The document discusses the ongoing transformation of the U.S. healthcare industry as it works to address rising costs and improve quality of care. It describes several key areas of change: 1) the development of a national healthcare IT infrastructure to share patient data electronically, 2) integrated health management through coordinated care models like patient-centered medical homes and accountable care organizations, and 3) personalized medical care enabled by new diagnostic technologies. Realizing this vision will require overcoming challenges around standards, costs, and adapting to disruptive trends in technology and demographics.

1. • Cognizant 20-20 Insights
U.S. Healthcare:
Converting Vision to Reality
A tremendous amount of change has occurred in mid-term elections. Significant progress, however,
healthcare over the last decade as the industry can be anticipated in the following areas:
has pushed to address significant cost and quality
issues. Long before the Patient Protection and • A national/international healthcare IT (HIT)
Affordable Care Act (PPACA), the healthcare infrastructure, linking providers, health plans
industry has steadily worked to enact funda- and consumers. This infrastructure is likely
mental changes to everything from administra- to comprise public and private networks,
tion to patient care, prompted by incremental with data collected and shared electronically
regulatory change. Given increasing demand for using an array of enablers and tools, from
services and the unwieldiness of the industry Web services-based transactions between
— tens of thousands of professionals across trading partners and personal smartphones, to
hospital systems, physician groups, long-term netbooks and social network-style applications
care facilities, bio-pharmaceutical firms, health for consumers.
insurers, government agencies, suppliers — the
redesign of healthcare to reduce costs and improve Given increasing demand for
access for all U.S. consumers will continue to be a services and the unwieldiness
large-scale transformation effort. of the industry, the redesign
Recent legislation such as the PPACA, as well
of healthcare to reduce
as provisions in the American Reinvestment costs and improve access
and Recovery Act (ARRA), are seen as catalysts for all U.S. consumers will
that are accelerating the transformation process
through mandates and incentives. Mechanisms
continue to be a large-scale
that the government hopes will accelerate transformation effort.
industry change include the use of electronic
health records, enhanced data coding standards • Integrated health management based on
and the creation of health insurance exchanges the concept of coordinated care. This means
to support direct sales to consumers. While a a healthcare process that is not a series of
number of PPACA provisions went into effect in disjointed events but a synchronized effort to
2010, many mandates are expected to be phased provide wellness services and preventive care,
in over the next decade. It is hard to predict along with acute/post-acute care, through
exactly how healthcare reform will proceed, given patient-centered medical homes (PCMH) and
the broad scope of the legislation, still undefined accountable care organizations (ACO). The
provisions and the uncertainty introduced by the effort also includes consumers increasingly
cognizant 20-20 insights | may 2011

2. engaged in managing their own health, through Real-Time Connections
smartphone applications and intelligent home
The HIT infrastructure is a basic requirement
monitoring tools.
for a connected healthcare system that shares
• Personalized care strategies based on more patient data with whomever requires it, at the
targeted diagnostic tests made possible moment it is needed. Another requirement is
through advances in molecular profiling widespread availability of standards-based health
technologies, including genetic testing, and data that can be shared through Health Informa-
coordinated by both local and virtual teams tion Exchanges (HIE), and properly and safely
of caregivers who have real-time access to interpreted by another caregiver.
monitoring data, as well as electronic health
record information. At the macro level, all this makes sense: providing
information in real time to caregivers, who can
• Easier access to care, through mass use of then make informed, accurate decisions and
new applications such as physician office visits thus eliminate expensive redundant tests, inef-
(e-visits), online appointment scheduling, fective treatments and prescription errors, while
online access to test results, and the ability for improving outcomes. However, at the organiza-
patients to connect electronically with their tional level, developing a business case for EHRs
physicians through secure e-mail messaging. and HIEs has been challenging. For example,
management consulting firm McKinsey & Co.
