1. S u mme r 2 01 1 -Ju lyInformation Advantage Groups Healthcare Digest is focused on the emerging delivery models andtools for the hospital-to-consumer continuum. In a fast-read format, we provide only the vital newsthat is essential to keeping you current on the latest and most notable trends, ideas, research,results, technological developments and helpful resources. Click on titles below for quick navigation, once there, click on abstract title to go to source.MACRO TRENDS DOJ SAYS MOST ACOS WONT HAVE ANTITRUST Q1 GDP A DJUSTED U PSLIGHTLY PROBLEMS CONSUMER AND B USINESS CONFIDENCE SLIPS NEWLY RELEASED - CMS ACO HELPFUL RESOURCES BY FAR, MAJORITY OF A MERICANS ARE STILL HAPPY MARKETERS CAN MISS THE LARGEST P ERCENTAGE OF MEDICAL HOME BUYERS FIRST ONCOLOGY MEDICAL HOME REDUCES A SHIFT TO THE RIGHT THE MAJORITY (52%) OF HOSPITALIZATIONS SOCIAL NETWORK USERS ARE 36+, YOUNGER SHOWS ONLY 35% OF UNDER 20 PHYSICIAN PRACTICES USE STEEP DECLINE MEDICAL HOME PROCEDURES COORDINATION OF CARE I MPROVES WITH EHRHEALTHCARE MACROS NEWLY RELEASED - HELPFUL R ESOURCES: IDC STUDY: H EALTHCARE IS THE MOST ATTRACTIVE US MARKET HIE HOSPITAL SERVICES COST CONTINUES TO RISE YEAR THE AMERICAN ASSOCIATION FOR FAMILY PRACTICE OVER YEAR LAUNCHES LOW-COST MESSAGING SERVICE (HIE) $8,100 PER MAN, WOMAN AND CHILD IN 2009 MAINE PASSES OP-OUT HIE R EQUIREMENT MOST HOSPITALS PREPARING FOR THINNER MARGINS LESSONS LEARNED FROM CONNECTING TO AHIP COUNTERS AMA CHARGES THE NATIONWIDE HEALTH INFORMATION NETWORK MCKINSEY QUARTERLY: E MPLOYERS WILL PUSH TO (NWHIN) DROP TRADITIONAL COVERAGE NEWLY RELEASED - HIE HELPFUL RESOURCES: EXPECT E MPLOYER-BASED R ETIREMENT PLANS TO BE RETOOLED PHYSICIAN & PROFESSIONALS HEALTH SAVINGS ACCOUNTS GROW 14% PATIENT EXPERIENCE A LONG LIST OF ROOM FOR EMPLOYERS WILL INVEST MORE IN WELLNESS/FITNESS IMPROVEMENT IN THE TYPICAL OFFICE VISIT PROGRAMS BETTER PHYSICIAN-TO-PATIENT COMMUNICATIONS IS THE NEXT GENERATION OF MOBILE APPS TO OFFER THE KEY TO IMPROVING P ERCEIVED Q UALITY VIDEO HOUSE CALLS CANADIAN PHYSICIANS RECEPTIVE TO PHRWITH THE WORLDWIDE MOBILE HEALTH PROJECTS EARLY USUAL CONCERNS DAYS, RELATIVELY LOW T ECH VA PHYSICIANS STILL USE WORK-A-ROUNDS WITH MINNESOTA PIONEERS ALLIED HEALTH WORKFORCE EHR EXPANSION 19% OF PHYSICIAN USING TABLETS CLINICALLY PATIENT LIKE I PAD EDUCATION VIDEOSACO EARLY F EDERAL ACO PILOTS FALL SHORT ON RETURN PATIENT-CONSUMER -CAREGIVER AND COSTS PWC: CONSUMERS WILL SPEND $13.8 BILLION OF CALIFORNIA HYBRID ACO PARTNERSHIP SHOWS $15.5 THEIR OWN MONEY MILLION IN SAVINGS CONSUMERS WILLING TO PAY FOR NEW GENERATION KPMG SURVEY: MOST P ROVIDERS A RE STILL OF HEALTH DEVICES THINKING ABOUT AN ACO, MOST PAYERS DON T HAVE MEDICAID PRICE CONTROLS LIMITS CHILDREN A STANCE GETTING CARE HFMA: 12 ESSENTIALS FOR ACO SUCCESS REPORT YOUNG CANCER PATIENTS SPEND A LMOST FOUR TIMES PHYSICIAN ALIGNMENT IS THE MOST CRITICAL STEP AS MUCH AS THOSE WITH OTHER CHRONIC FOR DEVELOPING AN ACO CONDITIONS TOP FIVE: ALIGNING PHYSICIANS FOR THE ACO NEWLY RELEASED - PATIENT-CONSUMER-CAREGIVER HELPFUL RESOURCES Information Advantage Group, San Francisco, IAG.co, 415.346.3860 1

2. BOOMERS NEED EDUCATION ON HOW TO CARE FOR FCC CALLS FOR COMMENT ON GRANDFATHERED THEIR PARENTS RURAL TELEMEDICINE PROVIDERS NEW BILL EASES TELEMEDICINE REQUIREMENTS FOROVERSIGHT -INFLUENCE -INNOVATION VETERANS HEALTHCARE REGULATORY: TECH & INNOVATION: FDA MEDICAL D EVICE DATA SYSTEMS (MDDS) ACO REGULATIONS TO BE U PDATED PATIENT-CONSUME21 MACRO TRENDS Despite ayoure on the bus, youre off the bus economy, we are remaining a happy bunch of Americans (81%) in the face of renewed slippage in our personal and business confidence. What is also interesting is that the older we are the happier we seem to be getting. With 58% of us being outside the traditional 25-54 years of age demographic and the largest group (9%) being the 70+ and then considering the shift to 52% of those using social networks being 36+ years (a 58% increase since 2008), we can expect some wise rethinking about how to reach those who buy, use and provide the most healthcare.Q1 GDP ADJUSTED UPSLIGHTLYThe U.S. Department of Commerce delivered a bit ofgood news June 24th, announcing that real GDP growthduring the first quarter of 2011 was higher at 1.9%(final reading) than its prior estimate of 1.8% provided amonth ago and Wall Streets estimate of 1.8%, but down fromthe 3.1% of Q4, 2010. The small upward revision was due to anincrease in net exports, the changes in private inventories,decreases in state and local government spending andnonresidential fixed investment countered these increases.(US Bureau of Economic Analysis, June, 2011) TopCONSUMER AND BUSINESS CONFIDENCE SLIPSBased on data through June 16th, 2011, the ConferenceBoards Consumer Confidence 58.5 reading is lower thanthe consensus estimate of 60.8 and a decline from theMay reading of 61.7 - the lowest reading since December2010. This reflects a less favorable assessment of currentconditions and continued negativism about the short-termoutlook with fewer consumers than last month seeingconditions improving over the next six months. Information Advantage Group, San Francisco, IAG.co, 415.346.3860 2

