2016 Global health care sector outlook
Battling costs while improving care
Across the globe, governments, health care delivery systems, insurers, and consumers are engaged in a persistent tug-of-war between competing priorities: meeting the increasing demand for health care services and reducing the rising cost of those services.
So pivotal is the role of cost on the global health care ecosystem that it is at the core of the many issues – demographic, financial, operational, innovation, and regulatory – impacting sector stakeholders in 2016 . Read on to learn more about trends impacting the global health care sector in 2016 and suggested considerations for stakeholders.
2016 Global health care sector outlook
Use the "down" arrows (chevrons) in the black toolbar above to expand the image for full view or select the download button below on the left
The way forward for the global health care sector is clear: stakeholders must look for ways to decrease costs, given the consensus that the current upward trajectory is unsustainable and three macro issues are framing the cost discussion:
Sector defragmentation - The health care sector is moving from its traditional, fragmented approach to clinical and financial operations to one focused on consolidation, convergence, and connectivity.
Population health – Stakeholders are seeking to address the cost curve with innovative approaches to managing the health of a population and health and social care systems will need to join forces, and the public and private sectors will have to transition financial incentives from the “break-fix” model of care to prevention, predictive maintenance, and outcome optimisation.
Volume to value – Due to concerns about rising costs and wide variations in performance and quality indicators, stakeholders are pushing for a transition to outcome- or value-based care (VBC) payment models, which align physician and hospital bonuses and penalties with cost, quality, and outcomes measures.
Health quality is not keeping pace with longevity, nor is the development of age-appropriate health policies and services. The proliferation of chronic diseases is having serious repercussions in both developed and emerging countries. Meanwhile, the fight against communicable diseases continues, especially in developing countries. Also, population access to health care clinicians, facilities and treatments varies widely around the globe – from simplistic as infrastructure basics, to complex as issues with cost containment. Today’s consumers are also more informed, involved in, and financially responsible for their health care decisions and therefore have higher expectations for the services and products they receive.
Health care is one of the largest industries in the world, however, challenging economic conditions are making it difficult for governments in many of the world’s regions to devote the necessary financial resources to handle expanding health care demands, especially when they are coupled with ever-rising costs. Many countries are taking a broad approach to cost containment by implementing comprehensive health care reform, exploring alternative financial models, and looking at public-private partnerships to address these issues.
Providers may need to shift their operating model to one that addresses variations in care and that aligns clinicians around consumer/patient-centered care. They may also need to consider diversifying the care settings and types of services they offer to solidify control over patients as they move through the health system.
Stakeholders are continually trying to identify ways to drive waste out of the system. At the same time, cost pressures, changing staffing models, technology advancements, and consumer preferences are creating a business case for “everywhere care" through alternative care delivery and operational models such as retail clinics, home care, telehealth, and medical tourism. But as their populations and health care needs grow, countries all over the world struggle to match the demand for trained medical professionals.
Spurred by market competition, reform-driven financial challenges, and persistent regulatory pressures, increasing numbers of health care providers, particularly in the United States, are using M&A, partnerships, and alliances to consolidate hospitals and are forming large health systems that offer economies of scale and broader service reach.
Medical innovation comes with a high price tag. Widespread adoption of personalised/precision care, shifting clinical offerings from mass generalisation to mass customisation, will likely be made possible through public and private investments in offerings that integrate drugs and devices with low-cost diagnostics, disease management programs, and clinical decision support. Personalising care based on genetics and individuals’ health information also has the potential to generate new therapies that may radically improve outcomes.
The demand for value and an increasingly competitive environment are prompting health care organisations to find new and more effective ways to improve care delivery including telehealth, mHealth, electronic patient records, wearables, and social media – which are growing rapidly in use and influence and, thus, hold considerable implications for the health care sector.
As health systems continue to face shrinking margins, tightening budgets, and evolving payment models, the combination of data and analytics is also being touted as a possible missing key to unlock new sources of value.
Much of health care’s regulatory focus is on patient and drug safety. Regulatory agencies continue to exert pressure on pharma, biotech, and medtech companies, with increasing focus on off-label marketing, failures to disclose safety risks, and concerns about the clinical trial process.
Health improvements are also being accompanied by pervasive, persistent cyber risks that can leave organisations vulnerable to debilitating business losses and reputational damage. Tracking and analysing business relationships is an important part of minimising fraud and abuse that may result from questionable relationships and improper influence.