Recently it was announced that a key provision in the Affordable Care Act would be delayed until 2015. This provision requires businesses with more than 50 employees to provide their workers with health insurance or face fines and was postponed after businesses had expressed concerns over the complexity of the laws reporting requirements. This doesn’t surprise Mark Lindsay, consultant for the Livingston Group, who believes there are still a lot of things that need to be squared away before and reconciled before it can be implemented nationwide. This is not just a policy issue it is also a structural, cultural, and compensation issue as well.

Some places are better suited than others to implement these changes but on the whole those areas were already doing similar things. The larger problem is the outcome of data where uneven results were not intended and were supposed to raise the bar on opportunities which would help offset additional costs. A recent trip to the Governor’s Association Meeting discussed the concept of Geomapping using data metrics. This showed the discrepancies in different areas of the country with Houston having the highest costs and readmissions while the Northwest and Minnesota had the lowest. In addition to cost savings issues, innovation is also something that needs to be taken into consideration to ensure quality. All these complexities make it a major challenge implementing all aspects of the Affordable Care Act at the moment.

Mark Lindsay was on Obama’s Transition Team as a healthcare reform/policy advisor and was instrumental in Hillary Clinton’s healthcare reform drive. Prior to coming onboard with the Livingston Group, where he specializes in healthcare and pharma, Mark was with UnitedHealth Group in a number of senior positions including President of the AARP Pharmacy Services Division and Vice President of Public Communications and Strategy. The Livingston Group is recognized as one of the most respected government relations firms in Washington. TLG provides comprehensive public affairs, government relations and lobbying services on a global basis. If you would like to speak with Mark on a 1 on 1 basis on this topic please contact

On June 27th, Roulston Research held a roundtable on Clinical Diagnostics with Candice Miller, Principal at Strategic Health, Former CEO at Proven Diagnostics, and Former VP at Quest Diagnostics; and Joe Quill, Principal at Quill Consulting LLC, Former Director – Program Management, Revenue Service Strategy, and Regulatory Affairs at Quest Diagnostics, and Former Chair, Billing and Reimbursement Committee, American Clinical Laboratory Association.  They discussed how the Clinical Diagnostics industry would look moving forward, including the general growth in the healthcare industry, changes in Medicare, decisions that may be driven by the monetary side instead of the scientific side, and changes in the general regulatory environment.

The primary topic discussed was how the changes in the regulatory environment would affect these laboratories.  The Medicare fee schedule has been updated for nearly everything in the past 10 years, with the exception being rates charged to clinical labs.  This is expected to be updated soon, and likely would drive payments from Medicare to these labs down.  Additionally, there could be a 3% reduction in the margins on Medicare billing next year regardless of whether the fee schedule gets updated.  Despite this, however, the presenters do not believe that the industry will be in any serious trouble.  Medicare payments make up only about 25% of labs revenue.  In addition to these pending changes, changes in policy by Blue Cross Blue Shield have had an impact on the industry.  They recently eliminated a program that allowed labs to easily service customers in other states.  This has had a large impact on the industry, since companies like Bio-Reference have begun buying small labs in different states in order to serve customers there.  Small labs such as these often face large risks in their own right, since they often do not have solid contracts with insurance agencies, and often rely on patients to directly pay their bills.  As such, they often welcome their partnerships with larger companies.  Another recent headline involved Myriad’s Supreme Court Case.  They recently lost a case that would have allowed them to patent a specific type of cancer test.  As a result of this decision, other laboratories, such as Quest, will now be able to perform the test that up until this point Myriad had a virtual monopoly on.  There is very little doubt that doctors would trust the results that come from companies other than Myriad, so companies like Quest will be able to capitalize on this and bring the price down almost immediately. Other topics include the trend from volume to value purchasing, point of care trends, and data collection.  If you are interested in listening to the full podcast, or would like to engage in a 1 on 1 discussion with either Candice or Joe, please email

Roulston Research recently held their Pharma and Biotech Conference Call on April 22nd with Susan Nemetz and Christof Marré. Susan Nemetz is President of The Nemetz Group LLC, Former Vice President of Commercial Strategy at Millennium Pharmaceuticals, and Former EVP of Cardiovascular at DuPont. Susan provides over 25 years of experience in the healthcare industry. Christof Marré is President of CMH Consulting LLC, Former Vice President for Neurology Marketing at Biogen Idec and Former Marketing Director of Bristol-Myers Squibb. While the pharmaceutical industry is continuing to change and evolving unexpected ways, the presenters remain optimistic about what the future holds, despite some bumps along the way. Some of the majors forces identified to be driving and affecting the healthcare and pharmaceutical industry includes unsustainable growth in spending, healthcare system performance that is poorly correlated with cost, and payments and delivery model that incentives volume over outcome. Their optimism comes from the thinking that issues being addressed, with respects to healthcare would ultimately have been on the table despite changes in the law (i.e. Obamacare). Many of the primary drivers and issues of the healthcare industry are market driven, and not necessary government policy driven, including the integration of healthcare providers through joint ventures and mergers & acquisitions, new models of paying for care and incentive physicians, and new requirements to demonstrate the value of their offerings, which are somewhat outside of what the government is mandating.

