An interview with Mitch Morris, MD, Vice Chair and US and Global Health Care leader; Greg Scott, Vice Chair and US health plans leader; and Greg Reh, Vice Chair and US and Global Life Sciences leader.
Where are the opportunities for growth in health care and life sciences?
Dr. Mitch Morris: The opportunities for the provider sector in 2016 revolve around strategic approaches to providing additional value at more reasonable cost and greater efficiencies in organizational structure and service.
Strong mergers and acquisition (M&A) and consolidation activity is expected to continue, involving horizontal integration across health providers and vertical integration within the care continuum. Vertical integration offers a special opportunity for organizations, as it promises a shift closer to a more financially viable value-based care model.
As Americans live longer and once-fatal diseases become chronic illnesses, value-based care (VBC) will only grow in importance. As a result, providers have new opportunities to offer population health management services to more effectively serve these patients and improve outcomes. They’ll start moving the needle on stabilizing and reducing health care expenditures.
So far, a majority of providers have only dipped their toes into the expanding pool of value-based care. Transitioning into productive VBC models isn’t easy, but the growth potential is significant. We expect to see great progress among providers in 2016 toward value-based strategies.
Greg Scott: The opportunities for health plans fall broadly into four categories: government-driven lines of business, inorganic growth, the exploration of global markets, and diversification.
The commercial employer group business continues to be stronger than many would have predicted with the passage of the Affordable Care Act (ACA). For most health plans, however, Medicare, Medicaid, and individual markets shaped by the ACA represent the most promising sources of membership growth.
Growth potential for many organizations is expected to manifest in inorganic ways. Consolidation throughout the industry was a primary theme in the health plan marketplace in the last year, and we expect that to continue as an important growth play for plans in 2016.
An increasing number of US health plans are pursuing opportunities in global markets, across Latin America, Asia and Europe. That global upside will be widely explored in 2016, particularly by health plans that are most able to forge strong relationships with select partners in other countries.
Many health insurance companies operating in a heavily regulated industry are seeking diversified growth opportunities beyond the core business. Leading health plans, we expect, will move to adjacent product and services opportunities to expand their capabilities, customer reach, and financial returns.
Greg Reh: Emerging markets have yielded mixed results for US life sciences companies in recent years. But that doesn’t mean they won’t continue to offer promising opportunities in 2016. Life sciences organizations should be seeking openings in new markets that have significant access constraints and unmet needs, notably in Africa and Latin America.
Another important strategy will be restructuring the overall portfolio from a therapeutic area perspective, with M&D activity playing a significant role in the prospects for growth and diversification.
Certainly, we’re hearing a lot of discussion about demonstrating market value through innovation, in terms of operating models and the implementation of new technology. How the drive for operational innovation balances with the overall research and development (R&D) agenda will be a critical consideration over the next year.
Organizations also have a renewed opportunity to solidify their role within the evolving health care ecosystem. That will be one of the challenges facing the industry in 2016, as is the growing focus on patient engagement.
Although trust in life sciences companies appears to be rising, it still falls below other health care stakeholders. Addressing the question of trust directly is important to companies as they continue efforts to build patient confidence and gain permission to participate in patient engagement. That, in turn, can go a long way toward impacting market opportunities.
Read more about the 2016 outlook for life sciences and health care at www.deloitte.com/us/LSHC-Outlooks