Top health industry
issues of 2014
A new health economy takes
shape
December 2013
About this report

Highlights top issues for insurers,
providers, employers, pharma,
government and consumers.
HRI surveye...
2014 at a glance

As implementation
of the ACA
reaches its peak in
2014, innovative
companies are
empowering
healthcare
cu...
Table of contents
#

Top issue for 2014

1

Companies rethink roles in the new health economy

2

Technology is the new wo...
Companies rethink roles in the new
health economy

HRI Knowledge Sharing * Top health industry issues of 2014
PwC

Slide 5
Companies rethink roles in the new health
economy
Knowing the facts:
 Healthcare organizations ought to consider
reinvent...
Companies rethink roles in the new health
economy

Source: HRI Consumer Survey, PwC, 2013
HRI Knowledge Sharing * Top heal...
Companies rethink roles in the new health
economy
Implications:
 Be aggressive in seeking out opportunities to expand foo...
Technology is the new workforce
multiplier

HRI Knowledge Sharing * Top health industry issues of 2014
PwC

Slide 9
Technology is the new workforce multiplier
Knowing the facts:
 Technology is key to meeting the demands of up to 25
milli...
Technology is the new workforce multiplier

Source: HRI Consumer Survey, PwC, 2013
HRI Knowledge Sharing * Top health indu...
Technology is the new workforce multiplier

Implications:
 Use technology to extend care and build a workforce that is sk...
Fail fast, frequently, and frugally for
true innovation

HRI Knowledge Sharing * Top health industry issues of 2014
PwC

S...
Fail fast, frequently, and frugally for true
innovation
Knowing the facts:
 Pressure for innovation is being driven by
fe...
Fail fast, frequently, and frugally for true
innovation

Source: HRI Consumer Survey, PwC, 2013
HRI Knowledge Sharing * To...
Fail fast, frequently, and frugally for true
innovation
Implications:
 Introduce time and money constraints that force
ex...
Social, mobile, analytics, and cloud
come together

HRI Knowledge Sharing * Top health industry issues of 2014
PwC

Slide ...
Social, mobile, analytics, and cloud come together

Knowing the facts:
 Empowered consumers are demanding better
customer...
Social, mobile, analytics, and cloud come together

HRI Knowledge Sharing * Top health industry issues of 2014
PwC

Slide ...
Social, mobile, analytics, and cloud come together
Implications:
 Promote mobile technologies that help manage patients’
...
Employers explore private exchanges

HRI Knowledge Sharing * Top health industry issues of 2014
PwC

Slide 21
Employers explore private exchanges

Knowing the facts:
 A distinction between private and public exchanges
is that feder...
Employers explore private exchanges

Source: HRI Consumer Survey, PwC, 2013
HRI Knowledge Sharing * Top health industry is...
Employers explore private exchanges

Implications:
 Evaluate all options, from continuing to offer employees limited
heal...
Industry picks up the pace on price
transparency

HRI Knowledge Sharing * Top health industry issues of 2014
PwC

Slide 25
Industry picks up the pace on price transparency

Knowing the facts:
 Previous efforts at transparency were
hindered by l...
Industry picks up the pace on price transparency

Source: HRI Consumer Survey, PwC, 2013
HRI Knowledge Sharing * Top healt...
Industry picks up the pace on price transparency

Implications:
 Consider shunning non-disclosure agreements that prevent...
States pursue Medicaid managed longterm care

HRI Knowledge Sharing * Top health industry issues of 2014
PwC

Slide 29
States pursue Medicaid managed long-term care

Knowing the facts:
 The number of Americans age 85 and older is
projected ...
States pursue Medicaid managed long-term care

Source: HRI Consumer Survey, PwC, 2013
HRI Knowledge Sharing * Top health i...
States pursue Medicaid managed long-term care
Implications:
 Increased Medicaid enrollment under ACA provides added
incen...
Corporate funds invade healthcare
venture capital space

HRI Knowledge Sharing * Top health industry issues of 2014
PwC

S...
Corporate funds invade healthcare venture
capital space
Knowing the facts:
 Corporate venture arm investment in life scei...
Corporate funds invade healthcare venture
capital space

HRI Knowledge Sharing * Top health industry issues of 2014
PwC

S...
Corporate funds invade healthcare venture
capital space
Implications:
 Start-ups should seek corporate partners to benefi...
Twenty-first century tools refresh
clinical trials

HRI Knowledge Sharing * Top health industry issues of 2014
PwC

Slide ...
Twenty-first century tools refresh clinical trials
Knowing the facts:
 Drugmakers must incorporate new research methods
t...
Twenty-first century tools refresh clinical trials

Source: HRI Consumer Survey, PwC, 2013
HRI Knowledge Sharing * Top hea...
Twenty-first century tools refresh clinical trials

