Top health industry                                  issues of 2013                                  Picking up the pace o...
Table of contentsIntroduction	3States on the frontlines of ACA implementation	                                            ...
IntroductionIt is almost a cliché to observe that             •	 Concerns about data privacy remain,                    •	...
States on the frontlines of ACA implementationAfter nearly three years of polarized                Figure 2: Do you think ...
Caring for the nation’s most vulnerable: dual eligiblesDual eligibles—individuals who qualify for                    medic...
Bigger than benefits: employers rethink their rolein healthcareHealthcare and employers—inseparable?                Figure...
Consumer revolution in health coverageHealth insurance is about to witness a                        Insurers are also part...
Customer ratings hit the pocketbooks of healthcarecompaniesThe consumer experience matters to                   Figure 6: ...
Goodbye cost reduction, hello transformationWith reimbursement ready to reset under       Figure 7: How many times have yo...
The building blocks of population health managementPopulation health management shows                  Figure 8: Does your...
Bring your own device: convenience at a costFor many people, mobile devices are                           Hospitals must b...
Meeting the new expectations of pharma valuePharmaceuticals and medical devices play                      Such partnership...
Medtech industry braces for excise tax impactEffective January 1, 2013, the 2.3% excise       Figure 11: To what extent do...
FootnotesStates on the frontlines of ACA implementation1.	 Based on the 2012 HHS federal poverty guidelines for 48 contigu...
FootnotesCustomer ratings hit the pocketbooks of healthcare companies1.	 The Henry J Kaiser Family Foundation,, “Medicare ...
FootnotesMeeting the new expectations of pharma value1.	 Peter Back, Leonard Saltz, and Robert Wittes, “In Cancer Care, Co...
About this        This annual report discusses the top issues for healthcare providers, health insurers,                  ...
Health Research Institute                           Health Industries MarketingAdvisory Team                              ...
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  1. 1. Top health industry issues of 2013 Picking up the pace on health reformJanuary 2013Health Research InstituteAt a glanceThe pace of transformationin the health industry iscertain to quicken in 2013with the effects of technology,consumerism, budgetarypressures and the AffordableCare Act converging on asector that represents nearlyone-fifth of the economy.
  2. 2. Table of contentsIntroduction 3States on the frontlines of ACA implementation 4In 2013 the spotlight shifts to the states. Over the next year, state officials will decide whether to expand Medicaidcoverage, who will operate their insurance exchange and what type of market regulation is needed. Delay is not anoption—the federal government will step in where necessary. The race to 2014 is on.Caring for the nation’s most vulnerable: dual eligibles 5With the Affordable Care Act (ACA) set to add 16 million people to the Medicaid rolls by 2019, the number of “duals”is certain to increase. Cash-strapped states are increasingly turning to the expertise of managed care companies totackle skyrocketing dual eligible costs.Bigger than benefits: employers rethink their role in healthcare 6Healthcare and employers—inseparable? Maybe not. The emergence of public and private insurance exchangesoffers a fresh perspective on employer-sponsored coverage. Businesses have never had a better opportunity tore-examine their role. The year 2013 will likely be the turning point for how healthcare benefits evolve over thenext decade.Consumer revolution in health coverage 7With more of their own money at stake, consumers are exerting greater influence on the health sector—andbringing new expectations. The industry is finally responding, borrowing three key practices from the retailindustry: convenience, transparency and customer insights.Customer ratings hit the pocketbooks of healthcare companies 8Paying for performance takes on new meaning as consumer reviews generate penalties and bonuses for hospitalsand insurers. This could mean a bonus payout of more than $3 billion for insurers and a hold-back of $850 millionfor providers in 2013. Healthcare companies will need to invest in consumer research and education in order to takefull advantage of the new payments.Goodbye cost reduction, hello transformation 9With federal budget woes and reimbursement changes under the ACA, providers are taking cost reduction to thenext level. Labor productivity and supply cost reductions were the first phase; now, organizations are embarking onfull-scale transformations of their care delivery models.The building blocks of population health management 10Medicare’s accountable care organization (ACO) and patient-centered medical home initiatives have laid afoundation for improving population health, but other collaborations are fueling growth in populationhealth management.Bring your own device: convenience at a cost 11Hospitals must balance the desires of nurses and doctors to bring their own mobile devices to work with creatingan environment secure enough to protect sensitive patient data. Many are behind. Only 46% have a securitystrategy regulating the use of mobile devices.Meeting the new expectations of pharma value 12Pharmaceuticals and medical devices play a pivotal role in health outcomes. But the path from lab to bedside isoften long, arduous, and expensive. And now the final hurdle is not regulatory approval; it’s reimbursement.Medtech industry braces for excise tax impact 13Effective January 1, 2013, the 2.3% excise tax on medical devices could prompt consolidation in a $380 billionglobal industry consisting mainly of small start-up companies with lean product portfolios and fewer than50 employees.2 PwC Health Research Institute | Top health industry issues of 2013
  3. 3. IntroductionIt is almost a cliché to observe that • Concerns about data privacy remain, • Knowledge gaps exist abouthealthcare in America is changing rapidly. as access to medical data expands. exchanges. Though health insuranceYet the pace of the transformation is Seventy-three percent of customers are exchanges have been a major topiccertain to quicken in 2013 with the effects either very or somewhat concerned about among industry executives andof technology, consumerism, budgetary the privacy of their medical information regulators, one-third of consumerspressures and the Affordable Care if providers were able to access it on their don’t know enough about the newAct (ACA) converging on a sector that mobile devices. marketplaces to assess whether theyrepresents nearly one-fifth of the economy. will make it easier to find and purchase • There’s more evidence on the impact coverage.An industry that had grown accustomed of social media on healthcare. Moreto uncertainty now has a clearer picture than half of consumers read reviews • Skepticism about the value of mergersof its future. And that future includes of healthcare providers online, with and acquisitions is rising. Forty-sevenfull implementation of the reform law, doctors and hospitals being the most percent of consumers surveyed believedeclining federal reimbursement rates, viewed; this is heavily driven by younger costs would increase if their localnew taxes, and an influx of tens of millions consumers. hospital was acquired and 56% wouldof new customers who bring dollars—and expect quality to remain stagnant, up • Americans view doctors as the bestunique challenges—into a fragmented from 31% and 22% respectively in 2011. hope for the nation’s health system.system of care. Almost 60 % of respondents ranked For the health sector, 2013 offers enormousMuch of the action in 2013 moves to the physicians as first, second or third opportunities. Providers, insurers and lifestates, under pressure to expand their in terms of their ability to improve sciences companies have one year to targetMedicaid programs and ensure that the nation’s health system—ahead of and capture a large new market of payingnew insurance marketplaces known government, consumer groups, hospitals, customers. New bonus payments awaitas exchanges suit their constituents. insurance companies, employers or the innovators, while financial penaltiesEmployers too face fundamental decisions pharmaceutical companies. will squeeze other players. Success in 2014as many rethink their role in healthcare. will come to those who use 2013 wisely. • Consumers are warming up to new This year’s Top Issues report—informedAt the center of it all is a customer base that ways of purchasing insurance. by new consumer research and dozensis not only growing in size but in influence. Individuals are more likely to buy of interviews with policymakers andThe focus is no longer on patients, but insurance from non-traditional sources industry executives—offers a roadmapconsumers, who are demanding the speed, such as a retail store than they were in for navigating the reconfigured businessconvenience, transparency and results they 2011, increasing from 18% to 23%. environment.get in other service industries.A consumer survey conducted by PwC’sHealth Research Institute (HRI) in late2012 found that over 50% of Americans Figure 1: What is the biggest obstacle to making the US health system better?think the biggest obstacle to improvingour health system is politics.1 Respondentsidentified cost as the second obstacle. 