Stakeholders Now Agree: The Future of Health is Inevitable | Deloitte US has been saved
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By Neal Batra principal, Deloitte Consulting LLP
It has been nearly four years since Deloitte formalized its vision for The Future of Health,TM which predicts a monumental pivot from sick-care to well-care, early detection, and prevention over the next 10 years. Shortly before the holidays, I participated in a Future of Health webinar. Panelists included a leader in investment banking and the CEO of a large medical device manufacturer. While we each had a different perspective, we were in complete agreement that the health sector is in the midst of an unprecedented and radical transformation.
This was a milestone-moment for me because I have experienced a fair amount of pushback and skepticism since we introduced this concept in 2019. This webinar was the first time that I’ve witnessed universal agreement—from multiple stakeholders representing various parts of the ecosystem—about where health care in the US is heading.
Although the panelists were aligned with the overall Future of Health concept, there was some contention about the timeline and where (and when) investors should place their bets. It remains to be seen which organizations are best positioned to thrive in this unfolding future, which ones won’t be able to keep pace, what role new entrants might play in shaping the future, and how industries might converge.
Investors tend to focus on their return on investments (ROI). Their business is defined by quarters, not years, and they make their bets accordingly. Some consultants and advisors, by contrast, are more interested in changes that might take place over years or decades and the implications those changes could have on technology, talent, business models, and capital investments.
US health spending topped $4.3 trillion in 2021
Everyone on the panel agreed that the cost of health care in the US is unsustainable and is generating worse outcomes and higher costs than most other countries. The US spent about $4.3 trillion on health care in 2021—up 2.7% from the prior year, according to recent data from the Centers for Medicare and Medicaid Services (CMS).1 That works out to almost $13,000 per person. A Deloitte analysis projects that health spending could triple to nearly $12 trillion by 2040 if changes are not made. If our actuarial analysis is correct, the Future of Health could lead to a dramatic slowdown in spending.
The adoption of increasingly sophisticated technologies such as artificial intelligence by the health care sector could help usher in a new era. Unlike many other industries, however, the adoption of technology in health care can be hindered by reimbursement issues, regulations, and political headwinds. In addition, hospital systems sometimes have extremely localized infrastructures, which can make it difficult for them to integrate some types of technology. What other industry still relies heavily on fax machines and paper files?
Medtech and technology firms are eyeing health care consumers
One of the financial experts on the panel suggested the pandemic accelerated the speed at which we are likely to arrive at the Future of Health. COVID-19, he explained, forced consumers to become “armchair epidemiologists” who were responsible for diagnosing, testing, and treating themselves. Many medical devices have become more consumer-friendly over the past few years, and some are being sold directly to consumers, rather than being distributed exclusively to hospitals and clinicians. In addition to their traditional sales and marketing strategies, some device manufacturers have expanded into direct-consumer advertising. The medtech CEO agreed that consumers—whether they are healthy or suffer from chronic illnesses—have become much more aware of their health and well-being. The combination of technology and social media has made it easier for people to share information and experiences with each other.
However, it could be difficult to determine an ROI for a device that helps detect disease or prevents an illness. Employers and managed care organizations—as well as investors—will likely want to see evidence that a medical device can reduce the total cost of care.
Some medtech companies might be able to use real-world evidence to demonstrate the impact a device has on both health and costs. For example, the longer people with diabetes can keep their blood-glucose levels within a recommended target range, the less likely they may be to develop complications.2 Continuous glucose monitors that help patients keep their blood-glucose levels within that target range could help physicians monitor and manage their patients more effectively, the medtech representative noted during our discussion.
Just as some medtech companies are marketing more devices to consumers, some consumer-focused technology firms are wading deeper into the health care waters. Smartphones, smart watches, and other wearable devices are generating more data for consumers and could steer people toward healthier behaviors. However, the panel agreed that clinicians are unlikely to consider information generated by a consumer device because it is not clinical-grade data. One panelist noted that clinicians would likely never dose insulin based on a sensor that was less than clinical grade.
The US health system is set up to provide episodic and infrequent care. The panel agreed that people generally don’t interact with the health care system until they get sick. But if people had access to reliable, actionable information, they might be more likely to engage in their health—maybe multiple times a day. If that happens, the power and influence of the sick-care system could diminish, and the consumer-oriented business model could be elevated.
Everyone on the webinar panel lives in a different point along the health care ecosystem. However, we all agreed that transformation in health care is an inevitability. Timing is the only real question. Device manufacturers, health care organizations, clinicians, and investors may not want to take a wait-and-see approach. The Future of Health is coming, and it appears to be coming faster than we originally predicted.
1 National Health Expenditures Fact Sheet, CMS, December 15, 2022
2 Manage blood sugar, Centers for Disease Control and Prevention
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Neal Batra is a principal in Deloitte’s Life Sciences and Health Care practice focused on business model and commercial operating model innovation, redesign, and transformation. He heads Deloitte’s Life Sciences Strategy & Analytics practice, leading the way on next-gen enterprise/functional evolution by connecting strategic choice with analytics and technology. Batra has more than 15 years of experience advising health care organizations across the ecosystem on critical strategic challenges, including leading businesses in biotech, medtech, health insurance, and retail health care. Batra is the coauthor of Deloitte’s provocative Future of health point-of-view, speculating on the health care ecosystem in 2040 and the business models and capabilities that will matter most. Batra lives in the Tribeca neighborhood in New York City. He holds an MBA from London Business School and a BBA from the College of William and Mary.