2018 Global health care outlook - The evolution of smart health care - Deloitte
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2018 Global health care outlook The evolution of smart health care
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Section title goes here
2018 Global health care outlook l The evolution of smart health care
Overview and outlook 03
What exactly does smart health care look like? 04
Global health care sector issues in 2018 07
Strategically moving from volume to value 11
Responding to health policy and complex regulations 16
Investing in exponential technologies to reduce costs, increase
access, and improve care 18
Engaging with consumers and improving the patient experience 22
Shaping the workforce of the future 25
Appendix 27
Endnotes 28
Contacts 31
22018 Global health care outlook l The evolution of smart health care Overview and outlook With quality, outcomes, and value the watchwords for health care in the 21st century, sector stakeholders around the globe are looking for innovative, cost-effective ways to deliver patient-centered, technology- enabled “smart” health care, both inside and outside hospital walls. 3
What exactly does
smart health care
look like?
Appropriate treatments are delivered at the appropriate time, in the
appropriate place, for the appropriate patient
Clinicians use technology to more accurately diagnose and treat illness
and deliver care
All care delivery stakeholders across the ecosystem effectively and
efficiently communicate and use information
Patient data is in one, easily accessible place
The correct individuals do the correct work (e.g., nurses handle patient
care, not administrative tasks)
Patients are informed and actively involved in their treatment plan
New, cost-effective delivery models bring health care to places and
people that don’t have it
Efficiency improves; waste declines
42018 Global health care outlook l The evolution of smart health care
Evolving policies, processes, and capabilities home and outpatient ambulatory facilities. systems. Clinicians may, therefore, have
to deliver smart health care will not be Members of the health care delivery chain difficulty coordinating appointments and
easy, given global health care’s magnitude often work in multiple locations (hospital, procedures, sharing test results, and
and complexity. For example, there could doctor’s office, retail medical clinic,
involving patients in their treatment plan. In
be significant logistical and technology diagnostics lab). Patients may reside in a
obstacles to overcome. More and more city or even a country away from their care other words, care providers may be working
inpatient services are being pushed to providers. And health records frequently hard but they are not necessarily working
non-traditional care settings such as the reside in different formats and on disparate “smart.”
Global health care spending is projected to increase at an annual rate of 4.1% in 2017-2021, up
from just 1.3% in 2012-2016. Aging and increasing populations, developing market expansion,
advances in medical treatments, and rising labor costs will drive spending growth.1
Per-person health care spending will continue to vary widely, ranging from
$11,356 in the United States to just $53 in Pakistan in 2021.2
Life expectancy is estimated to increase by more than a full year between 2016 and 2021—from 73 to 74.1 years—
bringing the number of people aged over 65 to more than 656 million, or 11.5% of the total population. Much of
the gain in life expectancy globally is due to falling infant mortality rates.3
Although the battle against communicable diseases is far from over, countries are making headway through improved
sanitation, better living conditions, and wider access to health care and vaccinations. The estimated number of malaria deaths
worldwide fell to 429,000 in 2015, down from nearly 1 million in 2000. 4 The number of AIDS-related deaths dropped
from 2.3 million in 2005 to an estimated 1.1 million in 2015, due largely to the successful rollout of treatment.5
Rapid urbanization, sedentary lifestyles, changing diets, and rising obesity levels are fueling an increase in chronic
diseases—most prominently, cancer, heart disease, and diabetes—even in developing markets.6 China and India have
the largest number of diabetes sufferers in the world, at around 114 million and 69 million, respectively.
Globally, the number is expected to rise from the current 415 million to 642 million by 2040.7
Someone develops dementia every three seconds. In 2017, an estimated 50 million
people worldwide live with dementia—a number that is predicted to double every 20 years. 8
By 2018, dementia will become a trillion-dollar disease.9
52018 Global health care outlook l The evolution of smart health care
Independently and collectively, health care stakeholders in 2018 are likely to face a number of existing and emerging issues in their quest to get
“smarter” (Figure 1):
• Creating a positive margin in an uncertain and changing health economy
• Strategically moving from volume to value
• Responding to health policy and complex regulations
• Investing in exponential technologies to reduce costs, increase access, and improve care
• Engaging with consumers and improving the patient experience
• Shaping the workforce of the future
This 2018 outlook reviews the current state of the global health care sector; explores trends and issues impacting health care providers,
governments, other payers, and patients; and suggests considerations for stakeholders as they seek to deliver high-quality, cost-efficient,
smart health care.