50% 33% 9% 8%A separate HRI post-election survey Politics Costs Individual Fundingshowed that voters think the best way to responsibilityreduce costs is to trim payments to doctorsand hospitals, and reduce investment inhealth information technology.2 Those arewarning bells that the push for value is nowcoming directly from consumers. And evenhigh-value companies need to do a betterjob of proving and articulating their worth.For this year’s Top Health Industry Issues,HRI polled 1,000 consumers about a rangeof healthcare topics.3 Key findings include:• Digital communication is gaining traction. More than a quarter of consumers have had caregivers use email or text messages to communicate with them, with most satisfied with the Source: PwC Health Research Institute experience. PwC Health Research Institute | Top health industry issues of 2013 3
  4. 4. States on the frontlines of ACA implementationAfter nearly three years of polarized Figure 2: Do you think health insurance exchanges will make it easier for you to find andanticipation, the Affordable Care Act’s p urchase a competitive health insurance plan?(ACA) cornerstone healthcare coverageprovisions now become reality. In 2013the spotlight shifts to the states. Buildingup to 2014, when the major provisions ofthe law take effect, state officials mustmake a series of decisions about how—orif—to run their own insurance exchanges,whether to expand Medicaid coverage, andwhat type of insurance market regulationis needed. Tabling these decisions is notan option; where states are unable to, orchoose not to, implement reforms, thefederal government will step in.States were to submit plans for state-based insurance marketplaces, knownas exchanges, in December 2012, andblueprints for partnership exchanges are Source: PwC Health Research Institute Consumer Survey, 2012due in February 2013. In October 2013,an open enrollment period will kick-startthe exchanges, drawing millions of peoplewho were previously uninsured—andputting pressure on states to aid consumersin selecting coverage and determining just a third of consumers believe exchanges partnering with statewide organizationssubsidy eligibility. will make shopping for coverage easier, to conduct focus groups and has usedState decisions about whether to expand while the same number say they don’t have social media, including blogging andMedicaid to 138 % of the federal poverty enough information (see Figure 2). Twitter, to reach potential participants.level (FPL), about $15,400 for an Guidance released by the federal Colorado also plans to engage “trustedindividual, will have a direct impact on government in November 2012 notes that faces” to educate its citizens about thethe exchanges.1 In states that choose not states will oversee risk pools, develop exchange.6to expand, some individuals who would their own effective rate review programs, • States should creatively and efficientlyhave been eligible for Medicaid will instead establish open enrollment periods, and build IT capabilities by partnering withreceive subsidies to buy insurance through have a hand in certifying qualified health other states, using commercial off-the exchanges (those with income between plans.3 States will also have flexibility to the-shelf systems, optimizing existing100% and 138% of the FPL). Subsidies will define essential community providers.4 technical components, and/or engagingboost exchange participation, but states contractors with detailed expertise in The biggest challenge facing the statesand industry alike know from experience systems integration. Some are relying, in 2013 is information technology. Manyhow challenging it can be to enroll new at least temporarily, on the federal are overhauling their existing Medicaidpopulations. government’s infrastructure currently eligibility systems and designing anAbout 30 million Americans are expected under development. exchange infrastructure to create a single,to gain coverage under the ACA through seamless entry point. Even states not • Healthcare companies should get toMedicaid, exchanges, and employer- expanding Medicaid or running their know their new customer base andsponsored coverage. However, the newly own exchanges must conduct significant be prepared to deal with distinctiveinsured are likely to be significantly poorer, upgrades to existing systems.5 challenges, such as language barriersless educated, less likely to be employed and frequent movement betweenfull time, and more ethnically diverse than Implications exchange plans and Medicaid.those who are currently insured, according • State exchange leaders should involve • Healthcare companies should closelyto demographic analysis by PwC’s Health stakeholders and conduct thorough monitor how states are interpreting newResearch Institute (HRI).2 States and research on consumer needs, then rules and regulations, and stay in closehealthcare companies must anticipate design targeted outreach and education communication with state officials asthe needs of this population and devise programs using many communication they build their regulatory capacity.strategies to engage and educate them. A channels. For example, Colorado isrecent HRI consumer survey indicates that4 PwC Health Research Institute | Top health industry issues of 2013
  5. 5. Caring for the nation’s most vulnerable: dual eligiblesDual eligibles—individuals who qualify for medical and related services for duals. programs. A PwC’s Health Researchboth Medicare and Medicaid coverage—are An interdisciplinary team coordinates Institute (HRI) internet survey of a subsetamong the nation’s sickest and poorest. care, enabling many duals to receive care of duals found they are more likely thanMany have multiple chronic conditions and at home. In place for over a decade, the other consumers to use social media formore than half have annual incomes of less program has reduced hospitalization healthcare purposes (63% comparedthan $10,000.1 “Duals” often fall through rates and improved care coordination with 40%). Also, 42% of duals havethe cracks of two programs that were not but has yet to demonstrate savings, since communicated with a caregiver viadesigned to work together. This lack of capitated payments have exceeded the email and nearly one-quarter via textcoordination often leads to poor quality, amount Medicare would have spent on (see Figure 3). Twenty percent of dualsinefficiency, and avoidable costs. fee-for-service.6 have healthcare apps on a mobile device, compared with 12% of non-duals.10Cash-strapped state Medicaid programs In 2011, CMS announced a three-yearreport that projected long-term costs for demonstration project that covers two • Plans and providers should fill educationthis population are not sustainable. Some million duals. Of the 26 state proposals, and awareness gaps to improve areas suchresearchers say shifting dual eligibles to 18 proposed a capitated model paying a as medication adherence. The HRI surveymanaged care plans or care coordination combined, risk-adjusted, per-member, per- found that 53% of duals have participatedprograms could save up to $20 billion month amount.7 The first demonstrations in a prescription assistance program ina year.2 But it will be an adjustment for begin in April 2013, in Massachusetts with a which they can take advantage of freepatients accustomed to fee-for-service capitated approach, and in Washington with samples, discount cards, and coupons.medicine in the traditional Medicare a managed fee-for-service model.8,9 • States and insurers should track progressprogram. of demonstrations on reimbursementWith the