Ernesto M. Nogueira, CEO at ValueConnected

Ernesto has 27 years of experience leading healthcare strategies to drive access and expansion for new products, developing value propositions for public and private stakeholders, and assessing global market opportunities for healthcare companies. He has worked for both government agencies and global healthcare companies in roles ranging from strategic marketing and new product development to health economics and reimbursement. Also, Ernesto led several Market Access projects across the US, Europe, Latin America, and the Middle East; Ernesto is the CEO and Founder of ValueConnected.

Ernesto also coordinates the ValueConnected team in applying Artificial Intelligence (AI) and Data Science to address significant unmet needs in healthcare, accelerating the adoption rate of medical technologies that can generate value for patients, payers, and providers. He holds an MBA from the University of Texas at Austin, US, and a Bachelor’s degree in Business Administration from Fundação Armando Ávares Penteado(FAAP), in São Paulo, Brazil.

Transcript

Speaker 1: 0:00

Welcome to the Latin MedTech Leaders Podcast, a conversation with MedTech leaders who have succeeded or plan to succeed in Latin America. Please subscribe on your favorite podcasting platform. Apple Podcast, Spotify, Google Podcast. Amazon Music is teacher tuning iHeartRadio, Pandora, or these are Welcome to the Latin MedTech Leaders podcast, a conversation with leaders who have succeeded or plan to succeed in Latin America today. Our guest is Ernesto NoDa, c e o, and founder of Value Connected. Ernesto has 27 years of experience leading healthcare strategies to dive access and expansion for new products, developing value propositions for both public and private stakeholders, and assessing global market opportunities for healthcare companies. So, Ernesto is a pleasure to have you here in the show. Welcome.

Speaker 2: 0:54

Thank you very much, uh, Julio, for inviting me. It's a pleasure to be here as well.

Speaker 1: 0:59

Excellent, Ernesto. So let's get started, uh, talking about your journey. How is it that you got where you are today,<laugh>?

Speaker 2: 1:07

<laugh>? Well, I started selling medical devices in 1997, and I was a rememberable selling what we would consider a techn technological update in that moment in which was, uh, sutures in which the threads were connected to the needles, so the surgeons will not needle surgeon systems will not need to insert the thread into the needle and start suturing. So they came connected, and that was a fantastic innovation at that moment. And after selling that and other, uh, innovations, which we would call, um, in that period, I started to have some pushbacks from, uh, doctors. They were telling me, Ernesto, why is this new technology more expensive? Why should we pay for that? And then I would describe the features, the technical aspects of the technologies, and basically they would say, yeah, we are convinced, but we are not the ones, uh, signing the check and somebody else, uh, needs to do that. And you need to talk to purchasing departments or in certain circumstances, payers, private and public. And then when I was started, uh, and I remember to this day, my first, uh, meeting with, uh, purchasing department at a hospital, I was not prepared that you talk to purchasing departments. And I did, uh, a strategy that I learned that moment that makes you, you, you look smarter. I just took a, a, a notepad and grab it all together with me, and I entered the room of the purchasing department with a notepad than a pen on my hands, because this makes you feel, makes you look more intelligent because intelligence, because intelligence, because I had no idea what to ask. And then the purchasing department to the purchasing manager told me, Ernesto, you are the first person from a medical technology company coming to talk to me, and I am the bad guy, and I have to judge products every day, which I don't know what they do. I, they, I don't know why they should be used for. And the only metric that I have is the price. And I mean, if something causes 100 and another causes 50, I am gonna select the 50 because nobody's telling me why the 100 is sufficient. And that's the moment that I shift my career to market access. And because I, I came from health economics and marketing, I always look as health economics as marketing and reimbursement as sales. The only difference is that instead of being marketing sales to physicians, clinical decisionmakers, it's marketing and sales, health, economics, reimbursement to economic decision makers for chasers, payers. And then I started moving this career, and of course I could see how intertwined they were. And I then I, uh, I wanted to have years, uh, later my MBA in the University of Texas at Austin, United States, working there as well, came back to Latin Americas, I'm from Brazil. And then eventually I received an offer to come to Europe. And in Europe, because you have such a strong public healthcare system, 95, 90 7% of the healthcare expenditure in Europe, it comes from public payers. Then I realized the importance even more of market access. And in 2013, I started my own company Value Connected, which now has 38 associates in 36 countries. And we have an office in Brazil. I'm currently in Sao Paulo right now in Brazil. And that's basically doing exactly, uh, what I, uh, perceived as a major challenge in my career. So value connected, uh, and the word value and connected, they mean let's connect value to both sales and market access approaches, because the market in general will not be convinced only by technical features. And that's basically an overview about my career.

