Brand and cost: Equal partners in the health care value equation

by Harry Greenspun, MD, Director, Deloitte Center for Health Solutions, Deloitte LLP

As the summer draws to an end, my kids are gearing up to head back to school. In years past, procuring school supplies and getting together the requisite vaccination forms has been challenging, particularly as the start of the school season typically coincides with a ramp up in my business travel. But more recently, between online shopping and electronic health records, we have been able to get the items we need quickly and easily, even if we’re on the road. Now, after just a few clicks, we’ve sent medical forms to the county, school supplies to our third-grader’s classroom, and new clothes to our doorstep (for our increasingly fashion-conscious middle schooler).

My own “back to school” tradition is to get a flu shot. That process, too, has evolved. For the last several years, I’ve gotten my flu shot at Chicago O’Hare Airport. I find myself there regularly, I generally have time to spare, and the cost is reasonable. Naturally, I would hesitate to walk up to just any stranger at an airport and ask them to stick a needle in my arm, but the kiosk is staffed by a reputable institution. This is an important detail because brand matters to me.

Brand matters to many consumers, whether they’re shopping for cereal and clothes or for their health care provider. But, when it comes to health care, brand is just one part of the equation. As health care consumers begin to have more skin in the game, cost and value may play a larger role, especially for consumers on the individual market.

In June, Deloitte published the 2015 American Pantry Study. It examines factors that drive how American consumers shop when they head to the grocery store. While this study focused primarily on consumer behavior and attitudes about consumer packaged goods, the study’s findings become particularly interesting when contrasted with findings about enrollees in health insurance exchange (HIX) plans from the Deloitte Center for Health Solutions 2015 Survey of US Health Care Consumers.

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As the HIXs mature and become a trusted option for people shopping on the individual market, the habits consumers have developed in other areas of their lives may have begun to impact the way they shop for health insurance coverage.

The findings above suggest that is already happening in several ways, especially among HIX enrollees. Many HIX enrollees look like grocery shoppers on a budget: They are tech savvy, cost-conscious, looking for better value, and willing to do some background research before they make a purchase. While many consumers turn to coupon cutting to cut costs and shopping apps to organize their grocery lists, many health care consumers are looking for apps and tools to help them enroll in coverage.

But, one distinction arises when you look at how brand impacts purchasing decisions in health care. Today, more than in recent years, consumers believe they are making a sacrifice when they purchase a store brand at the grocery store. But, at the height of the recent recession, cost mattered far more than brand to many consumers. So they made tradeoffs. As health care costs continue to grow, we may see consumers adopt more willingness to make similar tradeoffs in health care. There are some early signs that this is already happening. The percentage of insured enrollees who say that they would be willing to accept a smaller network of hospitals or doctors in exchange for lower payments rose from 2013 to 2015.

As these characteristics come to light and more people obtain coverage through HIXs or private exchanges, stakeholders may need a greater appreciation of the drivers of individual consumer choice. While brand may have carried the day in the past, people are increasingly looking for value—and that may mean different things to different people. As many retailers will tell you, understanding the drivers behind purchases and choices is critical to reaching a target market. Unless you satisfy the consumer’s needs, you risk losing them as a customer.

For me, the airport flu shot meets my value requirements – convenience and trust – so I expect to roll up my sleeve on my next layover. But, with my share of my own health care expenses rising, cost is becoming increasingly important, so I may start looking for high-value options as I travel. I wonder if anyone is doing colonoscopies at DFW?


Read the entire Health Care Current here and subscribe to receive weekly updates.


Harry Greenspun, MD, Senior Advisor, Health Care Transformation and Technology, Deloitte Center for Health Solutions, Deloitte LLPDr. Greenspun, director with the Deloitte Center for Health Solutions, Deloitte Services LP,  serves health care, life sciences and government clients on key innovation and clinical transformation issues. He was named one of the “50 Most Influential Physician Executives in Healthcare” by Modern Healthcare, co-authored the book “Reengineering Healthcare” and has served on advisory boards for the World Economic Forum, WellPoint, HIMSS, and Georgetown University. He previously served as the CMO for Dell.
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Biosimilars: Tapping the potential of emerging markets

by Rob Jacoby, Principal, Life Sciences, Deloitte Consulting LLP

Biologics are already a $150-billion-plus industry globally, and revenues could nearly double by 2020, accounting for more than a quarter of the pharmaceutical market.1  Analysts also expect the worldwide biosimilars market to grow, reaching approximately $35 billion by 2020.2 

To date, much of the biosimilars focus from global pharmaceutical manufacturers has been on developed markets. However, we believe the greatest untapped growth in biosimilars markets may not be from the EU, US, and Japan where biosimilars face brand-on-brand competition from their reference therapies and the potential entrance of bio-betters. Instead, long-term growth may derive from competition against non-consumption in emerging markets for biopharmaceutical manufacturers.