Some of the major trends highlighted during the call include the path to generic drugs for manufactures, the current cycle of innovation, reimbursement picture for diabetes/insulin therapies, big pharma newly found interest in niche disease markets where patients are few, and unique pricing model within the generic drug and niche market. Niche markets, explained by the presenters are drug offering to diseases that effect only a minimum number of patients and can range around 10 to 25,000 patients. The growth of rare diseases, primarily in oncology and autoimmune seem to have caught the attention of big pharma partly due to the patent cliff and are pitting them against traditional players, which tend to usually be biotech firms, such as Genzyme. Genzyme was started with a successful business model around rare diseases with the idea that there is a market even if the market only consist of 10 000 patients, charging a price premium above the usual. The presenters makes the argument that 30 to 40% of big pharma revenue are going to narrow in the near future requiring pharmaceutical companies to find new ways to generate revenue; in turn, leading to greater competition in the rare disease market. A good example used is Pfizer new drug that competes directly with Genzyne in the rare disease space. When looking at government policies, the  FDA has in recent years introduced the Pharmaceutical Drug User Fee Act (PDUFA), which include more retime communication with sponsors of various drug packagers to make sure the packages their putting together is designed in the most effective way and only time will tell if this strategy pans out. Companies that are covered and not mentioned above include GlaxoKlineSmith, Biomeridian, Biogen Idec, Allergen, Shire, and more. If you are interested in listening to the podcast from the event or engaging Christof or Susan in a 1 on 1 discussion, please contact

There’s no denying that the Medical Devices Industry has been growing and changing rapidly over the last 5 to 10 years and with change, comes obstacles and opportunities. Roulston Research recently held their informative medical devices conference call with two key healthcare executives, Jerry Liebrand and Edward Berger, both providing over 25 years of healthcare experience. Jerry Liebrand is currently President at Liebrand Consulting and has served as former Global Vice President of Strategy and Portfolio & Marketing Intelligence at Covidien and is the former VP of Business Development & Product Licensing at GE Healthcare. Edward Berger is the principle and founder of Larchmont Strategic Advisors, and President at Medical Development Group. He is the former VP for Policy, Reimbursement and External Relations at Abiomed. The presenters provided an in-depth analysis of the changing healthcare environment ranging from the ever-changing regulatory system to the current economic landscape in the healthcare industry. One of the importance and recurring theme in the conference call is will healthcare reform (Obamacare) restrict the potential for adoption of innovative medical technologies? The presenters don’t think so, there still remain extraordinary opportunities for innovative medical technologies and it is important to see that the key to success for innovative medical technologies is evolving.

In order for products to be used in a wide spread type of environment, clinical value proposition and to an extent, economic value proposition becomes more vital due to the appeal to the clinical buyer and economic buyer. Furthermore, the regulatory environment is moving towards wanting more clinical value proposition during the approval process. The hurdles for new medical technologies are higher now than they were 5 years ago. The FDA 510K process now seems to be gravitating towards the 510K plus more clinical data when approving medical devices, which is a deviation from their more lax stance on clinical data in the past. When looking at individual companies with excellence performing devices that are likely to remain solid, Thoratec clearly seem to be a sector leader in implementable long-term ventricular assistance, providing a product with an advanced pump that’s early in its commercial lifecycle, however not yet through the process of FDA approval. Abiomed has solidified their strength in the implantable space and is carving out a very strong position in minimally invasive and short-term cardiac support. On an International-Macro level, many companies have come to this conclusion that it is easier to get a product to market in Europe than in the U.S., which is becoming most companies starting point. This however, may not be the case in the future, as Europe continues to adopt the U.S. FDA protocols when approving of medical devices and healthcare related products. China and India are viewed as opportunistic areas, if a company’s strategy is successfully implemented. Companies have found it more beneficial to use the foreign direct investment (FDI) approach vs. exporting when entering these markets. Companies that are covered and not mentioned above include, Covidien, Johnson & Johnson, Stryker Corp, Medtronic, GE Healthcare, Macy’s and more. If you are interested in listening to the podcast from the event or engaging Jerry or Edward in a 1 on 1 discussion please contact

