PwC: Extreme makeover for healthcare in 2011?
Health organizations will undergo a strategy makeover in 2011 as they react to new rules and payment models, continuing cost pressures and new customer demands, according to a report from PricewaterhouseCoopers’s (PwC) Health Research Institute. But in a recent nationwide survey of 1,000 U.S. adults, PwC found that consumers don't fully understand or buy into all the changes.
Each year, the New York City-based PwC's Health Research Institute identifies the top issues that will influence the health industry agenda in the year ahead.
Record spending on health IT in 2011 is likely to increase demand for skilled health IT professionals, promote an expanded role for CIOs and fuel increased merger and acquisition activity among organizations looking to share the cost and benefits of health IT integration, according to the report.
“Significant changes in benefit plan design, plan pricing and the health plan landscape can be expected as insurers adapt to new medical loss ratio,” the report stated. “In spite of the ruling this month on the constitutionality of the individual mandate, states will have to continue moving forward on developing health insurance exchanges.”
Nearly half of consumers surveyed (49 percent) still call their doctor's office to request paper medical records. While the policy goal of EHRs is to allow consumers to participate in shared medical decision making, only 13 percent of consumers have ever been asked for input into what they would like to see in their EMRs or how they would like to use them, the report found.
New risks and opportunities may emerge as payment models shift from fee-for-service to new models that focus on performance, health outcomes and shared cost savings, such as accountable care organizations (ACOs). “2011 could be a make-it-or-break-it year for ACOs depending on congressional action. In anticipation of new performance payment incentives, health organizations are positioning themselves to participate in ACOs and share risks and rewards of keeping people healthier,” the report stated.
In addition, healthcare organizations may feel the trickle-down effect of decreased utilization by price-sensitive consumers, the report found.
A further uptick in merger and acquisition (M&A) activity is one way health organizations may share administrative burdens and IT investments, gain market share and fill strategic gaps. Within the pharmaceutical and life sciences sectors, PwC expects deals to focus on strategic mid-market transactions valued between $100 million to $500 million; international growth could yield larger transactions.
Increased consolidation is expected among payors, physicians are aligning with hospitals, hospitals are merging with other hospitals and health systems, and recent deals reflect blurring of the lines between the payors and providers sectors. Competition for acquisitions is likely to come from private equity funds investing in healthcare.
“Seventy-eight percent of consumers said they would prefer to use a retail clinic partnered with a local hospital for primary care services versus only 22 percent who would prefer an independent company owned by a retail pharmacy,” the report found.
Pharmaceutical companies see an opportunity to increase their visibility with consumers, influence health outcomes and reduce healthcare costs while increasing revenue using digital strategies and technology. The use of mobile health and wireless technologies by all health organizations is expected to continue to surge.
"Health organizations are placing their bets on the future direction of healthcare and making decisions that will position their businesses for competitive advantage," the report concluded. "Some organizations will undergo an extreme makeover while others will stay the course or refine existing strategies. Whichever path they take, all health organizations will be under pressure to deliver greater value for less, and they will face new risks and realities as business models and market players emerge."
A full copy of PwC's Health Research Institute's Top Health Industry Issues of 2011 is available for download here.
Each year, the New York City-based PwC's Health Research Institute identifies the top issues that will influence the health industry agenda in the year ahead.
Record spending on health IT in 2011 is likely to increase demand for skilled health IT professionals, promote an expanded role for CIOs and fuel increased merger and acquisition activity among organizations looking to share the cost and benefits of health IT integration, according to the report.
“Significant changes in benefit plan design, plan pricing and the health plan landscape can be expected as insurers adapt to new medical loss ratio,” the report stated. “In spite of the ruling this month on the constitutionality of the individual mandate, states will have to continue moving forward on developing health insurance exchanges.”
Nearly half of consumers surveyed (49 percent) still call their doctor's office to request paper medical records. While the policy goal of EHRs is to allow consumers to participate in shared medical decision making, only 13 percent of consumers have ever been asked for input into what they would like to see in their EMRs or how they would like to use them, the report found.
New risks and opportunities may emerge as payment models shift from fee-for-service to new models that focus on performance, health outcomes and shared cost savings, such as accountable care organizations (ACOs). “2011 could be a make-it-or-break-it year for ACOs depending on congressional action. In anticipation of new performance payment incentives, health organizations are positioning themselves to participate in ACOs and share risks and rewards of keeping people healthier,” the report stated.
In addition, healthcare organizations may feel the trickle-down effect of decreased utilization by price-sensitive consumers, the report found.
A further uptick in merger and acquisition (M&A) activity is one way health organizations may share administrative burdens and IT investments, gain market share and fill strategic gaps. Within the pharmaceutical and life sciences sectors, PwC expects deals to focus on strategic mid-market transactions valued between $100 million to $500 million; international growth could yield larger transactions.
Increased consolidation is expected among payors, physicians are aligning with hospitals, hospitals are merging with other hospitals and health systems, and recent deals reflect blurring of the lines between the payors and providers sectors. Competition for acquisitions is likely to come from private equity funds investing in healthcare.
“Seventy-eight percent of consumers said they would prefer to use a retail clinic partnered with a local hospital for primary care services versus only 22 percent who would prefer an independent company owned by a retail pharmacy,” the report found.
Pharmaceutical companies see an opportunity to increase their visibility with consumers, influence health outcomes and reduce healthcare costs while increasing revenue using digital strategies and technology. The use of mobile health and wireless technologies by all health organizations is expected to continue to surge.
"Health organizations are placing their bets on the future direction of healthcare and making decisions that will position their businesses for competitive advantage," the report concluded. "Some organizations will undergo an extreme makeover while others will stay the course or refine existing strategies. Whichever path they take, all health organizations will be under pressure to deliver greater value for less, and they will face new risks and realities as business models and market players emerge."
A full copy of PwC's Health Research Institute's Top Health Industry Issues of 2011 is available for download here.