Along with the implementation of CMS’s hospital price transparency rules in 2021 came a market opportunity for savvy health tech startups able to not only aggregate the massive amount of data coming in from providers and payers, but to actually make it usable for shopping healthcare services or large-scale market analysis for those without a computer engineering degree or background in healthcare economics. Turquoise Health is one of those startups, but what makes the Andreessen Horowitz-backed biz a stand-out from the pack is the extra SAS platform of services it’s building on top of those analytics and compliance products that will, ultimately, offer payers and providers a way to use all that pricing data to better negotiate their contracts with one another. Turquoise Health’s CEO Chris Severn explains the business model and how he plans to ‘platform out’ price transparency to a next-gen rev cycle state that gets us to the holy grail of “upfront, ubiquitous pricing in healthcare.”

By MATTHEW DALE

Did you know that as of January 2021, price transparency is being mandated for hospitals? But what exactly does that mean for company healthcare plans, third-party administrators, healthcare sharing organizations, employers, and employees? 

It means U.S. hospitals are now required to provide clear, accessible pricing information online about the items and services they provide in two ways: 1) as a comprehensive machine-readable file and 2) in a display of shoppable services in a consumer-friendly format. 

The Centers for Medicare & Medicaid Services are already requiring hospitals to publicly display their negotiated rates with insurers along with the cash pay price for over 300 shoppable medical services.

For healthcare consumers, this should mean they can shop for the hospital that performs the best knee surgery or other medical procedure for the lowest cost in their area. Unfortunately, the implementation of price transparency has been difficult, to say the least.

The American Hospital Association and other industry groups have spent large amounts of money to block the rule but were unsuccessful. Now, hospitals are trying to get around the rules. A Wall Street Journal investigation found that hundreds of hospitals implemented website code to block search engines from returning results for price inquiries. 

Technically, hospitals are following the price transparency rule, but by deliberately hiding data from search engines or making it nearly impossible to find, consumers are unable to locate a hospital or surgery center they can afford. That’s just one example of how hospitals are avoiding price transparency. The AHA has made it clear they are not happy with price transparency and they’ll do whatever they can to avoid this new rule, but why? 

Listing prices increases competition and there’s more money to be made when prices are not available. If patients can’t see the procedure price, they’re most likely going to choose the most prestigious or well-known hospital. They’re going to find the hospital that’s great at advertising even if that hospital is the most expensive in their area. That facility may have the same quality and outcomes measures as another down the street, that charges significantly less. When patients can easily see prices, the most expensive hospitals will inevitably lose patients and money. Additionally, hospitals have also urged the current administration to reverse price transparency because they don’t want people to see their negotiated rates with insurers. It raises serious questions when Medicare says a procedure should cost around $6,000 but a hospital charges $80,000 instead based on who’s paying.

If hospitals are preventing search engines from locating prices, creating confusing lists that consumers have to click through multiple pages to find, or simply not adhering to the price transparency rules and opting instead to pay the daily $300 penalty, how is price transparency going to help healthcare consumers? 

Platform technology is the answer. The ideal solution is a single, comprehensive platform for consumers to review all procedure prices across hospitals around them. This might sound like a fantasy, but my company Point Health has created a Smart Healthcare Platform that allows consumers to shop for thousands of healthcare services. And we’re not the only ones who see value in platform technology; companies like RxSaver, GoodRx, and Healthcare Bluebook also have solutions to help consumers make better healthcare decisions.

Price transparency can create the most impact for health plans, employers, health sharing organizations, and third-party administrators by creating plans that encourage patients to shop for care. When these entities use technology and services that promote healthcare consumerism and patient empowerment, we’ll see simplified and more widespread price transparency. Ultimately, price transparency is just one big step towards better healthcare for all.

Matthew Dale is the CEO of Point Health.

By JOANNE RODRIGUES-CRAIG

Financial well-being, or the state of an individual’s personal monetary affairs, is one of the six core indicators of wellness in the Gallup-Healthways Well-Being Index. Poor financial well-being can lead to a whole host of short and long term mental and physical health issues, including depression, anxiety, troubled relationships and chronic stress.^{[1] [2]}

It is surprising how American hospitals and other health providers have neglected financial well-being when considering their patients’ health. In a recent study by the American Cancer Association, 56% of Americans suffer from hardships related to the cost of care.^[3] Medical costs are the primary cause of 67% of all bankruptcies in the United States.^[4] To think that health care costs are not having a deleterious effect on American’s general well-being is a complete fallacy.