3. The University of Michigan Consumer Sentiment Indexfor June, 2011 came in at 71.5, down from the 74.3in the previous month.And finally, the NFIB Business Optimism Index of smallbusiness sentiment falls in line with the previousconsumer confidence indices.Doug Short sees these consumer and small businesssentiments as remaining close to levels associated with otherrecent recessions. The good news is that the trend sincethe Financial Crisis lows has been one of generalimprovement and it is too early to call whether thelatest monthly data will subsequently be seen as areversal.Given the combination of uneasiness about theeconomic outlook and future earnings, consumers arelikely to continue weighing their spending decisionsquite carefully.(Advisors Perspectives, June 28, 2011) TopBY FAR, MAJORITY OF AMERICANS ARE STILLHAPPY81% of Americans are happy. Of those, 33% of 2,184 Americans are very happy thisyear - slightly down from the 35% who were very happy in both 2008 and 2009 - according to a May, 2011 poll by Harris Interactive. The Harris Happiness Index is calculated byasking how Americans agree or disagree with a list of statements like: "My relationships with friendsbring me happiness", "I rarely worry about my health" and "At this time, Im generally happy with mylife" or "I frequently worry about my financial situation" and "I rarely engage in hobbies and pastimes Ienjoy."The poll also showed: Mens happiness has been trending down since 2009 - 31% are very happy in 2011, down from 32% last year and 34% in 2009, Women are generally happier than men and slightly trending up (36% vs. 35%) over 2010, African Americans are the happiest and trending up from 40% who were very happy last year to 44% this year, Hispanics are now less happy than they were last year (35% vs. 39%) yet they remain happier overall than White Americans who are steady at 32%, No surprise - the highest income bracket, earning $100K or more per year, are the happiest group (37%) - most interesting are the least happy who are those who earn just slightly less, between $75K and $99.9K per year (29% very happy), Older Americans remain happier than those younger, as has been the case in all previous years - 50-64 years (37%) and 65 years (42%) and older are very happy and Those who graduated from college are happier (35%) than those with less (32%) who have never attended.(Harris Interactive, June 22, 2011) Top Information Advantage Group, San Francisco, IAG.co, 415.346.3860 3

4. MARKETERS CAN MISS THE LARGEST PERCENTAGE OF BUYERSAccording to US Census and Neilsen data, 58% (180 Million) of the US population is outsidethe traditional 25-54 age demographic - of this the largest grouping by age is the 70+ at9%. Also, consumers age 55 and older have nearly identical purchasing habits to those age 25-54 inmany consumer package goods product categories. TopA SHIFT TO THE RIGHT THE MAJORITY (52%) OF SOCIAL NETWORK USERSARE 36+, YOUNGER SHOWS STEEP DECLINEThe average age of social network users rose between 2008 and 2010, according to Pew Research.Key trends include: The percentage of social network users age 18-22 fell 43%, from 28% to 16%, The percentage of social network users age 23-35 dropped 20%, from 40% to 32%, The percentage of users age 36-49 rose 18%, from 22% to 26% and Most significantly, the percentage of users age 50-65 more than doubled, from 9% to 20%.In total, 52% of social network users in 2010 were 36 years old and up, a 58% increasefrom 33% in 2008.(Pew Research, June 16, 2011) Top HEALTHCARE MACROS The $2.7 trillion healthcare market has always been an attractive market for the simple reason that its dependent on someone else providing and paying for it a natural fertilizer for runaway costs. We also know that persistent high costs and pending thinner margins (4% down to possibly -1%) are forcing those who pay for and provide most of our care to be a bit more collaborative. Information Advantage Group, San Francisco, IAG.co, 415.346.3860 4

5. Its early, but the exciting parts of the current proposition are the incentives to get the patient on a path of self-care and monitoring that requires them to think more about how and what they will pay and whos going to provide it personal responsibility seems to be a key ingredient in this brand of reformulation.IDC STUDY: HEALTHCARE IS THE MOST ATTRACTIVE US MARKETIDC States the FACTS: on a purely economic basis, the U.S. market for health care isthe most attractive single market in the U.S. because: $2.7 trillion spent in the U.S. is on health care, which is now 17 percent of GDP and rising, The total health-care IT provider spends on a global basis is $25.6 billion: a mix of hardware, software and services - 40% of that is in the U.S. and expected to be 53 percent by 2014, Estimates say $700 billion in wasted time, energy and resources is poured into health care, The 15 US hospital systems account for 29% of the total hospitals in the country, and 27% of the total beds, Because many providers have been able to recover about 30% of their overall IT budgets by optimizing their data centers and infrastructure, they are investing this in the CPOE, EHR and analytics systems under reform, 43% of providers are accelerating their investment in EMR to qualify in time for stimulus incentives, and An additional 32 million Americans will in theory have health insurance by 2019, and insurance companies are required to pay out up to 85% of the revenue they take in premiums to actual patient care.(CRN, June 16, 2011) TopHOSPITAL SERVICES COST CONTINUES TO RISE YEAR OVER YEARThe U.S. Bureau of Labor Statistics reports: Consumer prices for hospital services increased 0.8% in May up slightly from Aprils 0.7% climb the prior month - a year ago, the agencys index of consumer hospital prices increased 0.5%. The hospital index climbed 6.3% during the 12-month period ended in May compared with an 8.1% increase a year ago.(Modern Healthcare, June, 2011) Top$8,100 PER MAN, WOMAN AND CHILD IN 2009In an excellent summary, the July, 2011 National Institute for Health Care ManagementFoundations data brief Understanding U.S. Health Care Spending concludes that annualAmerican health care spending hit $8,100 per man, woman and child in 2009, for a totalof 2.5 trillion dollars. Key points include: 5% of the US population is responsible for almost 50% of all spending; conversely, 50% of the population accounts for only 3% of spending. Despite the growing numbers of those being treated for chronic conditions, spending distribution remains highly concentrated. Information Advantage Group, San Francisco, IAG.co, 415.346.3860 5

