TiE leapfrog event Bangalore Dr Rana Mehta PwC FoundingFuel

1. Healthcare Trends & Opportunities
PwC India Analysis
Dr. Rana Mehta
Partner, Healthcare
PwC India
1
Specially prepared for TiE Leapfrog in association with

2. Health lies at the heart of economic, political, social
and environmental prosperity : it matters to society
2
Source: 1. World Health Organization, WHO Global Health Expenditure Atlas, (2012); 2. Stewart WF, Ricci JA, Chee E, Morganstein D. Lost productive work time costs from
health conditions in the United States: results from the American productivity audit. J Occup Environ Med. 2003;45(12):1234-1246.; 3. Jamison D.T. et.al Global health 2035: A
world converging within a generation (2013);
Reductions in mortality
account for 11% of recent
growth in low and middle
income countries3
4 of the 8 UN Millennium
Development Goals (MDG) are
healthcare related. Health is expected to
be at the heart of the new set of goals, the
Sustainable Development Goals,
when launched in September 2015
Productivity losses related to personal
and family health problems cost US
employers $1,685 per employee per
year, or $225.8 billion annually2
Health represents 12.4% of
GDP in OECD countries. In the
US it is close to 18%1
The World Health Organization in its
constitution defines health as “a
state of complete and physical,
mental and social well-being and
not merely the absence of
disease or infirmity”
Significant economic returns and
social benefits derive from investing
in health
Health and health equity
are integral to public
policies of all sectors
Health remains a major political
issue in the developed and developing
countries as evidenced by elections in
Brazil, India, Japan, US, Turkey
and UK.

3. Yet rising costs and access to care pose big
challenges
3
People that still lack
access to healthcare
worldwide
Amount OECD and BRIC
nations are expected to
spend on healthcare
infrastructure and
services over the next
decade
1B $70TSource: 1. Chan M. WHO Director-General Remarks to Global Vaccine and Immunization Research Forum. March 2014 ; 2. 2040 health expenditure projections from “The
Financial Sustainability of Health Systems”, World Economic Forum and GDP data from the OECD (2013), PwC 2010-2020 spending projections

4. The collision of trends is impacting expenditure on
health around the world
4
North America
• Spending to increase by 4.9%
annually in 2014-18
• US healthcare spending, already the
highest in the world, is likely to reach
17.9 % of GDP by 2018
• Canada is expected to see growth of
4.5% annually over the same period,
reaching 11.6% of GDP
• Shift to value from volume care
• New wellness players emerging
South America
• Spending expected to rise by 4.6% annually
over 2014-18 as Gov’ts try to improve
public health systems
• In Mexico the rise will be an annual 8.2%
given the commitment to a universal social
service in the next 5 years
• In Brazil rising disposable incomes will
continue to drive rising healthcare
expenditure, with health expected to reach
9.1% of GDP by 2018 (lifestyle diseases on
the increase)
• Argentina to experience growth in medical
tourism
• Access to care remains a big issue across
the region
Middle East & Africa
• Population growth and efforts to expand
access to care will see strong growth
• The average increase is expected to be 8.7%
over the 2014-18 period
• Substantial growth in chronic disease
• Regional medical tourism
• Whole health system reforms, with a need
for “leapfrog” ideas and solutions
Western Europe
• The continued need to reduce fiscal
deficits means healthcare spending
is expected to rise just 2.4%
annually over 2014-18
• Greece, Italy and Spain will have the
tightest budgets whilst the UK,
Germany and Sweden will see the
strongest growth
• Proportion of population over 65
will be 20% by 2018
• EU Directive on cross-border care
• Telemedicine for chronic patients
• Regional medical tourism
Asia Pacific
• The rollout of public health care reform
programmes combined with growing
consumer wealth will boost health
expenditure by an average of 8.1% in 2014-
18
• Emergence of private provider sector
• The strongest growth, at 15.2% per year,
will be in India with China following at
12.5% per year
• Proportion of population over 65 will be
28% by 2018
• Access, quality and training issues
Source: Economist Intelligence Unit; Kennedy Consulting
Research Advisory estimates

5. Disruptive Trends
5

6. Disruptive trends are revolutionising the health
industry today
These trends are impacting the delivery and financing of care…
…resulting in:
6
Technological
advances
Shift in global
economic power
Demographic shifts
& social change
GlobalisationThe empowered
consumer
The emergence of
new business models
New entrants
expanding and
reshaping the health
system
A rebalance of the
public and private
sectors in the
financing and delivery
of care A greater focus to
reward for outcomes
instead of volume of
activity
A trend from
inpatient care to
outpatient services
The healthcare sector
industralising