aging of the baby boomers, the Implications versus medical cost trends, uniquenumber of today’s approximately 9 million • In assuming risk for duals, managed contracting mechanisms betweenduals will steadily increase, and so will care organizations should carefully managed care and providers, carethe cost of caring for them. Spending on consider the cost effectiveness of current management program efficacy, andduals reached nearly $320 billion in 2011, operations and how they can refashion effective coordination of clinical and non-accounting for 39% of total Medicaid and care delivery to better manage costs. clinical services such as transportation,31% of total Medicare spending.3,4 Federal meal service, and in-home assistance. • While managed care may be familiarspending on duals is projected to reach to Medicaid beneficiaries, Medicare • With long-term care support services$3.7 trillion during the next decade.5 To beneficiaries historically have had accounting for 70% of state Medicaidmanage the cost, the Centers for Medicare freedom of choice in providers. With so spending on duals, plans deciding toand Medicaid Services (CMS) is seeking many in Medicare fee-for-service, the increase those offerings must determinehealth plans willing to take on financial adjustment to managed care may be the most cost effective structure suchrisk through capitated managed care plans. difficult. as in-house coordination and referralSeveral states also intend to test a managed services, partnering with state, county,fee-for-service financial alignment model. • Some duals may be receptive to using and community organizations, or digital communication for diabetesIn the CMS Program of All-Inclusive Care outsourcing to a specialty provider.11 maintenance, weight management,for the Elderly, managed care providers disease management, and chronic carereceive capped payments to coverFigure 3: Have you and a doctor, nurse, or other caregiver ever communicated in the following ways about a healthq uestion you had (Dual eligibles vs. all other consumers)?Source: PwC Health Research Institute Consumer Survey, 2012 PwC Health Research Institute | Top health industry issues of 2013 5
  6. 6. Bigger than benefits: employers rethink their rolein healthcareHealthcare and employers—inseparable? Figure 4: Have you changed your behavior as a result of changes your employer made inMaybe not. With the Supreme Court ruling benefit offerings or wellness programs?to uphold the Affordable Care Act (ACA)and the president’s re-election, employershave never had a better opportunityto re-examine their long term role inproviding healthcare coverage. The year2013 will likely be the turning point for theevolution of healthcare benefits over thenext decade.For almost 70 years, employer-basedcoverage has been a cornerstone of UShealthcare. A result of wage-price controlsdating back to World War II and favorabletax treatment ever since, healthcarebenefits are a core component to attractingand retaining talent. But once seen as a Source: PwC Health Research Institute Consumer Survey, 2012tax-efficient way to reward employees,healthcare costs are now infringing onmany corporations’ efforts to competeglobally.Healthcare costs now rank second or In 2013, corporate leaders will embark on Implications “pay or play” financial analyses and manythird to wage costs. The median employer • Employers must determine their will ask tough questions such as why theyshare of payroll going toward health future role in healthcare and develop a focus so many resources on something thatinsurance costs was 12.8% in 2010, up transition strategy to support it, whether is not core to the business. Some employersfrom 8.2% in 1999.1 Many employers are they transition out, move to private may decide to transition out of healthcareconcerned about the financial impact of exchanges with defined contributions, altogether: a recent third-party surveynew mandates, taxes (including the 40% or change their practices for covering found that only 23% of employers are very“Cadillac” excise tax on high cost plans certain classes. confident that their organization will offerstarting in 2018), and administrative • Insurers and providers should anticipate healthcare benefits a decade from now,challenges brought forth by the ACA. And, a changing insurance marketplace where compared with 73% in 2007.2with healthcare entitlements center stage employers increasingly participate inin the ongoing budget debates at both the Others will elect to move toward a defined and defer to organized health insurancestate and federal levels, employers are contribution approach, similar to 401(k) marketplaces, such as public and privateconcerned that cost-shifting from these retirement plans, with the exchanges. Still exchanges.programs will only accelerate in the future. others will double down on their efforts, both individually and collectively, to bend • New delivery systems (e.g., accountableUntil now, an individual insurance market care organizations) should engage the cost curve through consumer-drivenseen by many as dysfunctional has left leading employers and employer healthcare, wellness programs, and newemployers no choice but to continue coalitions to become partners to deliver efforts related to delivery and paymentoffering coverage, even with the rising improved value and enhance employee reforms. However, this will not be easy.cost. But a number of provisions of the population health and productivity. The PwC Health Research Institute’sACA, such as guaranteed coverage, consumer survey found that only 21% of • Employers should stay in closeelimination of pre-existing condition consumers have changed their behavior communication with policy makers asexclusions, and government subsidies for as a result of their employer changing they make technical corrections to thethe poor and many in the middle class, benefit offerings or wellness programs ACA, including the healthcare benefitshave strengthened access and affordability (see Figure 4).3 tax exclusion, and tackle ongoing issuesfor those without employer-based coverage.Now employers are beginning to consider with the federal budget.the new state exchanges as a potentialsafety net for employees or retirees and arelooking at private exchanges as alternativesto the status quo.6 PwC Health Research Institute | Top health industry issues of 2013
  7. 7. Consumer revolution in health coverageHealth insurance is about to witness a Insurers are also partnering with retailers investing in data analytics to personalizeconsumer revolution. Promises of Amazon- to bring healthcare products to where the care management through targetedstyle online experiences for individuals consumer is. Costco, for example, which messaging. For example, predictive datashopping for health insurance will be sells health insurance for small businesses will be used to identify the best methodsput to the test in 2013, when 12 million in some states, recently began offering for communicating with members aboutpeople are expected to enroll in insurance store members a choice of individual health preventive care options, such as flu shots.11exchanges.1 plans through Aetna.7 The data would also allow BCBSNC to identify diabetic members who prefer moreIn actuality, this revolution is more like anevolution. The 18% rise in high-deductible Transparency self-care resources versus those who want more direct counseling.12plans from 2011 to 2012 has pushed Consumers have trouble assigning anmore consumers to feel the financial accurate value to their insurance; in fact,pinch.2 Consumers are also demanding an HRI consumer survey found that nearly Implicationsa greater say in how they spend their one-third overvalued their individual • Consumer expectations for flexibilityhealthcare dollars, and that, along with the coverage by more than 65%.8 As consumers and transparency should spur insurersdevelopment of state insurance exchanges, begin enrolling in the exchanges in and employers to offer intuitiveis prompting the industry to compete October 2013, expect them to demand navigation assistance and betterdifferently. Healthcare consumers can clear, simple information on prices, comparison shopping tools.expect to see a shift in the marketplace as provider networks, and quality. • As the retail convenience of coverageinsurers borrow three key practices from A recent HRI survey found that in grows, providers can also expect to seethe retail industry. addition to an easy-to-use website, 72% of a continued increase in the use of retail consumers want a cost comparison tool to clinics as consumers