Speaker 1: 5:01

<laugh>. Fantastic. Uh, that's a great story here, Ernesto. I loved it. Alright, so let's talk about trends. Ernesto. What do you see happening in the world in Latin America from the economic, political, social standpoint that is relevant to our discussion today? How is it that, that what's happening that is making Latin America more attractive, uh, for companies to, to enter the market?

Speaker 2: 5:22

Right. What is interesting to, to mention, I'm gonna focus my, my pointing in Latin America, now we can discuss other markets mm-hmm.<affirmative> later. But what is very important is that before the Covid pandemic, so that means 2018, 2019, we saw an increasing interest from external companies to enter the Latin American market. And in many circumstances, they saw the opportunity for growth, but they were hitting, uh, the ceiling of a reimbursement or hitting the ceiling of market access. So there was some discussions already thinking maybe we have already medical societies on our side. We have doctors, nurses on our side. Why are we not progressing? And we saw a lot of interest to understand the dynamics of a payment mechanisms, how, uh, the markets evolve. And I can talk more details about certain countries there. But then the, the pandemic came and the interest for Latin America did not, uh, change. But the healthcare system in Latin America changed. We have, um, in Latin America, that's most, uh, um, it's more, uh, is even stronger. In Brazil, we have a very significant presence of a private healthcare. And what happens is that in private healthcare, the dynamics are a little bit different than in public, because in public, of course, you have a public system that tries to provide the best possible for everyone. So if I'm providing an expensive test here, I won't have, uh, money to provide something else there. And there is always this, um, discussion for private, if you are paying, um, then means you are covered. And basically that population is paying for its, uh, its own healthcare service. So in that sense, what we have seen in Latin America is a strong trend towards digitalization, telemedicine, not necessarily going into artificial intelligence, into algorithms that can predict this. We don't, we see some interest on that, but a strong interest for remote consultation, um, and telemedicine, and this is happening a lot because the, the, the healthcare systems, especially private, they realized it's much cheaper and more efficient to see or, or, or to diagnose or, or follow up patients like that. And even specific systems of the way that the prescriptions are designed, the way that consultations are designed, they are all, um, with QR codes nowadays. So there has been an increasing interest on that. Now, the other trend that I wanted to, to come, uh, and the last important change, uh, trend, and of course there are others, is the need to take patients out of the hospital because of course the, the hospital capacity is significantly affected by coronavirus. We, you have, we have seen in Argentina, Mexico, Colombia, Chile, Brazil, even the academic institutions telling students the, the, the medicine, the school of medicine students to come back home to study from home because they need to use that capacity to treat those patients. And of course, thank God, hopefully, um, the demand for, for healthcare to, to coronavirus has been decreasing because of the vaccination, because of many other aspects. But in 2020, it was like that, I had many friends who were in medical school and I would call them, and they were at home and they were studying at home. So the, the huge capacity was dedicated to, um, ventilation, intubation to treating these patients. So a lot of, uh, the demand has to be held up and has to be, uh, uh, managed at, managed at home. So a lot of a patient monitoring a lot of, uh, mechanisms to avoid an extensive length of stay due to patient deterioration, infection, they started to become more important in Latin America. So in that sense, to summarize, um, that has been a stronger interest, stronger demand for healthcare in Latin America. And that demand has not, uh, uh, decreased at all during the pandemic. It has changed it to things to keep patients as short as possible in the hospital and or, and or to remove them to the hospital to go to ambulatory or to home care.

