By Evan Cohen, Associate Principal, Strategic Investing
COVID-19 has created a dramatic shift toward virtual care, in large part necessitated by local, state and federal protocols, as well as shifting patients, providers and payer interest. This unique case study, enabled by nearly a decade of progress in hardware, software, payment models and regulations, has demonstrably shown that digital care management programs can improve chronic disease progression and episodic care recovery. Understanding how the industry has evolved to support these new models of care is pivotal as we look back on recent market developments and hypothesize what is on the horizon.
The digital disease management revolution started in the early 2010’s in the diabetes space with Livongo and Omada. These companies used health coaches that leveraged connected devices, digital check-ins and educational content to drive beneficiary lifestyle change. As hardware, data assets and analytics capabilities have advanced, their programs have become increasingly personalized and expansive to manage co-morbidities (e.g., behavioral health, hypertension). Multi-chronic platforms have been built internally (e.g., Vida, Pack Health) and via acquisition (e.g., Livongo acquisition of MyStrength).
Telemedicine companies raised a record $4.3b in 2020, representing 30% of global digital health funding and fueling growth into new high-spend categories for payers. Musculoskeletal conditions, for instance, have been a big area of focus, given the importance of physical therapy in averting costly downstream surgical spend. Recent deal activity includes Omada’s purchase of Physera ($30m, May 2020) and VC funding for Hinge Health ($300m at a $3b valuation, January 2020) and SWORD Health ($25m, January 2020).
We believe that complex specialty care is ripe for virtual care adoption, given payer appetite to better manage expensive conditions and demonstrated value creation from precedent virtual model analogues. Complex cardiovascular disease management is one area that is poised for virtual care adoption. While many established digital disease management companies have experience managing hypertensive patients, complex heart disease patients (i.e., coronary heart disease, heart failure, atrial fibrillation, etc.) are not core to their program designs. However, digital disease management companies possess many similarities to effective management of complex patients, given the impact of lifestyle and medication management on outcomes, as well as the benefit of remote patient monitoring (RPM).
The budding trend in cardiology virtual care is being exhibited by provider, payer and consumer adoption. A MedAxiom survey of cardiology practices indicated that 75% of office visits moved to telehealth by the end of March 2020. Payer reimbursement rules have largely enabled this shift. In particular, Medicare temporarily relaxed rural requirements and permanently expanded reimbursable telehealth services. Cardiac care has been a major beneficiary of the reimbursement expansion, given the addition of cardiac rehabilitation codes in October 2020. Separately, commercial plans increased adoption of reimbursement parity and, in many cases, removed co-pays. Patient interest and satisfaction with telehealth has accelerated through the pandemic. A survey conducted by Doctor.com indicated that 83% of telehealth patients anticipate having virtual visits once COVID-19 ameliorates.
These are reasons we believe now is the time for adoption of and investment in cardiac virtual care:
High-quality, continuous RPM improves patient surveillance.
Significant advancement in ambulatory cardiac monitoring is improving remote surveillance. The miniaturization of electrocardiograms (ECGs), echocardiograms and implantable devices, in addition to the emerging clinical grade accuracy of wearables and smartphones, are increasing biometric data collection. Through continuous data streams, providers spot emerging deterioration trends and escalation events, while patients become increasingly aware and engaged in care.
One example of innovation is in the continuous ECG monitoring space, where companies like iRhythm Technologies, BioTelemetry, Preventice Solutions, BardyDx and BioIntellisense have changed the standard for monitoring cardiac arrythmias. Given the relative convenience of miniaturized wearable devices versus large and bulky Holter monitors, these companies have improved arrythmia detection by extending surveillance periods. We have also seen advancements in smartphone innovation. Google just announced a new software that calculates clinically validated heart rate and breathing rate through only the phone’s camera. This has the potential to change how consumers engage their health, while providing better data signals back to healthcare providers.
Provider tool enhancements enable effective interventions.
Additional data sources, including payer claims, EHR data, patient-reported outcomes and product usage, enable timely, appropriate workflows that may otherwise go unaddressed in a traditional care delivery system. Admission discharge transfer notifications may immediately prompt a virtual cardiologist office visit or a nurse-led medication reconciliation. Changes in blood pressure or weight detected via RPM devices may prompt a cardiologist to titrate beta blocker dosage. Patient-reported exacerbations could prompt a timely care manager conversation instead of a hospital admission.
By embedding clinical protocols and data risk classification, provider tools standardize engagements and empower lower-level practitioners to practice at the top of their license. In the cardiology market, this will serve to lower the cost of a marginal visit and free up physician resources for more complex care.
Consumers are embracing virtual care adoption.
Patients’ growing favorability and comfort with virtual care is in part due to virtual care companies elevating consumers as stakeholders. Patients now expect to play a more active role in their care plan, and digital-first programs allow for a better consumer care experience. Cardiac disease is positioned to piggyback off this trend by using digital touchpoints to encourage lifestyle management and medication adherence. Mayo Clinic research has shown the impact of digital interactions on downstream outcomes. Across a systematic search of published trials from 1990–2014, only 20% of cardiovascular disease patients who used a mobile app daily to record their blood pressure and weight were readmitted within three months post-discharge, versus 60% of those who did not.
Virtual and in-person cardiologist collaboration is required for optimal program design.
Cardiologists make most of their revenue on stress tests and procedures. IBIS World data indicates 62% of cardiologist revenue comes from cardiac stress tests, while catherization represents 12% of revenue, and angioplasty procedures equate to 10%. Since each of these revenue sources cannot be replaced by a virtual visit, virtual providers can position their products to be complementary to in-person care. This enables incumbent providers to shift to higher-margin opportunities or even participate in virtual networks. While better patient management has the potential to reduce procedure volume, cardiologists are positioned to accelerate the trend toward value-based program adoption and bring in ancillary revenue sources through their virtual partners (RPM and CCM reimbursement).
Successful virtual cardiology practice will require a collaborative workflow, with embedded in-person referral networks. Given the complexity of disease, virtual providers will need to develop referral pathways to other non-invasive cardiologists, radiologists, interventionalists and electrophysiologists. This may even span beyond cardiac care to cover other co-morbidities, such as diabetes and kidney disease. By managing referrals closely, virtual cardiologists can create collaborative care plans. Data science can also ensure that quality referrals are made.
Cardiology practice variation is indicative that standardization of workflow is valuable.
There is substantial practice variation in cardiology, indicating the potential savings to be gained through standardization. American Heart Association data indicates a 2.2x spend variation between top versus bottom quartile Medicare outpatient practice claims, but there is no association with lower mortality or hospitalizations. Standardization in virtual care models could include proprietary workflows guided by patient outcomes or established medical society guideline implementation. This could also lead to network optimization strategies around leading providers.
We are excited to see the cardiovascular care landscape being revolutionized by innovative care models that incorporate advancements in data and software. These models have the potential to improve outcomes and significantly lower the cost of care delivery relative to early telehealth models that were built on more convenient episodic care. While digital disease management companies have succeeded in building longitudinal programs, there is an opportunity to extend that playbook to higher-cost patients and create even more value to the system. Healthbox will seek to invest in companies that are driving this market dynamic forward.
Healthbox, a HIMSS Solution and healthcare advisory firm, drives innovation from the inside and out, helping organizations build internal innovation programs, assess the potential of employee-led projects, and look to the market to find solutions to implement or invest in.
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