Lisa Mazur and Ed Zacharias, McDermott Will & Emery10.03.22
The worlds of retail, technology, and healthcare are coming together in the digital health space. Businesses that once were heavily siloed by industry are now exploring and maximizing collaborative opportunities that can deliver positive results to owners, investors, patients, and other stakeholders.
Consider some recent business headlines:
For chronic and ongoing health concerns such as diabetes and hypertension, diagnostic, monitoring, and treatment products and services can be easily woven into the existing delivery, distribution, and retail infrastructure. Depending on the location and community, however, barriers such as lack of awareness or information, spotty or non-existent broadband internet coverage, and other issues must first be addressed.
Network Eye, a provider of vertically integrated retina care, epitomizes the importance of raising awareness as a first step toward increasing access. Research demonstrated that nearly half the people living with diabetes were unaware of the disease’s potential impact on their vision. Working with businesses, churches, and other organizations in communities with high diabetes levels, Network Eye disseminated information about diabetic retinopathy and macular degeneration, two of the leading causes of blindness. This led to the launch of its vertically integrated retina care offerings.
Cue Health also wants to lower the barriers to timely healthcare. The company recently signed an agreement with Albertsons to provide Cue-powered COVID-19 testing solutions, though it eventually hopes to roll out influenza and other assays as they come online. In collaboration with a Texas university, the company is sending hundreds of Cue devices to homes as part of clinical trials to identify the clinical and socioeconomic effects of having in-home access to care. Further, the company is also working with a large dialysis firm to provide at-home diagnostic devices to individuals in economically disadvantaged communities.
To address potential broadband issues, technology-based solutions must be flexible and field-based. Wifi solutions may be preferable to spotty cell coverage but cellular connections may work better in areas with limited wifi access. For older populations and individuals “aging in place”—many of whom have reduced exposure to technology—in-person training on remote-monitoring devices and tools may be delivered by non-medical staff to allow clinicians to focus their time on condition-focused patient interactions and treatment. On the other hand, younger people may look for healthcare apps and communication tools that meet their unique experiences and knowledge.
Ultimately, healthcare equity is an increasingly foundational component of many organizations’ diversity, equity, and inclusion goals. Whether focused on customers, patients or employees—or all three—eliminating roadblocks to healthcare is an important step in strengthening these relationships.
Retail and technology healthcare joint ventures are bringing new life to this sector, while more experienced players can provide hard-earned insights and resources. For example, established hospitals and health systems can benefit greatly from entrepreneurs’ emphasis on innovation, no-limits thinking, and new ways of connecting with patients; entrepreneurs, on the other hand, can take advantage of the institutional history and deep regulatory experience of major providers to avoid regulatory and financial pitfalls, particularly in an industry that operates under strict federal and state oversight.
Retail businesses also have a finely-tuned understanding of their current and potential customers and their changing values. Where healthcare providers may once have shunned such “commercial” exercises as market research, customer-satisfaction surveys, and the like, retailers and technology developers dive into this big pool of data without reserve. They respond to new information quickly and proactively. Just as Burger King now offers plant-based hamburger options and many bars and restaurants have a full list of “mocktails” on their menus, “health-adjacent” companies can take advantage of emerging wellness trends.
Technology is also prompting consumers to think more strategically about the healthcare services they desire and acquire. Since innovation in any sphere typically widens the range of options for consumers, healthcare providers can benefit from the tools and strategies honed by their retail and technology peers to parse this information for potential opportunities.
The COVID-19 pandemic has further accelerated this push for more personalized healthcare-delivery methodologies. Before vaccines became available, telehealth offered a much-needed solution to restrictions on in-person healthcare access. Over the last two and a half years, patients, family members, and caregivers have grown accustomed to web-based interactions with healthcare professionals, direct medication delivery, remote diagnostic and monitoring tools, etc., and many expect these technologies and platforms to continue to be available as the coronavirus threat ebbs and flows.
Collaboration is Key
Ultimately, collaboration is key. Innovation cannot disrupt to the point of dysfunction, or worse, anarchy. Relationships between providers, payors, employers, and patients must be maintained, even as positive changes spread throughout the system.
