2017 Global Health Care Outlook: Making Progress Against Persistent Challenges
2017 Global Health Care Outlook: Making Progress Against Persistent Challenges
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2017 Global health care outlook | Making progress against persistent challenges
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2017 global health care outlook |
                                 Making progress against persistent challenges
Overview
and outlook
The challenges of providing and funding health care
around the globe haven’t changed much over the
last few years—and they are unlikely to do so in
2017. Rising demand and associated spending are
being fueled by an aging population; the growing
prevalence of chronic diseases and comorbidities;
development of costly clinical innovations; increasing
patient awareness, knowledge, and expectations;
and continued economic uncertainty despite
regional pockets of recovery (Figure 1, next page).
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Figure 1: Global health care by the numbers   2017 global health care outlook |
                                                                               Making progress against persistent challenges
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2017 global health care outlook |
                                 Making progress against persistent challenges
Since today’s health care demand and cost               Can success in one clinical area, payment
challenges appear likely to persist in the              model, or geographic region be replicated
near term—if not longer—stakeholders’                   in another? Can new technologies solve
responses to them will have to turn the tide.           old problems? Certainly, collaboration
Are governments, providers, payers, life                will be essential to make progress against
sciences companies, and consumers making                persistent challenges. This 2017 outlook
progress? Perhaps, but in some cases it                 reviews the current state of the global
may be too soon to tell. Established players,           health care sector; explores trends and
disruptive entrants, and governments are                issues impacting sector organizations; and
developing new solutions and approaches                 suggests considerations for stakeholders as
to improve care access and quality, and to              they seek to deliver cost-effective, high-value
control costs. But are their efforts achieving          health care.
the cost efficiencies envisioned? Lacking
definitive measurements, results to date
appear mixed.
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                                                                              2017 global health care outlook |
                                                                                                               Making progress against persistent challenges
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2017 global health care outlook |
                                 Making progress against persistent challenges
•• Increased use of generic drugs and                   A number of countries are exploring              Population health management
   biosimilars versus more expensive                    adoption of public-private financial models.     Sector stakeholders, particularly in
   branded products.                                    China is issuing policies and launching trials   advanced health systems, are advocating
                                                        to speed-up the growth of commercial             the shift from a “break-fix” model of health
•• Shared services centers for back office
                                                        health insurance, which traditionally has had    care to one focused on prevention and
   support such as information technology
                                                        a minimal role in the health care system.        the overall holistic health of populations
   (IT), human resources (HR) and finance.
                                                        The coming years may see a reimbursement         rather than episodic and transaction-based
•• Technology-assisted service provision                scheme with public health insurance as the       treatments. Canada’s provinces have started
   and delivery methods, such as robots for             pillar (covering basic care needs) and private   to action this movement by targeting key
   drug dispensing, e-prescriptions, novel              insurance as a meaningful supplement.            population segments to introduce new care
   payment cards, patient administrative                In Japan, concerns about increasingly            models to improve outcomes. Mexico is also
   systems, electronic medical records                  expensive therapies are prompting private        focusing public health system programs
   (EMRs), personal health records (PHRs),              insurance companies to place more focus on       and resources on prevention. As part of the
   and telemedicine.                                    offering plans that supplement government        government’s goal to “consolidate protection
                                                        OOP subsidy programs, such as one that           actions, health promotion and disease
Emerging financial models                               sets a monthly co-pay cap (approximately         prevention,”15 Mexico is strengthening
Reimagining and reconfiguring economic                  USD $800 for those at a general income           health services at the primary care level,
incentives so that health care organizations            level). Similarly, in Southeast Asian markets    promoting adoption of healthy habits that
are rewarded for doing the right thing at               where public health funding covers               improve quality of life, and generating
the right time to support their patients’               only a portion of oncology treatments,           awareness among the population about the
health remains a critical frontier in the               multinational companies (MNCs) are               benefits of more frequent and proactive
push towards risk-sharing and outcome-                  experimenting with patient assistance            medical attention.
and value-based payment programs. At                    programs to help finance their oncology
a macro level, outcome-based payments                   drugs. Finally, changes in Mexico’s regulatory   Japan’s shift from medication to prevention
are continuing to grow in popularity over               framework and the desire to improve              can be seen in the Ministry of Economy,
historical fee-for-service (FFS) models in              upon the quality of government-provided          Trade and Industry (METI) program
response to increasing demand from health               health care should drive new public-             “Health & Productivity Stock Selection,”
care payers and consumers for high-value                private associations.                            which awards enterprises that focus
health care.11 In the United States, for                                                                 on and strategically carry out health
example, the Medicare Access and CHIP                   The United Kingdom is expecting to see           and productivity management for their
Reauthorization Act of 2015 (MACRA) is a                an increase in collaborative contracting         employees. In Australia, population
payment law intended to drive major health              and risk-sharing agreements. The National        health management is the responsibility
care payment and delivery system reform                 Health Service's (NHS) shared planning           of the Commonwealth government and
for clinicians, health systems, Medicare, and           guidance for 2016/2017–2020/2021 outlined        initiatives are largely managed through the
other government and commercial payers.                 requirements for health care systems             Primary Health Networks. Social marketing
The law establishes a path towards a new                to produce five-year Sustainability and          campaigns targeting obesity, smoking,
payment system that will more closely align             Transformation Plans (STPs).13 In January        alcohol, and other drugs have been
reimbursement with quality and outcomes.                2016, local systems came together to form        employed at various times with variable
The first performance reporting period                  44 STP “footprints” aimed at transforming        results. There is general recognition at a
under the law was scheduled to begin                    patient care and outcomes and closing            government policy level that a population
January 1, 2017.12                                      deficits; STP implementation began later in      health approach is required to bend the cost
                                                        the year. The UK‘s “lead provider” model of      curve on health expenditures, although real
Still, financial models vary widely by                  funding is also anticipated to gain traction     drivers to incentivize this approach have not
country. Australia, for example, retains a              in 2017. In 2015, the NHS invited individual     yet been fully implemented.
firm commitment to service-based funding                organizations and partnerships to apply
in both its public and private health care              to become “vanguard” sites for the new
systems although there is increasing                    care models program, as part of the NHS’
exploration of outcome-based payments                   Five Year Forward View. In this model, lead
schemes. Denmark is gradually reducing                  providers take control over budgets and
the use of DRG-based financial models in its            financial risk, subcontracting services to
move towards a focus on service quality and             partner organizations.14
relevance rather than volume.
