PwC's Health Research Institute Identifies the Top Ten Health Industry Issues to Watch in 2013
New HRI report provides insight into healthcare industry's focus in the year ahead; ACA implementation, healthcare coverage, employee benefits, the new pharma value proposition, increased consumerism, BYOD and medical device excise tax are highlighted among key issues
NEW YORK, January 9, 2013 – As the health industry undertakes a full transition to meet requirements of the Affordable Care Act (ACA) and to prepare for a shift in market dynamics, PwC's Health Research Institute (HRI) today published its annual list of the Top Health Industry Issues for 2013. According to PwC US, the pace is certain to quicken in 2013 with the effects of technology, consumerism, budgetary pressures and the ACA converging on a sector that represents nearly one-fifth of the economy.
"Health organizations can hear the thundering footsteps of 30 million newly insured Americans on the horizon. Yet they are feeling the full force and impact of federal spending cuts and pressure from states, employers and consumers to operate more like a consumer-focused, retail industry,” said Kelly Barnes, PwC's U.S. Health Industries Leader. “By this time next year, the major provisions of the health reform law will be in effect, and the health industry has a lot of work to do before then. It’s now a foot race to 2014. The evolution of healthcare that has been in effect over the past several years will become a full-scale transformation in 2013."
HRI has identified the following ten issues as the top focus for the health industry in the year ahead:
1. States on the frontlines of Affordable Care Act
implementation
Over the next year, state officials must decide how to run
insurance exchanges, whether to expand Medicaid coverage, and what
type of insurance market regulation is needed. The biggest
challenge states may face in 2013 will be information technology.
Designing infrastructure to create a single, seamless entry point
to the exchange will require some states to undergo a major
overhaul of existing Medicaid eligibility systems.
2. Consumer revolution in health coverage
Consumers’ rising voice on how they spend their healthcare
dollars, coupled with state insurance exchanges, is prompting the
health industry to compete on attributes similar to the retail
industry: convenience, price and transparency. HRI found signs that
consumers already are warming up to new ways of purchasing
insurance: nearly one-quarter (23 percent) of consumers surveyed
said they are likely to buy health insurance from non-traditional
sources such as a retail store, up from 18 percent in 2011.
3. Medtech industry braces for excise tax impact
A 2.3 percent excise tax on medical device companies takes effect
on January 1, 2013, representing potentially $29.1 billion to the
federal government over the next 10 years. The $380 billion global
medical device industry is unlikely to be able to pass the tax on
to its customers, but could look to its suppliers to share in the
burden. Some companies could owe more in taxes than they generate
in profits, making them less attractive to investors but more
enticing to larger companies looking to expand their portfolio. The
tax impact should kick start new innovation, industry consolidation
and operational recalibration in the medtech sector.
4. Caring for the nation’s most vulnerable: dual
eligibles
Dual eligibles – people who qualify for both Medicare and
Medicaid – make up many of the 16 million people the ACA will
add to Medicaid rolls by 2019. The cost of care for duals is
skyrocketing – much of it wasted due to a lack of care
coordination between the two programs – and 70 percent of
state Medicaid spending on duals goes to long-term care support
services, such as nursing homes. Cash-strapped states are
increasingly turning to the expertise of managed care companies to
better coordinate care, and they are seeking innovative solutions,
such as from the technology sector, to better support home-based
care and caregivers.
5. Bring your own mobile device: convenience at a cost
Doctors and nurses are bringing their own mobile devices to work,
but many hospitals do not yet have a secure enough environment to
protect sensitive patient information. Sixty-nine percent of
consumers surveyed said they are concerned about the privacy of
their medical information if providers were able to access it on
their mobile devices. According to PwC, only 46 percent of
hospitals have a security strategy to regulate the use of mobile
devices.
6. Goodbye cost reduction, hello transformation
With reimbursement resetting under the ACA and pressure from the
federal budget crisis and price-conscious consumers, hospitals are
scrambling to further reduce their costs. HRI research found that
40 percent of consumers postponed care in 2012 because of the
costs. Having already plucked low-hanging fruit with labor
productivity and supply cost reductions, more hospitals in 2013
will embark on full-scale transformation efforts to redesign how
they deliver care.
7. Customer ratings hit the pocketbooks of healthcare
companies
Paying for performance will take on new meaning in 2013 as consumer
reviews generate penalties and bonuses for hospitals and insurers.
This could mean a bonus payout of more than $3 billion for insurers
and a hold back of $850 million for providers in 2013. Healthcare
companies will need to invest in consumer research and education in
order to take full advantage of the new payments.
8. Meeting the new expectations of pharma value
Physicians, once the primary arbiters of pharma value, now have
less say in payment decisions than insurers and large providers.
The final hurdle in the long, expensive path to drug and device
development is not regulatory approval, but rather reimbursement.
Though pharmaceutical and medical device companies play a pivotal
role in health outcomes, they will have to prove it to earn it by
demonstrating their value and comparative effectiveness.
9. Bigger than benefits: employers rethink their role in
healthcare
For nearly 70 years, employer-based coverage has been a cornerstone
of U.S. healthcare - but healthcare and employers may not be
inseparable. With the Supreme Court ruling to uphold the ACA and
the re-election of the President, employers have an opportunity to
re-examine their long term role in providing healthcare coverage
and explore alternative approaches provided by state and/or private
exchanges. In 2013, CEOs will ask tough questions about how and why
so many resources are going to something that is not core to the
business. The answers will vary by company, some of which are
likely to transition away from healthcare coverage while others
will redesign their benefit strategies.
10. The building blocks of population health management
Medicare's accountable care organization and patient-centered
medical home initiatives laid a foundation for improving population
health, but other collaborations are fueling growth in population
health management. In 2013, more companies are likely to form
partnerships to build their population health IT infrastructures
and to share responsibility for patient outcomes and satisfaction,
data collection and analysis, member education and engagement, with
a focus on at-risk populations.
The list is informed by HRI research and the collective input of PwC's Health Industries professionals who work with hospitals, physician groups, pharmaceutical and medical device companies and employers. For this year’s report, HRI also conducted a poll of 1,000 U.S. consumers on a range of healthcare topics covered in the report. The report provides further analysis of the top issues for 2013 and outlines implications for key stakeholders. To download the full report, visit: www.pwc.com/us/tophealthissues.
About PwC's Health Research Institute (HRI) PwC's Health Research Institute provides new intelligence, perspectives and analysis on trends affecting health-related industries. HRI helps executive decision makers navigate change through primary research and collaborative exchange. Our views are shaped by a network of professionals with executive and day-to-day experience in the health industry. HRI research is not sponsored by businesses, government, or other institutions. For more information, visit: www.pwc.com/hri.
About PwC’s Health Industries Group
PwC’s Health Industries Group is a leading advisor to public
and private organizations across the health industries, including
healthcare providers, pharmaceuticals, health and life sciences,
payers, employers, academic institutions and non-health
organizations with significant presence in the health market. For
more information, follow PwC Health Industries at @PwCHealth or
visit www.pwc.com/us/healthindustries.
About PwC US
PwC US helps organizations and individuals create the value they're
looking for. We're a member of the PwC network of firms in 158
countries with more than 180,000 people. We're committed to
delivering quality in assurance, tax and advisory services. Tell us
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www.pwc.com/US.
Posted: January 2013
