed these independent practices and set them up as hospital outpatient departments to increase their potential profit margins,” he says.

	According to Richard Sorian, spokesperson for 

which represents more than 1,300+ public and private nonprofit hospitals and health systems that participate in the 340B drug pricing program, “the report is based on a series of incorrect assumptions, most significantly in its view that the 340B drug pricing program exists only to provide care to uninsured patients.

	“Congress made clear, in creating the program, that its purpose is ‘to stretch scarce federal resources as far as possible, reaching more eligible patients and providing more comprehensive services.’ This includes care for low-income and rural patients with insufficient coverage and those in public programs like Medicaid,” says Sorian.

	“Hospitals are using the program savings consistent with the intent to serve their low-income and rural patients,” says Sorian. “Research has shown that 340B hospitals provide 60% of all uncompensated care in the U.S., including provisions of no-cost drugs, cancer care, HIV care, substance abuse treatment, and many other areas. These hospitals also treat 64% more Medicaid and low-income Medicare patients than non-340B hospitals.”

	“Successful reforms to 340B would close these loopholes that allow providers to unjustifiably profit from the program,” according to Winegarden. “Reforms to 340B would discourage further consolidation based on the potential 340B profits and allow smaller practices to remain independent.”

	Nearly two-thirds of all 340B hospitals spent below the national average on charity care, according to a 2014 Medicare Cost Report data. “That means many for-profit hospitals are actually spending more on charity care than 340B hospitals,” Winegarden says.  

	“The 340B program also has increased the financial burden on our entire healthcare system. Mandating discounts on certain medications means that the costs of developing those drugs fall elsewhere,” he says.

	According to Winegarden, this has led to increased insurance deductibles and copays, spiked premiums, and higher overall costs. 

	“Industry leaders should be aware that increased abuse of 340B may lead to higher levels of pressure on Congress to reform the program,” Winegarden says. “Necessaray reforms would improve oversight of the program and ensure that it actually serves its original purpose of providing uninsured and vulnerable patients with the critical medications that they need at prices they can afford.” 

A Pacific Research Institute report revealed that the 340B program is in desperate need of reform, while 340B Health refutes damaging claims.

Report Slams 340B Drug Discount Program

Bioimilar adoption in the U.S. has been slower than expected, and a new report may offer clues as to why.

The State of the US Biosimilars Market Access: Payer Perceptions of Past, Present, and Future Hurdles to Adoption

,” from Trinity Partners, provides insight into U.S. payers’ perceptions of the past, present, and future state of biosimilar market access in the U.S.

As part of this report, Trinity conducted qualitative market research with N=10 medical directors at U.S. payer organizations (representing plans covering more than 100 million commercial and Medicare lives in the U.S.).

“Biosimilars were once expected to disrupt the U.S. biologic market in a major way,” says Jillian Godfrey Scaife, principal, Trinity Partners. “The industry anticipated increased competition would drive down prices for both payers and patients leading to reduced healthcare costs. This prediction has not come to fruition.”

As of December, 1, 2017, nine biosimilars were approved by the FDA but only four are available on the market, according to Godfrey Scaife. “Adoption of these biosimilars has been slower than anticipated resulting in cost savings far below initial expectations,” she says. “It will be important for healthcare executives to understand the market dynamics that caused this outcome.”

The adoption of biosimilars in the U.S. has been hindered by three main hurdles:

The lack of market access due to complex contracting dynamics

. “Biosimilar pricing to date has not offered the sharp discounts payers expect, after accounting for contract discounts and nuances such as the ‘rebate trap,’ an artifact of performance-based contracting between manufacturers and payers,” says Godfrey Scaife. 

She explains that payers receive rebates that increase in magnitude with certain “performance” metrics, such as how much volume or market share a product achieves within a class, for the contracted payer. “If payers encouraged switching away from the reference product to the biosimilar product, they could lose out on valuable rebates and therefore end up paying significantly more money in order to try the new biosimilar product,” she says.

. Biologic innovator companies have taken legal and promotional actions that have impeded biosimilar commercial success, according to Godfrey Scaife. “Innovator companies have filed lawsuits to try and delay the launch of biosimilar products,” she says. “Biologic innovator companies are also investing large amounts of money in direct-to-consumer (DTC) advertising to build patient loyalty for their biologic brands.”

A general lack of clinical comfort with biosimilars

. “Physicians are not completely comfortable with biosimilars and are interested in seeing more clinical and real-world data before they start switching their patients to biosimilar products,” Godfrey Scaife says. “If biosimilars were to attain interchangeability status, this gap in clinical comfort could be minimized.”

Understanding the key barriers to biosimilar adoption in the U.S. is the first step managed care executives can take to overcome these obstacles, according to Godfrey Scaife.

“The issues are quite complex and not easily resolved,” she says. “Managed care executives can also help educate physicians and increase their clinical comfort with biosimilars by providing more data that supports interchangeability of biosimilars with the reference product.  If biosimilar manufacturers could increase physicians’ clinical comfort with biosimilars, more payers would likely be willing to adopt more aggressive policies to encourage the use of biosimilar products and help increase adoption.”

Understanding the key barriers to biosimilar adoption in the U.S. is the first step managed care executives can take to overcome these obstacles, according to a Trinity Parners report.