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                                                                 2017 global health care outlook |
                                                                                                  Making progress against persistent challenges
Despite increasing enthusiasm for had a devolved structure for over 15 years,
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2017 global health care outlook |
                                 Making progress against persistent challenges
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                                                                          2017 global health care outlook |
                                                                                                           Making progress against persistent challenges
Care delivery                                     of situations that negatively impact access;       Some health systems—Mexico and Australia
Lack of access to basic health care services      among them, inadequate and/or outdated             among them—are making increased
and variations in care quality are persistent     health system infrastructures (facilities,         use of public-private partnerships
problems in many of the world’s regions—          technology, equipment, treatments). For            (PPPs) to remedy the lack of health care
not only those in which the majority of the       example, the number of hospital beds               infrastructure. Most new capital funding
population is served by a publicly funded         is declining in the transition economies           projects in Australia are PPPs. Examples
health system but also in developed markets       of Central and Eastern Europe (including           include the recently completed Fiona Stanley
such as the United States, where The              Russia and Ukraine), Western Europe,               hospital in Perth which has all non‑clinical
Commonwealth Fund, in a 2016 11-country           North America, Asia and Australasia (Figure        services provided by Serco, and the
survey, found that one-third of U.S. adults       3), spurred by regional economic slumps,           Northern Beaches Hospital in New South
went without recommended care, did not            decreased government spending on health            Wales (NSW) which is fully operated by a
see a doctor when sick, or failed to fill a       care, hospital closings and consolidations,        private hospital operator (Healthscope) but
prescription because of costs.27 Intermittent     and pricing pressures attributed, in part,         funded by the NSW government for public
or chronic funding shortfalls combined with       to adoption of value‑based payment                 patients. There also is a growing appetite for
other market drivers can produce a variety        mechanisms for clinical procedures.                forming Non-Governmental Organization
                                                                                                     (NGO) and private-sector consortia to
                                                                                                     respond to population/outcome-based
Figure 3: Shrinking number of hospital beds
                                                                                                     projects, particularly chronic disease
                                                                                                     management and/or care for the elderly.
                          Regional comparison of number of beds
                                 (per 1,000 of population)                                           Conversely, the United Kingdom may be
                                                                                                     moving away from PPPs. The UK was an
                                                                                      CAGR
                                                                                                     early adopter of PPPs (also called the private
                                                                                                     finance initiative, or PFI) for health care,
     Economies in                                                  7.70
                                                                                                     introducing them in 1991.28 However, recent
      Transition                                                      8.29            (0.7%)         developments—i.e., the reduction in NHS
                                                                                                     funding at a time of increasing demand—
                                                   4.81                                              have limited stakeholders’ appetite for
 Western Europe
                                                     5.14                                            further public-private collaborations. Indeed,
                                                                                      (0.7%)
                                                                                                     the costs of PFI have proved cost-prohibitive
                                                                                                     for a number of UK hospitals.
                                       2.81
   North America
                                          2.91                                        (0.3%)         Lack of clinicians—especially general
                                                                                                     practitioners and specialists—to properly
                                                                                                     diagnose and treat illness also limits patient
        Asia and                   2.01
                                                                                                     access to care. Demand shock caused by the
       Australasia                 2.09                                               (0.4%)         refugee crisis, ongoing large-scale people
                                                                                                     movement (e.g., undeveloped to developed
                                   2.12                                                              countries, rural to urban settings), and
    Latin America                                                                                    management of fast-moving diseases (e.g.,
                                   2.05                                                0.3%
                                                                                                     Ebola, Zika) are straining health and social
                                                                                                     service systems and driving demand for
                                                                                                     more health care professionals around
                                           2020       2010
                                                                                                     the world. Yet a comparison of physician/
                                                                                                     population ratios for 2010 and 2020 shows
Source: EIU database, accessed on 10 August 2016                                                     considerable regional disparities.
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2017 global health care outlook |
                                 Making progress against persistent challenges
Workforce shortages are being                           •• Physicians in China remain tied to public       Increasing numbers of public and private
compounded by rising labor costs which,                    hospitals and focus on maintaining their        health systems are embracing (and
along with pharmaceutical pricing,                         professional ranking within the public          importantly, funding) technology-enabled,
higher‑acuity patients, and infrastructure                 system, despite initiatives to allow them       virtual care—online, telehealth, mobile
needs, area key drivers of hospital cost                   to practice at multiple sites. Thus, private/   health (mHealth), wearable and implantable
growth.29 Workforce issues can be seen in                  foreign hospitals face the obstacle of          patient monitoring devices, and other
both developed and emerging economies,                     recruiting reputable physicians to attract      advancements—to help bridge the care
and often involve identifying and securing                 waves of patients.                              delivery gap, especially in remote areas.