6. 50% of national and 80% of private insurance premiums were attributed to increase spending for hospital care and physician and clinical services during the 2005-09 period. Rising prices per unit of service eclipsed rising utilization rates as the largest cause for recent expenditure growth. Leading drivers of rising unit prices and higher utilization rates include advances in medical technology, higher rates of chronic diseases and increased provider consolidation and market power.(NIHCM, July 2011) TopMOST HOSPITALS PREPARING FOR THINNER MARGINSResearch by a global consulting company posits that the resulting shift in the payer mix (i.e., moregovernment, less commercial interests) will likely cause the majority of hospitals to seetheir average 4% margin sink to -1% or lower over the next decade unless they beginpursuing major strategic changes now. This is because historically, the fiscal health of U.S.hospitals and health systems has been precariously supported by using profits from commercialhealth insurance plans to cover losses generated when caring for the uninsured, or lower reimbursedMedi/Medi patients (Medicare currently provides approximately 30% of all reimbursements tohospitals -- nearly five times the percentage of the American population that it insures). Trendscausing this change include: Companies discontinuing their employer-sponsored coverage plans, Companies not subsidizing employees healthcare benefits on health insurance exchanges, It may be cheaper to pay government penalties than to provide employee coverage at all, The decrease of employer-sponsored coverage will swell the ranks of lower-reimbursement Medicaid membership by 16-18 million individuals during the next decade, and The wave of "baby boomers" will continue to increase Medicare membership at roughly 3.1% per year.The dramatic shift to a much larger percentage of government reimbursements willsubstantially reduce profitability for most hospitals and health systems (despite thereduction in bad debt associated with fewer uninsured).(Marketwire, June 20, 2011) TopAHIP COUNTERS AMA CHARGESAmericas Health Insurance Plans (AHIP) released research on June 8 supporting theobservation that hospital systems are growing more dominant in their markets and thuscausing cost increases. The idea is that doctors and hospitals are behind cost increases has beena consistent theme of AHIPs public position on reform and health care public policy for years. According to AHIP, 80% of 335 markets studied would be considered highly concentrated by the Dept. of Justice and the Federal Trade Commissions Herfindahl-Hirschman Index - agencies use the index as a guide during merger review. AHIP-commissioned research in 2009 showed that hospital consolidation between 1997 and 2006 drove up the countrys health care spending by one-half of a percentage point - $10-12 billion annually. Hospital consolidation is not a new problem. From the late 1990s to 2003, these consolidations affected 90% of people in densely populated locations where the hospital market qualified as highly concentrated.AHIPs statements counters other, including the American Medical Association, reportsand statements arguing that increasing health plan market consolidation is the reason why Information Advantage Group, San Francisco, IAG.co, 415.346.3860 6

7. premium rates have been going up even as physicians have had to accept lower rates.Consistent research undertakings by the American Medical Association have indicated thatthe market for health insurance is highly concentrated in virtually every metropolitan areaof the country. AMA has reported that one insurer controlled 30% or more of nearly every market, based on enrollment data from Jan. 1, 2008.(Amednews, June 8, 2011) TopMCKINSEY QUARTERLY: EMPLOYERS WILL PUSH TO DROP TRADITIONALCOVERAGEAlthough the Congressional Budget Office estimated that, under reform measure, onlyabout 7% of employees will have to switch to subsidized-exchange policies in 2014 fromtheir currently employer-sponsored insurance (ESI) programs, in a February 2011 survey1,329 U.S. private sector employers undertaken to measure their attitudes about healthcare reform,as well as other proprietary research, found: 30% of employers will definitely or probably be offering ESI after 2014 - this rises to more than 50% and will push 60% to pursue some alternative to traditional ESI among those considered to have high awareness of reform. 30% of employers would gain economically from dropping coverage even if they completely compensated employees for the change through offering other benefits or higher salaries. If ESI was stopped, 85% of employees would remain at their jobs, but about 60 percent would expect increased compensation.(McKinsey Quarterly, June 2011) TopEXPECT EMPLOYER-BASED RETIREMENT PLANS TO BE RETOOLEDAccording to the sixth annual Employer Survey on Retiree Medical Strategy by Towers Watson: Nearly 60 percent of the retiree medical plan sponsors cite the high cost of providing coverage and opportunities under healthcare reform as the main reasons for retooling retirement plans.Among these sponsors: 87% are examining the new federally-subsidized insurance options under reform for pre-age 65 coverage, 73% cite the Cadillac Tax for high-end plans as a concern.So far, approximately 5% of employers have stopped group plan sponsorship entirely andswitched to helping Medicare retirees purchase higher-value medical and pharmacy insurance in theindividual market through the use of Medicare coordinators.(International Society of Certified Employee Benefit Specialists, 2011) TopHEALTH SAVINGS ACCOUNTS GROW 14% The American Health Insurance Plans(AHIP) association announced that more than 11.4million Americans are now using Health SavingsAccounts (HSA) - a 14% increase since lastyear. HSAs are tax-exempt trust accounts that arean alternative to traditional health insurance plans Information Advantage Group, San Francisco, IAG.co, 415.346.3860 7