Pieces of this vision exist
PCMH and ACO today, but many changes are
estimates that U.S. hospitals will need to spend
approximately $120 billion, at an average of
organizations required to bring it to fruition. $80,000 to $100,000 per bed, for the required
and quality-based For example, the electronic, EHR project planning, software, hardware,
real-time exchange of health-
reimbursement care information, whether clini-
implementation and training.1 Incentives are,
therefore, likely to offset only up to one-fifth of
models require more cal or administrative, requires the total expenditures, leaving a significant gap
experimentation and an extensive base of content, that hospitals will have to fill through improved
transaction, interoperability,
development before product and messaging stan-
management, process efficiency and quality.
broad adoption can dards. Many of these standards HIEs also face challenges. According to the seventh
be achieved. exist and are in various stages annual HIE survey published by the eHealth
of adoption, but more are Initiative, respondents cited sustainable business
needed. PCMH and ACO organizations and qual- models as one of the top three challenges facing
ity-based reimbursement models require more HIEs. On a positive note, the same survey reported
experimentation and development before broad that out of 234 known initiatives, 73 were opera-
adoption can be achieved. Finally, personal- tional and 18 were breaking even without federal
ized medicine is still in the funding, the major source of funds being subscrip-
In the long term, early stages of development, tion fees and membership dues.
payment based although the industry is2015.
ed to double in size by
expect-
Innovation will be necessary to bring down the cost
on the quality of of needed technological solutions. One promising
Healthcare will also be affected
data collected and by external societal and cultural
area of innovation that could accelerate the
deployment of HIT is cloud computing. Through
exchanged with changes, as well as the rise of the cloud, providers could avoid capital expenses
other partners disruptive, ubiquitous technol- and pay only for the capacity they need, yet still
ogies and structures, such as
in the healthcare cloud computing, mobile apps
have access to the latest technology.
ecosystem will help and social networking tools, Using hosted services and cloud computing for
sustain the industry’s globalization and virtualization. patient demographic and medical information
And because its fundamental requires adherence to significant data, security
investment in IT. purpose is caring for individu- and privacy requirements. Effectively managing
als — often at their most vulnerable moments — these requirements, however, goes well beyond
tackling these shifts will require sensitive, well- mere compliance — consumers will want additional
designed and well-executed change management assurances that their personal health data is
strategies. private and well protected.
cognizant 20-20 insights 2

3. In the long term, payment based on the quality The increasingly sophisticated and information-
of data collected and exchanged with other rich diagnostic tests that will enable personalized
partners in the healthcare ecosystem will help medical care will also likely alter business models
sustain the industry’s investment in IT. Specific and workflows for delivering
issues require more sophisticated solutions to preventive care. The industry, as
make this a reality. For example, healthcare has well as society, will
It will be important for these
specific security and privacy challenges that must
new delivery models to
need to define what
be addressed in order to adequately protect data
from unauthorized access and use. In addition, continue emerging alongside constitutes a quality
the industry’s ability to actively analyze data and more traditional approaches outcome for a variety
to prevent business disruption.
use it for informed decision-making will be critical
Transitioning will require sig-
of diagnoses.
to achieving improved outcomes at lower costs.
Achieving a positive return on investment should nificant change management, a process that will
drive continued IT investment. challenge all players across the industry.
New Business Models The Millennial Impact
Intertwined with HIT are new and evolving models Interwoven with these shifts are profoundly
of care and reimbursement structures. PCMHs disruptive societal and cultural changes that
and ACOs are concepts designed to provide coor- have a direct impact on the professionals who will
dinated comprehensive wellness and preventive deliver care, as well as those who receive it. These
care to individuals and thus reduce urgent and changes may pose the greatest business opportu-
acute care episodes. Deploying these models will nities — and challenges — of all.
not only require new organizational models but
Members of the millennial workforce now enter-
also a significant level of collaboration among
ing the profession have essentially been raised
providers and health insurance plans to transition
using the Internet, mobile devices and social net-
from volume-based to value-based care.