the right mix of specialist, primary care, and                                                             RingMD is one example. This innovative
mid-level practitioners.                                Some countries are trying to mitigate              online platform allows patients to connect
                                                        access issues through dual systems of              with verifiably qualified doctors by video or
•• Both the NHS and the social care sectors
                                                        public and private health care—with                phone from anywhere in the world. Patients
   of the United Kingdom have been
                                                        varying degrees of success. In Southeast           using the RingMD platform can schedule
   experiencing issues in recruiting and
                                                        Asia there is an increasing gap between            an affordably priced consultation in just a
   retaining permanent staff. In 2014, there
                                                        the state-of-the-art hospital and treatment        few minutes.32
   was a shortfall of 5.9 percent (equating
                                                        infrastructure in private institutions serving
   to around 50,000 full-time equivalents)
                                                        medical tourism and the well-to-do, and the        Technology-driven health care may prove
   between the number of staff that
                                                        very basic public infrastructure for the local     to be a literal lifesaver in geographic regions
   providers of health care services said
                                                        population. Unfortunately, private health          with widely dispersed, rural populations,
   they needed and the number employed,
                                                        care is unaffordable for most of the region’s      such as Africa and Southeast Asia. The
   with particular gaps in nursing, midwifery
                                                        consumers and private health insurance             practice is also gaining traction in developed
   and health visitors.30 Brexit will likely
                                                        uptake remains slow. The situation differs in      countries including Australia and the United
   lead to negative impacts on an already
                                                        China. Public hospitals provide 90 percent         Kingdom. Australia already has introduced
   constrained health care workforce, with
                                                        of the country’s health care services and          telehealth and telemedicine services and
   EU nationals accounting for 55,000 of the
                                                        retain a strong pool of talent and medical         there is a growing appetite to consider the
   NHS’s 1.3 million workforce. Ambiguity
                                                        resources. Still, riding a wave of favorable       use of robotics, automation, and cognitive/
   over future immigration policy is likely to
                                                        policies, strong demand, and an influx of          artificial intelligence (AI) in clinical settings.
   dampen the ability of the UK health and
                                                        private capital, private hospitals are making      In the United Kingdom, the Chief Executive
   social care sectors to attract and retain
                                                        improvements in process management,                of NHS England has indicated publicly that
   talent from the EU in the short term and
                                                        human resources, and medical equipment             virtual health care has a strong future in the
   many commentators are calling for the
                                                        and supplies, thus building their reputation       UK and in August 2016 announced a new
   government to clarify what arrangements
                                                        and service scope. Meanwhile, the                  £100 million funding pot to aid selected NHS
   will be for EU health and social care staff.
                                                        government, under pressure from rapidly            trusts in becoming centers of global digital
•• Japan has a lower physician-population               increasing medical expenses, is encouraging        excellence (CODE). This announcement
   ratio compared to other developed                    private health insurance as a supplement           of funding support follows other recent
   countries, with two doctors per 1,000                to the public scheme. Allowing the                 announcements by NHS England stating
   people (2012). The government promised               establishment of private hospitals should          that technology which enables patients
   to train an additional “250,000 care                 stimulate private insurance development.           to manage their own health is the key to
   workers by the early 2020s” to satisfy                                                                  improving care, promoting efficiency and
   demand for elder care.31                                                                                cutting costs throughout the NHS.33
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                                                                      2017 global health care outlook |
                                                                                                       Making progress against persistent challenges
governments, payers, and providers that to      childhood trauma and                                one type of trauma—rarely is it only
                                                                                                    sex abuse or only verbal abuse.
better manage population health and curb
rising costs the sector needs to add social
                                                chronic disease
                                                                                                 Ten types of childhood trauma are
determinants of health and wellness to the
                                                                                                 measured in the ACE Study; five are
care equation. Scientists have known for        The U.S. Centers for Disease Control and
                                                                                                 personal and five are related to other
some time that social determinants, the         Prevention (CDC)-Kaiser Permanente
                                                                                                 family members. Each type of trauma
conditions in which people live and work,       Adverse Childhood Experiences Study
                                                                                                 counts as one instance. Two thirds of the
can directly and indirectly shape physical      (ACE Study) 37 has identified a strong link
                                                                                                 17,000 people in the ACE Study had an
and behavioral health.34 Among these            between childhood trauma and the
                                                                                                 ACE score of at least one—87 percent of
influencers are income, education, living       chronic diseases people develop as
                                                                                                 those had more than one. So, for
and working conditions, transportation          adults, as well as depression, violence,
                                                                                                 example, a person who’s been physically
availability, childhood trauma (see sidebar)    being a victim of violence, and suicide.
                                                                                                 abused, with one alcoholic parent, and a
and environmental factors (e.g., lead paint,    The ACE Study is one of the largest
                                                                                                 mother who was beaten up has an ACE
polluted air and water, lack of outlets         investigations of the connection
                                                                                                 score of three.39 As the number of ACEs
for physical activity). In general, people      between childhood abuse and neglect
                                                                                                 increases, so does the risk for these
with lower socioeconomic status have            and later-life health and well-being.38
                                                                                                 outcomes.
greater exposure to health-compromising         Study results have shown that:
conditions.35 However, funding silos exist      •• Childhood trauma was very common,
                                                                                                 The wide-ranging negative
and communication and collaboration                even in employed, white, middle-class,
                                                                                                 consequences of ACEs highlight the
among social service agencies, primary care        college-educated people with great
                                                                                                 importance of preventing childhood
and behavioral health care providers is often      health insurance.
                                                                                                 traumas before they happen. The CDC’s
limited, disjointed, or absent, conditions      •• There was a direct link between
                                                                                                 Essentials for Childhood framework
that can impede care quality and drive             childhood trauma and adult onset
                                                                                                 proposes strategies that communities
up costs.36                                        of chronic disease—heart disease,
                                                                                                 can consider to promote safe, stable,
                                                   lung cancer, diabetes and many
                                                                                                 nurturing relationships and
Collaborative care models which address            autoimmune diseases, among them—
                                                                                                 environments for all children.40
behavioral and physical health or programs         as well as depression, suicide, being
                                                                                                 Essentials for Childhood can have a
which address social determinants have             violent and a victim of violence.
                                                                                                 positive impact on a broad range of
independently generated improved patient        •• More types of trauma increased
                                                                                                 health problems and on the
outcomes and lowered costs. However,               the risk of health, social, and
                                                                                                 development of skills that will help
these three factors are inextricably linked;       emotional problems.