Many emerging markets have relatively poor access to biologic drugs and may be attractive targets for drug manufacturers that are able to effectively develop and market less expensive treatments for millions of new patients – affording the opportunity to compete against non-consumption, rather than established, branded therapies.

From a regulatory standpoint, biosimilar pathways have been established in most emerging markets, even if the approval processes may differ from those in existing markets.

This focus on new and potentially high-growth markets raises several important questions.

First, are biosimilars a winning strategy? Major biopharma companies with existing production capabilities and mature sales and marketing structures globally are best equipped to compete in emerging markets, but what kind of margins can they realistically expect?

Second, what should be the extent of the investment in emerging markets, and what kind of business model should be built to sustain an ongoing program?

Emerging markets initially are unlikely to provide the level of profitability that might be expected in the more established systems. Factoring in demographics and financial considerations, there may be a need to sell biosimilars at lower prices than in the US, and the upfront manufacturing and marketing likely will be substantial.

Third, will it bring sufficient return on investment, given the expense of developing and marketing these complex molecular treatments? Will that, combined with anticipated lower prices in emerging markets, be enough to drive significant growth?

Biosimilars are not generics. They don’t project the extent of consumer cost savings that generic drugs have since the early 1980s. Biosimilar costs assumed by the customer are expected to be much higher than the small co-pays experienced with generic small molecule drugs.

Some companies may also look to bio-betters as a more cost-effective alternative. They follow the same regulatory path as the originators, but serve as an improvement in terms of clinical efficacy or new clinical indications than the original therapy.

Our view is that the untapped demand of emerging markets and large pockets of non-consumption provide a substantial opportunity for long-term growth. The smart play may well be to make emerging markets a centerpiece of a global marketing strategy.

Read more in Winning with biosimilars: Opportunities in global markets

 1 IMS Health, Searching for Terra Firma in the Biosimilars and Non-Original Biologics Market: Insights for the Coming Decade of Change, 2013
2 Allied Market Research, Global Biosimilars / Follow-on-Biologics Market, July 2014 



Rob Jacoby is a principal in Deloitte's Life Sciences practice focused on global supply chain and distribution strategy. Rob has led clients through transformational engagements across functions, business processes, and geographies. Rob is a frequent speaker on market entry strategy, follow-on biologics, and the emerging landscape for biopharmaceutical distribution and has published numerous articles and whitepapers on life sciences strategy for biotechnology and pharmaceutical manufacturers.

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Preparing for life after ICD-10 implementation

by Christine Armstrong and Christi Skalka

We’ve entered the ICD-10 homestretch, the few short weeks before health care stakeholders finally see the implementation of a transformative change nearly twenty years in the making.  

But go-live is just the beginning. Even with all the preparation, there are likely to be challenges organizations need to consider after the transition. Post-implementation, not only are the potential impacts that could disrupt the transition to ICD-10 important to consider, but they also provide multiple opportunities to assess and improve operations. Potential impacts include:

  • Operational disruptions: Implementation could trigger a decrease in coder productivity, backlogs in coding and billing, a fluctuation in performance metrics, and resource strain on clinical documentation programs.
  • Financial impact: Net revenue may decrease from cash flow interruptions and from increased denials and underpayments. Understanding the root cause of potential case mix and financial shifts will be critical.
  • Resource considerations: Change management processes, evolving training needs, employee retention, and resource reallocation may also present challenges.
  • Technological complexities and demands:  Providers may experience data transmission issues causing a need for re-testing of critical functions and unscheduled vendor updates to ICD-10 software packages.

Addressing these impacts head-on will require organizations to understand the highest areas of risk to proactively allocate time and resources. And it’s not just providers – their payers, vendors, and trading partners all should be equally supportive in order to alleviate financial and operational disruption.

Here are some suggestions that may address post-go-live impacts:

Assess demands on resources: Assessing training gaps, employee morale, and effective allocation of the most impacted resources will support early identification of issues with your most valued asset – your team.

Prioritize DNFC (Discharge Not Final Coded): Post-ICD-10, coding expertise will likely be in short supply and potential negative impacts on coder productivity could create a perfect storm for increased DNFC. Identify strategies with positive productivity impact, low financial and quality risk, and minimized levels of effort to keep DNFC under control. Examples include overtime opportunities for high-performing coders, optimized work queues, and management dashboards that track DNFC as real-time as possible.

Monitor net revenue and cash trends: Model and focus on key financial metrics such as DRG shifts, CMI changes, claim rejections (i.e., edits), increases in time-to-pay by payers, payment variances (i.e., underpayments), increased denials, and impacts to A/R to track trends in reimbursement.

