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At JP Morgan’s Annual Healthcare Conference, Providers Vie For Consumers Using Health Plans And Collaboration

The annual JP Morgan Healthcare Conference wrapped in San Francisco last week, and Dallas' own Hubert Zajicek, co-founder and CEO of startup accelerator Health Wildcatters, was one of the invite-only attendees. Here, he writes that digital health took a backseat to large-scale providers who are looking for innovation through partnerships and attracting more patients—er, consumers—using their own health plans.

The 34th JP Morgan Healthcare conference, an annual rite-of passage for all healthcare companies, is an invitation-only conference held in San Francisco every January. Dr. Hubert Zajicek, the co-founder and CEO of startup incubator Health Wildcatters, was one of the attendees and filed this dispatch after returning.

SAN FRANCISCO — This year, the conference started off with a bang—the wrong kind. The Nasdaq Biotech Index dropped 3.4 percent and had its worst opening day in more than a decade, putting a sour taste in the mouths of the 9,000 or so conference attendees. Was it the start of the long anticipated biotech correction? Was it the paucity of news? A preview of bad earnings reports? Empty drug pipelines? Politics? I can’t say that I have the answer to all these questions, but below are my observations after 72 hours of meetings and presentations at the St. Francis Hotel on Union Square.

Hospitals, healthcare consumers, and convenience: Last year I heard the term “healthcare consumers” again and again while listening to digital health company execs. This year, the phrase was used more by their hospital and urgent care counterparts. This represents a substantial change. Hospitals, many now armed with their own insurance plans, are competing directly for customers and paying close attention to the experience of healthcare consumers.

We’re talking way beyond sending anonymous surveys or follow-up calls. For instance, Dr. Bruce Irwin, CEO of the privately held American Family Care, an urgent care and primary care chain with more than 140 locations, recalled visiting an upset patient at her home and making her a customer for life. Or take the Geisinger Health System, a physician-run hospital group in Pennsylvania and a leader in care-delivery innovation. It has a system that allows a patient to ask for a refund of his or her co-pay if anything wasn’t up to par. Send the request, list the reasons, and the patient gets a refund, no questions asked.

The surprising part is how relatively modest the refund requests have been in Geisinger’s experience. But actions like these build trust. Dallas’ own Baylor Scott & White Health, represented by CEO Joel Allison, expounded on its growth plan. Like many other hospital systems, BSW can point toward an ever-expanding number of insured lives through their own insurance products, like the Baylor Scott & White Quality Alliance. Some hospital groups report substantial earnings from their insurance products, which is beginning to answer the big question of who will capture the savings from bundled payments. Also, consolidation among hospital groups will continue.

Stand-alone urgent care centers vie for the primary care relationship with their consumers, while hospitals are trying to extend their reach deeper into their communities. Various models to get ever closer to the patient are being tested, and startups are leading the charge. They’re redefining house calls and creating doctor-on-demand models. At the same time, telemedicine is being used in earnest, with hospitals and insurers agreeing that this option is often cheaper and more convenient for all involved.

Pharma and Pharmacies: Pharmacies like CVS are expanding and focusing on what they do best: being a pharmacy. Notably, CVS will be taking over all Target pharmacies, expanding their retail footprint substantially. This deal was announced last summer. There is plenty of money to be made in this sphere. With an aging population, we are getting more and more prescriptions filled, and the lucrative specialty pharmacy market is increasingly being captured by large pharmacy groups as well. In the U.S., there are more than 4 billion prescriptions filled every year, totaling somewhere north of $374 billion.

The big traditional pharma firms duly reported their progress (and underwhelmed the audience by no exciting breakthroughs). Some predicted significant headwinds in the near future with drugs coming off patent, like Roche’s, Herceptin, Rituxan, and Avastin. Meanwhile, established firms like Amgen and Novartis are getting into the biosimilar market, hoping to take advantage of these brand name drugs coming off patent. Ultra-orphan drugs are being developed and are certainly most welcome, but by definition have much less overall impact.

Precision medicine advances mean that some drugs coming onto the market need a companion diagnostic test, which opens up an opportunity for clinical diagnostic labs. Overall, the pharma segment was relatively uninspired, with the likes of Pfizer/Allergan announcing 2016 price hikes around 10 percent on a significant portion of their drug portfolio to juice incomes.

Genomics, Precision Medicine, and All Things Digital: LabCorp has purchased the genomics testing company, Covant, and is positioning for the companion diagnostic market, developing companion tests for some of the most expensive and tailored personalized medicine drugs.

Digital health and mobile health were represented, but didn’t have nearly as much buzz as last year. Their uses are now being examined and the crowds and businesses are looking for results. Some, like Lewisville-based telemedicine pioneer Teladoc, will be stand-alone operations, while many others will be acquired or in-licensed.

Notably, during the conference Alivecor, smartphone ECG pioneer, announced its new partnership with Lifewatch, in order to dive more deeply into patient monitoring. Athena Health’s Jonathan Bush, who coincidentally was “caught on tape” trying to save a life by performing CPR on a person close to Union Square, gave a fiery speech on why his company continues to chalk up wins—and his numbers prove him right. Cerner, a more traditional player in the EMR market, was upbeat too, doing more to help run hospitals and provide IT solutions using cloud-based technology.

People are having their genomes sequenced, but can only use that data in a limited way. Helix, Ancestory.com, and 23&me are vying to have a relationship with the healthcare consumer and become the conduit for converting mountains of genomic data to medical applications.

Device Innovation: Medical device companies reported new products in atrial fibrillation (St JudeBoston Scientific) and deep brain stimulation (St Jude) Fresenius is focusing on the dialysis center business through vertical integration and patient care coordination for patients with end stage renal disease. Startups like Glaukos came back reporting success with their glaucoma eye-stent. Both Irrhythm Technologies (developing a wearable Band Aid-like replacement for the holter monitor), and Dexcom, (maker of the Continuous Glucose Monitoring, or CGM, monitor) are working on new technologies that can revolutionize existing markets.

Finally, partnering was a big topic—between hospital groups, urgent care centers, pharmacies, drug companies, and/or medical device firms. There is a realization that partnerships lead to win-win situations. When a best in class partner can be brought in, the provider doesn’t have to sink as much capital or as many resources into creating its own solution.

(Editor’s note: Click here for Dr. Zajicek’s dispatch from last year.