                                                                                                 children reach their full potential.41
combining social determinants with
collaborative models in a fully integrated
care program may further improve
outcomes and provide the cost savings that      Case study: Addressing social                    program uses proactive outreach to
stakeholders seek.42 However, implementing      determinants" like we do for the one             prevent hospitalizations and emergency
sustainable integrated care programs faces      on page 8                                        room (ER) visits by focusing on timely
both financial and organizational barriers.43   The Connecting to Care program in                use of community-based services,
In addition to a lack of financial incentives   Saskatchewan, Canada, has shown                  including support for medical, mental
for addressing social determinants, certain     promising results in cost-control and            health, and addiction treatments, as well
activities associated with integrated care,     health-outcome improvement by                    as assistance with social needs.46 While
such as consultations between providers,        helping patients in ways that extend             the two pilots’ formal evaluations are not
and visits conducted outside of a physician’s   beyond the traditional prescription pad          yet publicly available, one has reportedly
office (including telehealth and online         and office visit. Launched in 2015 as            seen reductions in both ER visits and
consultations), are often not reimbursed        pilots in two cities, Connecting to Care         hospitalizations. One patient’s hospital
under traditional FFS payment models.           builds on the “hotspotting” approach,            inpatient days were reduced by 84
Structural, communication, and information      which mines administrative data to               percent (from 120 days in the previous
management limitations also diminish the        identify the subset of patients who              year to 20); each day spent out of the
effectiveness of an integrated care model.44    account for an outsized proportion of            hospital versus in it saved an average
                                                health care utilization and costs.45 The         of CAN$1,400.47
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2017 global health care outlook |
                                 Making progress against persistent challenges
Innovation                                              enabled innovations that target prevention,         creating opportunities for innovation but
Advancing health care sector innovation                 monitoring, and treatment are showing               stakeholders are challenged to do so while
is a clinical and cost imperative. Already,             potential to improve outcomes and reduce            under pressure to cut costs. (See sidebar.)
robotic surgery, 3D printing, implantable               costs. In addition, new R&D approaches,
devices, and other digital- and technology-             and big data and analytics use are
Top 10 innovations to •• Next-generation sequencing (NGS): •• Virtual reality (VR): Virtual reality can
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                                                                            2017 global health care outlook |
                                                                                                             Making progress against persistent challenges
To be a true game-changer, innovation              Yet despite overall growth in investment,           many patients don’t take their medicines
needs to begin as early as possible in the         targeted treatments still have to go through        according to schedule.56 With the cost of
R&D process and new approaches including           the rigorous and costly R&D process. And            non-adherence estimated at nearly $500
translational medicine are helping to              because the treatments may only be used             billion worldwide—including costs from
make that happen. A translational approach         for a small subset of patients, the return on       avoidable hospitalizations, nursing home
to R&D connects the traditionally discrete         investment is potentially reduced. It is both       admissions, and premature deaths—
steps of discovery, development, and               in spite of and because of these challenges         innovative solutions are essential to
delivery to facilitate a continuous process        that momentum around precision medicine             countering the avoidable adverse health
improvement cycle and accelerate time              is gathering like never before.55                   outcomes that drive-up health spending.57
to market.48 Big pharma and other life
sciences companies are using translational         New treatment delivery mechanisms                   As mentioned earlier, increased adoption
medicine to develop novel therapies for            may help improve medication efficacy                and reimbursement of digital and
cancer and chronic diseases, focusing on           and patient adherence. For example, as              technology-enabled health care
gene sequencing, unlocking nanoparticles’          the number of people living with one or             solutions can help mitigate care access
potential, and evaluating biomarkers.              more chronic conditions has increased, so,          challenges. In addition, technology-enabled
                                                   too, has the number of complicated daily            care can help providers and consumers
Precision medicine offers the potential            medication regimens needed to manage                improve disease management and enhance
for using more targeted therapies—                 and treat these conditions. Unfortunately,          the patient experience. According to the
targeting treatment to positively responding                                                           Deloitte 2016 Survey of U.S Health Care
patients—to improve outcomes and                                                                       Consumers, respondents’ interest in and
reduce adverse events. When paired                     Case study: Polypill improves                   use of technologies for health and fitness
with companion diagnostics                             treatment adherence                             purposes are growing:
(an in vitro diagnostic device or an imaging           Combining drugs commonly
                                                                                                       •• Fifty-eight percent of prescription drug
tool that provides information that is                 prescribed together in a single
                                                                                                          users report refilling prescriptions using a
essential for the safe and effective use of            pill—a polypill— helps patients
                                                                                                          mobile health application.
a corresponding therapeutic product49),                adhere to their prescribed treatment
targeted therapies can help physicians to              regimens.58 A cardiovascular polypill           •• Forty percent of surveyed caregivers say
select an optimal treatment the first time,            is being used in some European                     they would likely use sensors for location
avoiding the costly and risky practice of              and Latin American countries.                      tracking and fall detection.
trial-and-error prescribing.50 Specialty               The polypill includes a fixed-dose
                                                                                                       •• Consumer interest in using telemedicine
drugs are another clinical innovation;                 combination of a blood thinner
                                                                                                          ranges from thirty-two percent for a
when used with biomarkers to target                    (aspirin), a cholesterol-lowering drug
                                                                                                          minor injury to forty-nine percent for post-
subpopulations, such drugs could improve               (simvastatin), and an angiotensin-
                                                                                                          surgical care.
outcomes, lower treatment costs, and even              converting-enzyme inhibitor that
prevent disease.51,52                                  works to stabilize vessel walls and             •• Of note to technology solution providers,
                                                       blood pressure (ramipril).59 The cost              consumers have some concerns about
A recent report from the Tufts Center for              for this pill is low: between $14 and              using remote patient monitoring and
the Study of Drug Development shows that               $18 per month in Latin America.60                  telemedicine; specifically, that care
investment in precision medicine has nearly            A trial in Argentina, Paraguay, Italy,             would be lower-quality than if they saw
doubled in the last five years.53 One example          and Spain showed that the polypill                 a provider in person; and their personal
is the United States’ Precision Medicine               resulted in 66 percent adherence                   health information could be leaked.
initiative, which is focused on building a large       to the treatment regimen, a 10
                                                                                                       •• Consumers also express interest in using
research cohort for longitudinal studies,              percent improvement over patients
                                                                                                          robotics and drones for future health
and ensuring regulations are appropriate               taking the three drugs separately.
