2017 global health care sector outlook

Analysis

2017 global health care sector outlook

Making progress against persistent challenges

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. But how should sector stakeholders address these persistent challenges?

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 are just a few of the key issues and trends impacting the global health care sector. Read on to learn more about trends impacting the global health care sector in 2017 and suggested considerations for stakeholders.

2017 Global health care sector outlook

Deloitte 2015 Global health care sector outlook infographic

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Cost

The world’s major regions are expected to see health care spending increases ranging from 2.4 percent to 7.5 percent between 2015 and 2020. Even as countries strive to expand health care access or institute forms of universal coverage, infrastructure issues are making it increasingly difficult for public health care systems to sustain current levels of service and affordability.

Cost-containment measures

Stakeholders continue to implement cost-containment measures aimed at reducing clinical and administrative waste and improving operational efficiency such as consolidation; vertical integration, shifting of care to lower-cost and non-traditional settings; strategic procurement models; clinical pathways; standardized clinical processes; use of generics; shared service centers; and technology initiatives.

Emerging financial models

Reimagining and reconfiguring economic incentives so that health care organizations are rewarded for doing the right thing at the right time to support their patients’ health remains a critical frontier in the push towards risk-sharing and outcome- and value-based payment programs.

Population health management

Sector stakeholders, particularly in advanced health systems, are advocating the shift from a “break-fix” model of health care to one focused on prevention and the overall holistic health of populations rather than episodic and transaction-based treatments.

Localized health management

Numerous countries are moving from a centralized to a more localized health management process to deal with uniquely local demographic, governmental, clinical, and financial factors.

Cost-containment measures

Key takeaway:

Providers are finding it difficult to gain further cost and operational efficiencies after picking the low-hanging fruit should turn their attention to more transformative initiatives to bend the cost curve.

Care delivery

Lack of access to basic health care services and variations in care quality are persistent problems in many of the world’s regions – not only those in which the majority of the population is served by a publicly funded health system but also in developed markets. Funding shortfalls combined with other market drivers can produce a variety of situations that negatively impact access. Lack of clinicians to properly diagnose and treat illness also limits patient access to care. Refugee crisis, ongoing large-scale people movement, and management of fast-moving diseases (e.g., Ebola, Zika) are straining health and social service systems and driving demand for more health care professionals around the world.

Adding social determinants to the care equation

There is growing recognition among governments, payers, and providers that to better manage population health and curb rising costs the sector needs to add social determinants of health and wellness to the care equation.

Adding social determinants to the care equation

Key takeaway:

Today’s health challenges are complex and interrelated so care delivery models that use a multi-pronged, collaborative, and technology-enabled approach are more likely to yield positive results. The use of public-private partnerships to remedy the lack of health care infrastructure; the mitigation of access issues through dual systems of public and private health care; the use of technology-enabled, virtual care are potential solutions. Collaborative care models which address behavioral and physical health or programs which address social determinants may improve patient outcomes and lowered costs.

Cost

Cost is the biggest health care issue facing most countries in 2015. Pressure to contain costs and demonstrate value is coming from all sides. Political uncertainty, persistent economic stress, and austerity measures in numerous countries are calling into question the sustainability of public health care funding. In addition, questions and concerns exist about the amount of funding needed to better align supply to demand and, in particular, how to fund integration and primary care while meeting increasing demands for acute activity. Also, the high cost of targeted therapies, personalised medicine, genetic-based medicine, medical devices, and other advances continues to add to the health care cost burden along with the impact of waste, fraud, and abuse. 

Adapting to market forces

Change is requiring providers and health plans to rethink traditional business models to better address shifting or emerging health care challenges and opportunities.

Increasing role of government – Governments’ pivotal – and growing – role as payer, regulator, and market-shaper in the global health care sector cannot be understated.

Scale to prosper – Converging market forces are setting the stage for what may be a period of rapid consolidation among health care providers, particularly in the U.S. Both vertical and horizontal consolidation has been increasing, despite heightened regulatory scrutiny. In addition, cross-sector convergence is expected to rise with the shift towards an “eco-system” of product and service providers.

Competition for talent – As their populations and health care needs grow both developed and developing countries are struggling to supply adequate numbers of trained, qualified health care professionals, especially physicians and nurses.

Improving access to care – Workforce shortages, patient location, lack of health care infrastructure in certain countries, and outdated facilities in both developed and developing markets are major contributors to health care access problems around the world.

Consumerism – Patients facing large deductibles and cost-sharing for medical treatments and services – including specialty pharmaceuticals and medical devices – are becoming more cost-conscious and more involved in their health care decisions.  