seek lower costConvenience select insurance and 64% value products options for minor ailments. ConsumerNearly 40% of consumers surveyed by that match their needs and preferences.9 use of retail clinics rose from 9.7% inPwC’s Health Research Institute (HRI) States are responding to transparency 2007 to 24% in 2012 according to HRIsaid they would purchase insurance at a demands with such efforts as Enroll UX consumer research.private insurance company retail store3 2014, a public-private partnership that has • With price-sensitive customers and(see Figure 5). Insurers such as Florida designed a prototype online site for state a competitive generic drug market,Blue and Highmark have opened shops to exchanges.10 pharmaceutical companies can enhancesupplement their online presence.4,5 From brand loyalty through patient assistancea consumer perspective, buying health Customer insights programs such as drug discount andinsurance—and perhaps participating in coupon programs. Retailers tap analytics on consumer buyingwellness programs—at the local shopping patterns to stock shelves, create targetedcenter is very convenient. PwC’s national advertising and build customer loyalty.Experience Radar survey found that 40% Insurers such as Blue Cross and Blueof retail consumers want shopping options, Shield of North Carolina (BCBSNC) arewhether it’s online, via phone or in stores.6Figure 5: How likely are you to buy insurance from the following? 41% 34% 41% 37% 23% 15%Insurance broker Government Private insurance Private insurance Well known retail Other website company website company store store or website (in-person retail where you buy store) household itemsSource: PwC Health Research Institute Consumer Survey, 2012 PwC Health Research Institute | Top health industry issues of 2013 7
  8. 8. Customer ratings hit the pocketbooks of healthcarecompaniesThe consumer experience matters to Figure 6: Where have you read customer reviews of healthcare companies?healthcare businesses, especially withits connection to financial penalties andbonuses. Private insurers who coverMedicare members were eligible for morethan $3 billion in bonus payments in 2012based on quality ratings.1 The program,known as the Medicare Advantage Five-starQuality Rating system, relies on consumerinput for nearly half of its quality measures.2Hospitals and health systems are feelingthe pinch as nearly one-third of the federalgovernment’s value payment programconnects to consumer experience andsatisfaction. About $850 million, or 1% oftotal reimbursement in 2013, could be heldback as a part of the federal government’sHospital Value-based Purchasing program.3Customers support these effects. Abouthalf of consumers surveyed by PwC’s Source: PwC Health Research Institute Consumer Survey, 2011, 2012Health Research Institute said thatcustomer feedback should affect paymentsto healthcare organizations. Nearly 70%of consumers have used reviews to makehealthcare decisions related to their doctor, Healthcare organizations are already representatives and posting onlinehospital, insurance company or pharmacy. using positive quality scores as marketing messages during customer serviceAnd more than 60% said that a hospital’s tools. Nearly 40% of Medicare Advantage inquiries. Healthcare companies shouldquality of care affects their healthcare members are currently served by four use all consumer touch points wheredecisions.4 to five star health plans, which are the education could be relevant. highest ratings available under the bonus • Moving beyond surveys and usingMore consumers have read reviews on program, and the plans with high customerConsumer Reports and blogs, but consumers consumer research to get a more satisfaction scores have increased by 20% complete picture of consumers and theirare also discovering government-sponsored over the last year.8 The industry recognizeswebsites such as the Centers for Medicare health needs will be a differentiator. the importance of addressing negative Safety net hospitals are particularlyand Medicaid Services and the National customer input as well. Many companies areCommittee for Quality Assurance (see vulnerable, given their history of lower taking advantage of social media to address patient experience scores.10 (See issue onFigure 6). a consumer issue either immediately online “Consumer revolution in health coverage”One way providers are improving the or via a follow-up phone call. Nearly 70% of on page 7)patient experience is through the patient- consumers surveyed expected a responsecentered medical home, which uses the to complaints within a day, while 40% • Establishing a well-integrated andprimary care physician as a central point of expected it within a few hours.9 thoughtful consumer program that tiescoordination across the care continuum. All in with business needs will be more50 states have medical home efforts, with 44 Implications important than ever. Insurers andpassing 300+ related laws, and more than providers have shifted hiring practices • As healthcare companies develop new to include individuals with the skills38,000 physicians affiliated with medical ways to raise their quality scores throughhomes, an eight-fold increase in the past five and talents to connect with consumers improved consumer service, they need and understand how to collect and useyears.5 Patients in medical home practices to consider how consumers use andreported higher satisfaction with care, customer data. Chief experience officers contribute to the increasing amount of have become increasingly popular in theaccess to care, interpersonal experience, quality data.technical quality and communication.6 health sector, with one in ten hospitalsSuccess has been attributed to the reduction • Providers and insurers should educate giving accountability for the customerin bureaucracy, consistency in care, and consumers on quality metrics and how experience to a senior member of theproviding one easy hub for patient health to interpret and use the scores. This leadership team.discussions.7 can be done by training call center8 PwC Health Research Institute | Top health industry issues of 2013
  9. 9. Goodbye cost reduction, hello transformationWith reimbursement ready to reset under Figure 7: How many times have you decided not to seek healthcare inthe Affordable Care Act (ACA) and in light the last year because of how much that care would cost you?of the ongoing federal budget debate,hospitals are scrambling to reduce costseven further. And, with more than 40%of consumers postponing care because of 5xcosts, hospitals must be competitive (seeFigure 7).1 The traditional low hanging 4xfruit savings of labor productivity and 3xsupply cost reductions have largely beenpicked over. Healthcare companiesmust instead embark on full-scaletransformation efforts to redesign how 40% Consumers 2xthey deliver care. postpone careRetooling labor management because of costsHospitals and health systems havehistorically focused their productivityefforts on broad-based staffing benchmarks 1xinstead of tackling underlying issues suchas workflow. In designing new processes,hospitals now face pressure to use themost appropriate venue for care, which Source: PwC Health Research Institute Insurer Survey, 2012is often lower-cost settings. This mayrequire redeployment of existing staff andinvestment in continuing education andtraining. comparative effectiveness of products. • Transformation requires long term, data-Successful transformation addresses Hospitals are now employing more driven efforts with a perpetual focus onhow and by whom care is delivered. To physicians and have more influence in efficiency. Hospitals may want to createmaintain high quality while implementing managing physician preference purchases. a permanent project management officesustainable cost reductions, health systems to lead and sustain these efforts. Chiefare involving clinicians, staff and even Some innovators are building upon group innovation or transformation officerspatients in redesigning the delivery of purchasing contracts to create regional are emerging to lead the charge andcare. The Mayo Clinic created a Center for supply chain cooperatives with other determine which initiatives will have theInnovation that relies on a diverse design provider organizations. For example, the greatest impact across the enterprise.research team to connect evidence-based Texas Purchasing Coalition, a 27-hospitalpractices with consumer research. The partnership, expanded and forged a hybrid • Top leadership must approve whichcenter uses technology that allows it to contract with a