Remote Patient Monitoring for Disease Management: 10 Observations About the State-of-the-Market

1. Remote Patient Monitoring for Disease Management: 10 Observations About the State-of-the-Market Presented at NMHCC Disease Management Congress Chicago, Illinois September 2002 Better Health Technologies, LLC Vince Kuraitis JD, MBA Harry Leider MD, MBA www.bhtinfo.com (208) 395-1197

2. Top 10 ObservationsRemote Patient Monitoring (RPM) • The market is extremely fragmented. RPM comes in many sizes, shapes, flavors. • The value proposition of RPM is compelling! • Show Me the Evidence! The strength and specificity of the RPM value proposition is unproven. • Customers are adopting RPM applications. • Cost savings (NOT quality improvement) is driving current RPM adoption. • Valuation of RPM companies is unclear (market cap/sales) • RPM has multiple drivers AND multiple barriers. • Weak links in the RPM value chain • The immediate RPM market is being driven by niche applications (as opposed to integrated, enterprise-wide adoption). • Watch for RPM’s synergy with other promising health care information technology killer applications.

3. BACKGROUND

4. The Big Picture: Health Care in 2002Relative Cost & Quality Optimal Quality Relative Cost & Quality ? You Are Here x Optimal Cost Source: Northeast Consulting Resouces

5. Shifting DM Metrics:Creating Value for Patients and Shareholders Optimal Quality Relative Cost & Quality ? You Are Here x Optimal Cost Outcomes VALUE ROI Source: Northeast Consulting Resouces; Better Health Technologies, LLC

6. High Variation in Chronic Care Source: Rand Health, Taking the Pulse of Health Care in America, 1999 http://www.rand.org/publications/RB/RB4524/

7. Ch. 4 – Taking the First Steps “common chronic conditions should serve as a starting point for the restructuring of health care delivery”* *IOM Report, Crossing The Quality Chasm, 3/01

8. Restructure Health Care Around Priority Conditions • AHRQ should identify 15-25 priority conditions (mostly chronic conditions) Cancer Diabetes Emphysema High cholesterol HIV/AIDS Hypertension Ischemic heart disease Stroke  • Purchasers, health care organizations, and professional groups should develop strategies and implement action plans to substantially improve quality for priority conditions over the next 5 years • Arthritis Asthma Gall bladder disease Stomach ulcers Back problems Alzheimer's disease and other dementiasDepression and anxiety disorders

9. Strategic ContextPersonalized Medicine • Remote patient monitoring (RPM) • Contact center (mail, email, call center, in-person…..) • Appropriate treatment settings (home, ambulatory……) • Customer Relationship Management (CRM) software • Customized pharmaceuticals • Genomic profiling and therapies

10. 1) The market is extremely fragmented. RPM comes in many sizes, shapes, flavors.

11. A&D Medical ADT Active Corporation Advanced Bodymetrics Applied Digital Solutions AeroTel Medical Systems Agilent Alere AMD Telemedicine American Medical Alert American TeleCare Avidcare Biotrokik BodyMedia Cambridge Heart Cameron Health CardioCom CardioNet Cyber-Care CyberNet Data Critical Digital Angel DMCare Elite Care General Electric HealthCare Vision HealtheTech HealthFrontier HealthHero Network Heart Alert HomMed IGEN International iMetrikus InterComponentWare IntelliServices InterCure iSense Kivalo Life Navigator LifeLine Systems LifeConnect LifeLink Lifemasters Lifestream M-Biotech Medipattern Medisana USA Medisignal Medtronic Micronics RPM Companies Nexan Panasonic Personal Electronic Devices Polar QRS Diagnostic Remote Medical Corporation Roadside Telematics Corp Sensatex Sensitron Siemens Spacelabs Medical SportBrain Stayhealthy Telemed.com Telemedicine Group Telemedicine Solutions in Healthcare Therasense TransMedEx TransMedEx VISICU VitalCom VivoMetrics Welch Allyn Wellness Monitoring, Inc. World Wide Video

13. Medical Monitoring

14. MedicalDevices

15. Telemedicine

16. Disease Management

17. Fitness/Wellness

18. Sensors

19. Smart Houses

20. 2) The value proposition of RPM is compelling!

21. 3) Show Me the Evidence! The strength and specificity of the RPM value proposition is unproven.