Figure 1. Key issues in global health care
Creating a
Shaping the positive margin in
workforce of the an uncertain and
future changing health
economy
Engaging with
consumers and Top challenges facing Responding to health
policy and complex
improving the patient
experience health care stakeholders regulations
Investing in
exponential
Strategically moving technologies to
from volume to reduce costs, increase
value access, and
improve care
62018 Global health care outlook l The evolution of smart health care
Global health care
sector issues in 2018
Creating a positive margin in an uncertain and changing health economy
Improving financial performance and demand, funding limitations, infrastructure As has been the case for the past several
operating margins is likely to remain a upgrades, and therapeutic and technology years, spending is expected to be driven
top issue. Many public and private health advancements strain already limited financial by aging and growing populations,
systems have been experiencing revenue resources. Combined health care spending developing market expansion, clinical and
pressure, rising costs, and stagnating or in the world’s major regions is expected to technology advances, and rising labor costs
declining margins for years. The trend reach USD $8.7 trillion by 2020, up from USD (exacerbated by many markets’ competition
is expected to persist, as increasing $7 trillion in 201510 (Figure 2). for health care workers).11
Figure 2. Health care spending, 2015 - 2020
CAGR (2015 - 2020)
8,734.6
Global 4.3%
7,077.1
North America 4,083.6
4.3%
3,306.2
2,006.6
Western Europe 4%
1,645.7
1,964.9
Asia & Australasia 5%
1,537.5
400.5
Latin America 2.4%
355.7
138.9
Middle East & Africa 4.2%
112.7
246.1
Transition economies 7.5%
170.9
0 2,000 4,000 6,000 8,000 10,000
USD $ billion 2020 (P) 2015
Source: World Industry Outlook, Healtcare and Pharmaceuticals, The Economic Intelligence Unit, June 2017
72018 Global health care outlook l The evolution of smart health care
Health care spending by country varies widely (Figure 3). Unfortunately, higher spending levels don’t always produce better health
outcomes and value. For example, the United States, at 16.9 percent of GDP in 2016, continues to spend considerably more on health
care than comparable countries but it is in the lower half of the Organization for Economic Cooperation and Development (OECD)
countries’ life expectancy rankings.12 US health spending now exceeds USD $3 trillion per year, with growth rates projected to accelerate
through 2024. Major spending categories are led by hospital care (USD $1 trillion), physicians (USD $634.9 billion), and prescription drugs
(USD $328.6 billion).13
Figure 3. Health care spending by country
Health care expenditures as a share of GDP, 2016
20
18
16.9
16
14
12 11.5
11.2 11.1 11.1
11 10.8 10.6
10.4 10.4
10.1 9.9
10 9.8 9.6
9.4 9.4 9.3 9.1 9 8.9 8.8 8.4
8.2
7.7
8 7.5
7.4
7.2 7.2
7 7
6.3 6.3
6 5.2
4
2
0
United States
Switzerland
Japan
Germany
Sweden
France
Netherlands
Denmark
Austria
Belgium
Canada
Norway
United Kingdom
Finland
New Zealand
Ireland
Australia
Chile
Czech Republic
Italy
Spain
Portugal
Iceland
Slovenia
Greece
Israel
Korea
Luxembourg
Slovak Republic
Hungary
Poland
Estonia
Turkey
Source: OECD
Populations, therapeutics, and infrastructure drive spending
There are various views as to the drivers of doctors and patients are prompting more health costs.16 In addition, health systems
health care spending. In developed markets, (and more costly) tests and interventions are dealing with the ongoing challenges of
it’s expected that aging populations will for chronic and communicable diseases. containing and treating both communicable
continue to be a major factor—especially in Providers, payers, and life sciences and chronic diseases. Once a hallmark
Japan, where the share of people over age companies may have to balance the of developed markets, chronic diseases
65 will reach almost 30 percent by 2021, and development and adoption of new therapies (diabetes, chronic heart disease, Alzheimer’s
in Western Europe, with its share nearing and medical technologies with their potential disease) exacerbated by lifestyle risks are
21 percent.14 Changing patterns of care, quality, experience, and health outcomes. In becoming a shared health and cost issue.17
including increased visits and higher-quality developing markets, growing populations, an
services, could also be major cost-drivers.15 increase in higher-income households, and
Therapeutic advances and the desires of rising consumer expectations are pushing up
82018 Global health care outlook l The evolution of smart health care
Adding to the cost equation, many health percent surcharge to the cost of drugs. alternatives to contract labor; and revisiting
systems are struggling to update aging Some hospitals derived as much as 40 revenue cycle strategies, such as leveraging
infrastructure and legacy technologies with percent of their revenues from drug new technologies and analytics tools that
already limited capital resources. sales—which could account for their help improve processes and coding to
entire profit margin.21 In 2009, the Chinese reduce claims denials.25
As health care costs increase, affordability government passed the Zero-Markup Drug
and insurance coverage remain problematic. Policy, to rein in out-of-control drug costs, Particularly in the United States, hospitals
In the United States, deductible cost curb over prescribing, and reduce the and health systems are engaging in mergers
increases are far outpacing increases in financial burden to the public, especially and acquisitions (M&A) and other partnering
costs covered by insurance.18 Brazil’s private those in low-income settings. The policy schemes to achieve economies of scale.