8. and offer employees lower insurance premiums if they agree to place money into a special accountfrom which they pay for most of their lower-cost, basic healthcare. These plans includea catastrophic, high deductible insurance plan for larger medical bills due to hospitalizations,surgeries, or other higher cost specialized treatments.Based on their annual census, AHIPS January 2010 to January 2011 finds enrollment breaking outas: 2.4 million lives for the individual market, 2.8 million lives for small-group market and over 6.3 million lives were covered in the large-group market. 26% growth for large-group coverage, making it the fastest growing, with the individual market coverage coming in second at 15% The leading states include: California (1,073,319 enrollees), Texas (844,832 enrollees), Ohio (728,868 enrollees), Illinois (690,509 enrollees), Florida (656,243 enrollees) and Minnesota (507,307 enrollees).(AHIP, June 14, 2011) TopEMPLOYERS WILL INVEST MORE IN WELLNESS/FITNESS PROGRAMSA provision in the ACA law earmarks $200 million for grants to help small businesses setup wellness programs between 2011 and 2015. Some recent findings include: 86% of employers plan to significantly increase wellness and health promotion programs over the next three years and 56 % improving employee health and 49% lowering healthcare costs topped the lists of Hewitts 2011 Health Care Survey of 1,028 employers.(Boston.com, May 31, 2011) TopTHE NEXT GENERATION OF MOBILE APPS TO OFFER VIDEO HOUSE CALLSIncreasingly over the last year, insurers have begun offering mobile apps, largely foradministrative functions, aimed at patients. Payers like United Healthcare and HealthNetalready provide mobile access to coverage and benefits information, physician directories, healthsavings account balance totals and even out-of-pocket drug cost data. More inventive companieshave expanded to mobile apps for fitness and wellness tracking, localized allergy alertsand game-based social media apps for fitness challenges.What is on the horizon includes health apps that engage the patient with games that areinstructional, challenging and also have the addictive component of video games. MicrosoftsKinect is one of these systems that are just now being explored for exercise and fitness.For the physician, we can expect the current shift of mobile apps from consumerto biomedical measurement to continue. We can also expect payers to be looking to build"collaboration" apps that allow network physicians to communicate via Smartphone with patients,send secure messages to other providers, and receive alerts, results and "video house calls."( FierceMobileHealthcare, June 17, 2011) TopWORLDWIDE MOBILE HEALTH PROJECTS EARLY DAYS, RELATIVELY LOWTECHA recent World Health Organization study on mobile healthcare (mHealth) states: Nearly 50 percent of the mHealth projects underway around the world involve telemedicine, Information Advantage Group, San Francisco, IAG.co, 415.346.3860 8

9. Although worldwide mHealth is growing exponentially, theres no organization to it, The biggest problem with this growth is that, while 83% of the 112 countries studied have mHealth projects ongoing, most are pilot projects with only 12% of these evaluating the success of their mHealth programs, Europe (and the U.K., specifically), are the leading mobile-enabled countries when it comes to healthcare; Africa has the least mHealth involvement, and Appointment reminder (71%) is the most common use for mobile devices in high-income countries; in low income countries the two mHealth applications are lower-tech health call centers (59%) and emergency phone services (54%).(FierceMobileHealth, June 10, 2011) TopMINNESOTA PIONEERS ALLIED HEALTH WORKFORCE EXPANSIONMinnesotas lack of rural physicians has opened the door for mid-level practitioners totake on a greater role in providing health care. Called community paramedics, this newcategory of healthcare personnel targets underserved rural areas. Most of us accept nursepractitioners and specially-trained nurses to perform physical exams and prescribe medications.Whats new is the idea of using mid-level practitioners to fill health care gaps. An example isMinnesota being the first state in the nation to license "dental therapists," who perform duties that fallbetween those of a dental assistant or hygienist and those of a full-fledged dentist - they can fillcavities and other simple procedures, under the supervision of a licensed dentist. Or, it is also thefirst state to pass a law establishing certification for community paramedics who might suture awound, adjust a medication, or address an asthma attack or allergic reaction.(MPRNews, June 20, 2011) Top ACO Objections on the proposed rules for ACOs (as they are written) are often seeded with the less than glowing results from federal ACO pilots where only 40% of physicians got a shared savings bonus. The truth is, - the pilot did slow Medicare spending across the board. Other refined ACO-like pilots have been turning in good results. This has most looking for the best way to structure and align with the developing ACO model.EARLY FEDERAL ACO PILOTS FALL SHORT ONRETURN AND COSTSA key government five-year test of the ACO conceptenlisted 10 leading health systems around the country andoffered financial bonuses if they could save enough bytreating older patients more efficiently while providinghigh-quality care: By the last year of the study, 2010, only 40% of the long-established groups run by doctors, slowed their Medicare spending enough to qualify for a bonus. Two sites saved enough to get bonuses in all five years; three did not succeed even once. Information Advantage Group, San Francisco, IAG.co, 415.346.3860 9

10. Other work has shown that the financial investments for infrastructure and re-engineering have been higher than the government has predicted, causing it to lose moneyfor at least the first few years. The ACO rules will be final in December and much moreresearch is needed on these cost and return issues.(NCPA, June 8, 2011) TopCALIFORNIA HYBRID ACO PARTNERSHIP SHOWS $15.5 MILLION IN SAVINGSFour years ago, Blue Shield of California, Catholic Healthcare West and Hill PhysiciansMedical Group partnered to form their version of an ACO in response to concerns aboutrising health care costs and their effect on policyholders. Now in 2011, the partnership said forCalPERS 41,500 members have seen: Health care spending was reduced by $15.5 million in 2010, Premiums did not rise between 2009 and 2010 and There was a 15% reduction in the average length of hospital stays and readmissions.The partnership stated that much of the savings were created by eliminating duplicative positionsand jointly funding new positions to make care more efficient. They also indicated that it didntrequire a significant amount of capital to start their partnership.Headquartered in San Francisco Catholic Healthcare West (CHW) is the fifth largest hospitalprovider in the nation and the largest hospital system in California. It has stated that it does notintend to participate in the federal governments ACO efforts because as the rules arewritten, the bar is currently set too high for the incentives offered.(California Healthline, June 27, 2011) TopKPMG SURVEY: MOST PROVIDERS ARE STILL THINKING ABOUT AN ACO,MOST PAYERS DONT HAVE A STANCEIn April, KPMG polled leaders of healthcare systems, hospitals and healthcare payers about theirparticipation in the Centers for Medicare and Medicaid Services shared savings program (MSSP) the Medicare ACO program and found that most are still thinking about it. 64% of hospital and health system executives either didnt know their organizations position (39%) or were in a wait-and-see mode (25%) about participating in the MSSP - either position wouldnt allow them to be ready for the launch of the program, planned for January 1, 2012. 61% of payers said they didnt know what their organizations stance (50%) was or were in a wait-and-see mode (21%) on the MSSP.(Healthcare Financial News, June 30, 2011) TopHFMA: 12 ESSENTIALS FOR ACO SUCCESS REPORTHFMA 2011 Leadership report describes Baylor Health Care System 12 ACO essentials forsuccess that focus on people, quality, and finance and include: 1. Effective and Shared Governance 2. Aligned and Efficient Clinical Workforce 3. Informed and Skilled Participants/Workforce 4. Interoperable, Data-Enabled Environment 5. Quality 6. Attribution, Assignment, and Capacity Management Information Advantage Group, San Francisco, IAG.co, 415.346.3860 10