The managed care industry in the United States strives towards reduction of cost of providing health benefits and improves the quality of care for organizations that use those techniques to describe systems of financing and delivering health care to enrollees organized around managed care techniques and concepts. Roulston research held a Managed Care Roundtable on January 30th where James Mead and Michael Suesserman discussed the strategic outlook of this industry. James is the Vice Chairman of the Board of Capital Blue Cross of Pennsylvania, after having served twenty years as its President and CEO from 1984 to 2004. Michael had held a number of senior positions at Pfizer, including Vice President – Managed Care, where he was responsible for $16 billion in contracted sales and led a team of 450 professionals, Vice President of Marketing, and Vice President – Worldwide Urology, Ophthalmology and GI. Managed care plans—pressured by a variety of marketplace forces that have been intensifying over the past two years—are making important shifts in their overall business strategy. Plans are moving to offer less restrictive managed care products and product features that respond to consumers’ and purchasers’ demands for more choice and flexibility. In addition, because consumers and purchasers prefer broad and stable networks that require plans to include rather than exclude providers, plans are seeking less contentious contractual relationships with physicians and hospitals. Finally, to the extent that these changes erode their ability to control costs, plans are shifting from an emphasis only on increasing market share to a renewed emphasis on protecting profitability. Consequently, purchasers and consumers face escalating health care costs under these changing conditions.

On multiple fronts —consumer, purchaser, provider, and regulatory—managed care plans are facing mounting pressures to change.Consumers are becoming more active health care participants and are demanding more choice, greater flexibility, and fewer restrictions on access and service delivery. Employers (purchasers) are demanding less restrictive managed care to appease employees and at least so far have been willing to absorb most of the higher ensuing costs. Consumers’ and purchasers’ preferences for broad and stable networks give providers the upper hand in contract negotiations with plans. Also tipping the scales in favor of providers is consolidation among both physicians and hospitals and the reappearance of capacity constraints for many hospitals. With their new clout, these providers are pressuring plans to pay more and reduce the scope of risk in risk-contracting arrangements; others are pressuring plans to replace risk payment with fee-for-service (FFS) payments (for physicians) or per diem and case-rate payments (for hospitals). Federal and state regulations sought by consumers and providers in response to perceived problems with health maintenance organizations (HMOs) are prompting additional changes. Also, declining HMO enrollment is pressuring plans further. The sector’s ratings over the near term are likely to be unaffected by the uncertainty from the ‘fiscal cliff’ and ongoing implementation of the Patient Protection and Affordable Care Act (PPACA). Revenues and capitalization in the sector are sufficiently insulated from potential macroeconomic effects of the fiscal cliff. Acquisition activity is likely to continue as health insurers and managed care companies look to add technological capabilities, membership, and scale in an effort to overcome ongoing margin pressure. In addition, the increasingly blurred roles between payers, providers, and hospital systems could become more prevalent as the healthcare system strives to better align interests to reduce costs and manage care. If you are interested in listening to the podcast from the event or engaging James or Michael in a 1 on 1 discussion please contact

The Accountable Care Organization experiment has barely begun. While ACOs share many of the characteristics of the staff-model HMOs (like Kaiser Permanente in California and Harvard Community Health Plan in Massachusetts) that emerged in the 1970s, the current model can be traced back to demonstration projects authorized in the 2003 Medicare Prescription Drug, Improvement and Modernization Act. Guidelines for ACO participation in the Patient Protection and Affordable Care Act’s (ObamaCare’s) Medicare Shared Savings Program were published in March of 2011, and the first formal three year Medicare ACO contracts were announced in April of this year. An additional 89 ACOs were announced in July.

Nonetheless, we are already seeing a rush to judgment, purportedly based upon research findings, as to whether ACOs will be successful in reducing health care costs. A case in point: on Oct. 8, 2012, the first story in the FierceHealthcare daily email newsletter was headlined “ACOs produce little healthcare savings”. Leading with the evaluative comment that “It’s disappointing news for the architects and participants of accountable care, hoping that the alternative payment model would curb healthcare spending,” the newsletter’s report was a gloss on a on medpagetoday of a narrow and highly technical simulation study published in Health Affairs.

What does the study in Health Affairs actually show? The simulation was limited to diabetes care only, and reports the results of running very large quantities of historical data on both cost of care and quality of care – data of necessity generated in organizations that are not ACOs – through a program that is designed to explore the links between the two critical variables of cost and quality. The authors conclude that quality improvement of 10% will yield cost savings of only 1%. They add that “To achieve greater savings, accountable care organizations will have to lower costs by other means, such as through improved use of information technology and care coordination.”