Even as a former health technology data scientist, I was largely in the dark about how health provider pricing works. Finding health provider pricing is like pulling teeth; it’s extremely time0consuming, frustrating (and sometimes painful) to get a health estimate for even the simplest procedures. Having poor or inadequate insurance can feel like a weight holding you down during your most vulnerable time, in the midst of a major health crisis.

In 2018 on a fall evening, I took my daughter to an urgent care clinic thinking she might have the flu. We proceeded to wait late into the night for a simple flu test. The urgent care center sent the flu test to their affiliated hospital to be processed. The hospital refused to process it until they had enough batches, which took until 3 AM. In addition to a negative experience at the urgent care facility, a few months later we received a bill from the hospital for around $800 for the flu test and about $1,800 for the full visit. (A flu test cost about $67 at the 24-hour Walgreens around the block.)

It was around the same time that the Centers for Medicare and Medicaid Services (CMS) finalized a rule that every hospital had to post their chargemaster prices or ‘sticker prices’ on their websites.

The chargemaster price for a service at a hospital is similar to a car MSRP, or an official list price for a hospital service, without an insurer, self-pay or charity care discount. While very few people pay this price, it’s a strong indicator for the eventual cost to the patient. The average insured patient will pay 15 cents more for every dollar increase in the chargemaster price;^[5] chargemaster prices can wildly meaning that shopping around by chargemaster price might save a consumer hundreds to thousands of dollars per major health procedure.

As a data scientist and a member of a high deductible health plan, I could not wait to explore hospital chargemaster prices. For the last year, it’s been my mission to process, clean and collate the chargemaster and public healthcare data into a consumer-friendly, online format to prevent others from large surprise bills. My goal with building Clinic Price Check is to bring price transparency, foster better financial health and mitigate the rising rates of medical bankruptcy in the United States. ClinicPriceCheck.com, currently, has prices for over 9,000 health services at almost all California hospitals and we hope to cover the entire United States by summer 2020. 

After spending a year compiling all this data, a few aspects really stood out to me. Some matched the academic literature on hospital pricing and some belied it. These are the five aspects of hospital pricing that I feel every American should be aware of:

1. Hospital pricing is completely arbitrary and often based on “cockamamie” formulas.^[6] When I first read this, I thought no way could this be true, that hospital pricing was just some set of arbitrary multiples and random formulas. But, this pared out in the data. It became clear to me that this was in fact true. Some hospitals multiply the Medicare reimbursement rates to set their rates. Very few hospitals set rates that are in any way related to the costs of providing services.
2. De facto price discrimination (called ‘cost-shifting’ in health policy circles).^[7] When I first read that hospitals employ a strategy of de facto price discrimination, I thought this might be true, but the difference in payments was probably minimal. De facto pricing discrimination is when consumers pay different amounts for the same service. I thought Americans would revolt at the thought that individuals were paying vastly different amounts for care. This is in fact completely true and the payments could be vastly different. For instance, at one hospital in California the ‘sticker price’ for a basic metabolic panel is $1,201, the average insured patient pays $840, the estimated cash payer price was $132, while the Medicare patient pays $11. All for the same service at the same hospital.
3. Medicare reimbursement rate is too low.^[8] No hospital accepts this rate voluntarily from patients. This I found to be false. There are some hospitals that accept the Medicare rate as their self-pay or cash rate. There are many hospitals that accept less than 1.5 times the Medicare rate as their cash rates. From looking at the data, there was a strong relationship with the number of independent hospitals in a region and the cash rate being less than 2x the Medicare rate.
4. Prices are very high. This is true. Some listing prices, especially for lab work in California similar to my experience, are 100x’s the Medicare Reimbursement rates service. For many common services (in California), the average hospital’s list price is at least 10x the Medicare Reimbursement rates. This means that the average insured patient with the average insurer discount, which is 30% according to FAIR Health, is still paying 7 times what a Medicare patient would pay for the same service.
5. Self-pay is a great option if you have a High Deductible Health Plan (HDHP). There was very little discussion in the academic literature about self-pay. Self-pay or opting out of one’s insurance and paying yourself, is very interesting because it’s closest to a free market situation in healthcare. Self-pay patients can shop around for non-urgent health services and since you generally must pay before you receive the service, prices are transparent. As discussed above, self-pay rates can be as low as the Medicare reimbursement rates, which is usually a pretty good deal. [As a side note, Providers are under no obligation to share self-pay rates with consumers, but if you ask (at least in California) providers must provide you with a ‘good faith estimate’. In addition, according to the California Department of Managed Care (this may hold in other states too), anyone can opt-out of their insurance and pay the self-pay rates, even if a provider explicitly disallows this in their policies.]