Assess documentation quality: Providers may still be wrestling with the new documentation specificity and granularity requirements, as well as using diagnostic terminology rather than clinical indicators. Formally reviewing documentation through a Clinical Documentation Excellence program is the most efficient and effective way to assess documentation quality, while also providing feedback loops to physicians through formal and informal educational channels.

Audit coding productivity and quality: Coders may still be trying to fully integrate new coding concepts into their work, especially with the procedure codes, which could impact both their productivity and their accuracy. Formally reviewing coder work through standardized key performance indicators around productivity and quality, and taking immediate corrective action by conducting additional training and stand-and-deliver educations sessions, as needed, could stem issues with productivity, quality, and accuracy.

Develop a formal post-ICD-10 education program: Physicians, coders, and clinical documentation specialists will be some of the most highly impacted stakeholders in this transition. Putting their pre-go-live training into practice may reveal gaps in their content knowledge and will require a robust, continuing education program designed to support their educational needs proactively, before quality issues arise.

Identify reporting and data integrity challenges: To achieve meaningful reporting and analysis using ICD coding (e.g., trend analysis, quality scoring, population management), data integrity across the transition is necessary. Modeling the state of the business and identifying how ICD-coded data is currently used in key reports and analyses that drive clinical, financial, and other decisions could reveal the options for handling the blended data during the conversion.

Assess your EHR template design: Updating the Electronic Health Record template to capture necessary information to support ICD-10 documentation requirements is an automated method that may positively impact quality and reimbursement.

Life after go-live

The challenges brought on by the transition to ICD-10 may seem daunting. But a carefully designed post-go-live strategy can mitigate some of the potential difficulties by effectively addressing not only the potential go-live challenges posed by ICD-10, but also how to adapt to the period of transition immediately afterward.


ArmstrongChristine Armstrong is a principal for Deloitte Consulting LLP and has more than 25 years of health care experience within industry and consulting organizations. She has extensive international experience with operational improvement projects including ICD-10 coding quality improvement and training projects in the Middle East and Europe. She is a national speaker on many topics such as coding, documentation, compliance, revenue cycle improvement and ICD-10 readiness.

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SkalkaChristi Skalka is a Senior Manager in the Life Sciences and Health Care Practice of Deloitte Consulting LLP. She has more than 20 years of experience in both industry and consulting in the areas of revenue cycle, pricing, operational improvement, and cost reduction.  Her management consulting experience includes end-to-end Revenue Cycle Transformations, ICD-10 implementation and remediation, and Middle Revenue Cycle assessments and implementations, including charge capture/CDM, HIM operations, and pricing strategy and execution, specifically for large, national healthcare organizations and physician practices.

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Building a legacy: Planning for the health system of the future

by Mitch Morris, MD, Vice Chairman, National Health Care Provider Lead, Deloitte LLP 

In 2004, Kenneth Freeman was the CEO of Quest Diagnostics, a provider of medical diagnostic testing services. He had taken the company from the brink of bankruptcy to one that was sharply focused on the future of health care. He led the company into new business areas with a focus on “cutting-edge procedures” like genomic testing. In the spring of 2004, BusinessWeek ranked Quest Diagnostics number 34 on its list of corporate America’s 50 best-performing companies.1

Freeman subsequently walked out the door.

But, this was all part of his plan. Freeman believed that “your true legacy as a CEO is what happens to the company after you leave the corner office.”2

Today, many health system CEOs realize that they may step down over the next 10 years, which could be a time of unprecedented change in health care. Payments are shifting toward value over volume, the payer mix is evolving and narrowing profit margins along the way, new technologies are transforming how and when care is delivered, and stakeholders are calling for health care to be more responsive to consumers. Many health system CEOs understand that their successor may be the one to lead the next wave of change and innovation for their health system.

Through a recent survey of 19 large hospital and health system CEOs, Deloitte sought to identify how CEOs are dealing with the pressure and preparing their organization for the future. We detailed findings of this survey in a recent report, “Lens into the future: Health system CEO interviews.” Regardless of their retirement plans, we found that health system CEOs have focused their lens on the future, planning ahead and steering their organization toward success.

Health system CEOs face many challenges in today’s health care environment. Margins are narrowing as government and commercial payers tighten their reins – the number of hospitals with negative operating margins grew from 9.5 percent in 2012 to 14.5 percent in 2013.3 New payment models are shifting the focus from fee-for-service (FFS) to value-based care (VBC), and this is mounting pressure on hospitals and physicians to take on more financial risk for patient care. And, as consumers take on more responsibility for the cost of their care, many are beginning to seek better access, more involvement in care decisions, and improved customer service. Deloitte’s 2015 Survey of US Health Care Consumers found that respondents were most dissatisfied with hospitals’ treatment processes, customer service, and skills/specialization during their most recent overnight stay.4

When Deloitte asked these health system CEOs to describe their vision for 2025, they identified some core issues that they are likely to be focused on moving forward.