health insurance sector lost 2.5 million went nationwide in 2015 and hospital Provider organizations are working to
beneficiaries between 2014 and 2016 due margins have been falling as a result.22 increase their physician networks, expand
to the country’s high unemployment rate. their geographic reach, and diversify their
•• In Brazil, profit margins for private health
Added to that, companies in Brazil had to cut specialized offerings and talent. Growth
care providers have become less attractive
expenses, and changing their employees’ via M&A could provide several benefits,
following a ruling by the high court,
health insurance plan to a cheaper one was including increased access to capital, which
Supremo Tribunal Federal, that these
a popular option.19 could mean more money to invest in facilities,
providers are to reimburse the Brazilian
technologies, and staff.26
public health care system (Sistema Único
Sector stakeholders’ efforts to manage rising
de Saúde, or SUS) in the same way that
costs are complicated by price controls, In another example, large medical groups
private hospitals are currently reimbursed
reduced funding, and misaligned incentives in China are trying to form a “closed-loop”
for treating privately insured patients.23
(e.g., the longstanding fee-for-service supply chain by acquiring hospitals. CR
payment model). For example: •• Many hospitals in India are discovering Healthcare currently manages 109 hospitals
they need to build more financially sound with more than 11,000 beds, while sister
•• The United Kingdom’s National Health
operating models to offset diminishing company CR Pharmaceuticals supplies
Service (NHS) is currently experiencing the
margins due to price controls on drugs, the hospitals’ drugs. Chinese insurance
longest slowdown in funding in its history.
consumables, and medical devices, and companies are also using similar business
While all four nations (England, Scotland,
due to insurance companies’ use of models to promote commercial medical
Wales, and Northern Ireland) share many
growing patient share and buying power insurance.27
of the same challenges, the demand and
to squeeze hospital pricing. In addition,
financial sustainability issues appear most
India’s medical workforce shortage means In April 2017, Japan’s government began
acute in England. Between 2010-2011 and
available doctors command a high price allowing medical corporations to create
2015-2016, NHS funding growth slowed
structure, further eating into hospital nonprofit holding companies without
significantly, averaging 1.2 percent per
margins. corporate acquisitions as a way to promote
year (in real terms), and is set to average
organizational change. Under the scheme,
1.1 percent from 2016-2017 until 2020-
Consolidating and collaborating a holding company can manage several
2021, compared to the long-term average to compete medical institutions/nursing care facilities in
of nearly 4 percent a year since the NHS Health care providers are employing a the region. This may be especially effective for
was established.20 While the first few variety of strategies to combat shrinking medical institutions in rural areas that need
years of the United Kingdom’s response margins and rising costs. Case in point: to increase operational efficiency despite
to the global financial crisis provided Rather than being paid more to increase declining patient populations.
an opportunity to improve efficiency inpatient volume to generate revenue,
of services, the last two years have many health systems are responding to Joint ventures, public-private partnerships
seen NHS providers struggling to break new financial incentives to treat patients (PPPs), and other collaborative arrangements
even. Meanwhile, a growing and aging outside traditional hospital settings. To are taking place within and across health care
population, changing patient expectations, illustrate the impact, the proportion of sectors and geographies.
and pressure on social care and public revenue from inpatient services relative Governments, providers, employers, and
health budgets are increasing demands on to outpatient services in US hospitals has insurers are developing wellness programs
NHS services. fallen 10 percentage points since 2004.24 to aid public health efforts. Hospitals are
•• China’s policy of “zero markups” for drugs Among other margin-enhancing strategies cooperating with biotech companies to
sold at hospitals is a major contributor are combining traditional workforce develop personalized therapies, especially for
to eroding profit margins. For more than planning with predictive analytics to cancers.
20 years, hospitals were able to add a 15 improve efficiencies in labor costs and find
92018 Global health care outlook l The evolution of smart health care
Large conglomerates (e.g., services for international patients
traveling abroad for care), and launching new
are entering Southeast companies and philanthropic organizations—
Asia (SEA) and expanding all to come up with an alternative revenue
stream to subsidize government or improve
laterally between life the bottom line.28
sciences and health Respondents to Deloitte’s 2017 survey
care through M&A and of US health care CEOs had the following
suggestions for producing and sustaining
joint ventures (JVs), positive margins in an uncertain and changing
and traditional medical health economy:
technology (medtech) •• Increase system efficiencies beyond
what is needed to be profitable.
companies are moving Many hospitals and health systems have
into care provision. And, reduced costs and increased efficiencies
at the margins of their organizations, but
nontraditional players like long-term sustainability may require a
technology companies fundamental transformation of the way that
services are organized and delivered.
and other disruptors are
•• Operate as a consolidated system.
entering the health care Many health systems have grown through
market and providing acquisition, and have not fully realized new
efficiencies and synergies system-wide.
innovative perspectives. Consolidating where appropriate and
looking for synergies across the system can
Considerable opportunities exist for health improve efficiency.
care players to work collaboratively on
innovative access, delivery, and financing •• Diversify beyond the core hospital.
models to reduce health care costs and As inpatient revenues decline, many CEOs
increase quality. are partnering or integrating physician
practices, as well as investing in outpatient
Stakeholder considerations services, step-down care, urgent care, etc.