Speaker 1: 10:01

Yes. Yes. Uh, I, I keep hearing something that says the cell phone or the small phone is a new clinic, right? Yes. Everything will be done on the cell phone nowadays. And I was, uh, patient my cell a couple weeks ago, had an eye infection, and I, for my first time, I had a telemedicine consultation. I saw the doctor via video call. So it was a, a great experience. And he prescribed something to the pharmacy. I went to the pharmacy, picked it up, and that was it. So simple. Didn't have move around the city, search for parking, any of that stuff was a quick thing.

Speaker 2: 10:38

So absolutely. And all these technologies, they had been around for many, many years. Yeah. And of course, it took Afor, it took an unfortunate case of, uh, uh, COVID. But if we look from the positive side, if we make an effort looking from the positive side, the healthcare systems in the world, they developed a lot due to the, uh, pandemic. And unfortunately, it's, it's necessary to have this kind of circumstances to get at such a level of development.

Speaker 1: 11:05

Yes, I agree. All right. So let's talk about, uh, what you're doing today at Value Connected. Uh, can we talk about company, the work that you guys do? What's the profile of your clients? Are you involved in any exciting projects today? So please elaborate

Speaker 2: 11:20

On that. Yes, absolutely. Now, we are involving, involved in, in many, many exciting, uh, projects. I am passionate about, uh, AI and, um, and digital, uh, healthcare myself. So that's something that really gets my attention a lot. And, but if looking to what we are doing right now, what the basic, what we do is to accelerate access of patients and providers to the medical technologies they need. So what do, the typical problem that we see is that medical companies, uh, launching products in the market, which are products that they truly bring benefits to patients, but the, the medical companies don't know how to translate those benefits to the decision makers. What is important to understand, of course, we focus, um, uh, mostly in medical technologies and digital health, but we also work with pharmaceuticals. But if you look into digital health and medical technologies, uh, that's the second most innovative industry in the world. That means every 35 minutes, that is a new patent for a medic on average, a new patent for a medical technology in, uh, registered. So when you, when medical companies come to hospitals, to providers and say, here, dear doctor, dear nurse, dear committee, we have this new exciting product here that does this and that it has a lot of benefits, a lot of research, a lot of efforts, a lot of investments put on that product. But the first reaction from the healthcare provider and payer is to think, oh my God, an upfront cost, another cost. And especially in Latin America, when we have, uh, a, a more delicate situation in terms of econ economy, especially related to certain markets and certain segments, the breaks are always on. There is always some kind of a barrier to say, wait, let's evaluate this technology better. And especially in Latin America, if you cannot demonstrate that you save costs, it is going to be very hard. You may have very high level evidence, but if you are increasing costs, then it's not impossible. With that happens all the time, but it's going to, you need that to make this kind of a argumentation. So we help our patients, patients, our clients, to identify how can we translate the benefits of the products to value. And value means why should I pay for your product? Why is it something that we should use and we should pay for? And an example of this was in 2000 and, um, and 18. And that's a very special, uh, project to my, uh, to me come to my heart. And I will explain why in 2018 we were, were working with, uh, this, uh, this large company. Usually we work with large companies, we, but we also work with, uh, startups as well. But we were working with this large companies that was trying to obt obtain an inclusion of, um, um, home care mechanical ventilation in the national healthcare system of Brazil. So it's a national health system with a 212 million people to include something, the national coverage, it's complicated. And we made our analysis, and if we would tell the healthcare system in Brazil to pay for that device, for the, the, for ventilation at home, not only at hospital, but at home, this would increase costs. And this kind of obvious, because then you have the ventilators at the hospitals, which are already being used, but then you have to pay for ventilation at home. But that, and that's the first reaction when you think about price. But then we start our work, which is shifting from price to cost and from cost to value. So let's take these two steps from price to cost. It's not only about the price of the ventilation, but the cost of the treatment. A patient at home is, I would say, represents 25, 30% of the cost of a, of the same patient in the hospital. So when you start putting these, uh, costs, they tend to balance them off. Not that you mention patients with mechanical ventilation that needed to go to the hospital, they are usually feeling very bad. So they did, they require a lot of attention. So we made these scenarios to the Brazilian healthcare system, say, listen, this is the cost of the ventilation, but actually let's consider the other courses that are related. And we doubt getting into much details. We developed eight scenarios to present to the Brazilian government. So we, we moved to from price to cost, and then to cost to value. The national healthcare system of Brazil has a chronic over demand. It's always, um, uh, more, there's a always a line of a patient demanding access to healthcare. And these patients, when they don't get treated, most of them will deteriorate. And, uh, not that to mention the worst possible scenario, which is, uh, unfortunately the patient, uh, come into death, but there's also the patient getting more expensive to treat. So what we showed to the Brazilian government was the value of, uh, uh, treating these patients at home. And although it would be slightly more expensive because it would be that capacity in the, in the, in the public hospitals would be released to other patients. So we present there and was was a very magical moment for me because, uh, I got to talk to a lot of patients and we got to, to, um, because we need to do this to understand the patient experience. And we had the patients that were living in public hospitals for 2, 3, 5 years, they were there because they could not be discharged. And by the moment, um, they would have a me mechanical ventilation at home reimbursed. They could come back to their families with, uh, in a, in an environment which has a much lower, uh, propensity for infection. So, uh, fortunately we, this was a project that they started in 2018 and we succeeded. And the Brazilian government eventually, uh, included home care ventilation in the national co um, wow. Coverage plan. Nice. That's super nice. And of course, nobody expected that. And then coronavirus came and heat and we, uh, we feel very happy. And this is one example of the projects that we do, that I, I feel extremely happy and my, my team feel extremely happy that if we could save at least one patient yeah, that could receive mechanical ventilation at home and not at the hospital, especially during coronavirus, then this project was more than than worth it. So that's the kind of a projects that we do. And again, um, governments, payers, they have so many technologies to look at health policies, so many things. It's important to do this work from price to cost, from cost to value, and act more as a partner to these healthcare stakeholders instead of a, a supplier or a manufacturer of a medical products.