national group purchasing transformation projects move forward,simulate leading practices and adjust organization to not only reduce supply focusing on projects that have broadthem to fit the clinic’s environment. This costs but also to standardize distribution impact and the ability to be scaledapproach helps Mayo Clinic to understand and improve decision support. As a “power across the organization. Having a formalthe needs of its consumer base while buyer” with over $800 million in combined process, possibly through internaldeveloping a positive and cost-effective supply costs, the coalition achieved $54 social media, for employees to suggestexperience.2 million in savings in the first 18 months.3 improvement projects is also critical. • Hospitals must align individual incentivesReining in supply costs Implications with organizational incentives whichTransforming organizations often requires • Before embarking on full are ultimately aligned with paymentincreased stakeholder involvement and transformations, healthcare companies incentives. If ACOs or other contractsnew alliances. Health systems have should first master general cost require organizations to meet qualitytraditionally focused on standardizing management, particularly in nonpatient and efficiency targets, then cliniciansand reducing costs of commodity supplies care areas, and assess the effectiveness and staff need to have similar incentives.such as bandages and IVs, through group of management layers in patient care Health systems need key performancepurchasing contracts while tiptoeing and administrative areas. indicators that measure progress andaround politically charged issues such connect to compensation physician preference items and the PwC Health Research Institute | Top health industry issues of 2013 9
  10. 10. The building blocks of population health managementPopulation health management shows Figure 8: Does your hospital have a physician compensation plan that is based atpromise in the quest for better health at a l east partially on metrics of quality, efficiency, and/or health outcomes?lower cost by creating an integrated systemof care, rather than leaving consumers tofend for themselves. In 2013, expect tosee more partnerships as companies buildtheir population health infrastructureto include shared responsibility forpatient outcomes and satisfaction, datacollection and analysis, member educationand engagement, and a focus on at-riskpopulations.Collaborations can start small, targetingspecific chronic diseases or patientgroups. Bon Secours St. Francis HealthSystem and Michelin North Americacollaborate to provide integrated care forMichelin employees and dependents withdiabetes. Care ranges from coordination ofspecialists to buying groceries, providingeducation, and conducting work-site Source: PwC Health Research Institute Human Capital Survey, 2012evaluations. Successes include patientswho are able to stop insulin therapy anddecreases in blood glucose levels, bloodpressure, and weight.1Other partnerships allow large In some population health approaches, number of readmissions involved urinaryorganizations to tap remote expertise. The navigators or care managers assess the tract infections acquired in the hospital.Mayo Clinic Care Network connects nine socioeconomic environment of patients More active screening and treatment priorsystems, including Dartmouth-Hitchcock and help remove barriers to improve to patient discharge reduced readmissions.6and Chicago’s NorthShore University adherence. A diabetic patient who keepsHealthSystem. Patients and practitioners returning to the hospital might be taking Implicationsgain from Mayo Clinic expertise through insulin as prescribed but may not have a • Population health management requirese-consultations and an online database refrigerator to store it in or electricity to major investments over multipleof clinical information. Members may run the refrigerator—and insulin loses its years, and requires trial and error.refer complex cases to Mayo Clinic while effectiveness when exposed to excessive Convergence and consolidation mustproviding follow-up care locally.2 heat. Only when such underlying problems accelerate among otherwise disparate are identified and addressed willPopulation health management sometimes players. patients improve.involves co-management, giving • The push for higher quality and valuephysicians a governance role and basing For care management, an Arizona requires standardization of processescompensation on outcomes. Geisinger hospital system contracts with Optum and the ability to continually improve orHealth System in Pennsylvania ties about (of United Healthcare), providing Optum risk losing reimbursement.20% of physician pay to quality and nurses access to patient electronic healthefficiency and uses a bundled payment records. The nurses consult with patients • Collaborations need a strong technologyarrangement (ProvenCare) for some by phone, provide instructions, and set foundation, including web-basedprocedures, such as cardiac bypass surgery, expectations for follow-up care. This reporting tools that connect to clinical,reducing costs through fewer complications has resulted in immediate responses to financial, and administrative systems.and readmissions and improved patient after-hours queries; reduced use of on-call Systems must support analytics across aoutcomes (see Figure 8).3 physicians, ER visits, and hospitalizations; wide spectrum of inpatient, outpatient, and improved patient satisfaction.5 Other post-acute, and community services.But the shift to compensation based on insurers and providers are following suit.value is only beginning to take hold. Only47% of hospitals participating in a recent Kindred Healthcare, a post-acutePwC Health Research Institute survey provider, reduced hospital readmissionsaid they have a compensation plan based rates by more than 8% by forming “jointat least partially on metrics of quality, operating committees” with hospitals. Oneefficiency, or health outcomes.4 partnership discovered that a significant10 PwC Health Research Institute | Top health industry issues of 2013
  11. 11. Bring your own device: convenience at a costFor many people, mobile devices are Hospitals must balance the desire for work devices allows providers to access a limitedan extension of themselves, so it’s not flexibility with creating an environment amount of information: demographics,surprising that they have found their way secure enough to protect sensitive allergies, medications, and lab results. Sooninto the workplace—including hospitals. patient data. According to a recent PwC the VA will expand access to more medicalOnce there, they easily outshine employer- Health Research Institute survey, half applications that require the input of patientissued desktop computers or laptops, and of consumers agree that being able to data. The VA uses complex pass codes, lockssoon clinicians have switched to their own access electronic health records (EHRs) inactive machines, tracks data, has remotedevices instead. Recognizing the associated using a mobile device would help their wiping, and never stores patient data onrisks and admitting that attempts to stop providers work together more effectively the devices.9the trend might be futile, many hospitals to coordinate their care, and one-thirdnow permit employees to “bring your own believe that doing so would result in a Implicationsdevice” (BYOD) to work. quicker response to their health questions.5 • Hospitals need an identity managementCurrently, 85% of hospitals support Also, 61% of consumers are willing to approach that accounts for patientclinician use of personal devices at work.1 communicate with a clinician via email, and employee mobility. This includes and 91% who have done that were satisfiedIn 2013, expect a heightened focus on a centralized, integrated, and with the as more employees “bring their comprehensive view of people, roles,own” and more sensitive data is made Even so, consumers are not enthusiastic and privileges for more accurate andavailable on them. about physicians accessing their health efficient auditing and reporting and for information on a personal device, with continuous improvement of policies andOf the 502 breaches of protected health nearly three-quarters saying they would be controls.information reported to the Department of concerned about privacy (see Figure 9).Health and Human Services Office of Civil • Stage two of the government’sRights since September 2009, 71 involved Indeed many hospitals are behind on “meaningful use” program calls for