working tools. They require this technology to be
With reimbursement patterns changing to effective in their jobs. This
reward wellness and quality outcomes, plans and fact alone has powerful impli- Millennial workers
providers will have to collect and analyze more cations for the industry and may not be drawn to
data in new ways to effectively monitor and its technology investments: healthcare as readily
optimize the health of a specific segment of the Millennial workers may not
population. The industry, as well as society, will be drawn to healthcare as if they perceive
need to define what constitutes a quality outcome readily if they perceive it as it as behind the
for a variety of diagnoses. behind the technology curve. technology curve.
Large-Scale Transformation
Accelerators Planned Outcomes Description
National/international Linking providers, health plans and consumers to collect
Drivers
Mandates healthcare IT (HIT) and share data electronically using an array of devices
and infrastructure and tools.
incentives;
Cost concerns; Integrated health Synchronized effort to provide wellness services and
electronic health
quality issues; management (based preventive care along with acute/post-acute care through
records;
legislation content on the concept of patient-centered medical homes (PCMH) and accountable
(ARRA PPACA) standards; coordinated care) care organizations (ACO).
B2C Using more targeted diagnostic tests made possible due
insurance Personalized care
to advances in molecular profiling technologies, includ-
exchanges strategies
ing genetic testing.
Leveraging technology to create virtual teams of caregiv-
Easier access to care ers who have real-time access to monitoring data as well
as electronic health record information.
Figure 1
cognizant 20-20 insights 3

4. This will only exacerbate predicted shortages of Not all of these physicians eschew technology,
qualified personnel. yet many see no compelling business reason to
invest in EHRs or support HIEs. This may change,
Furthermore, these same individuals will expand however, given recent decisions by several health
the ranks of healthcare consumers. They will insurance plans to require physicians to have
want to interact with the healthcare ecosystem in EHRs in order to remain part of their provider net-
the same way that they interact with all of their works. It is the younger physicians, themselves
other service providers: through Web sites and millennials, who will expect to use technology.
portals, via e-mail, using
Consumers 65 years smartphone and tablet Balancing the requirements of millennial
of age and older will PC apps. Technologically
astute industry players will
employees and consumers with those who prefer
more traditional methods will require careful
remain the largest have the advantage with attention to what technology is implemented,
consumers of the these consumers. how and where. Satisfying such a wide range of
needs could require a mix of traditional and new
healthcare dollar, and Yet providers and health
methodologies. For instance, some physicians are
while some members insurance plans also will
hiring scribes to enter data into electronic devices
have hundreds of thou-
of this group would sands of employees and
while they give full attention to their patients.
welcome new mobile customers who will prefer
Handling the Future Now
and Web-based more traditional, non-tech-
nical tools. Consumers 65 Many of the tensions, challenges and opportu-
technologies, most years of age and older will nities specific to healthcare also mirror broader,
simply will not, unlike remain the largest con- critical megatrends that promise to redefine how
millennials, who sumers of the healthcare successful enterprises will engage their employees,
dollar, and while some customers and partners. Specifically, the explosion
view technology as a members of this group of cloud computing, the rise of knowledge global-
necessity. would welcome new mobile ization and an increase in virtualization all hold
and Web-based technolo- great potential for the healthcare industry.
gies, most simply will not, unlike millennials, who
view technology as a necessity. Healthcare players across the ecosystem that are
able to embrace these trends should have the tech-
Furthermore, approximately 36% of practicing nological and business agility required to test new
physicians today are 55 years of age or older. business models, create powerful real-time data
Megatrends Driving Change
Healthcare organizations must Cloud computing and mobile tools like
carefully select cloud, mobile and social Technology – smartphones and social networking
A
solutions that offer new business Real-Time Connections applications offer real-time data collection,
value or capabilities aligned access and collaboration that can help
with specific business objectives. solve healthcare challenges.