Some of the most effective disruptions are not tectonic fractures experienced at the core of a system but come from the edge. Many retail and technology entrants into healthcare work initially at the edges, but then move toward the center as their influence expands. This approach can do more than effect change; it can effect lasting change.
Similarly, healthcare disruption does not represent a full switch from one channel to another. The rapid growth of cable, satellite, and on-demand television—in addition to, rather than instead of, broadcast network television—over the past three decades provides a credible analogy. Just as viewers have more channels, bank customers have online and brick-and-mortar options, and shoppers can look for products online or in person, new healthcare platforms will increase access and expand alternatives available to patients, providers, and caregivers. It’s all about creating a healthcare ecosystem with a continuum of options that improve quality of care and outcomes.
One challenge, of course, is convincing payors—including the federal government—to cover new methods of delivering care. To reduce such barriers, innovators are often partnering with payors up front to align objectives and explore, develop, and roll out new products and services. Payor buy-in is cultivated from the beginning of the process, not during the final stages of potential deployment.
Of course, pressure for change from consumers, employers, health systems, and insurers will be limited without the collaboration of the elephant in the room—government. Legislation and regulation can either quash, limit, foster, or accelerate innovation. With more than 135 million Americans receiving healthcare benefits under Medicare, Medicaid, and the Children’s Health Insurance Program (CHIP), the Centers for Medicare & Medicaid Services (CMS) plays an outsize role in the adoption and use of new healthcare technologies and retail-based services. With this in mind, healthcare executives from across the spectrum must work closely with elected and appointed officials to help set the direction for digital health.
Among other issues, state corporate practice of medicine laws—which prohibit corporations from practicing medicine or employing a physician to provide professional medical services— and are designed to avoid interference with a physician’s independent medical judgment—may also come into play as a result of certain mergers, alliances, joint ventures, and other activities. Similarly, certain transactions could give rise to increased antitrust scrutiny, particularly in light of President Joseph Biden’s July 2021 “Executive Order on Promoting Competition in the American Economy,” which noted that “[h]ospital consolidation has left many areas, particularly rural communities, with inadequate or more expensive healthcare options” and highlighted prescription drug markets as an area of concern. Retailers and technology companies exploring digital health opportunities should consult with legal counsel to identify these and other concerns that could potentially undermine the goals of their collaborations.
Insurers and providers will also need to work together to create a rational system for providing cyber insurance. On one hand, new healthcare technologies use and generate massive amounts of personally identifiable data, depend on a complex and increasingly vulnerable infrastructure, and face ongoing cyber threats that can have more than just financial consequences. A single ransomware attack can prevent access to information needed to ensure appropriate care for hundreds of thousands of patients. On the other hand, retailers may be used to dealing with volumes of financial and transactional data, but they have less experience handling HIPAA compliance issues. For their part, insurers are limiting coverage and raising rates due to increased cyberattacks and their associated costs.
To protect all parties, insurance companies, health systems, vendors, suppliers, and other stakeholders in the healthcare delivery chain must work together to identify clear risks and develop robust, cost-effective cyber insurance policies.
Lisa Mazur advises various healthcare providers and technology companies involved in digital health on the applicable legal and regulatory infrastructure, with a particular focus on telehealth, telemedicine, mobile health, and consumer wellness programs.
Ed Zacharias advises providers, insurers, digital health companies, Big Tech, life sciences companies, and health services vendors on a range of data use, privacy, and cybersecurity matters. Ed is a Certified Information Privacy Professional and writes and speaks frequently on the intersection of healthcare and technology.
Consider some recent business headlines:
- In late July, Amazon agreed to acquire membership-based primary-care provider One Medical for roughly $3.9 billion. The deal augments the company’s roll-out of its “Amazon Pharmacy” brand in 2019, following its 2018 acquisition of mail-order pharmacy PillPack.
- To help “make home the center of health,” retailer Best Buy last fall acquired Current Health, an at-home care technology platform integrating patient monitoring, telehealth, and patient engagement. That deal follows its 2018 acquisition of GreatCall (now Lively), a provider of connected health and personal emergency response services.
- Also in 2021, fitness equipment manufacturer and interactive platform Peloton launched “Peloton Corporate Wellness,” a program designed to help businesses and organizations improve mental and physical well-being as well as work performance.
