| Reenita Das |
The global healthcare industry is in the middle of an era of ‘re-imagination’. Disruptive and transformative forces are colliding with one another and creating a massive remix. With technology intruding into biology and society, boundaries are changing and often disappearing. More change is expected to be driven from markets/ industries outside the healthcare industry than from within the field. Due to these developments, progressive healthcare business models are evolving to focus on personalisation, communication, decentralisation and collaboration. In order to remain ahead of these changes and continue on the growth path, traditional healthcare companies are rethinking their ‘value.’ In fact, definitions of ‘value’ have changed as well in this new era. The following chart shows the shift in the system as the focus of healthcare moves from sick care to wellness and prevention. It is from this model that companies will need to identify their value and core offerings.
With the goals of making healthcare more affordable and cost effective, there will be a seismic shift from public to private sector financing of healthcare services and solutions. Frost & Sullivan expects this to be a trillion dollar opportunity in the next five years. A recent study conducted by a team of analysts across Asia Pacific (APAC) found that approximately 180 million new beds are necessary over the next decade to meet the healthcare demand in Asia; more than 40 per cent of that is expected to come from the private sector. Several bigger hospital groups from within and outside APAC are acquiring smaller hospitals in the region due to tremendous market potential. Revenues from the hospital sector in APAC are projected to account for more than one-third of the global market by 2015.
The second transformation is the re-engineering of healthcare. The industrial revolution has arrived for our industry at last. Connectivity and smaller, cheaper testing solutions will reduce dependence on large, expensive facilities and give individuals greater control over their health and well being. This patient-centric health system opens the door to new market participants from industries such as mass retail, telecommunications, health/ wellness/spa, automotive, travel and tourism.
In the next 10 years, data science will contribute more to improving medicine than anything learned in medical school or researched in the laboratory. This system of collecting and analysing billions and billions of patient records, understanding protocols and pathways, and identifying the highest success factors and best practices lead to overall success rates being increased and cost lowered. Physicians will need to rely on big data to predict outcomes. With the current model of reimbursement changing soon, physicians will need to be incentivised to utilise big data to predict these outcomes. Insurance companies will also need access to this data as well to determine payments. By using electronic medical records (EMRs) and advanced analytics, companies will be able to develop appropriate pathways for treatment and diagnosis. This will lead to a shift in control and responsibility from the clinician to the patient.
The consumer will take on the role of the CEO of their own health through increased engagement, access and empowerment. This will lead to the concept of ‘care anywhere,’ ‘care customisation,’ and ‘care coordination,’ in which healthcare will evolve to become a team sport using the support of not only clinicians and the medical community, but also family, support groups, fitness and diet counsellors, and therapists, among several others.
The healthcare industry will also become more focused on preventing sickness rather than providing treatment. In 2012, the segment of global healthcare expenditure on treatment was 60 per cent, which will significantly decrease to 35 per cent by 2025.
Currently the elderly population of 60 years or older is approximately 25 per cent of the world’s global population. Frost & Sullivan research also shows that 75 per cent of people above the age of 60 years have one chronic condition. By the time this elderly population reaches 70 years, they will have at least two chronic conditions. By spending more dollars on diagnosis, monitoring and prevention, this will accelerate reduction of healthcare costs in the long term and create a more wellness and preventative culture. This along with big data analytics will drive the change and reduce overall costs.
What are the implications today for a company to survive and grow with so many disruptions and transformations? The healthcare industry is moving from a system of being a volume business to a value business – identifying ahead of time what that value is. That is the roughest part of the market today and the hardest lesson for any company to realise, as it most probably implies the need for a change in business model. The industry is already embracing the shared risk model as is seen in so many cases in the recent months. Currently, pharma companies are forced to pay some portion of costs for treatment, taking on this burden along with the healthcare system. By moving the focus to outcomes and more bundled services, pharma companies will have to compete with all the other products and services that are part of the outcome value, while demonstrating their portion of it in terms of reducing cost and increasing efficacy. There is definitely a need for companies to start investing and looking at products beyond the pill in terms of service along the continuum of care, or related to maintenance and wellness. This is also a great time to start initiating patient engagement programmes, which will pave the way to increasing this dialogue and interactivity.