Speaker 1: 18:34

Okay. Alright. So the question that I have now is about how can a new technology get inserted into the healthcare system in a country, specifically Brazil? Let's, is there a framework? Is it a step-by-step process, process that ha that a company has to go through? Could you please guide us through the process? Because I'm sure listeners wanna know how they can get reimbursement for their technologies, right?

Speaker 2: 18:59

Absolutely. We can talk about, uh, other countries as well as well. But let's focus on Brazil and I will make some parallels. Um, yes to, to Latin America in general. So first of all, the first, let's start with good news. Uh, Latin America is very, the latinamerican in general is very open to international evidence. So for example, if you have a study that was developed in overseas and another country, but it's a a, a study that has a good methodological approach, um, uh, does not need to be fantastic, but it, it has a good description of outcomes, it will be accepted, it will be reviewed. Unfortunately, uh, uh, registry data is not so well accepted in Latin America. Uh, and we have registry datas with, uh, data databases, excuse me, with thousands of patients, sometimes with dozens of thousands of patients, but they are not so well accepted. So have international data, um, uh, especially if it's, uh, randomized and prospective that's extremely well accepted. So that's the first thing. And of course, case, local case studies talking about Brazil, for all the countries in Latin America, Hulu, Brazil is the country that has the strongest separation between private and public healthcare. All other markets in the main markets, Colombia, Mexico, Chile, uh, Argentina, that is a kind of, uh, uh, overlapping and a strong overlapping in Brazil. There is a certain overlapping, but there is a strong differentiation the way that medical products are assessed and evaluated. So to come into this, um, Brazil, the public healthcare of Brazil has one of the most complete, um, healthcare information databases in the world. Really say what is exactly, I know it's, uh, in many circumstances it could be better, but the level of information you cannot obtain in the healthcare system of Brazil data source is second to none. Um, uh, I would say even, even to to Germany. Having said that, this what how policies are designed, if people are using this information, that's another story. But what I'm saying is that in the public healthcare system of Brazil, which covers every whole residents in Brazil, that is a formal process, a formal health technology assessment process. Oh, there is a process ready place, okay? Mm-hmm.<affirmative> exactly. So that you can submit your technology and any institutional person in Brazil can submit. Of course, if, uh, if a medical society submits a patient association or a doctor will have more influence, a more, a stronger weight, then of course if the company itself submits, but there's no problem for the company self submits. Yeah. Okay. And they evaluate the, the technologies and the cortech is extremely well organized. They usually took six months to evaluate a medical technology. As soon as the coronavirus, uh, heat, they publish the website, we will continue to review technology, but our timelines are flexible. We just, uh, submitted something to, to contact and they responded in six months<laugh>. So, uh, it did not affect very question predictable. Yeah. Very, very predictable. The process itself, and the process is that, and this is specifically now during this, this time because there were other meetings, but everybody's is, uh, uh, hesitant to have face-to-face. How does it work? You submit your technology or procedure for evaluation in the, for the contech, uh, remember it's not a product. You have to submit a procedure procedure. So you have a device that can be used in different procedures. You'll have to make different applications. The Contech will receive that and they will inform if there is something missing like a form or stuff like this. Once this is complete, processes starts and they will perform an internal evaluation and they will have an internal meeting. And all the meetings for Contech, they are recorded and made available over YouTube, maybe maybe other platforms as well. But I always access YouTube and they will discuss and they will come to what is called a preliminary conclusion. By the moment they reach a preliminary conclusion, which could be, yes, we think this should be included in the sus, or SUS is the national public healthcare system, or no, we should, uh, not included. Then they, uh, made a public, they start of a public consultation that they say, listen, we are open to receive comments from the society, and they are looking specifically for additional evidence. The main goal of contact is to assess evidence. So they open this public consultation, which usually lasts between 20 and 30 days. And after the public consultation, they will call the applicant the person who, or institution who made the application. And they will listen to the applicant in a second meeting and they will listen. They will, they ask questions by the moment that meeting ends. The second that meeting ends, the pplicant