theportable electronic devices.2 Loss and security. Three-quarters of hospitals encryption of data on end-user devices.theft are the top threats to the information permit clinicians to access EHRs on their Starting in 2014, failure to comply willstored on mobile devices. Viruses and other personal devices,6 but PwC’s Global mean the loss of incentive payments and,software attacks targeting smart phones Information Security Survey found that in 2015, penalties.and tablets rose by 273% in the first half of 46% have a security strategy governing • Hospitals must continue to communicate2011 over the first half of 2010.3 Physicians the use of mobile devices.7 More than half privacy and security policies andand contractors who work in multiple of IT professionals say they’ve experienced practices to consumers, especially as thehospitals might inadvertently spread viruses employees circumventing or disengaging desire to communicate with patients viavia their mobile devices among the hospitals security features like passwords and key email and text gains popularity amongthey visit. And patients add another wild locks.8 clinicians.card: one study revealed that of the 76% Some hospitals give staff read-only access • The costs of BYOD may outweigh whatof hospitals allowing visitor access to the to sensitive data; others permit interaction hospitals save in hardware costs. OneInternet on their mobile devices, 58% lack with it to enhance work flexibility. The study found that supporting employeepassword protection for that access, putting Department of Veterans Affairs’ program personal devices can cost companieshospitals at risk for viruses.4 to make EHR data user-friendly on portable 33% more.10Figure 9: If doctors, nurses and other caregivers were able to access your medical information from a phone/mobiledevice that they also used for personal use, how concerned would you be about the privacy of your medical information?Source: PwC Health Research Institute Consumer Survey, 2012 PwC Health Research Institute | Top health industry issues of 2013 11
  12. 12. Meeting the new expectations of pharma valuePharmaceuticals and medical devices play Such partnerships could yield substantial In Germany, if a company cannota pivotal role in health outcomes. But the savings. A recent study found that demonstrate that a new therapypath from lab to bedside is often long, medication adherence by diabetics could provides clinical benefit over establishedarduous, and expensive. Today, the final save between $4.7 and $8.3 billion in treatments, reimbursement starts at thehurdle is no longer regulatory approval; it’s annual US healthcare costs.4 However, same level as existing clinicallyreimbursement. only 74% of consumers surveyed by PwC’s equivalent medicines.10Physicians, once the primary arbiters Health Research Institute (HRI) said Collaborating with regulators early in drugof pharma value, now have less say in they very closely adhere to prescription development is another approach. For itspayment decisions than insurers and large instructions.5 psoriasis medication, Novartis collaboratedproviders. If purchasers don’t see evidence Interest is growing among insurers to with NICE on trial design, productthat a new drug fills an unmet need or partner with pharma to determine unmet selection for comparative effectiveness,outperforms similar products at a more medical needs, and improve medication study population, and economicreasonable cost, the drug won’t receive adherence and clinical outcomes. In a evaluation.11 Following the pilot, NICEpreferred formulary placement and may recent HRI insurer survey 43% of insurers established its Scientific Advice programnot even be covered by insurance. The agreed that they would benefit from a to provide fee-for-service advice to pharmaindustry has largely shielded customers data sharing partnership with pharma and medtech companies. The agencyfrom the price of medication, but as costs companies (see Figure 10).6 Drug maker reviews product development plans toshift to individuals, drug and device Pfizer and insurer Humana have formed a ensure that they produce relevant evidencemakers will be under greater pressure to five-year partnership focused on improving for submission.prove value. cost, quality and access to appropriate care.Memorial Sloan-Kettering Cancer Center They seek to better understand patient care Implicationsrecently refused to pay for a new colorectal needs by tapping into clinical evidence • The pharmaceutical industry mustcancer drug, citing data that it performed and comparative effectiveness research. provide robust and reliable data tono better than a similar medicine at less Specifically, they hope to improve the purchasers on cost-effectiveness, usingthan half the cost.1 The manufacturer treatment and management of chronic mock formulary evidence audits, data- conditions including cardiovascularresponded by lowering the price to that of sharing partnerships, and outcomes- disease and Alzheimer’s disease. 7the competing therapy barely two months dependent contracts.after launch.2 Comparative effectiveness studies can • Pharma and its partners should monitor help build pharma’s value case. Britain’s costs and outcomes as they aggregateOutcomes-based contracts help prove the National Institute for Health and and interpret data. Underused datavalue of drugs and devices. EMD Serono, Clinical Excellence (NICE), which makes from electronic health records, patientthe biopharmaceutical division of Merck reimbursement recommendations for registries, medical devices, nutritionKGaA, has forged separate contracts with England and Wales, initially recommended studies, and social media can ofteninsurer Cigna and pharmacy benefits against a highly touted, FDA-approved supplement claims and prescriptionmanager Prime Therapeutics to provide melanoma medication because it had not information.adherence-based discounts on Rebif, a been compared with other drugs used formultiple sclerosis therapy. Cigna claims • Drug and device makers can prove value the same indication.8 It recently reverseddata has shown that Rebif helped reduce by including a comparative effectivenesshospitalizations by 43% the first year of its the decision after the manufacturer offered to discount the drug.9 component in clinical trials and pairingagreement with EMD Serono.3 products with diagnostics targeting patients who can benefit the most.Figure 10: How much do you agree with the following: our organization would benefit from a data sharing partnership ith wbiopharmaceutical companies?Source: PwC Health Research Institute Insurer Survey, 2012; 3% did not respond12 PwC Health Research Institute | Top health industry issues of 2013
  13. 13. Medtech industry braces for excise tax impactEffective January 1, 2013, the 2.3% excise Figure 11: To what extent do you agree or disagree with the following statement:tax on medical devices could prompt Pharmaceutical and biomedical research is an important engine for economic growth consolidation in a $308 billion global in this country?industry consisting mainly of small start-ups with lean product portfolios and fewerthan 50 employees.1 Some could owe morein taxes than they generate in profits,making them less attractive to investors butenticing to larger companies that are betterpositioned to absorb the tax and looking toexpand their portfolio.Federal coffers stand to gain $29.1 billionover the next ten years from this tax, whichwas included in the Affordable Care Act(ACA).2 Much of the industry has labeledthe tax a job and innovation killer—predicting nearly 39,000 US job losses.3Some companies say it’s just anothercost pressure in an evolving market, butothers have already blamed it for shelveddomestic expansion plans and layoffs.One company is cutting its workforce by Source: PwC Health Research Institute Consumer Survey, 201210% and plans to move some operationsoverseas.4 Medtronic, a large medicaldevice manufacturer, estimates that the taxwill increase its annual tax liability by $125million to $175 million, or 1%−2% of to absorb the tax and reduce expenses • Medtech companies should considerUS sales.5 elsewhere, others are recalibrating working with providers on comparativeMedtech companies are unlikely to pass on operations, resources, and investments effectiveness studies of products beforethe tax to customers for several reasons. to spur strategic growth in other areas to they are distributed. Doing so mayA group of hospital associations opposes offset it. Because the tax applies only to US help reduce write-offs on consignmentpass-through of the tax