7. Ageing populations are increasing the demand for
healthcare
Source: UN Population Division, World Population Prospects (2012)
7
1 billion
expected increase in the world’s
population by 2025
300 million
of that increase is predicted to come from
those aged 65 or more

8. Developing countries are experiencing a rising
middle class, leading to lifestyle changes…
8
Source: Brookings Institute (2010)
Nearly 65% of
the global
population will be
middle class by
2030

9. …promoting a sedentary lifestyle that’s
contributing to the rise in obesity and chronic
disease
9
Chronic diseases
are expected to
increase to 57% by
2020.
And 60% of this
burden will occur in
emerging markets
57%
Emerging
markets
Source: World Health Organization (2005)

10. Demographic shifts and societal changes are
burdening existing health systems
10
Source: World Health Organization (2013)
Projected shortage of healthcare
workers
2013
2035
7.2 million 12.9
million
Health worker retirements and demand for
care are contributing to a shortage of skilled
labour

11. 2030
Shifts in economic power are leading to financial
pressures and new markets
11
Source: PwC World in 2050 Projections (2013)
We predict
that seven of
the world’s 12
biggest
economies in
2030 will
come from
emerging
markets, the
‘E7’

12. Competition from different geographies and
stakeholders are contributing to new health
economies
12
As part of its strategy to
develop the digital
opportunity in the
mHealth market,
Telefonica Digital, part
of telco Telefonica,
acquired AxisMed, a
chronic care
management provider
based in Brazil.
South Korea’s
largest mobile
telecom carrier
bought a 49% stake
in China’s X’ian
Tianlong Science
and Technology Co,
a producer of
medical diagnosis
equipment
Walgreens bought
45% of shares in
Alliance Boots
with plans to
acquire the rest to
create a “global
pharmacy-led
health and
wellbeing
enterprise”
Telefonica
AxisMed
SK telecom
Tianlong
Walgreens
Alliance Boots
Source: telecoms.com. “Telefonica eyes e-health opportunity with Brazilian acquisition”, (4 February 2013); SK Telecom; New York Times, “Walgreen to take stake in Alliance Boots for
$6.7 billion”, 12 June 2012

13. Technology is becoming a driver of change and a
solution, creating greater efficiency & value
13
Social Volume Value
2000 2010 2020
Mobile
Analog
Analytics
Cloud
Places Spaces
General Individual
Digital
Institutional ConsumerAgent
New value propositions
New care delivery models
More customised solutions
Greater portability, security, access
More freedom, transparency, choice

14. Technological advances are also creating new care
delivery models – and consumers are responding
14
Source: Economist Intelligence Unit, “Emerging mHealth: Paths for growth “ (2012)
49%
expect mHealth to
change how they
manage their overall
health
59%
say mHealth has
changed how they
seek information on
health issues

15. Patients are becoming empowered and engaged
consumers, taking greater accountability for their
care
15
36.7%
Have at-home
chemotherapy
Get an MRI at a retail clinic or pharmacy
34.4%
Percent of respondents answering “Very likely” and “Somewhat likely” to consider these alternatives:
Have a wound or pressure
sore treated at a clinic in a
retail store or pharmacy
49.1%
Have stitches or staples removed at a
retail clinic or pharmacy
48.3%
Have a pacemaker
or defibrillator
checked wirelessly
by a physician
42.6%
43.6%
Have an electrocardiogram at
home using a device attached
to your phone, with results
wirelessly sent to your
physician
Source: HRI US consumer survey (2013 and 2011)

16. Consumers are leveraging new technology to self-
manage their care
16
52%
make
healthcare
substantially
more
convenient
for me
46%
substantially
reduce my
healthcare
costs
48%
improve the
quality of
healthcare I
receive
In the next three years, patients agree mHealth
applications/services will:59%
of patients say
that mHealth
services have
replaced some
visits to
doctors or
nurses
Source: Economist Intelligence Unit, “Emerging mHealth: Paths for growth” (2012)

17. Globalisation is allowing for greater
collaboration, resulting in new care delivery
models
17
Example:
Europe
EU Directive
2011/24/EU allows:
• European Union
patients to access
treatment in another
EU country and be
reimbursed for it
• Cooperation between
EU health systems

18. Impact on healthcare
18

19. New business models are emerging
19
Excellence
from strength
through
execution
Unleashing
potential
Driven by
client
issues
Developmental
in all we do
Consumer
insight
Value proposition
• Customer
experience
• Product + service
• Brand value
Business model innovation
Value network
• Value
network/ecosystem
• Revenue & margin
model
Target customer
• Buyers & involved
non-buyers
• Marketing methods
Source: Making Innovation Work, Davila Epstein, Shelton: Wharton School Publishing (2006)

