Insuring healthcare innovation

frederic_van_roeckeghemHow should public and private insurers cover innovation? To answer this question, we called upon an expert in two areas: Frédéric Van Roekeghem, former Managing Director of the French national healthcare insurance fund for salaried workers (CNAMTS) and now Executive Director of MSH International, a world leader in international healthcare coverage solutions.


What is healthcare innovation?


“Healthcare innovation is a vast topic, but I would define it as the sum total of all techniques that improve the overall health of the population at a favourable risk/return ratio.” Frédéric sees three major areas for future innovation: robotics, artificial intelligence and gene therapy. Firstly, on robotics, he says, “This is the domain of innovative SMEs. Robotics has the potential to fundamentally transform the way surgeons operate, making them quicker, more precise and more efficient.” Secondly, regarding artificial intelligence, Frédéric believes that “AI systems like IBM’s Watson will soon be able to analyse all of the patient’s data, from symptoms to family health history to behavioural data, and apply overall scientific knowledge to a unique individual. Artificial intelligence will evolve and be able to compare a specific patient with all similar patients who have come before him or her and find the most personalised response. This is data driven medicine.” Finally, as for gene therapy, “it will gradually take over where chemistry and pharmacopoeia – which have already made great strides – leaves off, even if the road from gene sequencing to treatment is still a long one.


Finance real innovations; root out pseudo-innovations


Insurers must adapt to the radical changes taking place in medicine. “Real innovations, although they have a high cost in the short term, will reduce the direct cost of insurance over the long term.” From improved anaesthesia in cataract surgery that makes implants more effective to new hip replacements that improve seniors’ mobility, healthcare innovations will also reduce indirect costs to the community. “The rule is that an invention that improves the overall health of the population will ultimately be deployed, via collective interest for public insurers and market competition for private insurers.”


Frédéric nevertheless warns against the danger of “pseudo-innovation”. “Some companies spend heavily on marketing, spurious studies and lobbying to push medicines onto the market that don’t improve over existing solutions and even endanger the lives of patients, as in the recent clinical test accident in Rennes.” In this context, we must deploy real expertise to identify disruptive innovations, as opposed to “incremental” ones offering no real value-added.


Promoters and insurers should share the risks


Frédéric argues for a balanced sharing of gains between promoters and patients, once innovations have been identified, by focusing on margins rather than on total revenue. “The gain associated with new treatments must be greater than that of their predecessors to finance R&D and the ageing of the population.” He also thinks promoters’ ROI should be reasonable: “For certain vaccinations, such as hepatitis C, pharmaceutical companies are demanding prices that are still much too high.” In addition to fighting monopolies, he is therefore in favour of a performance-based payment system. “Along the lines of what is being developed in the United Kingdom, we must be able to verify that medical promises are translating into reality and then remunerate the various stakeholders accordingly.”


Apax Talks


Apax Talks is a digital magazine aimed at company managers. It presents growth levers for SMEs, with a focus on TMT, consumer, healthcare and services sectors.