                                                                                                          care scenarios, such as medication
to facilitate sharing of patient data across           Polypill users experienced
                                                                                                          assistance for chronic disease (40
institutions and agencies. The program’s               improvements in blood pressure
                                                                                                          percent); disease diagnosis assistance (40
goal is to get more targeted treatments for            and cholesterol management.61
                                                                                                          percent); delivering laboratory samples (38
a variety of diseases to patients faster.54
                                                                                                          percent); home maintenance (caregiver)
                                                                                                          (35 percent); and disease diagnosis
                                                                                                          replacement (32 percent).62
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2017 global health care outlook |
                                 Making progress against persistent challenges
Health care digitalization, the collection              Sophisticated data sharing, processing,          a competent, well-trained workforce
and electronic exchange of vital biological             and mining techniques can support the            that operates in appropriately-sized and
and clinical data among life sciences                   development of personalized medicines            balanced teams, delivering safe, responsive,
companies, providers, health plans, and                 and increase speed to market for new drugs       fair and efficient care; and effective use
patients can improve drug and device R&D,               and devices. Integrating and analyzing new       of innovative technologies to contain
manufacturing, distribution, adoption, and              types and sources of data also can be used       costs, heighten staff performance, and
use. Examples include patient-level data                to inform performance management of              improve the comfort and safety of patients
to drive discovery of new drugs; electronic             commissioned services and to flex payments       and staff.68
medical record (EMR) use to establish the               up and down (including incentives) according
safety signal of a questionable drug;63                 to provider performance.66 As more data          Three sector trends—vertical and horizontal
and wearable and implantable devices to                 becomes available from connected care            consolidation, market disruptors, and
collect and transmit patient information                sources, analytics should be able to help        patient engagement—are indicative
to monitor treatment regimen adherence.                 detect hidden patterns in information and        of health systems’ increasing focus on
To gain maximum value from new digital                  deliver actionable insights that are likely to   operational transformation to offset
capabilities, health systems will need to               play a major role in helping health systems      persistent clinical and financial challenges.
integrate them into core processes and                  improve costs and quality.67
systems rather than use them as adjuncts to                                                              Vertical and horizontal consolidation
business as usual.                                      The real and perceived value of health care      Fewer hospitals and independent physician
                                                        digitalization is likely to generate increased   practices are choosing to “go it alone” in
It is important to note that while adoption             oversight of its use. For example, in June       the battle against increasing competition
of digital- and technology-enabled care is              2016, China’s State Council issued guidelines    and sharply climbing costs, opting instead
increasing, many health systems are still on            for promoting and regulating big data            to merge and form large health systems or
the first digital rung; for example, they don’t         applications in health care provision. The       chains that can leverage economies of scale
necessarily have coverage of computers                  guidelines also aim to promote sharing of        and broader service reach to withstand
in primary or secondary care and are still              the government health care information           rising clinical, financial, and regulatory
working off paper records. Funding and                  system and public medical data by                pressures. This continuing trend of “bigger
employee training issues may continue to                establishing a database based on EMRs and        is better” is apparent in the number of
exert downward pressure on widespread                   prescriptions.                                   U.S. announced hospital mergers and
adoption and use.                                                                                        acquisitions going back as far as 1998
                                                        Operations                                       (Figure 4, next page). Denmark’s
The combination of data and analytics is                Both public and private health systems           public hospitals are in the middle of a
being touted as the missing key to unlock               will likely need to implement new business       consolidation process, supported by a
new sources of health care value64 and                  and clinical operating models to deliver         range of construction projects, which will
innovation. Hospital expenditures on                    scalable, efficient, and high-quality care,      lead to fewer acute care hospitals. In the
analytics are anticipated to reach USD $18.7            and to reduce waste, redundancies, and           United Kingdom, devolution has enabled
billion by 2020, up from USD $5.8 billion in            costs that threaten system sustainability.       vertical integration between providers in
2015, as hospitals focus on quality and cost            Among key ingredients for productive health      the Greater Manchester region. Salford’s
reduction.65                                            care operations are safe, standardized,          Integrated Care Organization (ICO), which
                                                        and evidence-based processes that enable         aims to integrate primary care, acute care
                                                        the provision of health interventions to         and social care provision, was launched
                                                        those who need them, when and where              in July 2016 and is moving towards
                                                        needed, with a minimum waste of resources;       implementation in 2017.69
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300       287
                                                                                    249                                                          244
250
                                                            236
200
                  175                                                                                                                                               178
                                                                                                                                         156
       139                                                                                         149
150
                             132                                                                                              125
                                    118
                110                                                                                                                            107
                                           101
                                                                                                                                    90                            100
100                                                                         88
                        86         83                                                                         78        80                             88
                                                                                                                             72
                                          58          56   59                     57          58         60
                                                                       51                                          52
 50
                                                 38
   0
                                                                 (1)                    (2)                                                                 (3)
         98       99      00        01     02      03       04          05         06          07         08        09        10     11          12     13          14
Source: Irving Levin Associates, Inc. (2015). The Health Care Services Acquisition Report, Twenty-First Edition.
(1) In 2004, the privatization of Select Medical Corp., an operator of long-term and acute-care hospitals, and diverstiture of hospitals by
    Tenet Healthcare Corporation helped to increase the number of hospitals affected.
(2) In 2006, the privatization of Hospital Corporation of America, Inc. affected 176 acute-care hospitals. The acquisition was the largest
     health care transaction ever announced.
(3) In 2013, consolidation of several investor-owned systems resulted in a large number of hospitals involved in acquisition activity.
