October 2018 Healthcare Hot Takes: Apple Watch gets cleared as medical device

Healthcare Hot Takes is Luma Health’s monthly rundown of healthcare innovations happening right now. Check out what the industry is thinking, reading, doing. This month’s main topic is the Apple Watch as a medical device.

The Apple Watch is now considered to be an appropriate medical device after receiving clearance from the FDA to use its sensor and app to diagnose atrial fibrillation, an irregular heartbeat that can lead to blood clots, stroke, and even heart failure.

The Apple Watch Series 4 utilizes an electrocardiogram (ECG) monitor in addition to the typical infrared (IR) sensor. While this technology isn’t new, this is the first time that a non-medical device company has gained FDA approval to detect and treat medical ailments.

The challenge will be how doctors and clinical staff plan to incorporate the medical device into treatment plans, but having something that patients already use on a daily basis is sure to drive early detection and treatment for those with cardiac symptoms.

Luma’s Hot Take: This is exciting news! By embedding an ECG monitor within the Apple Watch and gaining FDA approval, Apple is making a bold stride into the clinical space. There is already large adoption of the Apple Watch due to its convenience and functionality, and now patients with A-fib have an easy way to monitor and detect symptoms — ultimately improving patient access and outcomes.

Theranos, Inc., the Silicon Valley blood testing company that has been rocked by a high-profile scandal, is shutting down its operations for good. The company touted that its state of the art, “needle-free” technology could use a drop of a person’s blood to test for a variety of diseases. This profound claim led the company at one point to reach a valuation of $9 billion.

However, an investigative report by The Wall Street Journal charged that Theranos produced inaccurate and defective devices. The report led to regulatory and quality control checks into the company, resulting in federal fraud charges against founder and CEO Elizabeth Holmes, as well as president and COO, Ramesh (no relation!) “Sunny” Balwani. While Holmes settled the fraud charges brought against her and the company by the SEC (she gave up control of the company and had to pay a $500,000 civil fine), both Holmes and Balwani still face criminal charges.

To avoid bankruptcy, Theranos ended up laying off 80% of its workforce in April. However, the company has been unable to find a buyer in the months since. Therefore, it is ceasing to exist. It hopes to reach a settlement with its investment group so that it can pay its creditors the remaining cash.

Luma’s Hot Take: Theranos is a cautionary tale. Technology companies always make bold claims, but when it comes to technology in healthcare it is especially important to make sure that there is proof in the pudding.

Side note – If you’re interested in more on this story, there is a great book entitled Bad Blood that is written by the WSJ investigative reporter on this case, John Carreyrou. Hollywood is adapting the story into a full fledged movie starring Jennifer Lawrence as Elizabeth Holmes. Make sure to check these out!

The Centers for Medicare & Medicaid Services (aka CMS) admitted to making an error when processing quality scores for providers participating in the Merit-based Incentive Payment System (MIPS) during the 2017 performance year. Through a targeted review process, participating clinics, group practices, and others had access to their performance scores and feedback, while also having the opportunity to request a review of their payment adjustment if they thought there was an error.

According to CMS, they had an extremely high 91% participation rate in the first year and received a ton of requests to review the scores. What they found was flawed logic in the scoring system that was leading to concerns on the part of participants. CMS was able to quickly take action and implement solutions that led to changes in the final 2017 MIPS scores and associated 2019 payment adjustments.

CMS did not disclose how many clinicians were affected or how much payments were adjusted due to the errors. They have extended the review deadline from September 30th to October 15th to give physicians extended time to review their performance.

Luma’s Hot Take: The transition to value-based payment is going to have some hiccups — that’s evident here. What is encouraging is the high participation rate in the quality-focused MIPS program, as well as the level of requests to CMS to review errors in the scoring. It shows engagement on the part of clinicians in trying to achieve the Triple Aim – better care, better health, and lower costs.

With more in-home primary care services, as well as remote patient monitoring, medical care is moving into homes and out of the hospital. According to Kaiser Permanente CEO Bernard J. Tyson, “the future of healthcare is the home.”

What does Mr. Tyson mean by this?

We have chronicled the move into healthcare by nontraditional companies like Walmart and CVS in previous Hot Takes. These companies are betting big on healthcare moving into the community and away from hospitals. Therefore, they have made leaps by conducting mega merger deals with the nation’s largest health insurers.

“Everyone is vying for what I call their piece of the dollar,” Tyson said. “As you start to see the integrations, vertical and horizontal, what you are seeing are the economics behind it saying, ‘I want to own more and more of that dollar, so then I can influence more and more of the health system around it.'”

This push of healthcare into the community and into home is not only seen in the mega mergers, but also in the technology being developed by innovative companies. For example, Clover Health is attempting to reduce hospital admissions and improve health outcomes by launching an in-home primary care service that utilizes genomic testing. Through at-home testing, monitoring, and check-ins, Clover Health is providing a continuum of care in the comfort of patients’ homes.

In similar fashion, Jawbone, the once famous fitness tracker company, is shifting its focus to remote patient monitoring. Rebranding as Jawbone Health, the company is operating as a “check-engine light” for humans. The hope is that by having a wearable that can remotely monitor patients while they’re at home, health problems can be detected early resulting in fewer hospital admissions.

Luma’s Hot Take: We tend to agree with Mr. Tyson. Everything up to this point has shown a real drive towards making healthcare more easily accessible for the patient. The future of healthcare will emphasize preventative care and early detection of disease through innovative solutions that are convenient for the patient (something we at Luma know a little about 🙂 ).