- Companies such as Cue Health—maker of the first FDA-authorized molecular diagnostic device for at-home and point-of-care COVID-19 testing—and Dexcom, which provides equipment and apps for continuous glucose monitoring, are delivering a range of diagnostic tools and applications directly to consumers, businesses, and organizations.
Top Priorities: Equity and Access
Digital health products and services provide a way to increase healthcare equity and access. In the U.S. particularly, household-name retailers are often the “great equalizer” in their communities. Even in rural areas, big-box companies have a significant presence and are frequently clustered in commercial districts where there are few healthcare facilities. Likewise, online retailers such as Amazon deliver to almost every U.S. business and residential address, typically within just a few days.For chronic and ongoing health concerns such as diabetes and hypertension, diagnostic, monitoring, and treatment products and services can be easily woven into the existing delivery, distribution, and retail infrastructure. Depending on the location and community, however, barriers such as lack of awareness or information, spotty or non-existent broadband internet coverage, and other issues must first be addressed.
Network Eye, a provider of vertically integrated retina care, epitomizes the importance of raising awareness as a first step toward increasing access. Research demonstrated that nearly half the people living with diabetes were unaware of the disease’s potential impact on their vision. Working with businesses, churches, and other organizations in communities with high diabetes levels, Network Eye disseminated information about diabetic retinopathy and macular degeneration, two of the leading causes of blindness. This led to the launch of its vertically integrated retina care offerings.
Cue Health also wants to lower the barriers to timely healthcare. The company recently signed an agreement with Albertsons to provide Cue-powered COVID-19 testing solutions, though it eventually hopes to roll out influenza and other assays as they come online. In collaboration with a Texas university, the company is sending hundreds of Cue devices to homes as part of clinical trials to identify the clinical and socioeconomic effects of having in-home access to care. Further, the company is also working with a large dialysis firm to provide at-home diagnostic devices to individuals in economically disadvantaged communities.
To address potential broadband issues, technology-based solutions must be flexible and field-based. Wifi solutions may be preferable to spotty cell coverage but cellular connections may work better in areas with limited wifi access. For older populations and individuals “aging in place”—many of whom have reduced exposure to technology—in-person training on remote-monitoring devices and tools may be delivered by non-medical staff to allow clinicians to focus their time on condition-focused patient interactions and treatment. On the other hand, younger people may look for healthcare apps and communication tools that meet their unique experiences and knowledge.
Ultimately, healthcare equity is an increasingly foundational component of many organizations’ diversity, equity, and inclusion goals. Whether focused on customers, patients or employees—or all three—eliminating roadblocks to healthcare is an important step in strengthening these relationships.
Disruption, Not Destruction
The healthcare industry remains steeped in tradition and long-established practices. Although there is increased attention on value-based care, for example, most healthcare offerings continue to be reimbursed on a fee-for-service basis.Retail and technology healthcare joint ventures are bringing new life to this sector, while more experienced players can provide hard-earned insights and resources. For example, established hospitals and health systems can benefit greatly from entrepreneurs’ emphasis on innovation, no-limits thinking, and new ways of connecting with patients; entrepreneurs, on the other hand, can take advantage of the institutional history and deep regulatory experience of major providers to avoid regulatory and financial pitfalls, particularly in an industry that operates under strict federal and state oversight.
Retail businesses also have a finely-tuned understanding of their current and potential customers and their changing values. Where healthcare providers may once have shunned such “commercial” exercises as market research, customer-satisfaction surveys, and the like, retailers and technology developers dive into this big pool of data without reserve. They respond to new information quickly and proactively. Just as Burger King now offers plant-based hamburger options and many bars and restaurants have a full list of “mocktails” on their menus, “health-adjacent” companies can take advantage of emerging wellness trends.
Technology is also prompting consumers to think more strategically about the healthcare services they desire and acquire. Since innovation in any sphere typically widens the range of options for consumers, healthcare providers can benefit from the tools and strategies honed by their retail and technology peers to parse this information for potential opportunities.
The COVID-19 pandemic has further accelerated this push for more personalized healthcare-delivery methodologies. Before vaccines became available, telehealth offered a much-needed solution to restrictions on in-person healthcare access. Over the last two and a half years, patients, family members, and caregivers have grown accustomed to web-based interactions with healthcare professionals, direct medication delivery, remote diagnostic and monitoring tools, etc., and many expect these technologies and platforms to continue to be available as the coronavirus threat ebbs and flows.