20. Patient influence and empowerment are
influencing business models and the delivery of
services
20
Convenient
Reliable
TransparentAffordable
Seamless
High quality
The principles of a
consumer-oriented
system
Source: PwC Health Research Institute “Money matters: Billing and payment for a New Health Economy” (2015)

21. Patient engagement will become increasingly
important as financial performance is tied to
clinical outcomes
21
Health systems
Source: HRI Consumer Survey (2012)
When asked if consumers want their feedback tied to
healthcare companies’ financial records, almost half said yes

22. Advances in technology and analytics are exciting
tools for stakeholders to become more precise with
treatments and predicting patient behaviour
22
0
30
60
90
Clinical informatics goal to support
organisational strategies e.g., new
product dev't, new business models over
the next 2 years
Effectively impact patient behaviour
Formal
informatics
program
No formal
informatics
program
69%
58%
17%
7%
Physician benefits
Source: HRI Clinical Informatics Survey (2011)

23. New entrants are expanding and reshaping the
health system
23
• Patient-centric health
systems opens the door
to new market
participants
• These commercial
entrants are
revolutionising
healthcare, introducing
new products, services
and delivery systems
Source: Fortune 50 (2013)

24. New entrants are helping democratise and
decentralise the healthcare industry
24
• Apple and Google have
announced health and
wellness phone apps
• Facebook is exploring the
creation of online “support
communities” connecting
users suffering from similar
ailments
• Canada’s 9000 points of care
aims to reduce care wait times by
shifting 17 million physician
visits to pharmacists
• Walmart partnered with
DirectHealth.com to offer
customers with agents who will
help consumers navigate the
health exchange
• Orange (formerly French
Telecom) uses SMS
technology to fight the spread
of counterfeit drugs in Kenya
• Swisscom formed a
partnership with a software
company to help Swiss
hospitals process medical and
administrative records more
effectively
• Nintendo recently revealed
plans to redefine itself as a
health-oriented entertainment
company
Sources: 9000 Points of Care website 9000pointsofcare.ca; “Walmart Works with DirectHealth.com to Introduce Comprehensive Health Insurance Program” press release (6 October
2014); “Apple Unveils iOS 8, the Biggest Release Since the Launch of the App Store” press release (2 June, 2014); Dean Takahashi, “Nintendo CEO outlines plan to move into
health-related entertainment”, VentureBeat, (3 March 2014); PwC, “Bending the Cost Curve: Stellenbosch” (2011) ; “Swisscom continues to expand its healthcare business” press
release (3 September 2013); Christina Farr and Alexei Oreskovic,, “Facebook plots first steps into healthcare”, Reuters, (3 October, 2014)

25. New entrants regard their unique perspective as
an asset to capture and dominate the fragmented
sector
25
Global
reach
Customer
insights
Innovation
Brand
recognitionGlobal reach
Commitment to
consumer needs
and value
Exploit ability to
attract and retain
new markets
Products/services
launched based on
ability to meet
outcomes
Leverage existing
intellectual property
Perspective

26. Incumbents face critical decisions about whether
to compete or partner with new entrants
26
Ford and Medtronic partner
to make chronic disease more
manageable through mobile
health solutions
?
Compete
Partners
UnitedHealth offers Health4me app,
allowing users to find health facilities
in their area thus competing with other
similar solutions in the marketplace

27. There is a rebalance of the public and private
sectors in the financing and delivery of care
27
Government
New healthcare
facility and/or clinical
services delivered by
private partner
Private sector
partner
Contract
Private sector
expertise (skills) &
investment
(capital)
Financial
compensation; transfer
existing assets; policy
vision

28. Public and private sectors are evolving to reward
for better outcomes while providing economic
benefits
28
University Hospital and Primary
Care, Alzira, Valencia, Spain
• Includes infrastructure & clinical
services for hospital and primary
care clinics
• Performance is contractually
demanded
• Alzira has seen 20-30% efficiency
gain
• Cost per capita in the Alzira
Model is 75% lower than the cost
for the UK’s Regional National
Health Service
Examples:
The Queen ′Mamohato Memorial
Hospital, Maseru, Lesotho
• Includes infrastructure, clinical &
non-clinical services for hospital
& 3 clinics
• Full patient risk transferred to
the private partner with
performance standards
safeguarded through reward &
penalty clauses of clinical and
non-clinical indicators
• Death rate decreased by 41%
• On target to deliver financial
results
Sources: PwC, “Bending the Cost Curve: Washington, DC” (2011), IFC (2013); PwC, “Bending the Cost Curve: Stellenbosch” (2011)