Social Change –
B
Globalization – The Millennial Impact
D
New Business Models
Technology and globalization are Mobile and social technologies have
converging to enable the creation of rapidly become necessities for
virtual organizations, processes and teams. millennial consumers and employees.
In healthcare, this trend is already visible in They are increasingly frustrated by
Virtualization – workplaces with technology lagging
the form of ACOs and PCMHs. C
A Precursor to behind the tools they use at home.
Globalization
Figure 2
cognizant 20-20 insights 4

5. for information sharing and satisfy the demands radiological scans, to analyzing population health
of a millennial workforce and customer base. data. Clearly defined core expertise — what a
healthcare organization does better than anyone
Key trends shaping the future of healthcare today else — will be a critical pre-requisite to successful-
include: ly adopting globally-based knowledge resources.
Only then will organizations understand which
Technology: Cloud computing and mobile tools
global knowledge and skills to tap and why.
such as smartphones and social networking
applications offer real-time data collection,
In particular, globally sourced Healthcare
access and collaboration that can help solve
skills and processes — delivered
via the cloud — can help reduce organizations must
healthcare challenges. This “anytime, anyplace”
data management makes it possible to design
the costs of mission-critical carefully select
and support new, virtual ways of delivering care
but noncore operations. Trust- cloud, mobile and
that use information and expertise, wherever
ing these processes to a low-
cost service provider releases social solutions that
it is located. Cloud solutions can support HIT
deployment and benefits exchanges, as well as
human and financial resources offer new business
internal data sharing. When combined, these
to strengthen and adapt core value or capabilities
technologies and tools will support ACOs, PCMHs,
expertise to respond to the
many forces exerting pressure that are aligned with
personalized care, information-sharing applica-
tions and more.
on the industry. The flexibility specific business
to re-focus resources will help objectives.
In addition, mobile and social technologies have
the industry develop an HIT
rapidly become necessities for millennial con-
infrastructure, shift to integrated health manage-
sumers and employees. They expect to interact
ment and personalized care delivery services,
with all of their service providers virtually and in
and make those services easier to obtain, more
real time, and are increasingly frustrated by
affordable and of higher quality.
workplaces with technology lagging behind the
tools they use at home. The healthcare industry
Virtualization: Technology and globalization are
will need to adopt cloud and mobility to meet
converging to enable the creation of virtual orga-
baseline service expectations of the next genera-
nizations, processes and teams. In healthcare, this
tion of consumers, and to compete successfully
trend is already visible in the form of ACOs and
for talent.
PCMHs. These are effectively
virtual organizations. Each The flexibility to re-
Fortunately, cloud and mobile solutions can be member entity provides its focus resources will
deployed without inflating capital budgets and core expertise, while common
can actually reduce costs and improve efficiency. administrative processes could help the industry
That said, new cloud platforms will typically be outsourced to a third party, develop an HIT
complement existing IT platforms, which means
healthcare organizations must carefully select
giving patients and consumers
infrastructure, shift
the experience of dealing with
cloud, mobile and social solutions that offer new only one organization. New to integrated health
business value or capabilities that are aligned partnerships among industry management and
with specific business objectives. Further, the
healthcare industry’s ever-present regulatory
players could also be support-
personalized care
ed by virtualized structures
compliance requirements are likely to affect how and processes that enable delivery services,
it uses these tools. a blending of expertise with and make those
reduced capital investment
Globalization: The real-time, mobile and social
services easier
and operating costs.
aspects of technology are enabling a new phase to obtain, more
of globalization, in which knowledge is freely The impact of virtualization affordable and of
accessible from all points, worldwide — including will also be apparent as certain
healthcare expertise and skills. Using resources
higher quality.