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Many of the respondents are trying to decide whether to retire within the next five years. These challenges are likely to be a part of that decision.

Ultimately, defining the future is half the battle to succeeding in the future. Regardless of their future within that particular health system, CEOs are working to identify the path forward for their organization. How that path looks will likely differ for each market and health system. As they define their path, they are focused on their biggest needs for 2025: preparing for VBC and identifying the right investments, particularly for VBC-enabling technology.


Read the entire Health Care Current here and subscribe to receive weekly updates.


Mitch Morris, MD, Vice Chairman and National Healthcare Provider Lead, Deloitte LLP Mitch Morris is the National Leader for the Health Care Provider sector at Deloitte including Consulting, Audit, Tax, and Financial Advisory Services. Dr. Morris has more than 30 years of health care experience in consulting, health care administration, research, technology, education, and clinical care.
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P.S. Read more about the Deloitte Center for Health Solutions 2015 Survey of US Health System CEOs.



1 Kenneth Freeman, Harvard Business Review, “The CEO’s Real Legacy,” November 2004, https://hbr.org/2004/11/the-ceos-real-legacy

2 Ibid.

3 Beth Kutscher, “Fewer hospitals have positive margins as they face financial squeeze,” Modern Healthcare, June 21, 2014, http://www.modernhealthcare.com/article/20140621/MAGAZINE/306219968/fewer-hospitals-have-positive-margins-as-they-face-financial-squeeze?utm_source=frontpage&utm_medium=newsitem309&utm_campaign=carousel-traffic

4 Deloitte Center for Health Solutions, 2015 Survey of US Health Care Consumers


Infographic: A lens into the future of US health systems

Hospital and health system CEOs face unprecedented changes and a dramatically different market in the coming decade. With this in mind, the Deloitte Center for Health Solutions sought to uncover some of the top challenges facing health system CEOs and to learn more about their priorities moving forward.  

View larger


For more on the findings and survey approach from the Deloitte Center for Health Solutions 2015 Survey of US Health System CEOs, visit www.deloitte.com/us/health-system-ceos.


HIX enrollees: From passive patient to engaged consumer

by Sarah Thomas, Research Director, Deloitte Center for Health Solutions, Deloitte Services LP

When the Medicare Part D program began in 2006, I was the “go-to” person for my mother and all of her friends as they enrolled in plans through Medicare.gov, the website that helps people to shop for coverage. At the time, shopping online was fairly new to that demographic group, but the tool allowed you to sort plans by premiums and whether they cover certain prescriptions. It was much easier than sorting through Medigap options, which I had done with my mother a few years earlier.

Today, many people in my mother’s generation are confident online shoppers, getting good deals by comparing product features and prices. That’s true for several of their services, as many get online to book their flights and order books.

When health insurance exchanges (HIX) were still being discussed as a notion, supporters of the idea painted a picture of a new generation of shoppers. This new generation would find good health insurance coverage just as easily as they find affordable and convenient airfare. In direct opposition to “the old days” of individual insurance, where in most markets people would have to go to a broker or to each company’s site to find out what was available, a key to delivering on this promise was functional websites that allowed for online comparison and reasonably knowledgeable consumers who would figure out how to shop and what to shop for. Of course many helpers – formal ones (navigators and brokers) and informal ones (like me for my mom and her friends) – stood ready to help.

To gain ground in driving the competitive virtual marketplaces that many hoped for, key stakeholders, such as health plans, regulators, and advocates, identified three important ingredients:

  1. Consumers needed to be cost-conscious and searching for a good deal
  2. Consumers needed to understand the differences between options – what benefits are covered and the total cost (premium and cost sharing) of the products being offered
  3. Consumers needed to trust (and be able to use) the websites


So has it turned out like we thought it would?

  08112015 MyTake

Findings from Deloitte’s 2015 Survey of US Health Care Consumers reveal that the HIXs are beginning to deliver on the promise of transforming the individual insurance market. Many HIX customers are actively engaging in the buying process, using both “high-tech” and “high-touch” purchasing channels and putting health plans on notice that they will switch if they are dissatisfied. The exchanges already rank among consumers’ most trusted sources for information, suggesting they are quickly becoming an accepted way to purchase health insurance.

HIX consumers are more price conscious than consumers with employer coverage. To some extent, this is probably because they have lower incomes and are exposed to more of their premium than those with employer coverage. But many people with employer coverage do not have much choice among plans and options, so often are not in the position to shop for coverage to begin with. Even though the last figure on shopping tools indicates that tools like one finds on HIX websites are more important to HIX enrollees than people with employer coverage, the number being in the low 40 percent range shows, I think, that there is room for improvement in the tools.