While greater price transparency in healthcare can improve consumers’ ability to shop around, it will not solve the central problem of affordability. Health provider consolidation and closure are leading to fewer provider choices. Healthcare is not easily shopped for in emergency situations or during a health crisis. Any changes to the healthcare system, whether it be in a Medicare For All or in some other form, must include some form of price control or price caps to keep healthcare affordable to all Americans.

Joanne Rodrigues is an experienced health technology data scientist, and founder of ClinicPriceCheck.com, with Master’s degrees in Mathematics, Political Science and Demography.

^[1] Weisman, R. “Personal Financial Stress, Depression, and Workplace Performance,” in Financial Stress and Workplace Performance: Developing Employer-Credit Union Partnerships, The Center for Credit Union Innovation and Filene Research Institute, Madison, Wisconsin, 2002.

^[2] Richardson, Thomas, Elliott, Peter and Roberts, Ronald. “The relationship between personal unsecured debt and mental and physical health: a systematic review and meta-analysis.” Clin Psychol Rev. 33 (8), 2017, 1148-1162. doi:10.1016/j.cpr.2013.08.009

^[3]  American Cancer Association (ACA). Medical Costs Create Hardships for More than Half of Americans. Published 2-May-2019.  Accessed on 14-Feb-2020 at http://pressroom.cancer.org/YabroffFinancialHardship.

^[4]  Konish, Lorie. This is the real reason most Americans file for bankruptcy. Published 11-Feb-2019. Accessed on 14-Feb-2020 at https://www.cnbc.com/2019/02/11/this-is-the-real-reason-most-americans-file-for-bankruptcy.html.

^[5] Batty, Michael and Benedict, Ippoito. “Mystery of the Chargemaster: Explaining the Role of HospitalList Prices in What Patients Actually Pay.” Health Affairs. 36 (4), 2017,  689-696.

^[6] Reinhardt, Uwe. “The pricing of US hospital services: chaos behind a veil of secrecy.” Health Aff (Millwood). 25, 2016: 57-69.

^[7] Frakt, Austin. “How Much do Hospitals Cost Shift? A Review of the Evidence.”  The Milbank Quarterly 89(1), 2011.

^[8] Lee, J.S. et al., “Medicare Payment Policy: Does Cost Shifting Matter?” Health Affairs 22, 2003: 480–488, 10.1377/hlthaff.w3.480.

By TAYLOR CHRISTENSEN, MD

I strongly believe that getting people the information and incentives necessary to choose higher-value providers and insurers is the solution to improving value in healthcare (see my Healthcare Incentives Framework). But, you say, we’ve tried that and it doesn’t work, and current efforts are a waste of time!

Here’s an example of some great research that you might use to support your opinion:

Examining a Health Care Price Transparency Tool: Who Uses It, and How They Shop for Care (Sinaiko and Rosenthal, Health Affairs, April 2016)

The news media would see this and report the main findings–that only 3% of enrollees used Aetna’s price comparison tool–and argue that even people who have the opportunity to shop for care will not do it, which they will interpret to mean any “consumer-driven” healthcare effort is proven through evidence not to work. People can wrest information to prove whatever they want.

But what if you actually read the study?

Sinaiko and Rosenthal found that only about 60% of enrollees even had a claim during their study period. And of those 60%, I’m guessing a large percentage of those were outpatient visits (primary care or specialty) with established providers, which are claim types that people historically do not shop for. Think about it, if you have your favorite hairdresser who knows you best, you have a relationship with that person, and you like how they cut your hair, are you going to price shop every single time you need to get your hair cut?

Now take out all the non-shoppable services (something we should look at further sometime), and we’re left with a relatively small percentage of enrollees who may have actually had a reason to shop for care. But, wait, what about the people whose insurance plan required them to pay the same amount regardless of which provider they chose? (Remember, people need an incentive to choose higher-value options.) That’s a lot of exclusions, and I wish I had the numbers to know what percent of enrollees would be left. 30%? 10%? Those are the enrollees who would be the target audience for this price comparison tool.