                                                                                                                                                                         15
2017 global health care outlook |
                                 Making progress against persistent challenges
Announced Hospital Mergers and                          power, enable market expansion through           •• Technology companies are looking
Acquisitions, 1998–2014                                 two-way referrals, and broaden the base             at how to take blockchain technology
There is also growing appetite among                    of available clinicians for consultations           beyond its origin as the public ledger
health care providers in the United                     and other services. Still, many health care         for cryptocurrency transactions and
States, Denmark, the United Kingdom,                    alliances struggle with technical integration       repurpose it to drive health care and life
and other countries for horizontal or                   and information-sharing, and rely on                sciences innovation, strengthen security
system-level consolidation. Providers are               poorly structured incentives that prevent           of medical and product data, improve
developing Shared Service Centers aimed                 long‑term sustainability.                           health plan back-office processes and
at consolidating back-office functions                                                                      systems, and enhance the health care
in order to achieve cost savings and                    Market disruptors                                   customer experience.74 For example,
reduce administrative burden. In the                    The emergence of non-traditional health             blockchain applications can provide
United Kingdom, a report issued by NHS                  services and technology providers from              heightened visibility and improved
Improvement estimated that service                      the retail, high-tech, telecommunications,          data-tracking at various points along the
consolidation between hospital providers                and consumer & industrial products                  pharmaceutical and medical device supply
can contribute in some cases to operating               (C&IP) sectors is disrupting the health care        chain, combatting the ongoing problem of
cost savings of 12–14 percent (compared                 marketplace The potential impact of these           counterfeit medications.75
to between 1–2.5 percent without                        innovators (many with deep pockets) could
consolidation) through standardizing                    transform how established organizations          Patient engagement
and integrating work processes, support                 prevent, diagnose, monitor, and treat            Anticipating and meeting patients' clinical,
functions, suppliers and investments. The               disease. Among notable developments by           financial, and emotional expectations
NHS report estimated that consolidating                 disruptors both small and large:                 have become major focus areas for
corporate and clinical support functions                                                                 health system executives facing payment
                                                        •• Retail clinics and urgent care centers
alone can lead to cost savings 1–3 percent                                                               pressures, a market shift to value-based
                                                           provide more convenient and lower-cost
of turnover, within a time frame of six to                                                               and patient-centered care, and renewed
                                                           health care to patients than traditional
12 months.71                                                                                             payer emphasis on patient experience as
                                                           physician offices and clinic settings.
                                                                                                         a core element of care quality.76 Enhancing
                                                           Typically located within shopping centers
In the United States and elsewhere, health                                                               the patient experience is regarded as a
                                                           or other public spaces, these alternative
plans are also “defragmenting” via mergers                                                               potential driver of hospital performance,
                                                           care sites offer extended hours, more
and acquisitions (M&A) and collaborative                                                                 since it can strengthen customer loyalty,
                                                           locations, and shorter wait times. The
relationships with providers to create                                                                   build reputation and brand, and boost
                                                           use of physician assistants, nurse
powerful data-sharing networks that help                                                                 utilization of hospital services through
                                                           practitioners, and pharmacists, under
drive integration across the continuum                                                                   increased referrals to family and friends.77
                                                           the supervision of physicians, lowers
of care.72                                                                                               Furthermore, research has shown that
                                                           costs. As retail clinics expand their
                                                                                                         better patient experience correlates
                                                           services to include areas such as chronic
Joint ventures and other collaborative                                                                   with lower medical malpractice risk for
                                                           care management, educational and
agreements are also on the upswing.                                                                      physicians78 and lower staff turnover ratios.79
                                                           behavioral counseling, care coordination,
Japan’s government has established
                                                           and infusion centers, their impact may
measures to promote collaboration among                                                                  What are some of the main drivers of patient
                                                           increase. According to the Deloitte Center
medical facilities that allows them to share                                                             experience in health care? Deloitte’s 2015
                                                           for Health Solutions 2015 Survey of US
physicians and hospital beds and increase                                                                Survey of US Health Care Consumers found
                                                           Health Care Consumers, 77 percent of
purchasing power. In China, ongoing                                                                      that staff engagement measures (such as
                                                           respondents choose retail clinics for their
medical reform is driving hospitals to                                                                   quality of staff, staff communication and
                                                           convenience, 72 percent for speed of
create alliances and partnerships to gain                                                                responsiveness, and appointment ease),
                                                           securing an appointment, and 60 percent
operational efficiencies and cost savings.                                                               among others, were the most important
                                                           for after-hours care.73
Such arrangements improve participants’                                                                  drivers of patient experience. Improving
upstream and downstream bargaining                                                                       hospital staff’s and, in particular, nurses’
16
                                                                        2017 global health care outlook |
                                                                                                         Making progress against persistent challenges
work environment, therefore, could lead to      •• Employee skills in using interactive            Regulatory compliance
improvements in patient experience.80              technology and automatic information            Health care is one of the world’s most
                                                   delivery methods to give patients a             regulated environments. The primary
Effective patient engagement is foundational       greater sense of control over their care        driver is patient health and safety; however
to a positive patient experience. Patient          without them feeling overwhelmed by too         authorities’ approaches to protecting
engagement is the idea that patients and           much information.82                             patients can vary widely—assessing and
caregivers are actively and collaboratively                                                        regulating health care practitioner quality,
involved in care operations—processing                                                             for example, is a hugely complicated process
information, deciding what types and               Case study: Patient-centered                    that differs country to country. Adding to
timing of treatment would fit best with            care                                            this complexity are factors including rapid
their lives, and acting on their decisions.        Valencia, Spain’s Ribera Salud                  clinical and technology changes; calls
Patient engagement is crucial for achieving        initiative shows that patient-                  for increased financial and performance
a sustainable and cost-effective health            centered care delivery, potentially             transparency as part of the move to