While reducing costs has long been a way for •• Improve revenue cycle systems. Despite
health care organizations to offset shrinking upgrades to revenue cycle systems in
margins, many are pursuing new cost-cutting recent years, many health systems are
measures, such as developing alternative still leaving money on the table. They may
staffing models, shifting patients to outpatient be able to leverage scale and improve
services, and reducing administrative and efficiency by reducing the number of supply
supply costs. In addition, health systems are chain vendors and noncritical employees.29
exploring new revenue sources. Some, for
example, are looking to capitalize on their
intellectual property (IP) by working with
employees to develop innovations including
medical devices, training videos, health
information technology (HIT) tools, or patient
safety solutions.
Once the hospital has filed for patent or
copyright protections, it can sell or license the
IP to other industry stakeholders. Hospitals
and health systems are also investing in
JVs, commercializing their foreign assets
102018 Global health care outlook l The evolution of smart health care
Strategically moving
from volume to value
Health care is continuing its transition from fee-for-service (FFS) reimbursement to outcomes
- and value-based payment models (Figure 4):
Figure 4. A continued shift from volume to value
Value
• Focus on maximizing value (lower cost
and higher quality) of health care delivered
Volume through alignment of incentives and
management of risk
• Payment systems based on
fee-for-service; limited financial risk • Care coordination driven by standardized
protocols; use of information technology for
• Providers have incentives to increase information sharing
payment rates, specialization/intensity,
and volume; fragmentation of providers • Investment into supporting clinical integration,
(”silos”) population health, and other cost
reduction/revenue enhancement
• Limited focus on outcomes and opportunities to respond to new payment
information sharing systems and grow market share
In the United States, the shift toward value is Other countries are also moving from treatments, as well as assistance with social
being accelerated by the Medicare Access and volume to value through reform policies needs.30 Mexico’s CASALUD primary care
CHIP Reauthorization Act of 2015 (MACRA), and programs promoting operational delivery model deploys innovative medical
which offers significant financial incentives efficiency, technology use, population health technologies that better engage patients
for health care professionals to participate management, and wellness. For example, the and health care professionals.31 One such
in risk-bearing, coordinated care models Connecting to Care program in Saskatchewan, application is the MIDO® Mobile Module
and to move away from the traditional FFS Canada, uses proactive outreach to prevent Cart, an all-in-one, self-contained system
system. MACRA is poised to drive increased hospitalizations and emergency room (and standardized training) that facilitates a
participation in risk-bearing models across all (ER) visits by focusing on timely use of proactive approach to disease detection and
payers, not just Medicare. community-based services, including support offers promise in preventing or slowing the
for medical, mental health, and addiction rate of disease progression.32
112018 Global health care outlook l The evolution of smart health care
Japan’s government has introduced a series “beyond quality to value,” and “beyond The Unite Kingdom’s 2015 NHS Five Year
of reform initiatives, the most symbolic health care to health.”34 The MOH is focusing Forward View sets a clear course of action
being the establishment of an Integrated its productivity improvement projects to 2020: While the NHS is already one of the
Community Care System that combines in four areas to deliver quality care and leanest publicly funded health services in
health care, long-term care, housing, and better value: helping patients navigate the industrialized world, opportunities to go
livelihood support services in a unified the health care system more efficiently further faster are detailed in the NHS’s Ten
manner so that Japan’s elderly can receive without compromising quality of care; Point Efficiency Plan. The NHS is also seeking
continuous quality care in their local automating labor-intensive activities to to leverage the potential of technology and
communities33 versus the hospital. increase operational efficiency; streamlining innovation more effectively, empowering
workflows, expanding job roles, and upskilling patients to take a more active role in their
The Singapore Ministry of Health (MOH) health care staff to work more effectively and own health and care while also enabling NHS
has categorized the nation’s top health care productively, and meet the needs of patients staff and their care colleagues to do their
reform issues and trends into three broad more holistically; and empowering patients, jobs more efficiently.
shifts referred to as the “3 beyonds”—moving caregivers, and volunteers to self-serve and
“beyond the hospital to the community,” self-care.
