A few weeks ago, PWC’s Health Research Institute (HRI) published their list of 10 biggest issues for 2014. Before I publish mine, I thought I’d share theirs. I put my comments on each in [brackets].
1. Picking up the pace of price transparency [this is an easy and obvious one…lots of energy here.]
Purchasers are demanding more information about the prices that providers charge and the government is giving it to them. Earlier this year, CMS released a trove of hospital pricing data for the first time showing significant variability in cost. Cost-conscious employers are making transparency a top factor in negotiations with health plans and providers. As more pricing information becomes public, how will consumers, employers, and insurers put the data to use and what does it mean for providers?
2. Employers explore new options with private exchanges [an interesting and surprising effect of Obamacare…I don’t think most people predicted this would happen quickly]
More large employers are using private exchanges as a way to provide healthcare benefits to their workers. This trend will likely grow in 2014 as employers continue to explore strategies for holding down costs, shedding the administrative burden of providing coverage, and expanding plan choice for employees.
3. Pharmaceutical supply chain security: Combating counterfeit drugs [a long time issue…not sure if 2014 will be the year for this]
A new federal law – the Drug Quality and Security Act – is aimed at eliminating counterfeit medications in the drug supply chain. The law imposes a tight timetable on implementing the first step toward a nationwide “track and trace” system to document the journey of prescribed medications from manufacturer to patient. Drug makers will be required to begin tracking prescribed drugs in large bundles or “lots” starting in 2015. And in 2017, the industry must begin assigning serial numbers to individual “saleable units” of every prescribed product sold in the U.S. PwC estimates that the program will cost drugmakers $10 million to $50 million per manufacturer.
4. Medicaid’s march toward managed long-term care [agree…Obamacare will drive more people here making this critical to long-term budget management]
States are struggling to contain rising Medicaid costs in the face of an aging baby boom population that has not saved enough for health costs in retirement. Demographic and economic trends point toward many years of rising long-term care costs. States are looking to a familiar tool – managed care – to help hold the line on long-term care spending. Ten years ago, only eight states had a Medicaid managed long-term care program; in 2014, that number is expected to climb to 26.
5. Companies rethink their roles in the new health economy [new models will become the norm as people stop focusing on ROI and focus on how to improve overall wellness with shift to prevention]
In the new health economy, money will move differently as consumers exercise greater control over spending and more companies compete for a piece of the healthcare dollar. Competition from new entrants, incentives to take on more risk, pressures to reduce costs, and the growing influence of consumers are all forcing healthcare organizations to rethink who they are and what they offer. Many are striking new alliances, marrying their own healthcare experience with the likes of big box retailers, technology companies, and wellness companies to diversify their brands and gain an edge over their competitors. Others are forging ahead on their own by expanding beyond their core competencies.
6. A new mantra for healthcare innovation: fail fast, frequently, and frugally [not sure this is new…been the mantra for years but now more mainstream]
Converging forces in 2014, including reduced government funding, will necessitate a new and leaner innovation model. Instead of fearing failure, organizations must embrace it. A discovery process focused on failing fast and frequently can help arrive at solutions in less time and with less cost. By fostering an innovative culture that brings more rigor to the process and views failure as a means to an end, companies can achieve high-impact innovations in less time and at lower cost.
7. Social, mobile, analytics, and cloud technologies prime health industry for new business models [new models yes…business models and ways of making revenue – TBD]
A single ecosystem of mobile sensors, devices and apps are enabling us to track everything from steps we walk to the calories we consume. Although separately these tools are not new, they are now being used to improve the practice of medicine and coordination of care. Instead of prescribing drugs, providers are prescribing exercise regimens and using data to keep patients on track to meet health goals. In 2014, the trend has the potential to fundamentally alter how health organizations interact with patients and one another to deliver care and manage health while keeping costs down.
8. Corporate venture capital picks up the slack [will continue with some big fails…more likely go to fund managers like the health plans have done]
As traditional venture firms pull away from funding life sciences start-ups, corporate capital will pick up the slack in 2014. With many corporations cash rich – but R&D poor – new venture funds may be a solution for stagnating innovation. New and unusual marriages are occurring between corporate cash and traditional venture capital, injecting not only money, but fresh innovative thinking and industry insights. Start-ups can benefit from a steady stream of funding that can last throughout the development phase and draw upon corporate expertise to help commercialize products.
9. Technology is redefining the healthcare job market [this will continue…not sure any net new changes here]
With millions of new customers, the rise of quality-based payments, and more discerning consumers, healthcare organizations require new workforce capabilities that stretch beyond traditional clinical roles into more convenient, consumer-focused technologies. Healthcare organizations need to use technology to extend care and build a workforce that is skilled at engaging digitally with patients.
10. A new lens on clinical trials [big changes coming for pharma over the next few years]
In 2014, as the pharmaceutical industry comes under increasing pressure to replenish its product pipeline faster and with fewer dollars, drugmakers must re-think their research methods. Precision medicine and the continued focus on specialty products are giving rise to new clinical trial designs, such as non-randomized studies. These changes will present new challenges for drugmakers as they work to ensure the integrity of their data, recruit appropriate patients, and determine product pricing. New technologies, such as virtual clinical trials, may offer a solution. According to HRI, nearly 70 percent of consumers surveyed agree that biomedical research is an important economic growth engine, but they are unsure of their role.
The list is informed by HRI research and the input of PwC’s Health Industries professionals who work with hospitals, physician groups, pharmaceutical and medical device companies and employers. In the fall of 2013 HRI also conducted a poll of 1,000 U.S. consumers on a range of healthcare topics covered in the report. The report provides further analysis of the top issues for 2014 and outlines implications for key stakeholders. For the full report, videos with industry experts and graphics illustrating each issue, visit: www.pwc.com/us/tophealthissues.