11. 7. Anchored Patient-Centered Medical Home 8. Care Coordination and Patient Compliance 9. Risk Assessment and Acceptance 10. Cost Monitoring and Reduction 11. Provider Reward Methods/Incentive Design 12. Sustainable Business Structure(HFMA, 2011) TopPHYSICIAN ALIGNMENT IS THE MOST CRITICAL STEP FOR DEVELOPING ANACOA recent survey of 882 administrators and physicians highlighted that, while capital,infrastructure and data analytics are key structural components regarding both ACOformation and the industry-wide effort to enhance quality of care and reduce costs,physician alignment was most pivotal: 58% stated they are either in the process of forming ACOs or are thinking about it - of these, 42% said physician alignment is the most serious obstacle to their efforts, followed by lack of capital (38%), lack of integrated IT systems (31%), and lack of evidence-based treatment protocol data (25%). 42% will not form ACOs in the near future - of these, 40% cited physician alignment as a reason they are not, followed by lack of capital (31%), lack of integrated IT systems (26%), and lack of evidence-based treatment protocol data (23%).(MarketWatch, June 20, 2011) TopTOP FIVE: ALIGNING PHYSICIANS FOR THE ACOPeggy Naas, MD, MBA, vice president of physician strategies at VHA, Dallas, TX has one of thebetter lists for developing strategies for successfully aligning physicians with a hospitalduring the creation of an ACO:1. Focus on clinical outcomes being delivered efficiently and in a way that benefits the entireorganization.2. Choose a specific model suited to the culture of the enterprise: Employment -Hospitals can employ or contract physicians as a step on the way to align them with the organization. Co-management - Physicians are employed or otherwise paid for administrative roles or clinical leadership tasks and other administrative leaders would have or preferably share outcome-based incentives. Clinical integration - Health systems and hospitals partner with health system-employed and self-employed physicians on specific performance metrics.3. Foster physician leaders who can participate in committees; listen to them and start nurturing theirunderstanding of the broader organizations work and the perspective of the board," she says.4. Be visible in the enterprise and transparent about the health systems or hospitals performanceand outcomes, no matter what the outcome - positive or negative.5. Create a culture conducive to alignment and experiences involving collaboration.(Becker Hospital Review, June 27, 2011) Top Information Advantage Group, San Francisco, IAG.co, 415.346.3860 11

12. DOJ SAYS MOST ACOS WONT HAVE ANTITRUST PROBLEMSAt the Second National Accountable Care Organization Summit in Washington June 27th, deputychief of the legal policy section/antitrust division of the Department of Justice GailKursh, JD, stated: An ACO will be considered legitimate if it is a clinically integrated collaboration of otherwise independent providers and not a vehicle for competitors simply to raise prices and Most ACOs would not have problems with their legality under antitrust provisions on the proposed rules.Under current proposed rules, to participate in the Medicare Shared Savings Program, would-beACO collaborations that have more than a 50% market share of a primary service area (PSA) wouldneed to demonstrate that their percentage of the market does not create market power oranticompetitive behavior. However, what constitutes a clinically integrated collaboration remains tobe figured out.(FierceHealth, June 27th, 2011) TopNEWLY RELEASED - CMS ACO HELPFUL RESOURCESCMS Proposed Rule establishing ACO Program DetailsRequest for Information Regarding Accountable Care Organizations and the Medicare SharedSavings ProgramIRS Request for Comments Regarding the Need for Guidance on Participation by Tax-ExemptOrganizations in the Shared Savings Program through ACOsImplications Regarding Antitrust, Physician Self-Referral, Anti-Kickback, and Civil Monetary PenaltyLawsProposed Statement of Antitrust Enforcement Policy Regarding Accountable Care OrganizationsParticipating in the Medicare Shared Savings Program MEDICAL HOME Objections about the proposed rules for ACOs (as they are written) are often seeded with the less than glowing results from federal ACO pilots where only 40% of physicians got a shared savings bonus. The truth is, - the pilot did slow Medicare spending across the board. Other refined ACO-like pilots have been turning in good results. This has most looking for the best way to structure and align with the developing ACO model.FIRST ONCOLOGY MEDICAL HOME REDUCES HOSPITALIZATIONSConsultants in Medical Oncology and Hematology, PC (CMOH), a private practice in southeasternPennsylvania, has become the first oncology practice in the nation to achieve level III recognitionfrom the National Committee for Quality Assurance as an oncology patient-centered medical home(OPCHM) with results that include: CMOH chemotherapy patients ER visits are half the rate reported in another large commercially insured population and 65% lower than their practices own 2006 rate in 2006. Information Advantage Group, San Francisco, IAG.co, 415.346.3860 12

13. CMOHs rate of hospitalizations per chemotherapy patient per year has dropped by 43% since 2007.(Fierce Health, June 14, 2011) TopONLY 35% OF UNDER 20 PHYSICIAN PRACTICES USE MEDICAL HOMEPROCEDURESA just released study in Health Affairs offer the firstnational data on to what degree 1,344 medicalpractices with fewer than 20 doctors had adopted theseven fundamental principles of medical homeprocesses showed: Across all entities, only 35% used medical home processes, and overall earned only 21% of the medical home points, Adoption was greatest for the largest medical groups (>140 physicians) and those owned by large entities like hospitals and Contrary to the studies assumption, practices serving a high percentage of minority or poor patients were not less likely to be using medical home practices.With 35% of visits to US office-based physicians are to solo practitioners, and 88% are to practiceswith nine or fewer physicians, the study offers several strategies to raise these scores.(Health Affairs, June 28, 2011) TopCOORDINATION OF CARE IMPROVES WITH EHRA 12 month study of 119 patients, about half at Taconic Independent Practice Association in NewYork State and the rest at eHealth Initiative, Sanofi-Aventis and Health & Technology Vector, aHartford, Conn.-based health IT and care redesign firm, the study found many processimprovements in the care with the inclusion of an EHR in the workflow that included: More information being transmitted to patients during each clinic visit, more frequent setting of goals, and more complete summaries being transmitted from primary care physicians to cardiologists, Electronic communication between cardiologists practices was problematic due to processes not being in place, the communities did not have the tools for electronic data exchange, and the providers did not have compatible EHR systems. However, researchers also reported that some cardiologists were interested in expanded exchange of electronic clinical data.Researchers concluded that to be sustainable and successful, care coordination requires ongoingand explicit three-way communication between patient, primary care physician, and specialist.(Information Week, June 23, 2011) TopNEWLY RELEASED - HELPFUL RESOURCES:American Academy of Pediatrics: From pediatric to adult medical homes Joint report outlines howto plan, execute better health care transitions for all patientsThe Joint Commission has developed Primary Care Medical Home which enables the potential forincreased reimbursement when the additional requirements of a Primary Care Information Advantage Group, San Francisco, IAG.co, 415.346.3860 13