HIX enrollees are relatively confident in their knowledge of the benefits included and cost of their coverage. Fifty-one percent of HIX enrollees said they had a good understanding of their benefits at the time they enrolled, compared with 47 percent of people in employer plans and 45 percent of people in Medicaid. When it comes to the total costs of their coverage, 55 percent of HIX enrollees said they understand this, compared with 47 percent of people with employer or Medicaid plans. Again, I think this is a good signal that people getting coverage through the HIXs feel they understand what their coverage is.

HIX enrollees expressed relatively high levels of trust with the information they find on HIX websites. Thirty-five percent of HIX enrollees report they trust the information they were provided. On its face, this might not sound very high, but it is just behind their trust in friends and family (38 percent) and health care providers (36 percent).

I find these results encouraging, but the work is not over. Price is the most commonly reported driver of dissatisfaction and switching among HIX enrollees. Satisfaction varies by age, subsidy eligibility, and prior insurance status, which could be a reflection of differences in expectations, needs, and preferences within the HIX population.

What is needed to equip this new generation of health care consumers? The survey findings suggest that multiple purchasing channels, more reliable information sources, better decision support, and further development of online resources and digital technologies could help health plans and exchanges fulfill the promise of these new marketplaces for health insurance coverage. Exchanges and health plans will likely need to give thoughtful consideration to strategies for accommodating differences within their HIX populations as they strive to retain customers and prepare for subsequent waves of enrollees.


Read the entire Health Care Current here and subscribe to receive weekly updates.


Sarah Thomas, Director of Research, Deloitte Center for Health Solutions, Deloitte LLPSarah Thomas is the director of research for the Deloitte Center for Health Solutions. Sarah has experience in public policy, ranging from reimbursement to addressing issues such as quality in Medicare, Medicaid and the private health insurance market, including health insurance exchanges and marketplaces. She has more than 13 years of government experience.

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The health plan of the future is easy to see

by Bill Copeland, Vice Chairman, US Life Sciences & Health Care Leader, Deloitte LLP

For years, my son dreamed of being an officer in the US Army. Today, he is six years into that dream, serving as a Captain in the Armor Division of the First Infantry – Big Red One.

Because of his assignments in the US, Kuwait and most recently in Iraq, it has been a challenge to get time with him. However, recently my wife and I rendezvoused with him on his way to a new assignment. The time went quickly, but we had a chance to meet his girlfriend, catch up on family and his career plans. We also helped him make investment decisions with his savings. The Army provides a living allowance for officers while state side, and when he was deployed in theatre, his salary was tax free. It also didn’t hurt that there isn’t much you can spend your money on when you are on a base in Iraq. He had accumulated a nice sum that he wanted to invest.

We reviewed the past performance of his investment portfolio using his investment management company’s website, shopped for different funds, used the tools on the website to balance his portfolio given his age and investment goals and completed trades and new investments. All of this took about 30 minutes—what once took days or weeks to execute with much less certainty or precision at a much higher cost can now be completed in minutes.

As I worked through this process with my son, I began to realize that the health plan of the future is easy to see. Just look around: the financial services industry has built a customer model that has made the complex simple, with transparency, low cost and the ability to meet each person’s unique investment needs anytime, day or night, and tools and information that guide them through the process.

New customer models that facilitate and enable customers to get the service, product and information they want, when they want it and in the location they need it are everywhere. They’re becoming very familiar to many of us—and even more so for Millennials. Take Uber as an example. On demand, Uber’s app connects consumers to transportation, in the exact location where they need it and at a cost that meets their budget. It allows consumers to pay without hassle and lets them express their satisfaction (or dissatisfaction) with the service.

I believe the health plan of the future will not just help with the financing but will also be the facilitator and enabler of achieving health through a consumer-focused platform. The future health plan may simplify the complex, helping consumers get the services, products and information they need to achieve their health and wellness goals.

Today, there are many constraints that are holding us back from realizing the great potential these future health plans could deliver. Conventional provider networks, patriarchal ownership of clinical data, lack of transparency, payment complexity, rudimentary telemedicine capabilities, delayed adjudication of consumers’ financial responsibility for services and little ability to estimate the cost of the health care services are but a few of the roadblocks on this journey.

But, companies seeking to be health plans of the future might use these roadblocks as jumping off points, seeking to turn convention on its head.

For starters, the health plan of the future may not rely on conventional provider networks. While each provider will probably still have an agreement with the health plan, patients would select their provider through an app or online platform that presents options based upon their search criteria, geography and provider expertise. Then, based on their benefit plan and co-insurance, the member would be able to see how much services will cost. Advanced capabilities in this area would allow health plans to drive patients to providers based on the providers’ total cost of care and value, not just their discount levels. Value-based care payment innovations and delegation of care management would have co-insurance amounts calculated based on a holistic view of value as opposed to a transactional fee-based arrangement.