29. Rising healthcare costs are prompting healthcare
systems to reward for better outcomes, better
quality, cost savings and value
29
Source: Outcome Based Commissioning Alliance (OBC Alliance) formed of PwC, Wragge & Co, Cobic and Beacon, excerpt from “Beginning with the end in mind: How outcomes-based
commissioning can help unlock the potential of community services”, NHS Confederation’s Community Health Services Forum in collaboration with PwC (September 2014)

30. As consumers become engaged, there is a shift
towards wellness and prevention
30
Source: PwC analysis (2014)
Fitness and wellness offers a lucrative market
opportunity
$1.49 trillion
total global ancillary/wellness
market size
$391B
Global nutrition
market
$236.5B
Sporting goods
and apparel
$595B
Weight loss
industry
$8.02B
Mobile
health apps
$114B
Alternative
medicine
$48B
Medical
tourism
$3.1B
Wearable
devices
$113. 4B
Natural &
organic foods
$109.5B
Supplements
$43B
Natural and
organic
personal care &
household products
$125.1B
Functional
foods
$19.4B
RPM/
Telemedicine
$78.4B
Global fitness
industry

31. There is a trend from inpatient care to outpatient
services
3131
Primary Care Centre
Mobile platform to
connect patients to the
care network and enable
continuity of care
1
Analytics and its
dissemination with
other care settings to
make effective
decisions thus driving
higher quality care
within the network
2
home
AcuteCare
Research FacilityTertiary Care Centre
Standard-of-Care
Medical Learnings and
Discovery
Collaboration platform to facilitate
real-time use of patient data to
enable dynamic triaging and
learning
3

32. Technology via remote monitoring, telemedicine
and mobile devices will help usher a move towards
home care
32
Mobile system gives
physicians and caregivers
remote access to a
patient's vital signs from
anywhere within the
hospital.
A device lets
doctors
conduct real
time
consultations
using a
revolving
robot.
Patch cardiac rhythm
monitor provides
continuous monitoring for
up to 14 days.
Sensor mat is placed
under mattresses to
monitor a patient's
presence, sleep pattern,
heart rate and breathing
rate.
Sensors on the patient and
throughout the home
detects falls, wandering,
missed medication

33. Analytics can give insight into patient flows and
care pathways, allowing providers to deliver care
that’s appropriate for the patient
33
Analytics
Personalised
healthcare
Measurements/
benchmarks
Clinical decision
support
Well-being
monitoring

34. There is a general move from fragmented to
integrated care across the continuum
34
Extension of
care
Preventativecare
Primarycare
Immediatecare
Specialtyvisit
Diagnostics
Treatment
ancillaries
Emergency
care
Inpatient
care
Rehabcare
Long-termcare
Skillednursing
Residentialcare
End-of-lifecare
Healthcarecontinuum
Healthcare providers have been
concentrating here Extension of
care

35. Healthcare is transforming into a precision-based
industry
35
PERSONALISED
An understanding of how
genetic variation drives
individual treatment
• Targeted therapeutics
• Personal Health Records
PREDICTIVE
Ability to identify what
condition a person might
contract in the future and how
they will respond to a given
treatment, enabling tailored
health strategies
• Molecular diagnostics
• Genomic sequencing
PREVENTATIVE
Facilitates a proactive approach
to health and medicine, shifting
focus from illness to wellness
• Nutritional / Functional
Foods
• Wellness programs
PARTICIPATORY
Empowers patients to make
informed choices and take
responsibility for their own
health
• Telemedicine
• Remote patient monitoring

36. Process driven advances, standardised procedures
and the division of labour can reduce costs and
improve quality
36
• Quebec Ministry of Health applies Lean
management, which has meant a 50% inventory
reduction in medication and bed linen1
Lower costs
• Narayana Health System has an average 1.4%
mortality rate within 30 days of a coronary
artery bypass graft surgery, compared to 1.9% in
the US2
Improve quality
• Aravind Health Care System, an eye care
provider in India, performs around 2,000
cataract procedures a year, compared to the
national average of just 4003
Efficiency
Source: 1. PwC, “Bending the Cost Curve: Amsterdam” (2011), 2. Wall Street Journal “The Henry Ford of Heart Surgery” (25 November, 2009); 3. Aravind Health Care System (2013)

37. Emerging markets are practicing reverse
innovation, introducing creative solutions to help
solve pressing problems
37
Developed countries Emerging markets
Entrenched, conservative
infrastructure
Lack of legacy infrastructure
to impede change
Rigid regulations Fewer regulations to hinder
progress
Abundant resources and
many options for first-class
treatment
Lack of access and fewer
options drives alternative
solutions