13 th International EBHC Symposium Krakow October 9

13 th International EBHC Symposium Krakow, October 9 th 2018 VALUE-BASED HEALTHCARE – FROM CONCEPT TO PRACTICE: LEARNINGS FROM AUSTRALIA. A PERSPECTIVE FROM THE MEDICAL DEVICE INDUSTRY JOHN GILLESPIE PHD HEALTH ECONOMICS, HEALTH POLICY & REIMBURSEMENT MEDTRONIC AUSTRALASIA

CONFERENCE ARE A GREAT WAY TO MAKE NEW CONNECTIONS……. See: https: //alchetron. com/ORP-Piorun-(G 65) 2 VBHC –From Concept to Practice: Learnings from Australia | October 9 th, 2018 | 13 th International EBHC Symposium

HERE IS WHAT I PLAN TO TALK ABOUT…. § Value-Based Healthcare (VBHC) § Concept § Enablers § What does VBHC mean for Medtech? § Why should Medtech be interested? § Australia § Background/Challenges/Emerging interest in VBHC § What does VBHC mean for Medtronic? § What we are learning 3 VBHC –From Concept to Practice: Learnings from Australia | October 9 th, 2018 | 13 th International EBHC Symposium

4 VBHC –From Concept to Practice: Learnings from Australia | October 9 th, 2018 | 13 th International EBHC Symposium

5 VBHC –From Concept to Practice: Learnings from Australia | October 9 th, 2018 | 13 th International EBHC Symposium

VALUE-BASED HEALTHCARE: THE CONCEPT

VALUE BASED HEALTHCARE (VBHC) REDEFINING “VALUE” FEE FOR SERVICE § Rewards volume § Little accountability § Current state of play 7 HOW WE PAY FOR HEALTHCARE MATTERS PAY FOR VALUE § Rewards value § Shared accountability § Large policy change required VBHC –From Concept to Practice: Learnings from Australia | October 9 th, 2018 | 13 th International EBHC Symposium

THE IMPORTANCE OF PATIENT OUTCOMES IS NOT A NEW CONCEPT……. Qual Saf Health Care 2002; 11: 104– 105 8 VBHC –From Concept to Practice: Learnings from Australia | October 9 th, 2018 | 13 th International EBHC Symposium

WHAT ARE THE KEY ENABLERS OF VALUE-BASED HEALTHCARE?

ENABLERS REQUIRED TO ACCELERATE VALUE BASED HEALTHCARE 1. Measuring standardised health outcomes & the costs required to deliver those outcomes across the full cycle of care. 2. 3. 10 Tracking & reporting health outcomes and costs for defined population segments on an ongoing basis. Payment models where direct accountability for healthcare costs and patient outcomes is shared across stakeholders. OUTCOMES & COST MEASUREMENT HEALTH INFORMATICS VALUE BASED PAYMENT MODELS VBHC –From Concept to Practice: Learnings from Australia | October 9 th, 2018 | 13 th International EBHC Symposium INTEGRATED CARE DATA TRANSPARENCY SHARED ACCOUNTABILITY

WHAT ELSE IS REQUIRED TO ENABLE VALUE-BASEDHEALTHCARE? The idea of a ‘Learning Health System’ (LHS) involves using patient data for continuous quality improvement. The internet, ‘big data’ analytics, combined with improved outcomes measurement and systematic behaviour change methods have been proposed as key factors for emerging LHS. Clinician, patients and other stakeholders need to be prepared to learn and change what they do. 11 VBHC –From Concept to Practice: Learnings from Australia | October 9 th, 2018 | 13 th International EBHC Symposium

WHAT DOES VBHC MEAN FOR MEDTECH?

WHAT DOES VBHC MEAN FOR MEDTECH? WHY SHOULD MEDTECH BE INTERESTED? Value-based healthcare represents a new way to enable access to medical technology Medtech are uniquely positioned to drive change due to: § Partnerships with clinicians & patients § Deep understanding of care delivery for specific diagnostics & interventions Source: https: //www. bcg. com/en-au/publications/2017/health-care-why-every-medtech-company-needs-value-based-strategy. aspx 13 VBHC –From Concept to Practice: Learnings from Australia | October 9 th, 2018 | 13 th International EBHC Symposium

WHAT DOES VBHC MEAN FOR MEDTECH? WHAT VBHC STRATEGIES ARE POSSIBLE? Source: https: //www. bcg. com/en-au/publications/2017/health-care-why-every-medtech-company-needs-value-based-strategy. aspx 14 VBHC –From Concept to Practice: Learnings from Australia | October 9 th, 2018 | 13 th International EBHC Symposium