Implications:
 As new trial methods take shape, companies will increa...
New rules combat counterfeit drugs

HRI Knowledge Sharing * Top health industry issues of 2014
PwC

Slide 41
New rules combat counterfeit drugs
Knowing the facts:
 The Drug Quality and Security Act,
establishes a national track an...
New rules combat counterfeit drugs

Source: HRI Consumer Survey, PwC, 2013
HRI Knowledge Sharing * Top health industry iss...
For more information
www.pwc.com/us/tophealthissues
www.pwc.com/hri

HRI Knowledge Sharing * Top health industry issues of...
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Top health industry issues of 2014

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As the Affordable Care Act proceeds into 2014, new norms and opportunities are rapidly reshaping the $2.8 trillion US health sector. Healthcare organizations must adjust to empowered consumers, rapid innovation, and most notably increasing competition from non-traditional players. The 2014 Top Issues report examines the shifting healthcare landscape and offers insights on how to survive rising expectations and tough competition.

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Top health industry issues of 2014

  1. 1. Top health industry issues of 2014 A new health economy takes shape December 2013
  2. 2. About this report Highlights top issues for insurers, providers, employers, pharma, government and consumers. HRI surveyed 1,000 US adults in Fall 2013 on their perceptions, beliefs, and actions regarding healthcare. HRI Knowledge Sharing • Top health industry issues of 2014 PwC Slide 2
  3. 3. 2014 at a glance As implementation of the ACA reaches its peak in 2014, innovative companies are empowering healthcare customers with new solutions and forcing the entire industry to rethink the way it does business. HRI Knowledge Sharing * Top health industry issues of 2014 PwC Slide 3
  4. 4. Table of contents # Top issue for 2014 1 Companies rethink roles in the new health economy 2 Technology is the new workforce multiplier 3 Fail fast, frequently, and frugally for true innovation 4 Social, mobile, analytics, and cloud come together 5 Employers explore private exchanges 6 Industry picks up the pace on price transparency 7 States pursue Medicaid managed long-term care 8 Corporate funds invade healthcare venture capital space 9 Twenty-first century tools refresh clinical trials 10 New rules combat counterfeit drugs HRI Knowledge Sharing * Top health industry issues of 2014 PwC Slide 4
  5. 5. Companies rethink roles in the new health economy HRI Knowledge Sharing * Top health industry issues of 2014 PwC Slide 5
  6. 6. Companies rethink roles in the new health economy Knowing the facts:  Healthcare organizations ought to consider reinventing themselves through controlled experimentation.  Some insurers, like EmblemHealth, are acquiring provider groups.  Some provider systems, like Sutter Health, are now entering the insurance business themselves.  Retail pharmacies are expanding their product and service offerings, and growing their retail clinics. HRI Knowledge Sharing * Top health industry issues of 2014 PwC Slide 6
  7. 7. Companies rethink roles in the new health economy Source: HRI Consumer Survey, PwC, 2013 HRI Knowledge Sharing * Top health industry issues of 2014 PwC Slide 7
  8. 8. Companies rethink roles in the new health economy Implications:  Be aggressive in seeking out opportunities to expand footprint, but consider potential impacts on current business.  Take calculated risks, but have a “fail fast” mentality. Early problem identification is key.  Consider building service businesses to insulate the core brand like UnitedHealth has with Optum population health services. HRI Knowledge Sharing * Top health industry issues of 2014 PwC Slide 8
  9. 9. Technology is the new workforce multiplier HRI Knowledge Sharing * Top health industry issues of 2014 PwC Slide 9
  10. 10. Technology is the new workforce multiplier Knowing the facts:  Technology is key to meeting the demands of up to 25 million newly insured patients and an aging population.  Bon Secours St. Mary’s Hospital uses a predictive analytics to help curb readmissions.  Health Partners’ “Virtuwell” technology uses algorithms to diagnose and customize treatment plans for 40+ routine conditions online— for $40. HRI Knowledge Sharing * Top health industry issues of 2014 PwC Slide 10
  11. 11. Technology is the new workforce multiplier Source: HRI Consumer Survey, PwC, 2013 HRI Knowledge Sharing * Top health industry issues of 2014 PwC Slide 11
  12. 12. Technology is the new workforce multiplier Implications:  Use technology to extend care and build a workforce that is skilled at engaging digitally with patients.  Deploy people and technology closer to consumers to protect revenues from the growing threat of alternative providers, such as retail clinics.  Draw talent from technology, retail and hospitality industries to meet consumer expectations.  With revamped scope of practice laws, physician extenders and pharmacists can help the newly insured get convenient primary care. HRI Knowledge Sharing * Top health industry issues of 2014 PwC Slide 12
