Monday 26 January 2015

ECG Tech from India Could Save U.S. $50 Million Today

Electrogardiography: A Brief Review

Electrocardiography (ECG) is a diagnostic method of recording the electrical activity of the heart. This is traditionally performed by attaching electrodes to the skin, which then pick up waveform electrical impulses generated by the polarization and depolarization of cardiac tissue. These are mapped on an electrocardiogram and interpreted to measure heart performance and health.

The use of ECGs is ubiquitous and popular among providers, and especially tertiary care hospitals. The Mayo Clinic, for example, performs about 240,000 ECG tests per year in their laboratory, and the global market for ECG machines is set to grow to over $5 billion by 2020. This growth is driven by the wide range of increasingly common conditions ECGs are able to effectively monitor, including heart arrhythmias, anginas, pericarditis, most symptoms of heart disease, the thickness of the heart's walls, the rate and regularity of heartbeats, the size and position of the chambers, and the presence of any changes to the heart's function in response to surgery, devices,  or medications.

The average cost of a provider-administered ECG test in the U.S., which is comprised of the test itself + the interpretation of results by a trained Cardiologist, is $1,750. As usual, the prices vary substantially from provider to provider, the lowest in the U.S. being $550, and the highest being $3,300.

The U.S. Market for ECG Machines

ECG machines vary in diagnostic ability, physical footprint, and price. The current market for these machines can be divided between the 'incumbent' products most of us associate with ECGs, and emerging 'disruptive' products that are portable and less expensive. The incumbents are made by about 16 manufacturers from the developed world, including Burdick, Welch Allyn, Schiller, GE, Bionet, Philips, and Nihon Kohden. They are often equipped for use with 12-leads, often include printing capabilitieg, and they are large enough to be wheeled around. They cost between $1,200 and $3,000 each.

By contrast, the disruptive class of ECGs are made by an (almost) entirely separate set of manufacturers, mostly from the developing world, including ReadMyHeart, InstantCheck, PC-80, AliveCor, ECG Check, Dimetek DiCare, MD100E, PC-80B Color, HeartCheck PEN, REKA E100, and Afib Alert; they often use 1 to 3 leads, rely solely on integrated digital displays, are handheld, and cost between $25 to $500. Dr. Grier at North Dakota State University has compiled an exceptional review of available 1-lead, handheld ECGs on his research page. Most of the 1-lead devices are from China, but some, like AliveCor, are U.S.-based companies. All of them have faced limited adoption among healthcare providers in the U.S., where the incumbent technologies are still used. As a group of physicians evaluating AliveCor stated,
". . . This device has significant limitations in the acute evaluation of chest pain associated with heart attacks. A single lead tracing will miss many real ischemic events, enough that even if it was stone cold normal it would not change our suspicion of myocardial ischemia. If there are significant elevations or depressions, it would probably raise our suspicion for myocardial ischemia, but we would still need a 12 lead ECG, begging the question of how it changes management."
Indeed most of the disruptive handheld ECGs above--at least in the U.S. context--have competed against non-consumption by offering patients and homecare nurses the ability to run ECG tests they could not run before. While additional monitoring increases the risks of false positives, the physicians above also concluded such portable testing could be useful for post-operative heart monitoring during convalescence.

A More Immediately Disruptive Class of ECG From India

India has produced a number of 12-lead handheld ECGs that may be more disruptively positioned than the 1-lead ECGs above, which begin to look like 'hobby devices' in comparison. One of the first major advances was GE's famous MAC India model released in 2007, which brought the price down to $500 from $2,000 - $10,000 for their other hospital-grade ECG machines.

GE's MAC India
In the past 8 years, other Indian companies have released 12-lead ECG devices that achieve greater portability, as well as allow for diverse methods of test data transmission, remote analysis, and storage.

Maestros Mediline launched the E UNO R-10 device in 2010 in partnership with Vodafone. The device relied heavily on Blackberry phones, and was designed mostly for remote consultation use, just as ECGs are in the U.S., except that ECG technicians in India will often travel to administer tests, the results of which are then transmitted to a centralized doctor at a hospital for interpretation. Developers have built applications allowing for use on the Android platform, but the device was not less expensive than GE's MAC India, costing about $500.

Maestro Mediline's E UNO R-10

Lifeplot CCD1 was another offering developed in Pune, India, that does not rely on any specific network or device for transmission of test results, making it potentially more versatile. Though the original model was more expensive at $2,000, LifePlot released a more advanced product just 2 years ago for only $700.

LifePlot UNIQ

The prices for these devices have likely come down, but there are less feature-rich ECG devices appearing in the Indian market from both indigenous and international sources. AliveCor has signed an exclusive agreement with the highly respected Apollo Hospitals chain to use its ECG technology for clinical tests, begging the question about whether the U.S. cardiologists' review of AliveCor's limitations above reflects incumbent biases more than solid clinical rejection, whether something is just better than nothing for India, or whether AliveCor's 1-lead technology has reached a point of relative parity with 12-lead testing. At a price point of $75, perhaps the tradeoff of some marginal performance is worth it.

AliveCor's ECG Device

The appearance of the indigenous Sanket PiE by Agatsa follows past patterns of the introduction of disruptive technology into the Indian market by foreign firms, followed by the release of indigenous versions which may or may not be better-suited for indigenous market conditions. Since Sanket is not yet available on the market, it's not clear what the price will be, but it will presumably be comparable to AliveCor.