I assume Aetna did a good job notifying people about this price comparison tool, so maybe 75% of people read the mailer and then half of them remembered it when it came time to shop for care. Why only half? Because people aren’t yet accustomed to shopping around for value in healthcare. They’re used to going to the lab or imaging center or specialist their doctor tells them to go to. It doesn’t even cross their mind that there may be cheaper options out there. There’s also an assumption that you have to go where your doctor tells you otherwise your doctor can’t get the results. It’s not true, but it can be very inconvenient to get records from somewhere. Thanks, non-interoperable EMRs.

So what are we left with? 3% of enrollees seems about right.

But what if we look specifically at services that are known to be shoppable? Considering all the factors above, the percent of people who shopped before getting those services blew me away. Tonsillectomy: 54%. Total knee replacement: 48%. Inguinal hernia repair: 27%. Cararact or lens procedure: 18%. Vaginal delivery or C section: 16%. Carpal tunnel release: 12%. These lower-percentage ones strike me as the ones that would more commonly be performed by a doctor you’re already established with (again, making you less likely to shop around), but I could be wrong here.

Anyway, you know what this proves to me? That price comparison tools can work! And I believe they will be used more and more as people start getting insurance plans that require them to pay more for more expensive options, and as they remember they can shop for price. The younger generation will probably drive a lot of this because they will be more used to using these tools and shopping for care and will eventually get older and start needing more services.

Here’s another great paper that sheds more light on this topic:

Americans Support Price Shopping for Health Care, But Few Actually Seek Out Price Information (Mehrotra, Dean, Sinaiko, and Sood, Health Affairs, August 2017)

Check out these numbers, looking specifically at people who have the type of insurance plans that would give them an incentive to compare prices:

• 72% of people think it’s really important to shop for value in healthcare
• 93% of people know prices vary greatly among providers
• Only 22% of people think higher prices in healthcare equate to better quality
• 75% of people said they don’t know of a resource they can use to compare costs among providers
• 77% of people who didn’t price shop for their last healthcare service said it was because they were seeing a provider with whom they were already established
• Only 1% said they didn’t shop because it was emergency care

I’m impressed that so many people know about the unwarranted price variations and think shopping in healthcare is important, but it’s sad that only 25% of people even know of a resource they could use to compare costs. And, like I said above, we see that most people aren’t doctor shopping when they’ve already established with a provider.
So, instead of making the jump from “price transparency doesn’t work right now” to “price transparency will never work,” let’s take a more constructive approach and actually understand what’s interfering with people shopping for care so we can fix it. Because even Medicare for All will not be a solution to our healthcare spending problem without getting people to shop for their care.

Taylor J. Christensen is an internal medicine physician and health policy researcher who blogs about how to fix the healthcare system at clearthinkingonhealthcare.com.

The potential of price transparency tools to help consumers with high out-of-pocket medical expenses remains largely untapped, according to two recent studies published in Health Affairs and other recent research by Consumer Reports and Public Agenda.

One study found that while more than half of the nearly 3,000 patients surveyed said they would use a website to shop for healthcare if they knew of one, only 13 percent actually looked for information on future healthcare spending and only 3 percent compared prices and costs across providers.

In the second study, patients with access to a price transparency tool focused on “shoppable” services did not experience overall lower spending on those services, and only 12 percent used the tool to begin with. On a positive note, patients who compared prices for imaging tests decreased spending an average 14 percent.

Research by us at Consumer Reports and a survey by Public Agenda (publicagenda.org) signals additional cautious hope for consumer’s use of price transparency tools in the future.   Both projects were sponsored by the New York State Health Foundation (nyshealthfoundation.org) and received additional funding from the Robert Wood Johnson Foundation (rwjf.org).

What Public Agenda found

Public Agenda surveyed 2,062 adults nationwide and, in addition, 802 people in New York, 808 in Texas, 819 in Florida, and 826 in New Hampshire. In contrast to the Health Affairs findings, Public Agenda found that about half of those surveyed had tried to find medical price information online before getting care—with a focus on how much they might pay out-of-pocket.