There is some legitimate academic and potentially operational value in this exercise, but it isn’t “disappointing news for …ACOs.” It is no news at all. No one who has thought about the problem for more than 10 minutes has ever believed that ACOs will “bend the cost curve” simply by improving quality of care.

The logic of the PPACA’s approach to health care cost control depends very much on implementation of three enabling innovations: the utilization of electronic medical records (EMRs); the development, refinement and broad dissemination of empirical information about the most effective clinical use of diagnostic and therapeutic options (comparative effectiveness research); and the replacement of the fee-for-service payment model with alternatives that simultaneously reward both efficient use of resources and improved quality outcomes. The ACO contracting model addresses provider incentives and is therefore critical, but it cannot achieve substantial cost savings without: EMRs that provide a comprehensive real-time picture of the patient’s individual characteristics, history and condition to all members of a coordinated team of caregivers; and an easily accessible and clinically sophisticated library of information about the appropriate utilization and relative effectiveness of diagnostic and therapeutic options for the individual patient.

We can’t yet judge the cost containment success of the ACO model, or even the quality improvement success, because all three essential innovations are in their infancy. EMRs are becoming widespread, but their potential for coordinating care, improving quality, avoiding duplication, and evaluating care protocols remains largely untapped. Providers need to learn to exploit the potential benefits of this still very new information resource. Comparative effectiveness research is only beginning in a systematic fashion, and the tools for extracting and applying CER findings to guide individual clinical decisions are still being developed. IBM’s Watson healthcare application is an example of an extraordinarily exciting initiative that remains almost purely potential. And providers within the new ACOs need to accept and act on a new culture of care giving – no quick and easy task, even for the willing. The task is made more difficult by the fact that most ACO caregivers will continue to see fee-for-service patients as well. They can’t, and won’t, apply different caregiving models to different subsets of patients. One model will predominate until it is replaced; where the tipping point will be – what percent of a practice must be within the ACO before that model’s incentives become controlling – is an unknown that will determine one important variable in the success equation for the early ACOs. To see this post and others by Ed Berger please visit


Dr. Edward Berger, has more than 25 years of experience working in senior management or as a consultant with medical device, biotechnology and health services companies, dealing with problems at the intersection of U.S.and international health care policy, corporate strategy development, and strategically sensitive corporate communications with government, investors and the media. He is the founder and principal of Larchmont Strategic Advisors which helps life sciences companies create and implement integrated strategies to address the many policy and regulatory obstacles and opportunities they face in their efforts to secure public and private insurer coverage and optimal reimbursement for new or evolving technologies. To learn more about Larchmont Strategic Advisors please visit


Our September 14th Healthcare Roundtable led by Carol Harding, Executive Director, Strategic Partnerships, Cleveland Clinic Health System, Former Vice President of Reimbursement, Edwards LifeSciences, who has been in the healthcare industry for nearly 30 years and Bill Greenfield, Managing Partner at Novation Healthcare Solutions, Former Regional Vice-President at HCA, who has 25 years of experience as a healthcare executive focused on EMR/EHR vendors and adoption, Revenue Cycle Management companies and the competitive landscape, Clinical Decision Making vendors and software for achieving cost effective, high quality care, and healthcare reimbursement under the healthcare reform model. The roundtable began by discussing more general issues focusing on comparing the healthcare industry with the cheesecake factory, conflux clinical issues, market segment, primary care position and healthcare reforms models. The speakers explained how the primary care position is being incentivised and in the healthcare reforms, there should be a dynamic shift from volume to quality care perspective. The models focus on aspects that would improve outcomes, increase efficiencies and lower costs for healthcare providers.

The roundtable later focused on more reforms facing the industry and highlighted certain topics such as; moving the volume to quality standards, incentivise people differently, changing the payment system, Group Purchasing Organizations and the competitive landscape, Devices, the future of outpatient centers, supply chain innovation, differences in policy models by region, market segmentation, culture change and cost shifting. Carol and Bill touched on these topics by referencing companies such as HealthStream, Vital Health Premiere, J&J, Athenahealth, Allscripts, HCA, UnitedHealth Group, WellPoint, Universal Health Services, Aetna, McKesson, Humana, AmerisourceBergen, Cardinal Health, and Community Health Systems among others. The industry still awaits a government spending cap announcement regarding limits for different healthcare situations. This announcement affects cost structure and payment reforms of companies moving forward.

If you would like to follow-up with either presenter for a 1 on 1 consultation please contact Tom Roulston at