14. HIE Were beginning to see more growth in privately offered HIEs verses public to help physicians qualify under meaningful use rules. Part of this shift is driven by a physicians affinity to local affiliations, like hospitals and IPAs, and trade associations way before governmentalhealthcare happens locally not regionally or nationally.THE AMERICAN ASSOCIATION FOR FAMILY PRACTICE LAUNCHES LOW-COSTMESSAGING SERVICE (HIE)The American Association for Family Practice Physicians Direct is now available to itsmembers for $90 a year. The service is intended to assist members meet meaningful userequirements and is a secure clinical messaging system allowing the sending of unlimited number ofmessages and data files to their clinical colleagues and other trading partners. The system is acollaboration with Surescripts, one of the largest electronic prescription networks in the US.(AAFP, June 22, 2011) TopMAINE PASSES OP-OUT HIE REQUIREMENTMaine has passed legislation requiring healthcare providers participating in the states HIE to provideinformative pieces that describes risks and benefits and how to opt-out. This action is the resultsof a public hearing that illuminated that a proposed op-in model had not garnered supportfrom major stakeholders. The proposed legislation also requires the HIE to offer online and offlineaccess to who, when and where has accessed their records by patients. TopLESSONS LEARNED FROM CONNECTING TO THE NATIONWIDE HEALTHINFORMATION NETWORK (NWHIN)Lessons shared about connecting to the NwHIN were offered by the North Carolina HealthcareInformation & Communications Alliance Organizations during a recent webinar: Be prepared for an abundance of interoperability testing and review before any information can be exchanged, Be ready for the intensity of developing and proving conformance and interoperability through partner testing that all has to take, Governance must be in place and must have the technical requirements installed first and then the networks governing body must approve the entities for interoperability and partner testing, and The cost of this is more on the enterprise and community HIE side than it is on the gateway connection to the NwHIN.Currently, those connecting to the NwHIN must be federal agencies or have a contract with a federalagency that covers these types of activities.(CMIO, June 20, 2011) TopNEWLY RELEASED - HIE HELPFUL RESOURCES:HIMSS Electronic Health Record Association, a vendor trade group, has developed a white paperthat lays out a framework for health information exchange by connecting EHRs more rapidly. Information Advantage Group, San Francisco, IAG.co, 415.346.3860 14

15. The eHealth Initiative has the second phase of its updated HIE Toolkit that addresses creating asustainable model, technical consideration of connectivity, marketing your HIE, auditing and value-add services and working examples of documents and other helpful materials. Top PHYSICIAN & PROFESSIONALS The attention directed toward the physician-to-consumer market under all of the new rules and models for healthcare have providers thinking hard about how to gain efficiencies and improver the consumer experience. Improved communication and patient participation and collaboration through the use of technology are proving itself again.PATIENT EXPERIENCE A LONG LIST OF ROOM FOR IMPROVEMENT IN THETYPICAL OFFICE VISITIntuits April 2011 Health Patient Engagement Study survey of 556 U.S. physician practices about thepatients experience in their office found: Almost 25% of providers who are not online think it is hard for patients to reach them to ask questions, make appointments or receive lab results, Almost 50% of physicians said their practices are typically running 30-60 minutes behind schedule, 33% of a providers office staff spend three or more hours per day trying to get follow-up information to patients, 83% of doctors say it takes more than one reminder before a patient pays their bill, 45% say phone interruptions happen so frequently they impact office efficiency. 72% say patients complain about having to repeatedly fill out the same paper forms, and 50% say their patients complain about spending too much time in the waiting room.To improve on these inefficiencies: 95% of doctors want their patients to fill out necessary forms online before their appointment, 81% of patient agreed, 67% percent of providers are planning to build add a patient portal, communication or EHR solutions in the next 12 months under ARRA to provide patients with access to health records and clinical information, appointment scheduling and prescription refills.(HealthcareITNews, June 14, 2011) TopBETTER PHYSICIAN-TO-PATIENT COMMUNICATIONS IS THE KEY TOIMPROVING PERCEIVED QUALITYCommunication between patients and clinicians still follows in one-way direction from doctor-to-patient. However, The New EnglandHealthcare Institutes (NEHI) recent teleconference took a hard look at thiscommunication channel and produced some valuable information andconclusions: The ACA of 2010 includes a number of provisions that encourage the development and use of shared decision-making and improved patient-clinician communication. Information Advantage Group, San Francisco, IAG.co, 415.346.3860 15

16. The law also calls for the measurement of communications quality and the information provided to and used by patients, caregivers, and authorized representatives to inform decision-making. Providers will increasingly be held accountable for their communication with patients, as exampled by the current use of patient satisfaction surveys (the Hospital Consumer Assessment of Healthcare Providers and Systems survey), which are currently part of Medicares Hospital Inpatient Quality Reporting program and included under the measures for the first year of the Value-Based Purchasing Program set to begin in October 2012 (FY 2013). As a guide for better patient-to-physician communications, two work groups (the Evidence Communication Innovation Collaborative and the Best Practices Innovation Collaborative) under the Institute of Medicine Roundtable on Value and Science-Driven Healthcare have developed a set of core principles and expectations to communication. Early demonstration results show that because patients are getting exactly what they want, providers save time because patients come to appointments more prepared and have greater risk perception.(NEHI, June, 2011) TopCANADIAN PHYSICIANS RECEPTIVE TO PHRWITH THE USUAL CONCERNSA new study of Canadian physician attitudes toward personal health records (PHRs) discovered: Physicians generally saw PHR adoption as an inevitable and positive step forward, Portability and potential to engage patients especially appealed to the docs.Common concerns included: Concerns about how PHRs could affect data management, patient-physician relationships and practice management issues, Security and privacy were top concerns, Unnecessary anxiety as patients struggle to make sense of the complex information, if information is shared without the conventional framing by a physician,One conclusion by a physician about a patients use of PHRs, If youre going to make (PHRs)worthwhile, you need to ensure patients are able to interpret the information they are receiving, ableto interpret it properly, and able to do something useful with it; otherwise, you are going to createchaos.(iHealthBeat, June 14, 2011) TopVA PHYSICIANS STILL USE WORK-A-ROUNDS WITH EHRA new study by the Veterans Administration showed that, even among practices with advancedelectronic health record (EHR) systems, physician workarounds persisted. Results included: Physicians used 11 types of workarounds that included: printing out copies of instead of viewing them on the screen, writing notes to help them remember things, and building computer spreadsheets to keep track of referrals. Communication breakdowns and some computerized consult management redundancies were also discovered.(International Journal of Medical Informatics, July, 2011) Top19% OF PHYSICIAN USING TABLETS CLINICALLYAccording to a survey of 3,800 physicians, use of mobile devices is growing rapidly: Information Advantage Group, San Francisco, IAG.co, 415.346.3860 16