About 20 percent of respondents said they sought the information to compare prices across providers while 28 percent tried to find out a single provider’s price. Of those who compared prices, 59 percent said they chose a less expensive doctor, hospital, medical test, or treatment.

Seventy percent agreed with the statement: “higher prices are not typically a sign of better medical care.”

Knowledge and use of state-sponsored price information websites was low, however. About 20 percent of people in states with such websites, like New Hampshire, said they had heard of the sites and only seven percent had tried to use them.

Consistent with the Health Affairs findings, almost 60 percent of Public Agenda’s respondents who had not tried to find price information online said they would like to do so in the future. And 70 percent agreed it would be a good idea for doctors and their staffs to discuss prices with patients before ordering or doing tests or procedures. Less than a third (28%) said their doctor had ever discussed cost with them.  

That plus low public awareness of medical price variation remain serious stumbling blocks to wider adoption of price transparency tools. A surprising 56 percent of people in the Public Agenda survey were not aware that doctors’ prices vary.

The Consumer Reports findings

CR used a combination of qualitative and quantitative methods to evaluate health plan websites and their cost estimator components. We also assessed stand-alone cost-estimator tools. For both, we used a structured evaluation by trained reviewers and usability testing by consumers.

We developed an overall score (0 to 100) based on 100 criteria grouped into four components: ease of use, functionality, content, and scope and reliability. (For details, see our technical report.)

We found that the quality of the tools varied substantially – from a low of 55 (Kaiser’s tool) to a high of 84 (Cigna’s tool).

Based on the 100-point scale, the insurance plan websites scored as follows:

Cigna – 84
United HealthCare – 82
Aetna – 77
Anthem – 73
Humana – 69
Kaiser Permanente – 55

The biggest failing was in the presentation of “value” to consumers—that is, combined cost and quality data integrated in a way that helps consumers make meaningful choices. Only the Cigna site got top marks for that.

Stand-alone national price transparency websites can provide useful information on prices and quality, especially for consumers who have no access to this information through their health plan. But our analysis found that many of the stand-alone tools lack key features that consumers want. Even the highest-rated tools have limited individual provider-level quality data, for example.

Two of the state websites (CompareMaine and New Hampshire’s HealthCost) and one of the stand-alone national sites (Amino) scored well, however—near the average of the private health plan tools.

The scores:

Amino – 66
CompareMaine – 65
NH HealthCost – 63
Colorado Medical Price Compare – 44
Guroo – 41
MDsave – 40
Healthcare Bluebook – 37
FAIR Health – 28

A synopsis of our findings for non-experts can be found here. The full report of our findings can be found here.

The New York State home page for the project is here.

Implications and recommendations

We think price and quality transparency is a basic right for consumers. People need this information to manage their out-of-pocket expenses, avoid expensive surprise bills, and optimize their chances of getting high quality care.   According to 2016 study by the U.S. Federal Reserve, 47 percent of consumers don’t have the financial resources to manage an emergency expense of $400 or greater, without borrowing or selling assets.

The cost/quality tools available now are improving, but there are critical gaps. Some lack essential features, such as accurate, reliable up-to-date data, and out-of pocket spending estimates. And most don’t yet marry price and quality information in a way that is easy for consumers to understand and use.

Given the financial burdens increasingly placed on consumers, creating actionable price and quality transparency content is no longer an option; it simply has to happen.

At a minimum, insurers should be required to provide the information to enrollees. At the time of our study, only 12 New York state health plans offered price and out-of-pocket cost estimator tools to their members. Those 12 plans reached about 50 percent of the fully-insured market. And nine other New York plans—with 3.3 million enrollees—did not offer a plan-specific cost-estimator tool.

There’s no question about the need. About 30 percent of people with insurance through their employer have a high-deductible health plan, and projections from the Kaiser Family Foundation and others indicate that will increase to 40 percent in the next few years.  The unintended consequences of high-deductible plans are causing consumers harm; much of the savings they generate are due to people cutting back on healthcare services. People postpone going to a doctor, don’t fill prescriptions, or cut back on preventive care—and most troubling of all is that the sickest workers also cut back on care. (See “How to Survive a High-Deductible Health Plan” (from the January 2017 issue of Consumer Reports.  

At the same time, it’s becoming much clearer that price and quality transparency alone will not be a magic bullet for bending the health care cost curve. One analysis found that only seven percent of total healthcare spending was amenable to shopping (although that seven percent represents 47 percent of consumers’ out-of-pocket costs.)