Collaboration is Key
Ultimately, collaboration is key. Innovation cannot disrupt to the point of dysfunction, or worse, anarchy. Relationships between providers, payors, employers, and patients must be maintained, even as positive changes spread throughout the system.
Some of the most effective disruptions are not tectonic fractures experienced at the core of a system but come from the edge. Many retail and technology entrants into healthcare work initially at the edges, but then move toward the center as their influence expands. This approach can do more than effect change; it can effect lasting change.
Similarly, healthcare disruption does not represent a full switch from one channel to another. The rapid growth of cable, satellite, and on-demand television—in addition to, rather than instead of, broadcast network television—over the past three decades provides a credible analogy. Just as viewers have more channels, bank customers have online and brick-and-mortar options, and shoppers can look for products online or in person, new healthcare platforms will increase access and expand alternatives available to patients, providers, and caregivers. It’s all about creating a healthcare ecosystem with a continuum of options that improve quality of care and outcomes.
One challenge, of course, is convincing payors—including the federal government—to cover new methods of delivering care. To reduce such barriers, innovators are often partnering with payors up front to align objectives and explore, develop, and roll out new products and services. Payor buy-in is cultivated from the beginning of the process, not during the final stages of potential deployment.
Of course, pressure for change from consumers, employers, health systems, and insurers will be limited without the collaboration of the elephant in the room—government. Legislation and regulation can either quash, limit, foster, or accelerate innovation. With more than 135 million Americans receiving healthcare benefits under Medicare, Medicaid, and the Children’s Health Insurance Program (CHIP), the Centers for Medicare & Medicaid Services (CMS) plays an outsize role in the adoption and use of new healthcare technologies and retail-based services. With this in mind, healthcare executives from across the spectrum must work closely with elected and appointed officials to help set the direction for digital health.
Among other issues, state corporate practice of medicine laws—which prohibit corporations from practicing medicine or employing a physician to provide professional medical services— and are designed to avoid interference with a physician’s independent medical judgment—may also come into play as a result of certain mergers, alliances, joint ventures, and other activities. Similarly, certain transactions could give rise to increased antitrust scrutiny, particularly in light of President Joseph Biden’s July 2021 “Executive Order on Promoting Competition in the American Economy,” which noted that “[h]ospital consolidation has left many areas, particularly rural communities, with inadequate or more expensive healthcare options” and highlighted prescription drug markets as an area of concern. Retailers and technology companies exploring digital health opportunities should consult with legal counsel to identify these and other concerns that could potentially undermine the goals of their collaborations.
Insurers and providers will also need to work together to create a rational system for providing cyber insurance. On one hand, new healthcare technologies use and generate massive amounts of personally identifiable data, depend on a complex and increasingly vulnerable infrastructure, and face ongoing cyber threats that can have more than just financial consequences. A single ransomware attack can prevent access to information needed to ensure appropriate care for hundreds of thousands of patients. On the other hand, retailers may be used to dealing with volumes of financial and transactional data, but they have less experience handling HIPAA compliance issues. For their part, insurers are limiting coverage and raising rates due to increased cyberattacks and their associated costs.
To protect all parties, insurance companies, health systems, vendors, suppliers, and other stakeholders in the healthcare delivery chain must work together to identify clear risks and develop robust, cost-effective cyber insurance policies.
Conclusion
The latest entrants in the healthcare space—technology and retail companies—are stepping into place to power a new generation of care delivery models that can potentially increase access and equity, improve care quality, and place patients and families at the healthcare ecosystem’s center. It is an exciting time, but collaboration and cooperation will be key to creating lasting change.Lisa Mazur advises various healthcare providers and technology companies involved in digital health on the applicable legal and regulatory infrastructure, with a particular focus on telehealth, telemedicine, mobile health, and consumer wellness programs.
Ed Zacharias advises providers, insurers, digital health companies, Big Tech, life sciences companies, and health services vendors on a range of data use, privacy, and cybersecurity matters. Ed is a Certified Information Privacy Professional and writes and speaks frequently on the intersection of healthcare and technology.