17. 83% of respondents own at least one mobile device, 25% think of themselves as Super Mobile" who use a smart phone and tablet device, 30% of respondent are using a tablet, 19% clinically, The most common professional uses of mobile devices are: look up drug and treatment reference material, learn about new treatments and research, and search for information on diagnoses, treatment paths, and educating patients. No age barrier to tablet adoption, and a slight to moderate age barrier for smart phone adoption, The iPhone (60%) was the most popular smart phone, and the iPad was essentially alone in the tablet space, and Android tablets were used by only a few.(QuantiaMD, June 15, 2011) TopPATIENT LIKE IPAD EDUCATION VIDEOSPatients using education videos on iPads atmoments of natural downtime during their physicianvisits for 3 to 5 minutes and covering their diseasetopics are being received well. Although its early,results show that the modules have improvedpatient knowledge and generated positive feedback without placing additional demands onphysicians or staff. The videos were developed by Wake Forest Baptist Health and Wake ForestUniversity School of Medicine.(AHRQ, June 2011) Top PATIENT-CONSUMER -CAREGIVER The Consumer Miracle in healthcare requires the patient-consumer to invest more of themselves and their money in seeking a healthy life - another round of studies are showing the patients willingness to do so and the consequences on not.PWC: CONSUMERS WILL SPEND $13.8 BILLION OF THEIR OWN MONEYA new report by PwC concludes that consumers would be willing to spend approximately$13.6 billion a year of their own money on healthcare services: Included in the $13.8 Billion is $4 billion on health-related video games, $8.9 billion on consumer rating of physicians and hospitals, and $700 million on mobile health applications. Younger consumers (18 to 24) are twice as interested in mobile health applications or programs and three times more interested in health-related video games than those 65+. Demand for convenience and transparency in services and pricing is spurring alternative sources of healthcare services like retail health clinics which grew from 10% to 17% over the 2007-10 period.(PwC, June 2011) Top Information Advantage Group, San Francisco, IAG.co, 415.346.3860 17

18. CONSUMERS WILLING TO PAY FOR NEW GENERATION OF HEALTH DEVICESA survey of 1300 consumers currently using wellness and health devices and conducted by the IBMInstitute for Business Value showed that consumers are demanding a new generation of healthdevices, greater simplicity and better information sharing. Leading reasons driving the buyare: 96% - ease of use is the key factor in selecting one device over another, 75% - consider price well ahead of features, customer support, warranty or stylish design and 86% - want real-time, easy-to-understand feedback from their devices.Moreover, the study finds, theyre willing to pay for devices especially with $100 or belowprice point; and over 33% of current device users expect to pay for part of the cost ofnew health devices over the next two years and 35% also expect monthly service fees.The report goes on to present a vision of key areas of growth that include dieting, eldercare, bloodmonitoring, mobility and communication. Here too the theme of collaboration rings for vendors andcontent providers to work together to amplify the utility of each device.(HealthcareITNews June 23, 2011) TopMEDICAID PRICE CONTROLS LIMITS CHILDREN GETTING CAREA University Of Pennsylvania, School of Medicine study found that children on Medicaid wererefused appointments by 66% of specialists and had to wait 22 days longer for anappointment than kids with private insurance. The primary cause was seen as Medicaids pricecontrols, which one survey reports 24 states plan to ratchet down even further.(NEJM, June 16, 2011; National Governors Association Survey, spring, 2011) TopYOUNG CANCER PATIENTS SPEND ALMOST FOUR TIMES AS MUCH AS THOSEWITH OTHER CHRONIC CONDITIONSA recent study in the Journal of Clinical Oncology found that 13% of non-elderly cancer patientsin the U.S. spend more than 20% of their income on healthcare, including health insurancepremiums. This compares to almost 10% of non-elderly adults with chronic conditions other thancancer and only 4.4 percent of non-elderly adults without any chronic condition. TopNEWLY RELEASED - PATIENT-CONSUMER-CAREGIVERHELPFUL RESOURCESThe National Prevention Strategy is a comprehensive plan that will helpincrease the number of Americans who are healthy at every stage of life. TopBOOMERS NEED EDUCATION ON HOW TO CARE FOR THEIRPARENTSA survey of 600 Boomers aged 45-65 say theyre likely to become caregivers for their parents, but...: Only 51% can name any medications their parents take, 31% dont know how many medications their parents are on, 34% dont know if their parents have a safe-deposit box or where the key is, and 36% dont know where their parents financial information is located.(Sun Times June 21, 2011) Top Information Advantage Group, San Francisco, IAG.co, 415.346.3860 18