  13. 13. Fail fast, frequently, and frugally for true innovation HRI Knowledge Sharing * Top health industry issues of 2014 PwC Slide 13
  14. 14. Fail fast, frequently, and frugally for true innovation Knowing the facts:  Pressure for innovation is being driven by federal budget cuts, new penalties for hospitalacquired conditions, and increased competition from non-traditional players.  Only 27% of health executives said their companies formally manage innovation, which is critical for achieving breakthrough results and creating new business models.  Companies like GE, Medtronic and Kaiser Permanente are embracing failure. HRI Knowledge Sharing * Top health industry issues of 2014 PwC Slide 14
  15. 15. Fail fast, frequently, and frugally for true innovation Source: HRI Consumer Survey, PwC, 2013 HRI Knowledge Sharing * Top health industry issues of 2014 PwC Slide 15
  16. 16. Fail fast, frequently, and frugally for true innovation Implications:  Introduce time and money constraints that force experimentation and failure.  Look to customers, partners and competitors to widen the funnel of ideas.  Compete or partner with consumer electronics, telecom, and retail companies.  Engage finance teams and insurers early and often to determine how to track progress and who will pay for innovations. HRI Knowledge Sharing * Top health industry issues of 2014 PwC Slide 16
  17. 17. Social, mobile, analytics, and cloud come together HRI Knowledge Sharing * Top health industry issues of 2014 PwC Slide 17
  18. 18. Social, mobile, analytics, and cloud come together Knowing the facts:  Empowered consumers are demanding better customer service through integrated social, mobile analytics and cloud technologies.  Only 18% of companies are maximizing the use of smartphone apps to integrate patient data into clinician workflows and EHRs.  Companies like Aetna and Partners Healthcare are making strides in fusing these technologies to deliver value to their customers. HRI Knowledge Sharing * Top health industry issues of 2014 PwC Slide 18
  19. 19. Social, mobile, analytics, and cloud come together HRI Knowledge Sharing * Top health industry issues of 2014 PwC Slide 19
  20. 20. Social, mobile, analytics, and cloud come together Implications:  Promote mobile technologies that help manage patients’ health outside of costly care settings.  Consumers may be more willing to pay for technologies to help manage their health as they assume more financial risk for their healthcare.  Consider paying for non-traditional ways to reduce medical costs. Some insurers are reimbursing chronic disease management in the form of prescribed smartphone apps. HRI Knowledge Sharing * Top health industry issues of 2014 PwC Slide 20
  21. 21. Employers explore private exchanges HRI Knowledge Sharing * Top health industry issues of 2014 PwC Slide 21
  22. 22. Employers explore private exchanges Knowing the facts:  A distinction between private and public exchanges is that federal subsidies to assist qualifying individuals buy insurance will be limited to products bought on the public exchanges.  Employers see private exchanges as a step toward “defined contribution” benefits.  High profile companies like Sears, IBM and Walgreens, among others, are making the switch. HRI Knowledge Sharing * Top health industry issues of 2014 PwC Slide 22
  23. 23. Employers explore private exchanges Source: HRI Consumer Survey, PwC, 2013 HRI Knowledge Sharing * Top health industry issues of 2014 PwC Slide 23
  24. 24. Employers explore private exchanges Implications:  Evaluate all options, from continuing to offer employees limited health plan choices, to private exchanges.  Benefits brokers and consultants are embracing private exchanges as a new and alternative business model.  Some health insurers and new entrants are serving as the general managers of private exchanges of their own.  Providers may see more patients with less robust insurance as employees and retirees opt for less expensive coverage. HRI Knowledge Sharing * Top health industry issues of 2014 PwC Slide 24
  25. 25. Industry picks up the pace on price transparency HRI Knowledge Sharing * Top health industry issues of 2014 PwC Slide 25
  26. 26. Industry picks up the pace on price transparency Knowing the facts:  Previous efforts at transparency were hindered by lack of meaningful data, fear of losing competitive advantage, and slow participation from key sectors.  Businesses are striking exclusive arrangements with providers for high-value care.  The federal government has opened its books on what hospitals bill for relatively common treatments. HRI Knowledge Sharing * Top health industry issues of 2014 PwC Slide 26
  27. 27. Industry picks up the pace on price transparency Source: HRI Consumer Survey, PwC, 2013 HRI Knowledge Sharing * Top health industry issues of 2014 PwC Slide 27
  28. 28. Industry picks up the pace on price transparency Implications:  Consider shunning non-disclosure agreements that prevent negotiated prices from being shared.  New health insurance exchanges will fuel the transparency push.  As prices are disclosed, providers will feel the pinch, as was seen in California when CalPERS capped reimbursement on hip and knee replacements. HRI Knowledge Sharing * Top health industry issues of 2014 PwC Slide 28