Future health plans may also leverage technology similar to that of Open Table. Members could book their appointment, review ratings posted by other patients and confirm pre-visit requirements and payment options in advance. They would then download their electronic passbook coupon for the visit. Members might also give providers access to their cloud-based electronic chart, which could include their dates of availability and sections of their chart that should be kept private. For many visits, the provider practice could offer telemedicine as an option rather than the traditional in-person visit.

Once they complete their visit, members would pay their co-insurance using their account preferences. Service recommendations and programs the member is eligible for would be uploaded to their account, and their health savings account balance would be updated. Alerts – from a request to rate their provider to calendar reminders for follow ups and prescriptions – could all be built into this consumer platform.

In this new operating model most health care providers would be responsible for managing their patient’s care needs and ensuring that the best possible outcome is achieved. In turn, health plans would provide tools and information to augment the patient’s knowledge and offer incentives and ad hoc programs to support the patient’s own goals for their desired health outcome.

Convenience and simplicity are fundamental to each of these operating platforms. But so is the creation of a marketplace where transparency, choice and reduction in switching costs hold the suppliers of the services accountable for cost, service and quality.

While this may seem too futuristic to drive today’s investments and operating model decisions, technology isn’t the barrier. Nor is it low consumer interest in a simpler, easier way to use the health care system. In fact, Deloitte’s 2015 Survey of Health Care Consumers found that 40 percent of surveyed consumers view the availability of an online tool that suggests the best plan based on their personal information as an important factor for choosing a health plan. This is likely to become even more critical as deductibles increase and consumers take on more of their health care costs.

I believe one barrier to this future state is that many health care market leaders and regulators are not ready to accept these new marketplace dynamics. But they may need to if they want to keep up. Otherwise someone else might do it for them.


Read the entire Health Care Current here and subscribe to receive weekly updates.


Bill Copeland, Vice Chairman, U.S. Life Sciences & Health Care LeaderBill Copeland, Vice Chairman of Deloitte LLP, is a 27-year Deloitte veteran and leads the US Life Sciences & Health Care Practice. Previously, Bill was practice leader for the health reform initiative, focused on serving clients’ needs around the incredible changes resulting from the Affordable Care Act. He was also National Managing Director of Deloitte's Life Sciences & Health Care Industry Consulting Practice and managed the Health Plans Consulting Practice.

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Infographic: Opening the door for a new generation of engaged health care consumers

Public health insurance exchanges (HIX) are beginning to deliver on the promise of transforming the individual insurance market giving way to a new generation of highly engaged health care consumers. Findings from the Deloitte Center for Health Solutions 2015 Survey of US Health Care Consumers suggest that HIX customers differ from those with other sources of insurance coverage in several ways. Understanding these differences is key to knowing how to engage and equip this new group of health care consumers.

  Deloitte Center for Health Solutions _ Public Health Insurance Exchanges Infographic

To download the full report, visit www.deloitte.com/us/hix-consumer-experience.


Employing wellness: The employer’s role in promoting health

by Harry Greenspun, MD, Director, Deloitte Center for Health Solutions, Deloitte LLP

My 13 year-old son Luca recently took up cycling. Inspired by my wife’s cycling prowess (see the June 30, 2015 Health Care Current), we created our “Tour de Pain” – family rides ranging from 15 to 65 miles amid the spectacular scenery in and around Washington, DC. When I was at work, Luca would ride on his own. With each stage we did together, it became clear that Luca was getting stronger, while I was simply getting older.

Determined to catch up, I considered investing in an indoor spinning bike so I could train before or after work (or even during excruciatingly long conference calls). But, doing my research, I found the prices steeper than some of the hills I struggled to climb. Much to my delight, Deloitte offers its employees a wellness benefit that can defray some of the cost of fitness equipment, making a sophisticated bike quite affordable. A few clicks and a few days later, it arrived at my door.

Deloitte is one of the many employers that offers some type of wellness program or incentive to their employees. By the latest count, 70 percent of employers offer general wellness programs – this can include newsletters, smoking cessation programs, health fairs, on-site fitness centers and more.1

It makes sense: The US is struggling with an epidemic of “lifestyle diseases” derived from unhealthy behaviors. Inactivity, poor nutrition, tobacco use and frequent alcohol consumption are just some of the issues contributing to this epidemic. And, because employers play a significant role in the provision and financing of health insurance – more than half the US population is covered by employer-based insurance – many have begun seeking ways to encourage healthier lifestyles among their employees.2

But, as employers continue to adopt wellness strategies that aim to encourage health, lower absenteeism and presenteeism and reduce health care expenditures, there are skeptics.