Untangling the knotty problem of low-value health care
Wasted spending on low-value health care—services that offer little or no expected benefit or that are inefficiently
delivered—can total billions of dollars a year. The Institute of Medicine (IOM) calculated that roughly $765 billion
of US medical spending in 2009 was wasted on unnecessary services, excessive administrative costs, fraud, and
other problems.35
Programs such as the ABIM Foundation’s Choosing Wisely Initiative36 (the European Federation of Internal Medicine
has also launched its own Choosing Wisely campaign),37 which seeks to advance a national dialogue on avoiding
wasteful or unnecessary medical tests, treatments, and procedures, aim to reduce low-value health care services,
but it’s a knotty problem to untangle. Generally, there is a lack of consensus on how to incorporate clinical nuance,
patient preferences and priorities, and cost-benefit tradeoffs in provider and consumer-facing initiatives to reduce
low-value care.38 Also, evidence is lacking for best practices to operationalize programs and emerging technologies
to reduce unnecessary and inefficient care.
According to IOM, incremental upgrades and changes by individual hospitals or health systems will not be enough.
Achieving high-value care, reducing waste, and lowering costs could require an across-the-board commitment to
develop a “learning” health care system that continuously improves by capturing and sharing lessons from every
care experience and research discovery. Stakeholders should consider strategies that include adopting value-
and outcomes-based payment models; embracing new technologies to collect and analyze data at the point of
care; engaging patients and their families; and establishing better teamwork and transparency within and across
organizations.39
122018 Global health care outlook l The evolution of smart health care
Population health management and The goals of population health management Encouraged and incentivized by employers,
wellness are critical: improving clinical effectiveness, health care practitioners, and even
Sector stakeholders, particularly in advanced lowering costs, sharing accountability, governments, more and more consumers
health systems, are advocating the shift enhancing safety and, most importantly, are taking their health and wellness into
from a “break-fix” model of health care to keeping an entire population healthier. their own hands. In an evolution to what
one focused on prevention and the overall But striving to achieve these goals is Deloitte calls an informed and empowered
holistic health of populations rather than both challenging and complex. Countries’ “quantified self,” consumer engagement in
episodic and transaction-based treatments. population health efforts range from minimal and expectations of health care are growing,
to robust and are as diverse as combating especially as individuals become better
opioid addiction to planning future care for informed about their genetic profile, the
Population health— health aging citizens. diseases they have and might develop, and
policy for specified groups, •• The opioid crisis plaguing many nations
the effectiveness of health interventions.
They are embracing prevention and devoting
from prevention to diagnosis is inciting widespread action by health
time, energy, and money to staying healthy,
systems, insurers, families, communities,
and treatment of chronic and all levels of government. Initiatives
including using regulated and validated
health applications (apps) and wearables.43
disease—takes a broad include more funding for interventional
programs to reduce overdoses, increased
look at the management of efforts to integrate health and social
One indication of the emerging “quantified
self” is the increasing popularity of mobile
outcomes for all of a health care to support vulnerable populations
communication devices for health services
being impacted by opioids, and enhanced
system’s patients, including support for recognizing and treating
and information.44 From wearable fitness
trackers to smart devices to cyber networks,
efforts to use health care mental health issues and addictions.
the mHealth market has doubled in just four
resources effectively and •• In July 2016, Japan’s government released years.45 In fact, there are more than 100,000
the “Asia Human Well-Being Initiative,” mHealth apps currently available,46 and
efficiently to improve the which aims to apply aspects of the health app market revenue was projected to
lifetime health and well-being Japanese health care/nursing care system grow to USD $26 billion by the end of 2017.47
in other aging Asian countries. With the While these devices and services encourage
of a specific population.40 initiative, it is expected that Japanese consumers to be engaged participants in
providers will expand their overseas managing their own health, fitness, and
Activities include promoting health and well- footprint, especially in Asian countries that general wellness, broader benefits may
being; primary, secondary, tertiary care; and are facing rapidly aging societies. be reaped as well. From the perspective
disease prevention. of population health, where 75 percent of
•• Some Southeast Asian nations are
all health costs derive from preventable
taking a holistic approach to addressing
Population health requires data and conditions,48 feedback devices like these
current and future health care needs
analytics to identify at-risk patients and could be enormously helpful in facilitating
with initiatives designed to expand care
target services that reduce their use of healthy behavior change.49
options (e.g., home and community-based
expensive and low-quality care. Under a
care, long-term care, virtual care), increase
population health model, providers manage
access, reduce costs, and empower
care—from preventive and maintenance
patients.
care to acute and long-term care—for a
defined population. •• In late 2016, China’s National Health and
Family Planning Commission (NHFPC)
Those who are most successful often deploy announced “Healthy China 2030,”
innovative delivery models; analyzing data the country’s first long-term strategic
and trends in a population’s health, quality, population health plan. The plan aims to
and costs, and bearing financial risk. Value- grow investments in the “Big Health” sector
based payment contracts reward providers to 16 trillion RMB by 2030.42
for successfully executing these processes.41
132018 Global health care outlook l The evolution of smart health care
Combining the power of analytics and mHealth devices, wearables, and other nontraditional sources of data collection could add even more
value to wellness programs by helping to identify new care pathways and high-risk individuals.50 Unfortunately, lack of interoperability among
devices currently limits big data’s promise and, by extension, overall wellness and prevention initiatives. Interoperability has the potential to
decrease costs51 and improve care coordination.52 With the advent of more open systems, data sharing should improve53 and analytics use
increase.