  29. 29. States pursue Medicaid managed longterm care HRI Knowledge Sharing * Top health industry issues of 2014 PwC Slide 29
  30. 30. States pursue Medicaid managed long-term care Knowing the facts:  The number of Americans age 85 and older is projected to triple by 2050 to nearly 18 million people.  Medicaid to helps pay for long-term care needs for 4 million people, at an annual cost of more than $130 billion.  In 2014, 26 states are projected to have a Medicaid long-term care program, up from eight 10 years ago. HRI Knowledge Sharing * Top health industry issues of 2014 PwC Slide 30
  31. 31. States pursue Medicaid managed long-term care Source: HRI Consumer Survey, PwC, 2013 HRI Knowledge Sharing * Top health industry issues of 2014 PwC Slide 31
  32. 32. States pursue Medicaid managed long-term care Implications:  Increased Medicaid enrollment under ACA provides added incentives for states to contain LTC spending. Federal waivers and demonstration projects provide states with a conduit.  Consider the unique health needs of this patient group.  Focus on community based care. Savings will come from health plans that can keep people from entering institutions.  Health plans need to expand their networks to include new partners such as transportation vendors. HRI Knowledge Sharing * Top health industry issues of 2014 PwC Slide 32
  33. 33. Corporate funds invade healthcare venture capital space HRI Knowledge Sharing * Top health industry issues of 2014 PwC Slide 33
  34. 34. Corporate funds invade healthcare venture capital space Knowing the facts:  Corporate venture arm investment in life sceinces companies increased from $108 million in 1993 to $2 billion in 2012.  Corporate venture firms invested more money in biotechnology than any other sector except software.  Traditional VC investment is declining. VC firms raised 11 life sciences funds in 2012, down from 28 in 2008. HRI Knowledge Sharing * Top health industry issues of 2014 PwC Slide 34
  35. 35. Corporate funds invade healthcare venture capital space HRI Knowledge Sharing * Top health industry issues of 2014 PwC Slide 35
  36. 36. Corporate funds invade healthcare venture capital space Implications:  Start-ups should seek corporate partners to benefit from rich networks and robust marketing, managerial, and compliance capabilities.  Corporations should nourish healthcare product pipelines with corporate venture arms.  Traditional venture firms should partner with corporations or their venture arms. HRI Knowledge Sharing * Top health industry issues of 2014 PwC Slide 36
  37. 37. Twenty-first century tools refresh clinical trials HRI Knowledge Sharing * Top health industry issues of 2014 PwC Slide 37
  38. 38. Twenty-first century tools refresh clinical trials Knowing the facts:  Drugmakers must incorporate new research methods to meet efficiency and cost pressures.  Adaptive designs account for 20% of clinical trials today, and are expected to grow.  Genentech partnered with 23andme to use genetic analysis to quickly identify patients for a recent cancer study.  Some drugmakers are recruiting patients, securing electronic consent, and shipping trial medications to patients’ homes, shrinking trial start-up times. HRI Knowledge Sharing * Top health industry issues of 2014 PwC Slide 38
  39. 39. Twenty-first century tools refresh clinical trials Source: HRI Consumer Survey, PwC, 2013 HRI Knowledge Sharing * Top health industry issues of 2014 PwC Slide 39
  40. 40. Twenty-first century tools refresh clinical trials Implications:  As new trial methods take shape, companies will increasingly need skilled personnel design and run studies.  Trial sponsors must make trial participation less taxing, more transparent, and convey better information about trial options, results, and how patients can participate.  Virtual models and simulations may identify potential risks, outcomes, and biomarkers that can diminish setbacks and lower costs. HRI Knowledge Sharing * Top health industry issues of 2014 PwC Slide 40
  41. 41. New rules combat counterfeit drugs HRI Knowledge Sharing * Top health industry issues of 2014 PwC Slide 41
  42. 42. New rules combat counterfeit drugs Knowing the facts:  The Drug Quality and Security Act, establishes a national track and trace program targeting counterfeit medicines, and preempts state laws.  Counterfeit Heparin was linked to 149 American deaths between 2007-2008.  Starting in 2017, the industry must use unique serial numbers to track drug lots and document each time the drugs change ownership. HRI Knowledge Sharing * Top health industry issues of 2014 PwC Slide 42
  43. 43. New rules combat counterfeit drugs Source: HRI Consumer Survey, PwC, 2013 HRI Knowledge Sharing * Top health industry issues of 2014 PwC Slide 43
  44. 44. For more information www.pwc.com/us/tophealthissues www.pwc.com/hri HRI Knowledge Sharing * Top health industry issues of 2014 PwC Slide 44
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