highly repetitive, redundant
from the global marketplace, healthcare organi- industry processes become commoditized and
zations can accomplish labor-intensive, repetitive ripe for servicing by trusted third parties. These
tasks, such as physician credentialing, at lower process-commodities are likely to range from
costs. The global market is also able to manage claims administration to data analytics. Commod-
complex tasks more cost effectively, from reading itized processes will lead to lower costs because
cognizant 20-20 insights 5

6. of service provider economies of scale. Simul-
taneously, commoditization will give healthcare A Healthier Future
organizations both the freedom and the necessity
The conversion from ICD-9 to the ICD-10
of differentiating themselves based on how well
coding structure will provide opportuni-
they deliver their core expertise.
ties for the healthcare industry to use
technology, globalization and virtualization
The impact of Finally, virtualization of knowl-
to its advantage.
edge will enable the health-
virtualization will care ecosystem to use the
ICD-10 will provide more granular data
also be apparent most effective resources and
than ICD-9. The diagnostic detail in the
as certain highly services available, whether
new codes should enable health insurance
they are across town or on
repetitive, the other side of the globe.
plans and providers to more effectively
identify at-risk populations, detect fraud
redundant industry All the key trends coalesce
and abuse and enable new types of care
processes become here: Technology enables
and reimbursement models, such as
knowledge to be accessed
commoditized and regardless of its location in
PCMHs and ACOs. The processes required
for effective use of credible ICD-10 data
ripe for servicing by the network infrastructure,
must be supported by technology that
trusted third parties. and tools like smartphones
can maximize the value of the additional
and tablet PCs can function
diagnostic detail available.
as video cameras and communications devices.
This allows analytics data to be accessed anytime/ With the use of effective processes and
anywhere (privileges permitting) from a cloud- technology, the transition to ICD-10 will
based server. Globalization opens up a wealth provide the opportunity for more sophisti-
of knowledge and ability regardless of location, cated data analytics and thus the potential
so virtual teams can collaborate on everything to enhance quality and reduce costs. The
from administrative tasks to patient care, and contributions that virtualization, globaliza-
can include both internal resources and business tion and cloud-based applications can make
partners. It will be the combination of technology, to improve the quality and cost equations
globalization and virtualization that will shape the will make them strategic considerations as
industry, even as it enables effective new strate- the industry matures in driving value from
gies and services. the transition to ICD-10.
Healthcare is one of the five major sectors of the
U.S. economy and represents 17% of the GDP.
The industry faces momentous change, not just
in response to legislative efforts but because globalization and virtualization to help them flex,
medical science is evolving so rapidly. Healthcare shift and evolve so they can succeed in delivering
organizations need the benefits of technology, high-quality, lower-cost care for everyone.
Footnote
1
“Reforming Hospitals with IT Investment,” McKinsey & Co., Summer 2010.
About the Author
Patricia (Trish) Birch is a Cognizant Vice President and leads the company’s Healthcare Consulting
Practice within Cognizant Business Consulting. She has 25 years of experience in healthcare operations
and management consulting and serves on the board of directors of Franciscan Services Corp., which
provides healthcare services in the midwest and south-central U.S. Trish is also a published author and
speaker on issues facing the healthcare industry. She earned a BSBA in Finance from Boston University
and an MBA from Jacksonville University. Trish can be reached at Patricia.Birch@cognizant.com.
cognizant 20-20 insights 6

7. About Cognizant
Cognizant (NASDAQ: CTSH) is a leading provider of information technology, consulting, and business process out-
sourcing services, dedicated to helping the world’s leading companies build stronger businesses. Headquartered in
Teaneck, New Jersey (U.S.), Cognizant combines a passion for client satisfaction, technology innovation, deep industry
and business process expertise, and a global, collaborative workforce that embodies the future of work. With over 50
delivery centers worldwide and approximately 111,000 employees as of March 31, 2011, Cognizant is a member of the
NASDAQ-100, the S&P 500, the Forbes Global 2000, and the Fortune 1000 and is ranked among the top performing
and fastest growing companies in the world. Visit us online at www.cognizant.com or follow us on Twitter: Cognizant.
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