Social determinants’ impact on health care
Health care stakeholders have long recognized that factors outside the system—the social determinants of health—influence an individual’s
health and well-being (see sidebar). Health-related social needs have been shown to affect individuals’ health outcomes to a large extent.54
The social determinants of health
Health-related social needs generally refer to factors that affect health outside of the health care system
and that are beyond an individual’s control.55 Typical categories include:
Housing instability/homelessness: e.g., having Interpersonal violence: Being exposed to
difficulty paying rent or affording a stable place intentional use of physical force or power,
of one’s own, living in overcrowded or run-down threatened or actual, that results in or has
conditions a high likelihood of resulting in injury, death,
psychological harm, etc.
Food insecurity (hunger and nutrition): Not
having reliable access to enough affordable,
Family and social supports: Not having
nutritious food
relationships that provide interaction, nurturing,
Transportation: Not having affordable and and help in coping with daily life
reliable ways to get to medical appointments or
Employment and income:
purchase healthy foods
Not having the ability to get or keep a job, or gain
Education: Not having access to high school steady income
or other training that might help someone gain
consistent employment
Utility needs: Not being able to regularly pay
utility bills (e.g., electricity, gas, water, phone) and/
or afford necessary maintenance or repairs
Source: Social determinants of health: How are hospitals and health
systems investing in and addressing social needs? Deloitte Center for Health
Solutions, 2017
142018 Global health care outlook l The evolution of smart health care
Across all developed countries, “vulnerable” There are amazing programs and And while addressing social determinants
or “troubled families,”—defined as those innovations being developed and is still outside the core of health care,64 the
that are in contact with several departments implemented right now, but efforts are shift to value is spurring more investment
of the local authority including the child fragmented, incremental, and there’s no and activity around addressing social
or youth welfare system—are a growing blueprint.61 Hospitals often lack dedicated needs. Taking a holistic system and life
concern. These families rarely succeed funds for all of the populations they want cycle approach to address care inequalities
in breaking the negative spiral, which to target, and finding sustainable funding and social needs can ease the burden
leads to persistent poverty, deprivation, to address social needs can be difficult. on vulnerable individuals, families, and
and transgenerational dependency Determining return-on-investment communities, and improve outcomes at all
on public support. Living in vulnerable (ROI) for social need activities is another stages of life.65 There is also an economic
families accentuates the risks of poor life challenge; it requires hospitals to identify rationale for investing in the social
outcomes for those most dependent on meaningful measures, such as quantifiable determinants of care: healthier individuals
family structures, especially children and improvements in health outcomes and cost contribute more to the economy, increasing
adolescents. The current failure to address savings. Generally, hospitals that are further government tax revenues and a country’s
the social determinants of health for these along in the journey to value-based care GDP.
vulnerable families is creating avoidable cost report the largest investments and most
and social pressures on society.56 activity around addressing social needs.
These organizations are also more likely to
Social determinants also can affect health engage in public and private partnerships,
outcomes and payments for health systems. employ innovative solutions, and measure
For example, while a top-rated hospital more aspects of their social needs activities,
might be highly effective at treating an acute including health outcomes, cost outcomes,
health issue, the patient’s condition could and patient experience.62
deteriorate when he returns home to an
unhealthy environment. Factors there— Stakeholder considerations
unstable housing situation, food insecurity, The needle is moving from treatment to
violence in the patient’s home or personal prevention as health care costs continue to
relationships, or others—may contribute to escalate, and governments, health systems,
the patient’s eventual return to the hospital health plans, and other stakeholders
for declining health, which can make it understand that it makes clinical and
difficult for the hospitals to receive incentives financial sense to invest in keeping
and/or avoid financial penalties.57 individuals and populations healthy. Value-
based payment models that reward health
Increasingly, hospitals and health systems systems for improved quality and other
are working to navigate the challenges of outcomes have the potential to improve
effectively linking community and clinical outcomes and margins, and reduce total
services to improve health outcomes in costs of care.63
the long term. For instance, many hospitals
now screen for social needs, although some However, a successful transition to value-
of this screening appears to be occasional based care requires that stakeholders—
and ad hoc rather than consistent and including consumers—move beyond health
systematic.58 Some health systems employ care to health; from treatment to prevention/
community health assistants (CHAs), non- wellness; and from individual to population
licensed professionals who assess patients’ health. Already, providers are leveraging
needs, connect with primary care and technology advances to expand care beyond
case management teams, and coordinate brick and mortar locations by establishing
referrals.59 Other hospitals and medical digitally enabled, integrated community care
providers are partnering with ride-hailing systems.