AUSTRALIA BACKGROUND

AUSTRALIA SOME TRIVIA § Australia is the driest of any continent on earth other than Antarctica § 17 of the world's most poisonous snakes can be found in Australia § Australia has a larger population of camels than Egypt § Australia was the second country in the world to grant women the right to vote; this occurred in 1894 16 VBHC –From Concept to Practice: Learnings from Australia | October 9 th, 2018 | 13 th International EBHC Symposium

AUSTRALIA’S HEALTHCARE SYSTEM AT A GLANCE Population Life expectancy • 82 years (at birth) (2015) • 4 th highest amongst OECD (2015) Healthcare spending • 170. 4 billion AU $ (2015 -16) (124 B US $) • 10. 3% GDP (2015 -16) Healthcare Provision • Universal coverage via Public Health system • Parallel Private Health system Health System performance 17 • 25 million (September 2018) • ≥ 65 years old = 15% • Healthier than OECD average • Room for improvement: obesity, care coordination VBHC –From Concept to Practice: Learnings from Australia | October 9 th, 2018 | 13 th International EBHC Symposium

AUSTRALIA MAIN DRIVERS FOR CHANGE IN HEALTHCARE DELIVERY Increasing demand for healthcare due to ageing population Healthcare costs are increasing Variation in care delivery 2 nd Australian Atlas of Healthcare Variation 2017 18 E, g Examples (data from 2014 -15) 11. 6 x variation in hospitalisations for diabetes complications 15. 7 x variation in hospitalisations for chronic obstructive pulmonary disease VBHC –From Concept to Practice: Learnings from Australia | October 9 th, 2018 | 13 th International EBHC Symposium

AUSTRALIA – CHALLENGES TO IMPLEMENTING VBHC AT A HEALTHCARE SYSTEM LEVEL

AUSTRALIA - OPPORTUNITIES FOR REFORM IN HEALTHCARE The Australian Government’s Productivity Commission has identified several areas where reform is required to improve the health system Integrated care • Primary and hospital care needs to be well integrated, with increased use of primary care to help patients stay out of hospitals • Information must follow patients • Funding models need to evolve to enable solutions to address local needs Patient-centred care • Development and use of Patient Reported Experience and Outcome Measures enable identification of opportunities for clinical improvements + process improvements • Identify high users, ‘frequent flyers’ of the healthcare system and focus on their care Funding • Move from rewarding activity to rewarding innovation and improved patient outcomes • Move from ‘siloed’ Commonwealth/State funding split to use of Funding Pools to incentivize adoption of new practice limited by current funding models Healthcare quality • Enable rapid divestment of ineffective/outdated – ‘low value’ services • Need to address unwarranted variation in care • Hospital-acquired infection rate should be lower Effective use of information • Integrated data systems and information flows required for genuinely integrated care: required to know ‘what works’ • Formal mechanisms required to enable timely dissemination of best practice and innovation • Need to improve capacity to collect and link data Source: Australian Government Productivity Commission. ‘Shifting the Dial’ - 5 year productivity Review. August 2017. Implementation of recommended changes would enable widescale adoption of VBHC in Australia 20 VBHC –From Concept to Practice: Learnings from Australia | October 9 th, 2018 | 13 th International EBHC Symposium

AUSTRALIA – IMPACT OF VBHC – EMERGING INTEREST

VBHC IMPACT IN AUSTRALIA VALUE-BASED HEALTHCARE – REQUIRES FOCUS ON OUTCOMES THAT MATTER TO PATIENTS 22 VBHC –From Concept to Practice: Learnings from Australia | October 9 th, 2018 | 13 th International EBHC Symposium

VBHC IMPACT IN AUSTRALIA ICHOM DEVELOPING PARTNERSHIPS 23 VBHC –From Concept to Practice: Learnings from Australia | October 9 th, 2018 | 13 th International EBHC Symposium

AUSTRALIA A NEW INITIATIVE IN PRIMARY CARE SHOWS A MOVE TO VALUE-BASED CARE ‘Health Care Homes’ are Primary ‘Health Care Homes’ initiative Care practices that put the patient recognises integrated care is at the centre of care, co-ordinating essential to meet the needs of multiple health professionals patients with chronic conditions 24 VBHC –From Concept to Practice: Learnings from Australia | October 9 th, 2018 | 13 th International EBHC Symposium

AUSTRALIA DATA COLLECTION – FURTHER MOVES TO VALUEBASED CARE? Example 1: TAVI Registry TAVI providers participate in ongoing data collection – aim is continual learning to identify how care & patient outcomes can be improved § https: //acor. net. au/registries/tavi/ Example 2: My. Health Record Comprehensive online electronic health record, key enabler of improving care integration 25 VBHC –From Concept to Practice: Learnings from Australia | October 9 th, 2018 | 13 th International EBHC Symposium

