Value will dominate the health industry in 2017, amid political uncertainty, with 10 trends dominating, according to PwC’s Health Research Institute (HRI).
In its annual report Top Health Industry Issues of 2017, HRI says as the industry adapts to a Trump administration and the corresponding uncertainty of its approach to health care, both traditional health organizations and new entrants will have to balance that uncertainty with “the continued opportunities being created by forces greater than politics.”
The report identifies the top 10 forces expected to have the most impact on the industry in the year to come, as well as outlining three main strategies key health care players are expected to use to address the shift to value: adapting, innovating and building to value.
Adapting to value highlights the fact that some health organizations are already developing models in preparation for policy changes, such as the declared intent of the incoming administration to repeal and replace the Affordable Care Act. Pharmaceutical companies will work toward better engagement with patients as the president-elect indicates a move toward a patient-centered health care system that promotes choice, quality and affordability.
Additionally, value-based payments will become more prominent with the beginning of the first performance year of the Medicare Access and CHIP Reauthorization Act (MACRA) in 2017 and as the Centers for Medicare and Medicaid Services offer more bundled payment programs. Health systems will also need to modernize payment systems to be low risk, low complexity and secure in order to deliver more consumer-centered experiences.
When it comes to innovating for value, the health care industry will find itself preparing for emerging technologies such as artificial intelligence, virtual reality and 3D printing, and the attendant impact on existing business models, operations, workforce needs and cybersecurity risks. Another front in innovation is the battle against infectious diseases, as is diet as a key driver of U.S. health care costs.
The third driver, building to value, requires the creation of new solutions in the coming year to such problems as new pricing restrictions from industry trade organizations and pharmaceutical executives, as market pressures weigh on prices. In addition, while mergers and acquisitions in health care will probably continue, there may also be a rise in alternative transactions as organizations seek to improve their competitive edge as quickly as possible with new capabilities.
Here are the 10 trends HRI has identified:
10. Preparing medical students for work in a value-based world
The shift toward value-based care will require medical schools and residency programs to build innovative training programs that will prepare students for a new and changed health care landscape that will demand additional and different responsibilities from them once they graduate. For instance, according to a 2015 HRI survey, physicians believe within the next 10 years, they will spend more time on such activities as leading teams and coordinating care.
9. New partnerships and collaborations
Continued consolidation through mergers and acquisitions within the health industry will likely continue in 2017, with an increase in alternative transactions such as joint ventures, partnerships, strategic alliances and clinical affiliations.
8. Dialing back drug prices — somewhat
In the wake of three years of steady pressure on the biopharmaceutical industry’s drug pricing practices, new pricing restrictions could be led by industry trade organizations and pharmaceutical executives rather than regulators.
7. Nutrition becomes a tool for public health
The drive toward value-based care is driving established health organizations and new entrants to focus on nutrition as a way to prevent costly medical problems and improve the overall health of the populations they serve. This increasing industry awareness of diet as means of controlling health care costs for many Americans will spur the creation of new programs and collaborations in 2017.
6. The battle against infectious diseases sparks invention
The rise of international efforts to fight infectious disease and antimicrobial resistance will lead to greater collaboration and investment by public health agencies and private industry in the U.S. and Europe in the development of new weapons against these health threats.
5. Emerging technologies will generate major change
Such emerging technologies as artificial intelligence, drones, virtual reality and 3D printing, and their impacts on business models, operations, workforce needs and cybersecurity risks, will require substantial changes on the part of health care organizations. For instance, a digitized supply chain could slash manufacturing downtime by 30 percent to 40 percent, boosting equipment effectiveness.
4. Modernized secure payments
Health systems will need to modernize secure payments with low risk and low complexity so that they will be able to create more consumer-centered experiences. A PwC estimate puts the amount of health care provider revenue coming from credit card transactions at 5 percent, and expects it to double by 2020 — and, according to a recent HRI survey, one in four consumers in poor or fair health stated that their experience with hospital billing and payment damaged their opinions of the organizations. That will have to change for the better.
3. Value-based payment goes prime time
While so far new programs and payment models have mostly presented health care providers with upside risk, in 2017 those providers will be asked to participate in one of two payment tracks, both of which emphasize downside risk. While there is a potential for bonuses for those who do well, the presence of downside risk will require adaptation if they are to succeed and thrive.
2. Pharma’s new strategic partner — patients?
As reimbursement and regulatory environments get tougher, and consumerism finds new directions, pharmaceutical companies will have to develop better relationships with patients to justify prices, show value and satisfy calls by regulators.
1. Under the new administration, the ACA’s fate is unclear
A top priority of the coming administration is the repeal and replacement of the ACA — with the replacement to be a mix of tax credits, health savings accounts, high-risk pools, state Medicaid block grants and a transference of regulatory control from federal to state government.