An interview with Mitch Morris, MD, vice chairman and US/global health care providers leader, Deloitte Consulting LLP; Greg Scott, US health plans leader and vice chairman of Deloitte LLP; and Homi Kapadia, US life sciences leader and vice chairman of Deloitte LLP
Dr. Mitch Morris: VBC is certainly on the horizon for our sector, but will likely take multiple years to play out. In 2015, both physicians and health systems likely will be just dipping their toes in the water; no one has yet invested heavily in the necessary systems and processes. Deloitte’s 2014 Survey of US Physicians reveals, however, physicians know that the shift to VBC is inevitable; as it becomes a more significant aspect of their income, physicians likely will choose to work with health systems that fully and fairly enable an equitable approach to compensation. Partners, therefore, will need to move quickly to attract and support physicians by providing them with the resources they need; doing so should enhance collaboration and, potentially, lead to market advantages over time.
In addition to consolidation between hospitals, cross-sector convergence is expected to increase. Health systems are investing in health plan capabilities and we also see plans buying providers. This convergence is occurring with the expectation that those who can better manage the risk of health care delivery and further reduce administrative waste will prosper. They also hope to create greater brand awareness and “stickiness” among consumers in order to better compete in an era of narrow networks and consumer choice.
The role of the consumer will likely gain more relevance over the coming years. How hospitals and health systems fare in a realigned market depends, in large measure, on their place within the health care hierarchy. Centers of Excellence (e.g., health systems focusing on children, cancer, hearts, and joints) likely will continue to proliferate. However, where there is acknowledgement that community hospitals can’t deliver similar outcomes to COEs or large systems, consumers may elect to go elsewhere for treatment.
Greg Scott: The much-hyped “rise of consumerism” is finally becoming a reality in the health care industry. The individual consumer insurance market is expected to grow in the coming years. Most health plans have placed big bets on this, investing greatly in building out their retail IT infrastructures. We are also seeing greater integration across the health care value chain – health plans entering the world of care delivery, providers starting insurance businesses, new health plan-provider collaboration models, etc. The health care ecosystem is rapidly evolving and these shifts are spawning new innovations and marketplaces. Non-traditional players are entering the marketplace (such as niche technology vendors, private exchange players, etc.). How the marketplace evolves is yet to be seen. But health plans that are able to clearly redefine and establish their value propositions in this new ecosystem will likely be winners.
Homi Kapadia: We see “big data” becoming an integral part of life sciences organizations encompassing the entire value chain. Regulatory compliance and patient safety will become board room topics. Life sciences companies will look to other industries and non-traditional players for disruptive technologies that could be applied to health care and foster product innovation, market expansion, and revenue growth. For example, mobile health (mHealth) is expected to be a valuable partner in health care’s shift towards a patient-centered, value-based delivery model. mHealth has the potential to improve workplace efficiencies, increase patient safety, better coordinate care, facilitate payments, and engage patients.
Additive manufacturing (AM), often referred to as “3D printing,” also has disruptive potential in health care. AM can spur additional innovation, improve patient access to life-saving devices, simplify and accelerate the supply chain and production process, and achieve considerable savings. The medtech industry already stands at the forefront of this transformative change—medical applications account for about one-sixth of AM market revenues.
In an era of specialty pharmaceuticals, life sciences companies will evaluate their role with regard to social responsibility and consider the overall impact of their corporation’s reputation.
Finally, given the level of transformation occurring in the overall health care industry, life sciences companies should pro-actively address many aspects of their strategy in order to maximize opportunities for their success.
Read more about the 2015 outlook for life sciences and health care at www.deloitte.com/us/2015lshc_outlooks