22. Conclusions-to-date RPM and clinical improvement: positive, inconclusive RPM and cost effectiveness: almost non-existent evidence AHRQ Evidence Report*: “The evidence for the efficacy of telemedicine technology is less clear. The problem is not that studies have strong evidence against efficacy, but rather that their methodologies preclude definitive statements. Many of them have small sample sizes that preclude statistical power, and the settings of others may not be equivalent to clinical settings. Still others focus on patient populations that might be less likely than others to benefit from improved health services, such as people who have complex chronic diseases.” Other studies with similar conclusions The Evidence *Source: http://www.ahrq.gov/clinic/telemedsum.htm

23. 4) Customers are adopting RPM applications.

24. 5) Cost savings (NOT quality improvement) is driving current RPM adoption.

25. 3 Definitions of Chronic Disease Market Size (Drawn to scale) $500 M DMSCs $700 B Chronic Care Patients $20 –$100 B Opportunity* * Projections by BCG and First Union

26. DMSCs (Business Model) Prevent unnecessary hospitalizations and ER visits Save $$ short term for payor Quality w/o ROI only “sells” for a few diseases 4 to 6 top diseases Done “to” the patient Care coordinator = 3rd party Local/regional focus Outsource vs. build DM (Care Delivery Model) Optimize patient health status & clinical outcomes Save $$ long term for payor or patient Health care consumerism/ patient empowerment 100+ conditions/diseases Done “by” the patient Care coordinator = patient or doctor Not geographically bound Assembly from components viable “Inside the Box” “Outside the Box”

27. MCOs Employers Patients/Caregivers Providers 4 Different Chronic Disease Customer Segments Emerging

28. Varying Value Propositions for Chronic CareWho cares most about ________?

29. Varying Value Propositions for Chronic CareWho cares most about ________?

30. Varying Value Propositions for Chronic CareWho cares most about ________?

31. 6) Valuation of RPM companies is unclear (market cap/sales)

32. Valuation of Health Care Sectors Differs Dramatically

33. RPM has multiple drivers ANDmultiple barriers.

34. Trends Fueling RPM • Health care consumerism • Medical error reduction/quality improvement initiatives • Connectivity infrastructure: transaction processing lays the foundation for e-care • DM “assembly” model gaining prevalence (vs. making or buying) • IT – data warehousing, data mining • Clinical work flow automation software • ASPs: particularly suited for health care • HIPAA = standardized data • eHR: employers connecting with employees • Physicians accept the Internet, particularly for clinical applications • HMOsRUs.com: Defined contribution/eHealth Insurance • Medicare reform

35. Barriers to RPM • Reimbursement • HIPAA: Privacy/confidentiality issues • Physician resistance • Technology maturity • Infrastructure • Bandwidth • Standards • Friendly user interfaces

36. Weak links in the RPM value chain: Reimbursement Mobility (wireless) Point-of-care access

37. 9) The immediate RPM market is being driven by niche applications (as opposed to integrated, enterprise-wide adoption).

39. Mobile Computing Apps • Charge capture and coding • Prescription writing • Clinical documentation • Lab order entry/results reporting • Decision support • Alert messaging and communications

40. 10) Watch for RPM’s synergy with other promising health care information technology killer applications.

41. Scanning the Horizon – Possible Killer Apps • Medical information sites for physicians • Wireless reference, ordering and coding systems • EMR (Electronic Medical Records) • Voice recognition • Physician patient email • Telehealth in the patient's home • Expert systems for decision-support

42. SUMMARY & IMPLICATIONS

43. RPM – early, promising • Value propositions • Initially cost savings • Multiple others • Need for industry collaboration • Evidence of RPM effectiveness • Improving reimbursement • Rapid development of synergistic, complementary apps

44. END

45. Better Health Technologies • Strategy, business models, partnerships • Disease/care management and e-health • Consulting/Business Development • E-Care Management News • Complimentary e-newsletter • 3,000+ subscribers in 27 countries worldwide • www.bhtinfo.com/pastissues.htm

46. Recent BHT Clients • Pre-IPO Companies • Life Navigator (remote monitoring connectivity and health intermediary services) • DiabetesManager.com (Internet diabetes DM) • CogniMed (highest cost/risk patient management software) • Caresoft (consumer focused DM) • Benchmark Oncology (oncology DM) • SOS Wireless (cellular phone technology) • Click4Care (Internet DM) • Established organizations • Medtronic -- Neurological DM (medical devices/chronic disease solutions) -- Cardiac Rhythm Patient Management • Disease Management Association of America (trade association) • PCS Health Systems (PBM) • Varian Medical Systems (oncology equipment & systems) • VRI (behavioral health care management services) • Washoe Health System (integrated delivery system) • S2 Systems (medical transaction processing software) • CorpHealth (MBHO) • Physician IPA • Centocor (biopharma)