Agatsa's Sanket PiE

One of the most immediate differences between the handheld ECGs being widely sold in India vs. those in the U.S. is that they are 12-lead ECGs, while those from Dr. Grier's page are all single-lead devices. This signals a serious disruptive position relative to traditional ECGs in the Indian market, which is a nice illustration of how the context of innovation shapes its ultimate shape. Many elements of the Indian market demand a fully functional, low-cost, handheld ECG: Sheer in-affordability of existing technology for huge numbers of needful patients, the necessity of portability for ambulatory community health workers, and a large supply of IT talent.

Would the U.S. Benefit from Adopting Indian ECG Technology? 

The U.S. market context is much different from that of India, which explains the strategies of handheld ECG devices like AliveCorScanadu, and Wello, which--so far--have not competed directly against incumbent technologies, preferring instead to position themselves mostly as patient-centric devices for self-use, providing only supplemental data to traditional provider-based ECG machines. This could still represent the beginnings of disruption, which often incubates in a foothold market that can sustain a nascent technology until it improves to the point of dominance across all or most of the dimensions of quality that matter to customers. At that point, the incumbent technologies quickly fade away. This is the story of transistor radios disrupting vacuum tube radios throughout the 1950s and early 1960s.

However, one of the biggest issues behind lack of serious medical adoption of handheld ECGs in the U.S. is that the alternative processes / delivery models are not yet in place for the use of these machines within provider settings, whereas in a market like India, the new devices are often competing against non-consumption, so in many cases they've had much more 'experience' in serious clinical use. What might the U.S. learn from the delivery models that have emerged around the use of these portable devices?

Adopting leaner delivery models and technology is likely where the real savings lie, but even if the U.S. were to switch over to the equivalent technology available in India today, substantial savings would immediately materialize. Just taking GE's MAC India at a $500 price point, if the average price of an incumbent machine is $2,000, and each of the 7,000 hospitals in the U.S. purchases 5 new ECG machines per year (as benchmarked against the yearly purchases of a UK hospital with 5 sites), this results in over $50 million in yearly savings on equipment costs alone, not including the lead replacement cost, which is also material judging from the UK hospital's spending.

Question for Discussion: 
  • What barriers prohibit the U.S. from purchasing lower-cost ECGs for clinical use? 

Friday 9 January 2015

20+ Facts About Healthcare Costs in the U.S.

General Healthcare Spend*
  1. The U.S. spends nearly 20% of its yearly GDP on healthcare. Other developed countries spend about half that, but the additional spend in the U.S. does not generally result in improved patient outcomes
  2. The healthcare-industrial complex spends more than 3x the amount of the military-industrial complex on lobbying each year
  3. Prices for U.S. prescription drugs are ~50% higher than those in other developed countries
  4. McKinsey estimated an annual healthcare overspend of $750 billion in the U.S.
  5. Company financials seem to indicate that if the U.S. payed for healthcare at similar levels to other developed countries, the profit margins for medtech and pharma companies would remain high enough to continue encouraging innovation

Image Courtesy of

Hospital Economics
  1. Hospital chargemaster prices are often capricious, and reach levels 10-15x higher than Medicare reimbursement rates
  2. Medicare price models are imperfect, but they are cost-based, and attempt to factor in all direct costs and allocated expenses required to provide a given product or service
  3. Hospitals around the U.S. market aggressively to Medicare patients
  4. The average hospital collection rate is ~35% of the total amount billed
  5. Average operating profit for non-profit hospitals is ~12%
  6. Medtronic sells its products at a 4x markup to COGS, and hospitals routinely sell devices to patients at a 2.5x markup to the wholesale price
  7. Pharma companies commonly offer wholesale prices at 10x to COGS, and hospitals routinely sell these drugs at a 4-5x markup to the wholesale price
  8. Hospitals routinely double- and triple-charge for items on the chargemaster that could reasonably be included under their general facility and room charges
  9. Doctor groups with in-house IVD labs seem to order more tests than those using outside labs
  10. A typical PET / CT piece of equipment will pay for itself within 1 year by carrying out 10-15 procedures per day. The equipment has an expected life span of 7-10 years
Patient Economics
  1. 60% of personal bankruptcy filings in the U.S. per year are related to medical bills
  2. Patients are often delivered large portions of medical bills not covered by their insurance plans
  3. 'Medical billing advocates' often achieve discounts of 30-50% on medical bills just by calling in to negotiate on behalf of patients

Image Courtesy of The Atlantic

Payer Economics
  1. Healthcare insurance premiums under ObamaCare will rise mainly due to 3 provisions: 
    1. Prohibitions on exclusion of pre-existing conditions
    2. Restrictions on co-pays for preventive care
    3. End of annual or lifetime payment caps
  2. The largest payers have historically negotiated reimbursement rates at 30-50% higher than Medicare rates, but increasing hospital consolidation is shifting more collective buying power back to the providers, so that the final negotiated reimbursement rates are moving closer to chargemaster prices
  3. FDA-approved drugs are reimbursed by Medicare at 'average sales price' + 6%. The manufacturer calculates and provides the average sales price

*All facts in this post are from Steven Brill's article Bitter Pill: Why Medical Bills are Killing Us, and his newly published book, America's Bitter Pill: Money, Politics, Backroom Deals, and the Fight to Fix Our Broken Healthcare System . They represent only a small portion of his findings, but are among the most objective and meaningful to me.