Our recommendations:

• For outpatient and elective in-patient services, consumers deserve a pre-visit, personalized estimate of the costs they will face.
• All cost/quality tools should meet high standards for ease-of-use, functionality, content, and reliability, similar to those described in the Consumer Reports ratings rubric. (See links above.)
• Quality information should always be made available alongside price information and vice versa.
• Insurers should address the shortcomings of their price/cost estimator tools now, to prepare for increased use in the future.
• State and federal regulators should consider mandating the availability of cost/quality tools for all health plans, to ensure consumers have timely access to price information specific to their plan.
• Insurers, employers, health providers, government agencies, and health navigators should promote the availability and user benefits of online cost/quality tools, to increase their “findability” and use by consumers.

As we were preparing to submit this post to THCB, we saw this excellent blog at Health Affairs. It discusses and links to Maryland’s new price and quality transparency initiative.

Doris Peter is Director of the Health Ratings Center, Chuck Bell is Programs Director, and Steven Findlay is a Contributing Editor, all at Consumer Reports.  

At the end of March the Amercian College of Cardiology (ACC) and the American Heart Association (AHA) issued a joint statement saying they “will begin to include value assessments when developing guidelines and performance measures (for pharmaceuticals), in recognition of accelerating health care costs and the need for care to be of value to patients.”

You may have heard of value-based medicine, but are we entering a new era of value-based medications or value-driven pharma?

Price transparency is great, but it has be combined with efficacy to get to value (price for the amount of benefit). Medical groups are catching on to how important value assessments are, because if patients can’t afford their medication, they won’t take their medication, and that obviously can turn into poor outcomes.

Twenty-seven percent of American patients didn’t fill a prescription last year according to a Kaiser Family Foundation Survey. This trend seems likely to continue as we move toward higher-deductible plans, where those with insurance can have great difficulty affording medications.

Included in the ACC/AMA statement was a quote from Paul Heidenreich, MD, FACC, writing committee co-chair and vice-chair for Quality, Clinical Affairs and Analytics in the Department of Medicine at Stanford University School of Medicine.

“There is growing recognition that a more explicit, transparent, and consistent evaluation of health care value is needed…These value assessments will provide a more complete examination of cardiovascular care, helping to generate the best possible outcomes within the context of finite resources.”

Spreading risk and payment to different members of the health care value chain is beginning to make it apparent to more people and organizations that resources are finite. Patients and their physicians are starting to ask which treatments are worth the cost and have best likelihood of adherence.

An outgrowth of the move toward digital health and accountable care is that we’re entering every patient into a potential personal clinical trial with their data followed as a longitudinal study, and we can look much more closely at efficacy and adherence and reasons why it happens and why it doesn’t.

It won’t be long before we start to see comparative effectiveness across a variety of treatments and across a variety of populations. When we can connect outcomes data, interventions and costs all in the same picture we begin to see where the value (price against results) is and where it isn’t.

The opportunity to assess value of treatments is bringing non-traditional players into the value-driven pharma arena. Samsung recently announced that they are becoming a drug company. According to Quartz:

“Electronics giant Samsung recently announced a foray into big pharma. The South Korean company is set to invest over $2 billion into biopharmaceuticals—drugs developed from biological sources (e.g. vaccines or gene therapies) as opposed to traditional chemical cocktails—with a focus on creating cheaper versions of existing therapies.”

The real advantage may be access to patient information via mobile. The Quartz article goes on to say:

“…cheapness won’t be Samsung’s only advantage. The company better known for its smartphones could also take advantage of the fact that the pharma industry has been slow to explore mobile health technology…The biotech industry is expected to generate sales of more than $220 billion in five years, Bloomberg reports, and Samsung expects to be taking a $1.8 billion slice of the pie by that time. The company will start by copying Enbrel (an arthritis therapy by Amgen Inc.) and Remicade (Johnson & Johnson’s autoimmune disease treatment) in the next couple of years.”

Samsung is going after arthritis, which Enbrel and Remicade treat. On the surface, this makes sense. Mobile devices are good at tracking and reporting what arthritis impairs– movement– opening up the opportunity for Samsung to close the loop on the effectiveness of their own drugs using their smart phones, tracking progress and improvement.