Many privacy advocates believe that giving employers access to sensitive health information puts employee privacy at risk. With the advent of fitness-related wearables, there is also concern that employers could use them to track employee whereabouts.

Some patient advocates are concerned that cost savings will be achieved at the expense of the disabled or unhealthy. The Affordable Care Act (ACA) increased the amount that employers can incentivize their employees for participating in health-contingent wellness programs. Employers can reduce insurance premiums by 30 percent if employees complete health-contingent action items. But in 2014, the Equal Employment Opportunity Commission (EEOC) filed several lawsuits against employers, challenging that requiring employees to submit to biometric testing and health risk screening may force employees to provide health information that is not job-related or required by business necessity. The Commission also challenged organizations that had what it deemed to be excessive penalties or rewards for participation in employer wellness programs. Then earlier this year, the EEOC published a proposed rule to reconcile the Americans with Disabilities Act (ADA) and current tax incentives for employer wellness programs. This proposed rule is intended to supplement earlier regulations issued by the US Departments of Labor, Health and Human Services, and Treasury. It clarifies how employers can promote better health without violating ADA prohibitions against using excessive penalties or rewards that essentially make the programs mandatory.

Finally, even some of the “believers” are skeptical that employee wellness programs will limit or reduce health care costs. Results from Deloitte’s 2013 Survey of US Employers found that while 36 percent of employers use health improvement tactics as part of their strategy, only 25 percent believe this will have a high impact on managing or reducing health care costs. Another survey found that fewer than half of employees (46 percent) have had clinical screenings or completed health risk assessments (HRA), which are used to identify employees for lifestyle health interventions.3 

However, according to Deloitte’s 2013 Survey of US Health Care Consumers, nearly one in five consumers covered by employer-sponsored insurance participated in a healthy living or wellness program to help them improve their health. Healthier employers can reduce absenteeism and improve productivity.

Ultimately, employers are likely to continue using wellness strategies – not only to encourage healthy habits among their employees, but also to bolster recruitment. For now, the question is how to proceed amidst the conflicting viewpoints, regulations and study findings on return on investment. Though subsidizing a gym membership seems straight forward enough, evidence suggests that disease management programs are more effective at limiting costs.4 Today, one of the best strategies for organizations may be to have a multi-faceted approach to their wellness programs so that their employees have several options for engagement.

I am fortunate enough to be healthy, but I also recognize I need to get into better shape. It’s likely I would have purchased the spin bike on my own, but my employer’s program certainly made the decision easier. Time will tell how this and other programs, bolstered by flexibility built into the ACA, will get me and others to make healthier lifestyle choices. For now, I have run out of excuses not to exercise, so when Luca and I are not out biking on the road, I will be sweating in the basement while wondering if our program will also cover the cost of a defibrillator.  


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Harry Greenspun, MD, Senior Advisor, Health Care Transformation and Technology, Deloitte Center for Health Solutions, Deloitte LLPDr. Greenspun, director with the Deloitte Center for Health Solutions, Deloitte Services LP,  serves health care, life sciences and government clients on key innovation and clinical transformation issues. He was named one of the “50 Most Influential Physician Executives in Healthcare” by Modern Healthcare, co-authored the book “Reengineering Healthcare” and has served on advisory boards for the World Economic Forum, WellPoint, HIMSS, and Georgetown University. He previously served as the CMO for Dell.
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3 Mattke, Soeren et al.

4 Caloyeras, John, Liu, Hangsheng, Exum, Ellen, Brderick, Megan, and Mattke, Soeren. Manging Manifest Diseases, But Not Health Risks, Saved PepsiCO Money Over Seven Years. Health Affairs, 33, no. 1 (2014): 124-131. http://content.healthaffairs.org/content/33/1/124.full.html


Value-based care: Why life sciences should be at the table

by Mary Cummins, Principal, Deloitte Consulting LLP

The accelerating move toward value-based care is resulting in new health care delivery structures, changing payment models, and new roles for everyone from physicians and care providers to payers, employers, and consumers themselves. At the national and local levels, there is debate on “who should be at the table” to drive this progress. Where do life sciences companies fit in? Do they have a seat at the value-based care table?

The short answer? Yes.

The move from volume-based care delivery to an ecosystem that values better health outcomes and effective cost-containment is usually discussed from a provider or plan perspective. Less attention has been paid to the role life sciences organizations are and should be playing in the evolving health care ecosystem.

In a recent meeting with biopharma and medtech clients, our conversation turned to the dramatic acceleration of value-based care. Until quite recently, many executives in the provider sector have been skeptical about the move to value, or have taken at best a “toe in the water” approach. Not surprisingly, many life sciences executives have followed suit. Many of us remember the undelivered promises of managed care from the 1980s and 1990s, and of course, all health care players still have much to earn through the existing fee-for-service model.