services to overcome transportation
barriers.60
152018 Global health care outlook l The evolution of smart health care
Responding to health
policy and complex
regulations
Creating a positive margin in an
uncertain and changing health economy The new legislation is expected to drive Three developments are helping health care
Growing health care market complexity leads development and widespread promotion of organizations mine insights from myriad
to more regulatory complexity and increases a comprehensive medical database to aid data sources:
the need for heightened stakeholder risk research for drug discovery using artificial
•• Cognitive computing. Turning the vast
management. And while health systems intelligence (AI) and other advances.
volume of available health care data—from
worldwide share overarching health policy
medical devices, smartphones, activity
and regulatory goals—ensuring quality care United Kingdom—The tax-funded NHS
trackers, electronic health records (EHRs),
and patient safety, mitigating fraud, and operates within a very complex regulatory
and more—into insights that enable
cyber threats—regions and countries are environment. England, for instance, has
personalized medicine necessitates
grappling with their own specific challenges. both a national financial (NHS Improvement)
new aggregation, storage, and modeling
and quality (Care Quality Commission)
approaches. Cognitive computing
Brazil—Brazil is experiencing a profound regulator; they provide ongoing evaluation
(machine learning, neural networks, deep
movement in its corporate management of performance against agreed-upon
learning, etc.) is a common technique
culture, moral conscience, and ethical criteria and publish the findings. There are
for dealing with large volumes of rapidly
action across all industries. In recent years, also professional group regulators and all
changing data. It allows for a variety of
there have been a number of corruption organizations have to comply with financial
statistical algorithms, can involve a large
cases in Brazil, even in companies that and data protection regulations. While
number of highly granular models, and
apparently had clear and well-established fulfilling requests for data and information
can quickly generate new models for new
compliance and other initiatives to mitigate can be burdensome for health care
data. It can be used to predict (disease
inappropriate conduct and practices. The stakeholders, regulatory pressure is a facet
onset, for example), detect patterns in
health sector was not immune to these of the larger financial, demand, and staffing
data (a drug’s effects on populations or
cases. Several scandals have been widely pressures under which the NHS operates.
individuals, for example), or to classify
reported in the major press, especially in the
populations (patient subpopulations, for
last three years, such as the so-called “Mafia United States—Although significant
example). Machine learning can also be
of Orthotics and Prosthetics.” 66 legislative, industry, and public attention
used to combine data across disparate
is heavily focused on the debate over the
data sources—say, to create a Patient 360
China—The number of private hospitals in future of the Affordable Care Act (ACA),
view.70
China surpassed public hospitals in 2015,67 health care stakeholders face other
prompting more regulatory supervision of significant strategic and compliance •• Cloud-based, interoperable electronic
the registration, drug management, medical challenges related to government programs, health records. Interoperable EHRs
environment, and physician certification health care payment and delivery system coupled with AI could create process
of private hospitals. Adding to the need reforms, and new billing and coding efficiencies and improve decision making
for oversight, the number of illegal private requirements. necessary to boost quality. Data could
medical institutions is also growing, be better integrated into daily care, and
accompanied unfortunately, by an increase Data management and security patients could play a role in curating
in medical negligence incidents. Digital health care (mobile health, wireless their own data. The data could include
health, connected health, etc.) technology is genetic, social, and behavioral patient
Japan—In May 2017, Japan introduced a delivering solutions to tackle the increasing information, as well as financial, clinical, and
law establishing a standardized rule for need for better diagnostics and more administrative records. It could be securely
anonymously processing medical care personalized therapeutic tools.69 It also is stored in the cloud and accessed on an
information.68 The law’s purpose is to creating challenges for governments, health as-needed basis—perhaps on a blockchain
promote R&D and advanced medical studies. systems, and insurers, which must collect, (a distributed, immutable record ledger
analyze, and store more and more data. of digital transactions that is shared and
editable by various stakeholders).71
162018 Global health care outlook l The evolution of smart health care
•• Internet of Things (IoT). Development of •• Who is responsible when the health care Until recently, medical institutions in
the IoT in the health care market (where it is technology a consumer chooses to buy—a Japan generally used closed systems
also called the Internet of Medical Things, or self-monitoring device, for example— to help reduce cyber threats. However,
IoMT) has been proving particularly valuable produces faulty information and sends it to implementation of the national health
in remote clinical monitoring, chronic the consumer’s primary care physician? system’s new medical ID and data-sharing
disease management, preventive care, scheme will require medical institutions to
•• Who owns patient information and who is
assisted living for the elderly, and fitness upload data to external servers, heightening
responsible for keeping it safe, especially
monitoring. IoT’s application is lowering the importance of cybersecurity.
