Goldman Sachs: Connected devices and services can save healthcare $300 billion

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Last week Goldman Sachs released a research report titled “The Digital Revolution comes to US Healthcare”. The report focuses on the potential for technology and “Internet of Things” solutions to save over $300 billion in healthcare spending.  The report specifically calls out a savings opportunity in asthma and COPD of $19.3 billion, with a potential for Propeller of $2.7 billion.

Key takeaways:

  • Chronic disease management, especially for chronic heart failure, asthma / COPD, and diabetes, represents the largest opportunity for connected devices and services
  • Significant clinical data and validation now exist to support adoption of many digital health solutions
  • Large healthcare institutions, and key stakeholders within these organizations, are rapidly adopting digital health solutions in these key chronic disease populations
  • Changing payment models, specifically a shift from Fee-for-Service (FFS) to Fee-for-Value (FFV), is driving adoption and reimbursement of digital health products
  • Propeller is one of nine companies highlighted and profiled as example of digital health success

The Goldman report focuses on the growing availability of connected solutions, such as Propeller, which provide real-time data on a patient’s health status and behavior in between physician visits.  Healthcare is a data-driven industry.  Most clinical and treatment decisions are based on data derived at the point of care: lab results, routine examinations, diagnostics and patient interviews (which are often subject to poor recall).  However, data on how a patient is doing in between these sporadic visits are lacking.  One of the great promises of digital health, and of connected health devices, is that they will passively capture data from patients during these intervening periods and arm clinicians and care providers with better data to make more informed clinical decisions.  Additionally, these digital services will take over some routine functions such as monitoring, reminding, alerting and educating patients. The goal is that these connected devices, analytics and services will make clinicians more efficient and allow them to practice pro-active medicine, giving more attention to those patients who need it, and less attention to those patients doing well.  Goldman estimates the potential savings for these solutions to be $305 billion, and the commercial opportunity for digital health companies providing these solutions to be $32 billion per year.

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One of the key driving forces for the adoption of digital health solutions in large health systems and integrated delivery networks (IDNs) is the rapid shift in payment model from Fee-for-Service to Fee-for-Value. CMS has increased from 0% of payments going to value-based contracts in 2011 to 20% in 2014.  CMS expects this number to rise to 33% in 2016 and up to 50% by 2018.  From our experience at Propeller, systems that fully embrace value-based contracting and payment models are very eager to adopt new solutions to monitor patients in daily life, make clinical outreach more automated and efficient, improve clinical outcomes and ultimately reduce costs.

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As with any new clinical intervention, the key to adoption is the demonstration of strong clinical benefit in controlled trials and settings.  Just like the formulary committee evaluating the cost and benefit of a new drug, at-risk systems are rigorously evaluating the cost, benefit and ROI of digital health interventions.  But unlike a drug, products like Propeller can directly measure the adoption of the product, how long a user uses the product and the clinical improvements seen with the product.

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At Propeller, we have spent years focused on demonstrating the repeatable clinical benefit of our system.  To date, we have conducted (completed or ongoing) 12 studies totaling over 1,200 patients, and have analyzed data on thousands more from our database.  We feel very confident in our clinical outcomes, including a rapid and persistent reduction in rescue inhaler use.  We see this “Propeller Curve” (at right) in almost all of our asthma-related studies and commercial programs, regardless of patient type, geography or type of health system.

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Additionally, in our asthma programs we see a consistent improvement in asthma control.  On average, 50% of patients who start a program with uncontrolled asthma achieve control of their disease.  This is an interesting finding due to the cost difference between a person with uncontrolled asthma vs. a person with controlled asthma (roughly $900 per year in direct asthma costs and $2,000 per year in total costs in our analysis of published studies).

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Goldman Sachs takes these clinical findings, and in a case study on Propeller estimates a savings opportunity in asthma/COPD of $19.3 billion and a potential direct market opportunity of $2.7 billion for a risk-sharing product in a small, severe population (2 million patients).  This is one of the early reports of the growing success of digital health products, and the important role of connected devices and services in the shift toward efficient, cost-effective and value-based healthcare in the United States.

Below is the complete Goldman Sachs case study on Propeller:

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