But now government and commercial health plans have set clear timelines for incorporating value-based care incentives into the majority of their payments.

In local markets, providers and plans have been coming to the table to create new partnerships and alliances and to invest in capabilities to effectively manage care as well as financial risk. Over the past year in particular, we have seen a growing set of health care players strengthen their core capabilities to rethink and integrate clinical workflows across organizations and sites of care, collect and analyze data for specific patient populations, and pilot new payment models. At the same time, new entities are emerging with a singular focus on improving transparency for cost and quality to further drive progress through better health care decision- making.

While change has already begun, providers and health plans still have a long way to go to achieve the goals of the Triple Aim and to deliver more value in a way that ensures their own business models are sustainable. The care continuum - physician practices, hospitals, post-acute skilled nursing facilities, home health providers, and so on - looks different by locality, as do patient characteristics. Although the market is experimenting with strategies to share risk through new payment models, some of which have shown early results, it is unclear if these will be scalable across diverse delivery systems and patient populations. As a result, there is no consensus on how best to design a system or a simple pathway to deliver lower costs and improved quality.

Despite the lack of consensus on how to make value-based care work, life sciences companies are already being impacted by this volume-to-value shift. In our meeting, the pharma and medtech executives were swapping stories on a range of topics regarding value-based care. They focused on the increasingly high hurdles to demonstrate value, a pharmacy benefit manager’s plans to set pricing for cancer drugs based on efficacy in different tumor types, and the intensifying public debate over affordability of even the most clinically impressive medicines.

One executive was calling out the growing trend for hospitals to significantly restrict the numbers of device suppliers with which they contract. Two things struck him about this trend. First, was the fact that even academic medical centers, which have historically welcomed a diversity of choices given their research and teaching missions, are starting to discuss and explore this streamlining. Second, he noted that this is not simply a continuation of previous cost-focused supply chain initiatives to improve purchasing power and inventory management, but rather intended to drive better outcomes by eliminating unnecessary variability in standards of care.

The headlines tell stories of biopharma and medtech companies redesigning their customer teams to better align with consolidating provider organizations and adopting new contracting models (e.g., pay-for-performance) for drugs and implantable devices. However, the strategic implications of a shift to value for biopharma and medtech companies go far beyond these moves. Succeeding in a value-based world means a new value proposition for life sciences companies. They will no longer be able to compete by focusing on clinical innovation alone, but will need to deliver innovation, through their portfolios of products and services, that drives economic value in addition to improved clinical outcomes.

Some leaders are already rethinking their portfolio of offerings to create new standalone services, while others are making more modest investments in wrap-around solutions such as patient-oriented apps to support treatment compliance and provide coaching for behavioral change. New strategic collaborations are beginning to form between life sciences companies, providers, plans, and entrants such as technology players to identify, deliver, and drive value across the health care system.

In addition, companies will need to build new capabilities to deliver on the value of their portfolios. These new capabilities span the entire life sciences enterprise from R&D to commercial operations and throughout the supply chain. Some examples include rapid incorporation of real world evidence into decision-making, faster investment cycles to drive new product development on this new view of unmet needs, robust actuarial capabilities to enable pricing models commensurate with reductions in total health care costs for specific patient populations, and segmented commercial models to engage with new decision makers.

And finally, as life sciences companies consider their strategies, they will need to make choices on how to build advantage through scale and/or therapeutic focus. These choices are already playing out in the market and continue to fuel M&A activity and asset swaps.

At my client meeting we discussed what these changes mean for life sciences leaders who need to operate in this heterogeneous and fast-changing set of local markets while still managing the scale of a national and global business. However, I believe this also creates an opportunity for life sciences companies who understand the emerging archetypes within the market and can engage their customers in assessing where both clinical and economic value is leaking from the system and how to address it – making them highly valuable innovation partners “at the table” with providers and health plans. This vantage point, combined with impressive resources – scientific expertise, deep knowledge of disease management and treatments, and analytic capabilities that extend beyond data integration to drive true insight – will set the life sciences leaders apart.

These leading companies will do more than just have a seat at the table. They will set the pace for value transformation and differentiate themselves from competitors by becoming indispensable partners to fuel the next-generation of innovation as the health care ecosystem continues to evolve.



Mary Cummins is a principal with Deloitte Consulting LLP, in the Life Sciences and Health Care strategy group and is leading multiple cross-sector initiatives for the Value-Based Care practice. Mary works with CEOs and management teams to redefine strategy and achieve operational transformation in the changing health care ecosystem. Her track record spans more than 20 years of delivering growth and improved profitability for a broad portfolio of life sciences clients as well as providers and payers, and her experience covers global leaders as well as earlier stage growth companies and non-profit organizations.
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