Translation: Healthcare is even more ripe for disruption than it presently appears. And that means it’s time to act fast or face irrelevancy.
Here’s a look at what hospital IT shops should be doing now to prepare for the future.
Strange healthcare bedfellows
New research from PwC found the U.S. health industry is undergoing “seismic change” generated by a collision of forces, such as the shift from volume to value, rising consumerism and the decentralization of care.
“The last six months have seen an explosion in unusual deals with the potential to reshape the US health ecosystem,” PwC authors wrote.
PwC, in fact, found that 84 percent of Fortune 50 companies already have a play in healthcare, and that’s up from 76 percent in 2013.
Consumerism, also on the rise, is posing a threat to old business models. PwC noted that while 17 percent of doctors used an EHR and 11 percent of people in the U.S. had a smartphone in 2008, those statistics have risen to 87 percent and 79 percent, respectively. That essentially opens the doors for technology firms to step in and deliver what consumers want more effectively, not to mention faster, than traditional healthcare entities.
Amazon, JPMorgan Chase and Berkshire Hathaway aligning to focus on improving health insurance for their own employees is one example. CVS Health buying Aetna is another.
To the question of whether Amazon can succeed in healthcare, 27 percent of respondents to new Venrock research said, “they just might pull this thing off.” Forty-eight percent, however, answered with “it’s gonna be a long haul,” and 25 percent believe the companies “have no idea what they’re getting into.”
Venrock’s research also found that 51 percent of participants said Amazon will have the biggest impact on healthcare in 2018, followed by Apple at 26 percent, Google at 18 percent then a sharp drop to IBM at 3 percent and Microsoft at 2 percent.
“This shifting terrain is creating uneven opportunities in the new health economy and will likely drive players new and established to reconsider their business models and strike the sorts of deals announced in the past six months,” PwC authors wrote. “Some will be driven to seek returns in new markets as their core revenues shrink. Others will find success creating value for other players, including consumers. Still, others will thrive by building infrastructure for the emerging virtual health system.”
PwC recommends: Fluency and focus
PwC was careful to point out that it could take a while and it’s wise to know that some of the moves that appear to be substantive today will fail, others will be transformed, while some will succeed.
With little doubt that disruption is coming, what can health executives do to prepare for the future regardless of what it might look like?
The consultancy cited Jeff Arnold, Chairman and CEO of Sharecare, a digital health company, saying that it’s time to become fluent in three languages: healthcare and technology, of course, but also and perhaps surprisingly media. Simply put: hospitals are going to have communicate with existing and prospective consumers in new ways.
PwC, for its part, also recommended three key areas to focus on in the short- and long-term as patient experience, broadening the workforce, and price.
Patient experience: That consumer expectations are changing as they embrace retail clinics for certain care events and increasingly anticipate that hospitals will operate on modern technologies is well known, if not as widely acted upon, at this point. “Companies that invest in a deep data-driven understanding of their customers will be able to develop tailored products and services,” PwC wrote. Newcomers the firm described as “vertical integrators, technology invaders and health retailers all have a leg up on many established health players in understanding consumers and tailoring experiences for them.”
The benefits of a broader workforce: PwC predicted that emerging business models will include knowledge worker coding, writing artificial intelligence tools, running data analytics and prototyping new technologies to advance patient experience. The firm added that 39 percent of providers are already investing in AI, machine learning and analytics. “Yet few established companies have the in-house capabilities to develop and implement these tools, so they should acquire these skills or partner to gain access to them,” the authors wrote. “And they should be prepared to pay for them — the rest of the global economy is seeking these capabilities, too.”
Money matters: “Price is the next frontier,” PwC wrote. Since potential disruptors are better-positioned to tackle costs through scale and a grip on the healthcare value chain than hospitals, healthcare organizations must focus on pricing or risk losing patients. “Consumers, employers and the federal government are seeking relief on price and likely will reward companies able to significantly cut them without downgrading quality.”
Today, there are plenty of indications that change is barreling its way into healthcare. The aforementioned unorthodox partnerships, new models of care, even new ways of providing care based on value rather than volume and using telehealth tools to treat patient outside the hospital are among those.
Ultimately, that means the time has come for hospitals – those dreading change particularly – to drive new business models, strike bold not-yet-considered partnerships akin to those that have manifested in the last six months — and innovate to shape the future that is coming.