19. OVERSIGHT -INFLUENCE -INNOVATION There continues to be any number of consumer health apps and devices entering the market weeklywith few showing a sustainable business model. This has hidden a shift away from pure consumer plays toward tools to improve communication and care across the provider-consumer continuum. The VA continues to promote telehealth while the commercial and federal markets ask for more data the VA must know something.REGULATORY:FDA MEDICAL DEVICE DATA SYSTEMS (MDDS) REGULATIONSTO BE UPDATEDTheres a shift from mobile health apps and devices being primarily consumerproducts to becoming useful tools to connect patients and caregivers toclinicians. These tools are expected to fall under FDA 501 (k) rules for medical devices when theFDA begins regulating mobile health apps. Currently, the FDA defines medical device data systems(MDDS) as hardware or software products that transfer, store, convert formats, and display medicaldevice data it does not control the device or modify the data or its display.(Information Week, June 7, 2011) TopFCC CALLS FOR COMMENT ON GRANDFATHERED RURALTELEMEDICINE PROVIDERSThe Federal Communications Commission has adopted an interim final rule toenable providers, who were "grandfathered" after the FCC changed its definitionfor a "rural area" on July 1, 2005, to continue to participate in rural telemedicineprograms that receive subsidized telecommunications rates. The FCC iscurrently seeking comment on whether to make these grandfathered providerspermanently eligible for discounted telecommunication services.(Health Data Management, June 27, 2011) TopNEW BILL EASES TELEMEDICINE REQUIREMENTS FOR VETERANS HEALTHCAREThe Service Members Telemedicine and E-Health Portability Act, also known as the STEP Act, wasadded to the recently passed $690 billion Defense authorization bill. . Although the legislation wasdesigned for mental health services, it will help expand access to other types of medical care besidestelehealth services to veterans across the U.S. In addition to making it easier for providers to usetelehealth tools including video links, cell phones and Skype, the bill would exempt care providersfrom having to obtain a medical license in the patients state. Providers still need to be licensed bythe Department of Defense.(iHealthBeat, May 31, 2011) TopTECH & INNOVATION:Smartphone and tablet users still using the desktop or laptop to access the Internet: 56.4% - Desktop 39.6% - Smartphone 4.0% - Tablet Information Advantage Group, San Francisco, IAG.co, 415.346.3860 19

20. Rock Health, a seed accelerator for Web and mobile health applications,has chosen ten start-ups from more than 350 entries as part of its inauguralprogram. The chosen reflect trends that are shaping the next generation ofhealth-related applications. The ten are:1. BrainBot technology to improve mental performance;2. CellScope at-home disease diagnosis;3. Genomera personal health collaboration;4. Health In Reach medical procedure marketplace;5. Omada Health clinical treatment social networking application;6. Pipette patient monitoring and education;7. Skimble mobile fitness application;8. WeSprout connecting health data and community; and9. Three additional start-ups in stealth mode.The start-ups now enter a 5-month program with funding in the form of a $20,000 grant;infrastructure; strategic medical, branding, communications and legal support; and mentoring fromexperts.(Healthcare ITNews, June 2, 2011) TopThe U.S. Department of Health and Human Services (HHS) andthe Institute of Medicine (IoM) co-hosted their second annualevent June 9th focusing on innovative applications and servicesthat harness the power of open data from HHS and othersources to help improve health and health care. Some notableapplications included: iTriage - An iPhone app that allows users to select their symptoms, severity, etc., and then the app guides the user to a nearby clinic, physicians office, or hospital based on his or her selections. Ozioma - A community-based app that aggregates data from HHS, CDC, NIH, and other sources (65 sources and 300 data sets in total). The app is for use by the press, writers, and communications groups. Healthline - SPG (surgical procedure guide) is a Web-based patient education application. Users can learn about their procedure, view hospital-compare data and costs and choose their doctor. Asthmapolis - Tracks where and when people use their asthma inhalers. Shows on a map where and when people have attacks - the app also improved asthma control from 25% of the time to 62% of the time. CommunityCommons.org - Connects individuals who are involved in the community health movement.(HHS Live, HHS, June 9, 2011) TopThe Aetna Foundation, the philanthropic arm of healthcareinsurer Aetna, has partnered with the Health 2.0 Conference inSan Francisco on September 25-27, 2011 to issue a developerchallenge. The idea is to spur new interactive browser-basedapplications designed to make data about obesity moreaccessible and usable. The prize for the best application will be $25,000 and two free passes to theconference. Second prize will be $15,000, and third prize will be $10,000. Information Advantage Group, San Francisco, IAG.co, 415.346.3860 20

21. (Healthcare ITNews, June 10, 2011) TopACOHealth information technology company McKesson Corps healthinformation technology group announced that it has signed a deal toacquire Portico Systems. The acquisition will boost McKessonsofferings as a provider of financial management tools for the ACOmarket which calls for new products that support value-basedreimbursement incentives to align payers and providers on controlling cost and optimizing healthoutcomes. TopPATIENT-CONSUMER A new translation app for mobile devices helps the hearingimpaired by enabling the user to speak into a device andhave the translated text appear; type-to-type translationsalso are available for situations that require quiet or for thosewho have trouble speaking. The application can support upto 1,000 voice recognition-based transcriptions; text-to-text and text-to-speech transcriptions areunlimited. $99. TopWith trend toward off-the-shelf computers increasingly beingable to replace proprietary devices, Care Innovations is a jointventure between GE and Intel with its first product to be TheGuide, a table vital sign monitor and two-way telehealthcommunication device. This is the first step in a transitionaway from purpose-built devices and toward device-agnosticmedical apps. It will run on any Win7 platform and they wioll recruit other vendors to offer devicesthat best fit each patients needs. TopThe No. 1 paid medical app in the U.S. Apple App store is called Pill Identifier andworks by communicating with a searchable database of pill images of more than14,000 prescription and over-the-counter medications found in the U.S. 99 cents forthe lite version $39.95 for the premium. TopThere has been an avalanche of mobile applications both for the consumer andprofessional see slide show: Information Advantage Group prepared this report as a general informative and educational guide andbasis for further discussions and diligence. This report includes qualitative and quantitative statements thatreflect plans, estimates, data, consensus views and beliefs of vendors, industry experts and commentaries provided by publicsources and IAG analysts. Best efforts have been made in assessing the reliability of these statements. IAG disclaims allwarranties, express or implied, as to the accuracy, completeness or adequacy of such information and fitness of this research to aparticular purpose. IAG shall have no liability for errors, omissions or inadequacies in the information contained herein or forinterpretations thereof. IAG advises that any discussion or listing of a company or product of any kind in this report should not bedeemed to be an endorsement of said company or product. The opinions expressed herein are subject to change without notice.This report is intended to be one of the many information sources including other published information and analysis of thesesources by the reader. The reader assumes the sole responsibility for the selection of these materials to achieve its intendedresults. The reader is urged to exercise the utmost discretion making the information enclosed in this report available to others thatmay need to analyze such material in the course of their evaluations. Each resource cited in this report is the property of theoriginating author or publisher and will not be individually reproduced or distributed by the reader. Information Advantage Group, San Francisco, IAG.co, 415.346.3860 21