Top US health industry trends of 2007
8 December 2006 New York, USA. The year ahead will be a watershed for
the health industries, according to PricewaterhouseCoopers LLP, as health
savings accounts reach a tipping point, states act where the federal
government hasn't and pressure on pricing amid demand for transparency
forces pharmaceutical companies, hospitals and health plans to rethink their
strategies. These are among the top issues identified by
PricewaterhouseCoopers' Health Research Institute, which today released its
report, "The Top Seven Health Industry Trends of '07." The report also
includes findings of a nationwide survey of 1,000 Americans about their
perceptions of the U.S. healthcare system. The survey identified significant
differences between what the public and industry believe to be key issues,
including:
- Nine out of ten Americans (90%) believe that greed is a major reason
that U.S. healthcare costs are rising, a greater number than those
citing drug prices, care for the uninsured, business inefficiencies or
malpractice costs.
- Nearly one-quarter (24%) of Americans don't yet believe that having
an electronic health record will improve the quality of healthcare, and
four in ten consumers (42%) are unsure.
- Only one in six (17%) agrees that a very important way to reduce the
cost of healthcare in the United States is for consumers to share more
of the cost, which is the strategy behind high-deductible health plans
with Health Savings Accounts. More than half of those surveyed (51%)
believe that better, more advanced medical technology and diagnostics is
the answer.
"Every health organization across the health industries is responding
to pressure to reduce costs, meet growing demand and do more, better and
faster with less," said David Chin, MD, partner and leader of
PricewaterhouseCoopers' Health Research Institute. "Our survey, however,
found a disconnect between what the American people, policy makers and
industry think is wrong with our nation's health system and how to fix
it. It appears that consumers may not appreciate the complexity of
healthcare as a business, and therefore the industry's messages about
itself and the challenges it faces are failing to resonate in the court
of public opinion. This disconnect must be addressed before real
progress can occur." PricewaterhouseCoopers has identified the
following as the top seven trends in the health industries for 2007, based
on its work with leading employers, policymakers, associations, advocacy
groups and organizations across the health industries, including hospitals,
health systems, physician groups, government and commercial health insurers,
pharmaceutical companies and life sciences firms:
- States Take the Initiative: In the presence of federal
gridlock, states are taking the lead on divisive issues such as stem
cell research, health insurance coverage for the uninsured and
oversight of advertising and promotion by pharmaceutical companies.
Responding to local social and fiscal concerns, states are
developing innovative insurance programs, forming public-private
partnerships to spur innovation and passing legislation to drive
greater accountability and transparency from hospitals, physicians
and pharmaceutical manufacturers. According to PwC, such state-led
initiatives will likely expand in 2007, but the risk is a patchwork
quilt of local programs and regulations.
- Transparency Could be Revealing: The demand for
transparency around pricing, quality measures, safety standards and
community benefit is being driven by and is supportive of
consumer-directed healthcare and pay-for-performance. In 2007, the
health industries will focus on becoming more transparent, but
government, insurers and employers need to educate consumers about
the availability and use of such information. Providers will need to
dedicate more resources to reporting, a strategic issue that can no
longer be delegated down in the organization.
- Time to Walk the Talk on Technology: Developing a digital
backbone to support electronic health records, interoperability and
transparency is a national priority, but the public mandate is
unclear and the industry is struggling with the cost and return on
the investment. According to PwC's research, nearly one-quarter (24
percent) of Americans don't yet believe that having an electronic
health record will improve the quality of healthcare, and four in
ten consumers (42 percent) are unsure. Progress will take an
investment of resources from the government and/or the private
sector.
- Consumers Take the Wheel: The shift toward
consumer-driven healthcare as a way to control costs will continue,
but the year ahead will be the tipping point for HDHPs and HSAs.
Insurers, employers, and to some extent the government have been
proceeding in favor of consumer-directed health plans in the absence
of strong support from the consumers themselves and from strong data
on the results of such changes in benefits. PwC's consumer research
found that only one in seven Americans (17 percent) surveyed by PwC
thinks that increased cost-sharing is a "very important" way to
reduce healthcare costs. With a critical mass of people now enrolled
in these plans, 2007 will be the year to see whether they really
have results to offer, and for consumers to weigh in on what they
think of them.
- Price Check for Pharmaceuticals: Forty-two blockbuster
drugs will lose their patents in 2007, opening the door to generic
equivalents and potentially creating an enormous loss of revenue for
brand name
pharmaceutical manufacturers. PwC's consumer survey indicates that
the public is quite aware of and sensitive to drug prices, perhaps
due to relatively high cost sharing and price transparency of
pharmaceuticals, relative to other health services. Nearly three
quarters (72 percent) of consumers surveyed said they would be
willing to take a generic versus brand--name prescription drug.
According to PwC, drug pricing will come under continued pressure
from generics, and pharmaceutical companies will have to develop
innovative pricing strategies to compete.
- Obesity is the New Smoking: First smoking, now weight.
There is a culture shift around healthy eating sweeping the United
States, as evidenced by the number of fast food chains cutting out
transfats and U.S. companies introducing health and wellness
programs. Two-thirds of U.S. adults are overweight, and obesity's
impact on chronic health problems is stirring healthcare
organizations and employers to
aggressively promote weight loss. Public attitudes have yet to catch
up: While three in five Americans (61 percent) believe health
insurance should cost more for smokers, only 40 percent believe it
should cost more for those who are overweight because of poor
lifestyle habits. In 2007, expect public health campaigns to push
the envelope on obesity through wellness programs and financial
incentives to lead healthier lifestyles.
- Small is Big: The competitive landscape will change as
healthcare gets smaller, more focused and patient friendly under
consumer-directed healthcare. Physicians and hospitals are now
competing with retailers, several of whom have announced plans to
open mini-health clinics within their walls. Consumers like the
idea: Four in ten people surveyed by PwC (42 percent) said they
would seek non-emergency care from a retail health clinic. In
addition, large general hospitals are seeing competition from
increasing numbers of smaller, specialty hospitals, surgery centers
and outpatient clinics, the result of regulatory action overturning
the specialty hospital ban. There already are 130 specialty
hospitals in operation and more under construction, predominantly in
the South and West.
"Though there is disagreement about priorities, most everyone
agrees that our current health system is ailing and isn't
sustainable without major changes," said Sandy Lutz, director of
PricewaterhouseCoopers' Health Research Institute. "There is a
myriad of issues facing health organizations and opportunities for
executives to address them, but they need to also focus on closing
the gap between how consumers view the industry and how the industry
views itself. Healthcare is a people business and must become more
consumer- centric. To be sustainable, health organizations must
communicate and connect with their customers through innovative
approaches and fresh perspectives - beginning in 2007."
A copy of The Top Seven Health Industry Trends of '07 is available
at www.pwc.com/healthcare
under "Publication/Thought Leadership." To top
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