and has urged the sales, medical device makers with robust products, demonstrate value toIRS to prevent them from doing so; and sales abroad should fare better. purchasers, and streamlineindustry analysts predict that companies the portfolio.dealing in commodities, such as coronary Implications • Industry consolidation could givestents or tongue depressors, are unable • Manufacturers that have been waiting medtech companies greater pricingto pass it on because of pricing pressure and hoping for repeal have run out of power in negotiations with insurers,and competition. Unless companies offer a time. They should have a basic system providers, and suppliers.novel product without direct competition, for calculating tax liability, or they riskthey will have to bear the cost. overpaying or underpaying the IRS.As manufacturers look to shift costs, • The supply chain may become volatile asthey must also innovate. Nearly 70% of manufacturers, contractors, distributors,consumers surveyed by PwC’s Health and other third parties maneuver toResearch Institute say that pharmaceutical avoid responsibility for the tax. Medtechand biomedical research is an important companies should assess the potentialcontributor to economic health (see for supply chain disruptions beforeFigure 10).6 While some companies expect changing pricing policies. PwC Health Research Institute | Top health industry issues of 2013 13
  14. 14. FootnotesStates on the frontlines of ACA implementation1. Based on the 2012 HHS federal poverty guidelines for 48 contiguous US states, http://aspe. HRI Analysis; US Census Bureau, Current Population Survey, March 2011 Supplement; Agency for Healthcare Research and Quality, 2009 Medical Expenditure Panel Survey; CBO, “Estimates for the Insurance Coverage Provisions of the Affordable Care Act Updated for the Recent Supreme Court Decision,” July 2012.3. Department of Health and Human Services, “Patient Protection and Affordable Care Act; Standards Related to Essential Health Benefits, Actuarial Value, and Accreditation,” 45 CFR Parts 147, 155, and 156; Accessed November 2012.4. Essential community providers are generally defined under the ACA to service low income, medically underserved communities, although states may further develop this definition.5. Michael Tutty and Jay Himmelstein, “Establishing the Technology Infrastructure for Health Insurance Exchanges Under the Affordable Care Act: Initial Observations from the “Early Innovator” and Advanced Implementation States”, University of Massachusetts, Medical School, National Academy of Social Insurance, and Robert Wood Johnson Foundation, September 2012; Final.pdf.6. Sarabeth Zemel, Abigail Arons, Christina Miller, and Anne Gauthier,, “Building a Consumer-Oriented Health Insurance Exchange: Key Issues”, National Academy for State Health Policy, February 2012; for the nation’s most vulnerable: dual eligibles1. Judith Solomon, “Moving ‘Dual Eligibles’ Into Mandatory Managed Care and Capping Their Federal Funding Would Risk Significant Harm to Poor Seniors and People With Disabilities,” Center on Budget and Policy Priorities, October 10, 2012; Randall Brown and David R. Mann, “Best Bets for Reducing Medicare Costs for Dual Eligible Beneficiaries: Assessing the Evidence,” Kaiser Family Foundation Medicare Issue Brief, October 2012; Judy Feder, Lisa Clemans-Cope, Teresa Coughlin, John Holahan, Timothy Waidmann, “Refocusing Responsibility For Dual Eligibles: Why Medicare Should Take The Lead,” Robert Wood Johnson Foundation and Urban Institute, October 2011; Eligibles.pdf.4. Ibid.5. Kenneth E. Thorpe, “Estimated Federal Savings Associated with Care Coordination Models for Medicare-Medicaid Dual Eligibles,” September 2011; http://www. Ibid.7. The Kaiser Commission on Medicaid and the Uninsured, “State Demonstrations to Integrate Care and Align Financing for Dual Eligible Beneficiaries: A Review of the 26 Proposals Submitted to CMS,”, accessed October 2012.8. The Kaiser Commission on Medicaid and the Uninsured, “Massachusetts’ Demonstration to Integrate Care and Align Financing for Dual Eligible Beneficiaries,” http://, accessed October 2012.9. Anthony Brino, “CMS Approves Washington’s FFS dual eligible demonstration,” Healthcare Payer News, November 1, 2012; content/cms-approves-washingtons-ffs-dual-eligible-demonstration.10. PwC Health Research Institute Consumer Survey, 2012. In October 2012, HRI conducted an Internet survey of 100 dual eligibles. One-quarter of the sample reported income before taxes of less than $15,000. Age ranges included 28% between 18 and 24, 35% between 25 and 44, 17% between 45 and 64, and 20% 65 or older. Sixty- four percent reported they own a smartphone.11. The Kaiser Commission on Medicaid and the Uninsured, “Medicaid’s Long-Term Care Users: Spending Patterns Across Institutional and Community-Based Settings,” October 2011; than benefits: employers rethink their role in healthcare1. The Henry J. Kaiser Family Foundation, “Health Costs A Primer: Key Information on Health Care Costs and Their Impact,” May 2012; upload/7670-03.pdf.2. Towers Watson and National Business Group on Health, “Performance in an Era of Uncertainty,” 2012; Watson-NBGH-2012.pdf.3. PwC Health Research Institute Consumer Survey, 2012.Consumer revolution in health coverage1. CBO, “Estimates for the Insurance Coverage Provisions of the Affordable Care Act Updated for the Recent Supreme Court Decision,” July 2012.2. In 2011, 11.4 million people were covered by health savings accounts or high-deductible health plans, increasing to 13.5 million in January 2012. AHIP Center for Policy and Research, “January 2012 Census Shows 13.5 Million People Covered by Health Savings Account/High-Deductible Health Plans (HAS/HDHPs),” May 2012.3. PwC Health Research Institute Consumer Survey, 2012.4. Florida Blue, “Florida Blue Centers”,, accessed October 2012; Highmark, “Highmark Direct”,, accessed October 2012.5. PwC Health Research Institute, “Customer experience in healthcare: The moment of truth,” July 2012.6. PwC 2011 Experience Radar Research.7. Costco, “Costco Personal Health Insurance,”, accessed October 2012.8. PwC Health Research Institute Consumer Survey, 2011. On average, consumers surveyed value their individual coverage at approximately $6,500 with nearly 30% of the consumers surveyed valuing their individual coverage at $9,000 or more compared with $5,429, which is the average annual premium for individual coverage on an employer sponsored health plan, according to a Kaiser Family Foundation Employer Health Benefits 2011Annual Survey, PwC Health Research Institute Consumer Survey, 2012.10. Enroll UX 2014,, accessed October 2012.11. Blue Cross and Blue Shield of North Carolina, “BCBS, SAS harness the power of analytics to improve health outcomes, personalize health plans,” May 10, 2012; http:// Diana Overland, “Fierce QA: Data analytics help BCBSNC in health exchanges,” Fierce HealthPayer, August 12, 2012; fierce-qa-data-analytics-help-bcbsnc-health-exchanges/2012-08-12.13. PwC Health Research Institute Consumer Survey, 2007 and 2012; PwC Health Research Institute, “Customer experience in healthcare: The moment of truth,” July 2012.14 PwC Health Research Institute | Top health industry issues of 2013
  15. 15. FootnotesCustomer ratings hit the pocketbooks of healthcare companies1. The Henry J Kaiser Family Foundation,, “Medicare Advantage Plan Star Ratings and Bonus Payments in 2012,” November 2011; upload/8257.pdf.2. Ibid.3. Robin Rose, vice president of client service at HealthStream, “Who are the Winners in Value Based Purchasing,” HealthStream; downloads/HealthStream_White_ValueBased-2012.pdf, accessed October 2012.4. PwC Health Research Institute Consumer Survey, 2012.5. Patient-Centered Primary Care Collaborative and the National Patient Centered Medical Home Movement, February 2012; NCQA’s Patient-Centered Medical Home (PCMH) 2011, “Recognition Program Activity.”6. Agency for Healthcare Research and Quality, “Early Evidence on the Patient Centered Medical Home,” February 2012.7. Robert Reid, Paul Fishman, Onchee Yu, Typer Ross, James Tufano, Michael Soman, and Eric Larson, “Patient-Centered Medical Home Demonstration: A Prospective, Quasi-Experimental, Before and After Evaluation,” American Journal of Managed Care, 2009; US Department of Health and Human Services, “People With Medicare Have More High Quality Choices,” October 12, 2012; press/2012pres/10/20121012a.html.9. PwC HRI Social Media Consumer Survey, 2012.10. Paula Chatterjee, Karen E. Joynt, E. John Orav, Ashish K. Jha, “Patient experience in safety net hospitals: Implications for improving