leaves, and this is online, pplicant leaves, and the ecotech starts reviewing the public consultations and they reach a final conclusion. Okay. Which will be published, um, in the, uh, um, in the report. The website. Yeah, in the website. Once this conclusion is made, of course, if it's negative, nothing changes. If it is positive, the tech has the road to device, the Ministry of Health of Brazil, but the Contech does not have the road to decide which funds should be used for what. So even in our case, when we got mechanical ventilation, we got approval from Contech, but it took six months. And that's completely normal from the Ministry of Health to say, okay, we're gonna fund this technology, but let's allocate the money from here from there. And that's a complex decision which happens internally. So overall from the Applic complete application to a decision for QuTech six months and another six months to have an inclusion in the public healthcare system. But that, uh, once again, the applications to Antech can be made at 24 7 anytime you want. Okay. I'll move into private. Now. Private healthcare, uh, we have the, a national private agency in Brazil, uh, in Portuguese, it's a n s. And what they do is that in private healthcare there is a national list of coverage, but as opposed to public healthcare, the national list of coverage in, in, um, Brazil private does not define a tariff, does not define a payment in the public healthcare in Brazil, that is a national payment, that is a national tariff. There's a code. There may be some exactly cold, there may be some adjustments based, oh, I am an academic hospital. I'm a hospital in a, you know, that needs more funds. Absolutely. There's a incremental adjustment. Minimal for private is completely different. So for example, you may uh, add into public coronary artery bypass graft at 10,000. Hes in private, it will be coronary artery bypass graft. And that's a, and there are two codes in private healthcare, I mean two code systems in private. That is the payment for the procedure itself, which will be decided once it is in the mandatory list. It will be negotiated between the provider, which could be a hospital, a clinical laboratory. It'll be decided between the provider and the payer. Each private payer. And there is another, uh, payment, which is the physician fee. And that there are many physician fees in the same procedure. For example, surgical procedure that are physician fees for opening the patient, for the anesthesiologist, for making the procedure. All the procedures that are there and these physician fees, they are ranked according to a certain grade, which starts with one A, which is the lowest grade, and then one way, one A, one B, one C to way to b B2C until 14 C. And each private payer will say, I will, I pay one a one hundreds. The other will say, oh, I pay one a two hundreds. And they will decide how much will be there. So what is important private, uh, uh, healthcare, uh, that is in comparison to public, that is much less availability of data. Data is fragmented. There are five types of private plans have private health plans in Brazil. And basically they will follow what is in the mandatory list and they will decide, negotiate how much that tariff will be. And that's the moment that's this negotiation part that many companies in Brazil don't follow up. And it's, uh, out of pocket payments in Brazil happens very frequently, especially in in Sao Paul and Rio, the largest cities. But altogether, it represents in the best case scenario, best case scenario, 5% of the market. We are talking about this. For example, if you take robotic surgery, the, the out-of-pocket payment represents less than 1% of the total demand of the market. So in the best case, we're talking about 5%. And the problem is that many companies, they turn on their conditioner, they stay relaxed, and they stop there. Let's go into our out of pocket. And then that is the opportunity to expand that usage applying to the a n s to the national coverage. And there are of course in, there's a lot of flexibility. There is possibility also, and that's the last point to say, um, potential to make individual agreements with health plans. And there are those health plans that own their own providers, their own, their own hospitals and labs. Others that are more like insurance companies. They are financial institutions that pay for coverage and they will perceive value differently. If you come to insurance companies, say we reduce the length of state insurance company will not, will not react the same way as if you tell them we reduce costs. But if you come to a, a health plan, which is in Brazil is called group medicine, that has a possibility to have these providers and you say, listen, we will reduce the life of state. They will say, wait, wait, you are reducing the cost of my provider that belongs to the same group. So it's important, uh, in the making a summary in the public healthcare system, that is one pathway. Uh, it's uh, it's a, a very defined pathway, harder to accomplish of course, but of course that's why it's important that we do the proper work. But in private, that is a lot of flexibility. There's a lot of possibilities that you can take.