system. However, effective engagement              enabled by new health information               outcomes-based payment models; more
is dependent on health literacy and                technology (HIT) solutions, could               sophisticated risk-monitoring techniques;
consumers having the appropriate                   help improve health outcomes                    and coordination across agencies and
knowledge and confidence to evaluate and           and lower costs.83 Launched in                  regions. In 2017, organizations of all sizes will
navigate the health care system.81 Health          1999, Ribera Salud is an integrated             need to continue navigating and complying
information technology (HIT) solutions,            care company with a patient-                    with a highly complex, changing set of global,
social media platforms, and performance            centered, population health                     regional, country, and industry-specific laws
analytics are important patient engagement         management orientation. The                     and directives.85 Primary regulatory focus
aids to improve consumer decision-making,          regional government engages                     areas include:
health behaviors, self-care, and treatment         Ribera Salud as a private contractor            •• Clinical quality and safety—Global
compliance. Other potential enablers of            to manage and maintain primary,                    harmonization for the evaluation of
patient activation and engagement include:         acute, and specialist care services                quality, safety, and efficacy of drugs
•• An organizational culture that prioritizes      in exchange for a fixed annual                     and medical devices could substantially
   and supports patient engagement                 capitation payment. Ribera Salud                   reduce R&D costs (which are then passed
                                                   uses a tightly integrated clinical and             on to payers), encourage sharing of
•• Formal channels for involving patients          business model with considerable                   knowledge and resources, and result
   in the design, management, and                  consumer choice, a rigorous                        in fewer clinical trials. For example, the
   achievement of positive health outcomes         management culture that adheres                    Identification of Medicinal Products (IDMP)
•• Processes to chart progress on patient          to high standards of quality and                   Data Standards86 are being developed
   engagement; for example, using                  consistency, and a networked health                and implemented by the International
   surveys to collect feedback including           information system shared among                    Organization for Standardization (ISO),
   feedback on patient-reported outcome            all service providers. Since Ribera                regulators, trade associations, and other
   measures (PROMs)                                Salud is responsible for the cost                  stakeholders in response to a worldwide
                                                   when consumers seek care outside                   demand for internationally harmonized
•• Peer support, self-management education,        the system, providers have strong                  specifications for medicinal products.
   health coaching, and group activities for       incentives to maintain high levels of              There also have been increasing calls for
   improved health and well-being                  clinical and customer service quality.             greater control and stringent monitoring
•• Workforce training in the use of patient        Several recent studies found that                  of medical devices in the wake of Europe’s
   activation measurement and in assessing         the average cost per patient was                   PIP breast implant scandal,87 a widespread
   levels of patient engagement                    between 23 and 38 percent lower                    hip replacement recall, and other incidents
                                                   in the areas where Ribera Salud                    which have highlighted the current
•• Investments in the right technology and         operates relative to other regions                 system’s regulatory weaknesses.
   services to empower patients to become          in Spain.84
   collaborators in their own care
                                                                                                                                                     17
2017 global health care outlook |
                                 Making progress against persistent challenges
18
                                                                          2017 global health care outlook |
                                                                                                           Making progress against persistent challenges
Stakeholder
considerations
Without exception, health care systems           Public policies also can play a key role in         Additionally, organizations should
around the globe should continue to source       encouraging and maintaining collaboration           standardize their clinical and business
and implement strategies that can help to        across sectors, as well as creating incentives      processes to improve quality and efficiency;
improve outcomes and hold the line on            for different sectors to contribute what            enhance hospital information systems to
costs.91 While there is no such thing as the     they can to the cause of improving                  support evidence-based decision-making;
“perfect health system” there are examples       population health.94,95                             and use M&A and alliances to share
of good performance in most countries                                                                resources and enhance capabilities. Insights
which can provide valuable learnings for all     Innovation—Health care leaders should               and evidence should inform where future
health care stakeholders92                       consider building ecosystems that embrace           strategic and tactical investments will be
                                                 nontraditional players and sources of               made to improve and operations and realize
Cost—Providers finding it difficult to gain      knowledge outside their own four walls.             greater value.
further cost and operational efficiencies        Stakeholders also should consider building
after picking the low-hanging fruit should       pilots before investing in scale, learn             Regulatory—Taking a standardized,
turn their attention to more transformative      to embrace change, and evaluate new                 consistent approach to compliance
initiatives to bend the cost curve. This         revenue sources. Additionally, organizations        planning, execution, and monitoring
means breaking through the constraints of a      should strive to be agile in anticipating and       makes good clinical and business sense
traditional care delivery model; shifting from   adjusting their strategies as innovations           in today’s highly regulated global health
longstanding FFS payments to outcome-            continue to evolve.96 From a tactical               care environment. Provider, payer, and life
based, cost-sharing financial models; moving     perspective, incorporating digital health care      sciences organizations should promptly
from acute, episodic medical treatments          and analytics into daily practice can help          assess potential capability and data security
to proactive and holistic population health      to streamline care pathways, reduce costs,          gaps, define their vision and needs,97
management; and transitioning from               increase patient satisfaction, and improve          establish a forum and governance process
manually intensive clinical and business         quality. For example, technology-enabled            for risk-related decision-making, secure
processes to technology-enabled solutions.       solutions like a polypill or an app designed        adequate funding and appropriately trained
                                                 to help manage a chronic condition have the         staff, and develop effective implementation
Care delivery—Today’s health challenges          potential to improve treatment adherence,           and remediation programs. Cyber security
are complex and interrelated so care             particularly if implemented as part of a            should be a major focus area: Organizations
delivery models that use a multi-pronged,        high-value health care delivery model.              can avoid or mitigate cyber breaches with a
collaborative, and technology-enabled            Finally, health care organizations of all sizes     centralized security program that contains
approach are more likely to yield positive       should embrace innovation and calculated            authoritative, uniform, and efficient policies
results. For example, integrated care that       risk-taking, and stop waiting for the “perfect”     and decisions; encourages employees to
addresses patients’ social, behavioral, and      solution—try, learn, and continuously evolve.       recognize and report potential threats;
physical needs can help improve outcomes                                                             and verifies the cyber security and privacy
and reduce costs; however, implementing          Operations—Sector stakeholders can and              practices of third-party business partners
a collaborative care model is likely to          should learn from the journeys of others,           that handle PHI.98 Finally, information-
generate organizational challenges. For both     including those in industries outside of            sharing and partnering can help to reduce
providers and payers, it can be difficult to     health care. Just like commercial enterprises,      health care operational and regulatory
overcome employees’ resistance to new            providers and health plans should invest in         risks. Countries in the EU and elsewhere are
roles and procedures without strong leaders      tools and processes to better understand            working across governments and agencies
to champion integration and improved HIT         their target market and customer segments,          to promote a more systematic approach
to enable widespread adoption.93 Improved        and improve the patient experience to               to regulatory rule-making, monitoring,
education and reimbursement incentives           engage more effectively with today’s active         and enforcement.
may drive adoption rates and usage.              and informed health care consumers.