Pharma has been slow to explore mobile health and data science and slow to leverage social media and other sources of consumer health data effectively for a variety of reasons — some legal (we aren’t responsible for what  we don’t know) and some historical.

This could be a severe disadvantage when looking to leverage existing therapies. Combing through available data from existing research can provide new and cheaper alternatives and, with relatively easy biosimilar approval, see how they compare.

Industry observers are beginning to see this shift and this opportunity, raising alarm bells for big pharma. Are they listening? Over the past month there’s been a virtual outcry for a business model for Pharma that’s based on value. Ernst & Young released a report (.pdf) calling for “radical collaboration.” Dan Munro at Forbes picked out the key line and bold proclamation from the report:

“Almost every life sciences company, regardless of their product or offering, will soon be expected to help change behaviors and deliver better health outcomes.”

EY hits the nail on the head. The combination of value-based care, digital health, and mobile technologies is inevitably driving toward pharma price and evidence transparency and a much better look at the efficacy of various treatments.

Samsung came late to the smart phone market, then experimented with pricing and models before taking over the top place from Apple. Now focusing on biosimilars, Samsung could be following a similar pattern in pharma, testing to see what combinations will work best, powered by ongoing results in a closed feedback-loop system.

Munro asks the question, “To what extent, and in what ways, should pharma companies move beyond the product?” Samsung may be answering that question.

AthenaHealth’s Jonathan Bush echoed the chorus for a new pharma business model in April to a group of pharma executives saying:

“Take every drug you have and organize it by disease by the number of hospital days that could go away…Find the moments that matter financially and clinically.” And further, “Follow up on the prescriptions that are written and make sure the patients get those drugs but also ‘don’t end up in the hospital…Relentlessly follow up on all conditions for success…”

We wonder if “all conditions for success” might also include the condition of affordability.

Jamie Heywood, CEO of PatientsLikeMe, hinted at a value-based medication future in a Nature Medicine interview recently on their new collaboration with Genentech, saying, “What we need to do is get more value for health care, and value means you have competitive outcomes. And that’s what, in our longest dreams, I think PatientsLikeMe begins to bring to bear.”

Samsung is in a unique position to capitalize on social, mobile and, peer interaction. Munro writes in Forbes about a social network/app,Whisper, that is on a fast-track trajectory because of its anonymous posting. Pharma companies could learn great deal of information on the derailing of adherence to treatment by following these posts. And if they don’t, others will fill the void by both providing and applying data to physicians and consumers as well as pulling in data from consumers.

On the data provider and application side, one Startup Health company seeks to provide cost and value transparency of medications at the point of care and bring the price discussion into the exam room.

RxREVU provides data services via API to use peer-reviewed value-based medication decisions for clinicians and their patients (full disclosure, RxREVU is a client of VivaPhi, Leonard Kish’s agency). Because it’s an API, it could also be deployed in the context of a mobile app at the point of care.

This data has always existed, what’s new is the demand for it and how it’s applied.

On the data intake side, more clinically-focused companies such as GoGoHealth are allowing remote EHR intake, improving access to consumer health data, including social determinants of health, to allow for faster, individualized attention by providers (GoGoHealth, also a StartupHealth company, is mentored by Center of Health Engagement, Nayer’s organization).

Part of that is allowing patients to lower barriers to enter the system, getting remote office visits and phone refills. A side product of these kinds of interactions is an understanding of what prevents and what enables patients from continuing on a course of treatment.

As providers and patients assume more of the risk and pay more of the bill, they are seeking solutions that can provide value-based treatment decisions that fit their personalized needs.

The most valuable solutions in a value-driven era will be those that we are able to customize based on information from a wide variety of sources and place the solutions into a contextual format in which patients ultimately have to treat themselves, including financial contexts.

Those that stick with the old pharma model, leaving data and consumers-as-patients out of the mix, will wind up with much less valuable medicine.

Leonard Kish (@leonardkish) is Principal and Co-Founder at VivaPhi, an agency that solves multi-disciplinary business problems involving data science, software, biomedical science, behavioral science, health care, product design, community development, marketing, consumer engagement and organizational design.

Cyndy Nayer (@CyndyNayer) is the founder and CEO of the Center of Health Engagement, an agency promoting strategic investments in health value for employers, health plans and provider organizations.

This post originally appeared in HL7 Standards.