care and value-based purchasing,” Archives of Internal Medicine, September 10, 2012; cost reduction, hello transformation1. PwC Health Research Institute Consumer Survey, 2012.2. Mayo Clinic, “The Center for Innovation,”, accessed November 2012.3. MedAssets, “Engaging MedAssets and clinicians helps Texas Purchasing Coalition to save $65.4 million in underlying cost structure—and still counting,” http://www., accessed November 2012.The building blocks of population health management1. Martin Storey, director of benefits at Michelin North America and Johnna Reed, vice president at Bon Secours St. Francis Health System, “Diabetes Integrated Practice Unite Pilot Project: Collaboration of Michelin, Bon Secours, United Healthcare, Medco, and Porter/Tiesberg/Wallace,” Storey_and_Johnna_Reed_Case_Sudy.pdf, accessed October 2012.2. Mayo Clinic, “Mayo Clinic Care Network,”, accessed October 2012.3. Thomas Lee, Albert Bothe, and Glenn Steele, “Innovation Profile: How Geisinger Structures Its Physicians’ Compensation To Support Improvements in Quality, Efficiency, and Volume,” Health Affairs, vol. 31, no. 9,2012; Steele_0912.pdf.4. PwC Health Research Institute Human Capital Survey, 2012.5. PwC Health Research Institute, “Advancing healthcare informatics: The power of partnerships,” September 2012.6. Statement from Paul J Diaz, CEO of Kindred Healthcare, Senate Finance Committee hearing on Progress in Health Care Delivery: Innovations from the Field, May 23, 2012; your own device: convenience at a cost1. Brian T. Horowitz, “BYOD Wins Over 85 Percent of Health Care IT Pros: Aruba,”, February 2, 2012; BYOD-Wins-Over-85-Percent-of-Health-Care-Aruba-243541/.2. “Breaches affecting 500 or more individuals,” US Department of Health and Human Services, breachnotificationrule/breachtool.html, accessed October 2012.3. “Share of mobile malware increases by 273 percent,” G Data, September 13, 2011. article/2342-share-of-mobile-malware-increa.html.4. Ibid.5. PwC Health Research Institute Consumer Survey, 2012.6. David Raths, “The BYOD Revolution.” Healthcare Informatics, February 28, 2012. iMA_page_visit_%2Farticle%2Fimaging-informatics-and-enterprise= 1com_silverpop_iMA_page_visit_%2Farticle%2Fbyod-revolution= 1.7. PwC Global State of Information Security Survey 2012.8. Ponemon Institute Research Report: “Global Study on Mobility Risks,” Stephen Spotswood, “Mobile Devices Make EHR Functionality More Portable for VA Clinicians,” U.S. Medicine, July 2012. mobile-devices-make-ehr-functionality-more-portable-for-va-clinicians.html.10. Rainer Enders, “BYOD Savings May be Lost by Security and Admin Costs,” SC Magazine, May 15, 2012; byod-savings-may-be-lost-by-security-and-admin-costs/article/241477/. PwC Health Research Institute | Top health industry issues of 2013 15
  16. 16. FootnotesMeeting the new expectations of pharma value1. Peter Back, Leonard Saltz, and Robert Wittes, “In Cancer Care, Cost Matters,” New York Times, October 14, 2012; hospital-says-no-to-an-11000-a-month-cancer-drug.html?_r=0.2. Ed Silverman, “Sanofi Blinks and Halves Price of Cancer Med,” Pharmalot, November 9, 2012; sanofi-blinks-and-halves-price-of-cancer-med/.3. “Hospitalizations Are Down, Adherence Is Up in Initial Year of Cigna Rebif Initiative,” Specialty Pharmacy News, vol. 9, no. 10, October 2012.4. Ashish Jha, Ronald Aubert, Jianying Yao, J. Russell Teagarden, and Robert Epstein, “Greater Adherence to Diabetes Drugs Is Linked to Less Hospital Use and Could Save Nearly $5 Billion Annually,” Health Affairs, vol. 31, no. 8, August 2012.5. PwC Health Research Institute Consumer Survey, 2012.6. PwC Health Research Institute Insurer Survey, 2012.7. “Humana and Pfizer Form Research Partnership to Improve Health Care Delivery for Seniors,” Business Wire, October 13, 2011; home/20111013006441/en/Humana-Pfizer-Form-Research-Partnership-Improve-Health.8. Ian Schofield, “NICE decision puts down a marker for drug development,” Scrip Intelligence, October 19, 2011; NICE-decision-puts-down-a-marker-for-drug-development-322635.9. Chicago Tribune, “UK cost agency backs Melanoma drugs after price cuts,” November 1, 2012; sns-rt-us-cancer-britain-nicebre8a1002-20121101_1_roche-s-zelboraf-melanoma-new-drugs.10. PwC Health Research Institute, “Unleashing value: The changing payment landscape for the US pharmaceutical industry,” May 2012.11. Andrew Tolve, “Marketing with Patients, Payers, and Providers in Mind,” Eye for Pharma, March 22, 2010; marketing-patients-payers-and-providers-mind.Medtech industry braces for excise tax impact1. Letter to House leadership—Device Tax, July 18, 2011,; “World Medical Markets Forecasts to 2017”, Yahoo Finance, October 1, 2012, Congressional Budget Office Cost Estimate, “H.R. 436 Protect Medical Innovation Act of 2012,”June 4, 2012; hr436.pdf.3. Rich Daly, “AdvaMed says device tax would cost jobs, hurt economic output,” Modern Healthcare, March 26, 2012; article/20120326/NEWS/303269959.4. Damien Garde, “The 10 Largest Medical Device Layoffs of 2012,” Fierce Medical Devices, October 10, 2012; story/10-largest-medical-device-layoffs-2012/2012-10-10.5. Bourne Partners, “The Medical Device Excise Tax (MDET) – Ramifications for Device Makers,” March 27, 2012; the-medical-device-excise-tax-mdet-ramifications-for-device-makers/.6. PwC Health Research Institute Consumer Survey, 2012.16 PwC Health Research Institute | Top health industry issues of 2013
  17. 17. About this This annual report discusses the top issues for healthcare providers, health insurers, pharmaceutical and life sciences companies and employers. In fall 2012 PwC’s Healthresearch Research Institute commissioned an online survey of 1,000 US adults representing a cross-section of the population in terms of insurance status, age, gender, income, and geography. The survey collected data on consumers’ perspectives on the healthcare landscape and preferences related to their healthcare usage.About PwC PwC helps organizations and individuals create the value they’re looking for. We’re a network of firms in 158 countries with more than 180,000 people who are committed to delivering quality in assurance, tax and advisory services. Tell us what matters to you and find out more by visiting us at PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see for further details.Health Research PwC’s Health Research Institute (HRI) provides new intelligence, perspectives, and analysis on trends affecting all health-related industries. The Health ResearchInstitute Institute helps executive decision makers navigate change through primary research and collaborative exchange. Our views are shaped by a network of professionals with executive and day-to-day experience in the health industry. HRI research is independent and not sponsored by businesses, government or other institutions. Kelly Barnes Alena Smalligan Partner Research Analyst Health Industries Leader 415 498 5244 214 754 5172 Janice Drennan David Chin, MD Manager Principal (retired) 813 348 7411 617 530 4381 Barbara Gabriel Ceci Connolly Manager HRI Managing Director 813 348 7181 202 312 7910 Serena Foong HRI Regulatory Affairs Team Senior Manager Benjamin Isgur Director 617 530 6209 Christopher Khoury 214 754 5091 Senior Manager Bobby Clark Senior Manager 202 312 7954 Sarah Haflett 202 312 7947 Manager, Health IT Research Matthew DoBias Senior Manager 267 330 1654 Anjali Saraf 202 312 7946 Research Analyst Caitlin Sweany Senior Manager 213 356 6740 510 506 8972 PwC Health Research Institute | Top health industry issues of 2013 17
  18. 18. Health Research Institute Health Industries MarketingAdvisory Team Todd HallJoe Albian DirectorPrincipal Provider Advisory Leader 617 530 Nadia Leather312 298 2018 DirectorReatha Clark 646 471 Art Karacsony678 419 1014 DirectorMichael Galper 973 236 5640Healthcare Payer 217 3301 HRI acknowledges the following additional contributors:Daniel GarrettPrincipal, National Leader Karla Anderson, Amy Bergner, JeffHealth Information Technology Cameron, Mick Coady, Gary Dowling, Lewis Fernandez, Nalneesh Gaur, Jeffrey267 330 8202 Gitlin, Lawrence Hanrahan, Annette Hastings, Brett Hickman, Sandra Hunt,Michael Goff Gary Jacobs, Joel Jaglin, James Koenig,Principal Katherine Kohatsu, Frank Lemmon, JamesPharmaceutical and Life Sciences US McNeil, Jack Rodgers, Sean Rutter, WarrenCo-Advisory Leader Skea, Ross Stromberg, John Wiestmike.goff 539 4336Vaughn KauffmanPrincipalHealthcare Payer Advisory 363 5817Michael SwanickPartnerPharmaceutical and Life Sciences 330 6060Michael 471 0720Robert VallettaPartnerHealthcare Provider 530 405318 PwC Health Research Institute | Top health industry issues of 2013