AUSTRALIA HOW ELSE MIGHT VALUE-BASED HEALTH CARE DRIVE CHANGE IN AUSTRALIA? Procurement Need to move away from focus on short term acquisition costs to consideration of value and cost benefits delivered over longer-term Health Technology Assessment VBHC can enable: § More effective implementation, post HTA – ensure value delivered § Delivery of coverage with evidence development § Replace HTA where evidence will not meet requirements or low use of technology does not justify HTA process 26 VBHC –From Concept to Practice: Learnings from Australia | October 9 th, 2018 | 13 th International EBHC Symposium

AUSTRALIA CASE STUDY – WHAT IS MISSED BY NOT TAKING A VALUE-BASED APPROACH TO TECHNOLOGY ADOPTION? Solution Issue Patients treated for peripheral arterial disease of the superficial femoral artery have a high risk of reintervention Drug-coated balloon (DCB) technology enables blood vessel opening, with eluted paclitaxel to minimize restenosis after treatment. Procurement decisions based on lower initial costs of alternatives vs DCB result in adopting alternatives with poorer patient outcomes and higher costs overall 27 VBHC –From Concept to Practice: Learnings from Australia | October 9 th, 2018 | 13 th International EBHC Symposium

WHAT DOES VBHC MEAN FOR MEDTRONIC?

WHAT DOES VALUE-BASED HEALTHCARE MEAN FOR MEDTRONIC? Accountability for patient outcomes and costs in our business models 29 VBHC –From Concept to Practice: Learnings from Australia | October 9 th, 2018 | 13 th International EBHC Symposium

EXAMPLE 1: USA THE TYRX™ ANTIBACTERIAL ENVELOPE IMPROVE OUTCOMES. REDUCE COSTS. Source: http: //www. ichom. org/wp-content/uploads/2016/06/Leading-the-shift-to-value-based-healthcare-Ishrak-v. Approved. pdf Mortality and cost impact data source: Sohail MR et al. PACE. 2015; 38(2): 231 -239. Centers for Medicare & Medicaid Services, U. S. Department of Health and Human Services Inpatient Prospective Payment System (IPPS) Final Rule FY 13. Infection rate is an aggregation of data; see Data on File at Medtronic TYRX: Infection rate reduction data source: Bloom HL et al. Pacing Clin Electrophysiol. 2011; 34(2): 133 -142. Mittal S et al. Heart Rhythm. 2014; 11(4): 595 -601. Kolek MJ et al. J Cardio Electrophysiol. 2015; 26(10): 1111 -1116. Shariff N et al. J Cardio Electrophysiol. 2015; 26(10): 783 -789. Henrikson CA, Citadel and Centurion Study Results: Use of Antibacterial Envelope is Associated with Low 12 -Month CIED Infection Rates. Oral presentation at European Heart Rhythm Association (EHRA) EUROPACECARDIOSTIM 2015. 30 VBHC –From Concept to Practice: Learnings from Australia | October 9 th, 2018 | 13 th International EBHC Symposium

EXAMPLE 2: NETHERLANDS CHRONIC CARE MANAGEMENT DIABETES CLINIC NETWORKS SHARED ACCOUNTABILITY THE APPROACH. THE EVIDENCE. Over 2, 000+ patients covered through integrated care model 50% of children reach Hb. A 1 c target, the best performing clinic in the Netherlands 5 Created 8. 6% in savings, mostly due to decreased hospitalization rates Diabeter clinics use an integrated care approach that links our financial compensation to the clinical and economic value added, not on the volume of services provided. But what makes Diabeter unique is that it not only provides superior care, it also plays an active role in making that care better through management outside of the clinic. 5 Zorg instituut, 2014 31 VBHC –From Concept to Practice: Learnings from Australia | October 9 th, 2018 | 13 th International EBHC Symposium

AUSTRALIA & VBHC, SOME LEARNINGS…

WHAT WE ARE LEARNING Australia: System-wide reforms required to improve healthcare not barriers to emerging interest & enablers for VBHC The need to collect and measure outcomes that matter: identified across several initiatives For the medical device industry: System-wide reform not required to implement stand-alone VBHC initiatives Need to think ‘beyond the device’: what else can be done to maximize value to patients and providers? 33 VBHC –From Concept to Practice: Learnings from Australia | October 9 th, 2018 | 13 th International EBHC Symposium

ACKNOWLEDGEMENTS Natalie Lawandi, Senior Manager, Health Economics, Health Policy and Reimbursement, Medtronic ANZ. Liesl Strachan Ph. D, Global Health Policy Consultant, Medtronic 34 VBHC –From Concept to Practice: Learnings from Australia | October 9 th, 2018 | 13 th International EBHC Symposium

THANK YOU QUESTIONS?