As the patient care pathway moves steadily away from the hospital, Philips launched its new Virtual Care Management platform in March. The company says the platform will offer a ‘comprehensive’ approach to telehealth for patients, providers and payers, improve patient engagement and health outcomes, lower the cost of care, and make workflows more efficient.
The Signify View
Philips Virtual Care Management brings onto a single platform the company’s legacy remote patient monitoring (RPM) business as well as the chronic disease management capabilities of BioTel Care, the RPM arm of BioTelemetry (BioTel). Philips acquired BioTel, a powerhouse in the cardiac monitoring market, in 2021.
The launch of Virtual Care Management in the US market is the latest move by Philips to deepen its roots in the burgeoning home care market in the country. The BioTel acquisition provided Philips with the technology to advance its own RPM and chronic care management business, where it had been a tier-2 vendor.
BioTel Care accounted for less than 10% of BioTel’s total revenues when Philips made the acquisition, but it brings a number of strategic and competitive advantages to the table. Two years on from the acquisition, Virtual Care Management is, therefore, a powerful prospect.
Philips claims that the Virtual Care Management platform will reduce pressure on hospital staff and reduce the cost of care by managing chronic disease more efficiently. The platform will leverage BioTel Care technology targeting condition-specific protocols including diabetes, hypertension, heart disease, chronic kidney disease and chronic obstructive pulmonary disease (COPD), as well as gestational programmes for diabetes and hypertension.
Generating data and actionable insights, Virtual Care Management goes beyond the ‘traditional’ capabilities of RPM solutions, says Philips.
Many Rivers to Cross
While that may be true, the success of RPM solutions and their vendors is typically determined by the reimbursement models that support them. In most geographies RPM does not have as clear a reimbursement structure as the US, and to date Philips’ Virtual Care Management platform has been launched exclusively in that market.
The Virtual Care Management platform targets the clinical chronic care management programmes that have been eligible for RPM reimbursement for a number of years now. However, Philips’ ability to really disrupt the US chronic care management market is far from certain: actual reimbursement volumes remain stubbornly low, covering just a few hundred thousand lives being managed to date. No vendor has yet been able to scale successfully in this environment, and is also an extremely competitive space. Philips will have its work cut out here too with the Virtual Care Management platform.
Where the platform could fare better is in the emerging ‘hospital-to-home’ market (as opposed to the ‘hospital-at-home’ market). Hospital-to-home relates to supporting the transition of patients from acute to post-acute settings using virtual care. Specifically, Philips is not targeting the ‘hospital-at–home’ market, the segment that relates to supporting patients at home via the use of technology, that otherwise would still require support in an inpatient setting. This is currently reimbursed in the US by the Acute Hospital Care at Home (AHCaH) waiver programme.
Philips does not refer to this in relation to the press material accompanying Virtual Care Management, but it ties in closely with the goals of reducing the costs of care (i e Value Based Care (VBC) and alleviating pressure on hospital staff.
This, understandably, is an interesting area for Philips and the Virtual Care Management platform aligns nicely with hospital VBC contracts and other fee-for-service reimbursement codes.
Unlike in RPM where reimbursement is a one-off payment for a service provided (for example, every time a vendor ships a device, or monitors a patient, it gets paid), hospital-to-home VBC reimbursement takes into account a range of criteria, for example rewarding a hospital for preventing patient readmission. It is a lump-sum payment for which the vendor takes a cut, and which covers the hospital’s cost of providing care and then (hopefully) leaving some profit. It is a win-win situation for both parties.
Contrast that to hospital-at-home, which Philips is not specifically targeting. This strategy is sound: currently around 200 US hospitals are licensed to provide hospital-at-home services under the Acute Hospital Care at Home (AHCaH) waiver programme, but the actual number of people whose managed care has been billed for this is very low – just a few thousand at most. We wrote in this recent Insight that the hospital-at-home market had yet to take off, but that has not deterred provider Atrium Health and Best Buy Health, a unit of the world’s largest speciality consumer electronics retailer, taking the plunge as partners.
But, given the need to educate patients and enable technology in their homes, hospital-at-home is more complex than hospital-to-home. Uncertainty around longer-term reimbursement has also deterred many providers from going down this route. The current AHCaH waiver programme was extended by the CMS until May 2025, but the scheme is a hangover from COVID emergency measures. Uncertainty over what happens after May 2025 continues to act as a brake on this market, and yet like RPM, it is a very competitive area dominated by start-ups. Philips will do well to steer clear from it, at least in the short-term.
Feeling the Love
As it rolls out Virtual Care Management, Philips might draw inspiration from the success of BioTel Heart, a leader in the mobile cardiac telemetry market and whose wearable ECG devices have been very successful. But it is a more rounded service – Philips provides not only the device but also the data monitoring services and report generation capabilities that takes pressure off hospitals and ambulatory care providers. It follows, then, that in terms of its Virtual Care Management platform, Philips will not be a pure chronic care device supplier per se. Elements of the legacy Biotel Heart service can be used in conjunction with the Virtual Care Management platform and services to provide patient pathways that allow for technology to be used to support patients remotely. This can be from diagnosis to on-going monitoring (particularly in relation to heart rhythm disorders). It will take readings remotely, physicians (and algorithms) will pore over and analyse the data, and prepare a report that is then sent to the hospital with a diagnosis. This is a tried and trusted formula in ambulatory cardiology in the US, and would translate well in chronic care management. In essence, Virtual Care Management therefore makes money from the service, not the device.
It is against this backdrop that vendors are now playing in the chronic care management market. It is an intensely competitive space where success is defined as much by the quality of solution as the reimbursement structures in place for each solution. These factors pose significant challenges for vendors and limit their ability to scale.
And yet, if any vendor can make a success of this, it is Philips. The company already has an impressive, well-rounded installed base in the US hospital monitoring and remote diagnosis markets, which provides a good link into the process to then move patients out of the hospital and to the home.
As such, Virtual Care Management gives Philips a fighting chance to drive success in the hospital-to-home market, and really push back against the crowd of start-ups vying for a piece of the action.