Regulations & compliance

The global health care regulatory landscape is complex and evolving. The primary driver is patient health and safety; however authorities’ approaches to protecting patients can vary widely from country to country. Adding to this complexity are factors including rapid clinical and technology changes; increased scrutiny by governments, the media, and consumers; more sophisticated risk-monitoring techniques; and coordination across agencies and regions. Payment transparency is also taking center stage. Protected health information impacted by security breaches and cyber attacks will also continue to be of importance to stakeholder. 

Innovation

Advancing innovation is a clinical and cost imperative. Already, robotic surgery, 3D printing, implantable devices, and other digital- and technology-enabled innovations that target prevention, monitoring, and treatment, are showing potential to improve outcomes and reduce costs. In addition, new R&D approaches, and big data and analytics use are creating opportunities for innovation but stakeholders are challenged to do so while under pressure to cut costs.

Top 10 innovations to achieve more for less in health care

  • Next-generation sequencing
  • 3D-printed devices
  • Immunotherapy
  • Artificial intelligence
  • Point-of-care diagnostics
  • Virtual reality
  • Social media
  • Biosensors and trackers
  • Convenient care
  • Telehealth
Top 10 innovations to achieve more for less in health care

Key takeaway:

Health care leaders should consider building ecosystems that embrace nontraditional players and sources of knowledge outside their own four walls. Stakeholders also should consider building pilots before investing in scale, learn to embrace change, technology, and evaluate new revenue sources.

Operations

Both public and private health systems will likely need to implement new business and clinical operating models to deliver scalable, efficient, and high-quality care, and to reduce waste, redundancies, and costs that threaten system sustainability. Key ingredients are safe, standardized, and evidence-based processes that enable the provision of health interventions to those who need them, when and where needed, with a minimum waste of resources; a competent, well-trained workforce delivering safe, responsive, fair and efficient care; and effective use of innovative technologies. Other trends:

Vertical and horizontal consolidation– few players are “going it alone” in the battle against increasing competition and sharply climbing costs, opting instead to merge and form large health systems or chains that can leverage economies of scale and broader service reach to withstand rising clinical, financial, and regulatory pressures.

Market disruptors- The emergence of non-traditional health services and technology providers from the retail, high-tech, telecommunications, and consumer & industrial products sectors is disrupting the health care marketplace The potential impact of these innovators (many with deep pockets) could transform how established organizations prevent, diagnose, monitor, and treat disease.

Patient engagement- Addressing patients' clinical, financial, and emotional expectations have become major focus areas in light of payment pressures, a market shift to value-based and patient-centered care, and renewed payer emphasis on patient experience as a core element of care quality. Enhancing the patient experience is regarded as a potential driver of hospital performance, since it can strengthen customer loyalty, build reputation and brand, and boost utilization.

Vertical and horizontal consolidation

Key takeaway:

Learn from the journeys of others, including those in industries outside of health care. Just like commercial enterprises, providers and health plans should invest in tools and processes to better understand their target market and customer segments, and improve the patient experience to engage more effectively with today’s engaged and informed health care consumers.

Regulatory compliance

Health care is one of the world’s most regulated environments. The primary driver is patient health and safety; however authorities’ approaches to protecting patients can vary widely – assessing and regulating health care practitioner quality, for example, is a hugely complicated process that differs from country to country. Adding to this complexity are factors including rapid clinical and technology changes; calls for increased financial and performance transparency as part of the move to outcomes-based payment models; more sophisticated risk-monitoring techniques; and coordination across agencies and regions. Primary regulatory focus areas include:

Clinical quality and safety- Global harmonization for the evaluation of quality, safety, and efficacy of drugs and medical devices could substantially reduce costs.

Cyber security- Cyber-theft and cyber-espionage continue to endanger patient privacy and the use of sensitive health data.

Counterfeit drugs– Numerous deaths annually are linked to the counterfeit drug trade.

Corruption- Compliance breaches such as life sciences company payments to doctors continue to bedevil the sector and carry the risk of fines and, more importantly, reputational damage.

Key takeaway:

Taking a standardized, consistent approach to compliance planning, execution, and monitoring makes good clinical and business sense in today’s highly regulated global health care environment. Organizations of all sizes will need to continue navigating and complying with a highly complex, changing set of global, regional, country, and industry-specific laws and directives.

Market updates

Download the global report from the link at the left, or explore market updates and local implications for the following countries/regions:

 

2015 Global Health Care Outlook
2015 health care outlook: United Kingdom

'The UK's dominant health care issue is likely to be the May 2015 elections, with the different political parties using health as a political football...'.

 

View/download the United Kingdom section of the 2015 Global health care sector outlook report

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