                                                                                                                                                       19
2017 global health care outlook |
                                 Making progress against persistent challenges
Appendix
Explore the latest health care sector                   insurers cut costs, manage risk, improve        MACRA: Disrupting the health care system
research from Deloitte members or visit:                customer service, grow their business, and,     at every level
www.deloitte.com/us/healthsolutions                     ultimately, bolster the bottom line. How can    MACRA is expected to drive care delivery
www.deloitte.co.uk/centreforhealthsolutions             a cryptocurrency technology like blockchain     and payment reform across the US
www.deloitte.com/healthcare                             potentially solve these problems and more?      health care system for the foreseeable
                                                                                                        future. Congress intended MACRA to be
2016 Global health care outlook: Battling               Health system analytics: The missing key to     a transformative law that constructs a
costs while improving care                              unlock value-based care                         new, fast-speed highway to transport the
Across the globe, governments, health care              Talk of analytics and “big data” is             health care system from its traditional
delivery systems, insurers, and consumers               everywhere in the health care industry          fee-for-service payment model to new risk-
are engaged in a persistent tug-of-war                  these days. Many stakeholders agree that        bearing, coordinated care models. It has the
between competing priorities: meeting the               analytics provide insights that can enable      potential to be a game-changer at all levels
increasing demand for health care services              organizations to improve quality and reduce     of our health care system. This page serves
and reducing the rising cost of those                   costs, a combination that is essential to       to be a one-stop shop for the latest on the
services. So pivotal is the role of cost on the         implementing effective value-based care         legislation, including what the MACRA final
global health care ecosystem that it is at              programs. As health systems continue to         rule means for you.
the core of the many issues—demographic,                face shrinking margins, tightening budgets,
financial, operational, innovation, and                 and evolving payment models, analytics are      No regulation is an island: EU regulatory
regulatory—impacting sector stakeholders                being touted as the missing key to unlock       changes and their impact on the global life
in 2016.                                                new sources of value.                           sciences industry
                                                                                                        The life sciences industry operates in one of
Blockchain in health and life insurance:                High-value health care: Innovative              the world’s most regulated environments.
Turning a buzzword into a breakthrough                  approaches to global challenges                 Life science organizations must navigate and
Health and life insurers are among the                  Health care organizations across the globe      comply with a highly complex set of global,
many players scrambling to determine how                are innovating to deliver higher-value health   regional, country, and industry-specific laws
blockchain could be adapted to improve                  care. What are pioneering health care           and directives as well as industry standards
the way they maintain records, execute                  providers, health plans, and life science       and codes that span a drug or device’s
transactions, and interact with stakeholders.           companies doing to anticipate patient           developmental and commercial lifecycle.
Key questions center on whether                         needs, reduce costs, and improve overall        Recent and ongoing European regulatory
blockchain’s unique attributes could help               health outcomes in the US and globally?         changes are anticipated to be among
                                                                                                        the most significant yet for the global life
                                                                                                        sciences industry.
20
                                                                         2017 global health care outlook |
                                                                                                          Making progress against persistent challenges
Precision medicine: Bridging the gap           experience is associated with higher hospital        determinants have independently generated
between potential and reality                  profitability. This association is strongest for     improved patient outcomes. However,
Precision medicine offers the potential        aspects of patient experience most closely           these three factors are inextricably linked;
for more targeted therapies—targeting          associated with better care—in particular,           combining social determinants with
treatment to positively responding             nurse-patient engagement.                            collaborative care models may further
patients—and reducing adverse events.                                                               improve individual and overall outcomes,
Despite investment growth, we would be         Top 10 health care innovations: Achieving            and provide the cost savings that health
remiss to forget that targeted treatments      more for less                                        plans and states are looking for.
still have to go through the rigorous and      Health care is an industry in need of
costly research and development process.       innovation. Health plans, providers, life            Vital Signs: How to deliver better health
And because the treatments may only            sciences companies, and the government               care across Europe
be used for a small subset of patients,        are facing rising costs and inconsistent             With many more people living longer but
the return on investment is potentially        outcomes. They are working to improve care           developing multiple, complex long-term
reduced. It is both in spite of and because    and health outcomes, all while reducing              conditions, it has become more important
of these challenges that momentum              costs and spending. What innovations are             than ever to ensure health systems
around precision medicine is gathering like    most likely to help stakeholders achieve             are fit for the future. So how well are
never before.                                  these goals and transform health care over           health systems across Europe meeting
                                               the next 10 years?                                   this challenge?
The value of patient experience: Hospitals
with better patient-reported experience        Social determinants and collaborative
perform better financially                     health care: Improved outcomes, reduced
Higher patient experience ratings are          costs: Implications and opportunities for
associated with higher profitability.          health plans and states
Improving the patient experience can help      Three factors can dramatically influence
a hospital improve its financial performance   a person’s health status and associated
by strengthening customer loyalty, building    health care costs: physical health, behavioral
reputation and brand, and boosting             health, and social determinants. Research
utilization of hospital services through       has shown that collaborative care models
increased referrals to family and friends.     which address behavioral and physical
Deloitte research shows good patient           health or programs which address social
                                                                                                                                                      21
2017 global health care outlook |
                                 Making progress against persistent challenges
Endnotes
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24
                                                                          2017 global health care outlook |
                                                                                                           Making progress against persistent challenges
Contacts
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