Speaker 1: 29:38

Wow. It looks like we can, we can have like five different episodes just to talk about this<laugh> because we're, we're just starting to, to scratch the surface of Brazil. Imagine Mexico, Columbia, Argentina. I mean, this is fascinating. So, um, we're close to the end of the show and, and, um, I have many more questions, but, uh, we're running out of time.<laugh>, we may, we may do another episode. I mean, that's, that's something we can do, uh, uh, certainly. So Ernest, Ernesto, the last question I have for you is, what will be your words, your final words of wisdom? What would you say to the CEO of a medical technology company from the United States or Europe who is just starting to explore Latin America as a place to do business? He wants to start in the region, he wants to serve individual. What would be your first tip or two or three tips, uh, to him or her?

Speaker 2: 30:28

Absolutely. So, uh, for somebody wanting to enter in to enter the Latin America market, it could be somebody overseas or could be even a, a local company willing to expand more. What is important to understand is that try to involve as early as possible in your strategic planning. The perspective of payers don't rely only on key opinion leaders. They are not important. They are essential. You, you won't achieve a success if you don't have opinion leaders in the ground period. Absolutely. But they are not the only ones taking the decision. So it's very expensive to make a huge connection with doctors that why start may start using the product, getting paid out of a pocket and then try to expand from there and then realize you did not have the, the proper evidence upfront and you could have spent the time before collecting that evidence. So even if, if you are launching a product in Latin America and you are going to through, go through the regulatory stages, sometimes changing two, three things in your study protocol will make a regulatory study applicable to a reimbursement decision. It's not a rocket science to make this, this, this leap, this jump is not even a leap this jump. And if you are already, uh, register your product's already registered and so it means you are running against time, then try to involve payers as early as possible and as early as possible means do it now. If you have done so, do it now. Talk to them. Understand what type of evidence are they requesting? What do they define as a metric of success? How would they evaluate the product? Because at the end of the day, and that phrase explains the ravine value is a perception, is not what you as a medical company would think your product has value, but how the decision makers, the local decision makers perceive the product that you're bringing. But that's basically the, the final words that I have.

Speaker 1: 32:27

<laugh>. Alright, Ernesto, thank you so much. I, I think, uh, listeners are learning so much from your wisdom and your experience in Latin America. And as I said, we should probably plan for another podcast episode, uh, to talk about my pleasure countries. But um, thank you so much for being a guest in our show. I look forward to being in touch and uh, it was a delightful conversation. As you usual

Speaker 2: 32:50

<laugh>. My pleasure. Thank you so much for the opportunity. Have a great day everyone. Thanks Julia. Bye bye-Bye.