when it is shared across clinicians, facilities,
costs, improving efficiency, and bringing the
and geographies? Stakeholder considerations
focus back to quality patient care.72
•• Realistically, how much of a health plan or Ineffective data management, compliance
The cybersecurity conundrum provider’s confidential clinical, business, issues, and cyber risks are often linked
WannaCry, a recent, widespread and patient data can a cybersecurity with not having systematic approaches
ransomware attack, infected computers in program (no matter how sophisticated) to investments in people, processes, and
tens of thousands of locations, including protect? technology. Dated technology is everywhere
hospitals and telecom companies.73 In May, and connected to everything— not just
a malware variant called Wanna Decryptor •• How can data monetization opportunities on desktop PCs. And while government
hit Britain’s NHS and infiltrated major (already in use by health plans and of policies and regulations seek to strengthen
international corporations such FedEx, interest to providers) move forward amid health care security and safety on a macro
Telefónica in Spain and Portugal, and privacy constraints? level, individual organizations need to focus
computers in Russia, Ukraine, and Taiwan.74 executive attention on compliance, ethics,
Among new legislation designed to mitigate and risk.
These and other recent cyberattacks have data access and security concerns is the
moved the issues of cybersecurity and data European Commission’s General Data Many employees at hospitals, health plans,
risk management front and center. Health Protection Regulation (GDPR), which reforms life sciences companies, and governments
care is second only to the finance industry in data protection rules in the European Union lack awareness of and training to manage
the number of cyberattacks annually.75 (EU). financial, operational, compliance, and
The objective of the new set of rules, which cyber risks. Led by senior management,
An average of one health care breach came into force in May 2016 and will apply organizations should perform a thorough
incident per day was reported in the United beginning in May 2018, is to give citizens assessment to understand how recent
States during the first half of 2017, with at back control over their personal data, and and upcoming policy changes will impact
least half of the incidents perpetrated by to simplify the regulatory environment for organizational priorities and explore
hackers.76 Globally, the average total cost of business in the digital economy.78 Similarly, strategies to build second-line defenses to
a health care data breach to an organization the United Kingdom has “Patients Know reduce their administrative, financial, and
reached USD $3.62 million per incident in Best”—a platform on which the patient reputational exposure.
2017. 77 controls who accesses their health record.
As patients take more active control of their In May 2017, Japan’s Ministry of Health, Labor
health, they will likely be accessing public and Welfare released the latest edition of its
and private health care in component parts Security Guidelines for Health Information
(e.g., software applications, devices) and in Systems. This edition incorporates measures
nontraditional settings (e.g., at home). to address the risk of cyberattacks targeting
This independence is likely to complicate medical institutions. Following the guidelines
quality assurance and cybersecurity efforts, is not mandatory, but is recommended.
prompting such questions as:
172018 Global health care outlook l The evolution of smart health care
Investing in exponential
technologies to reduce
costs, increase access,
and improve care
There is no doubt that change is coming to health care. Exponential technologies are helping to drive that change by making care delivery less
expensive, more efficient, and more accessible on a global basis. Consider: Beginning in 1999, scientists spent five months and approximately
USD $300 million to generate the first initial “draft” of a human genome sequence. The cost to generate a human genome sequence is now less
than USD $1,000,79 and could eventually drop to less than USD $1. In coming years, exponential technologies have the potential to dramatically
disrupt the systems and processes that have historically defined the industry (Figure 5).
Figure 5.
Adoption of exponential technologies in 5-10 years
12 key exponential technologies may reach varying levels
Telemedicine
of adoption and transformation within the next decade Ambient computing
Cognitive computing
Data democratization
Robotics
Additive manufacturing
Virtual reality/augmented reality
API/gig economy
Blockchain
Genomics & proteomics
Digital medicine
Degree of uncertainty
Syntheticbiology & nanotechnology
Low
Medium
High
Experimental Early adoption Early majority Late majority Laggards
Source: Deloitte analysis
182018 Global health care outlook l The evolution of smart health care
Already, Japan is experimenting with care Planning today for the hospital of For instance, spending on new hospital
robots to assist its elderly.80 In China, tomorrow infrastructure in India is expected to reach
clinicians are using AI to support imaging With aging infrastructure in some USD $200 billion by 2024, and China plans to
diagnosis in lung, ophthalmic, and skin developed countries and the lack of add 89,000 new hospital beds by 2020.91 92
diseases. A US startup is using AI to take all robust infrastructure in emerging markets,
the data flowing through a hospital to learn governments and private health care Demographic and economic trends, coupled
how to free up doctors and nurses to see providers (driven by consumers) are with advancing technologies, could have
more patients and improve outcomes: One of rethinking how to optimize inpatient and significant implications for how hospitals
its clients has been able to treat 3,000 more outpatient settings, and are planning of the future will be staffed, sized, and
patients a year with the same resources, an how to integrate digital technologies into designed. For example, more health care
increase of 18 percent.81 traditional hospital services to reduce costs, services are taking place in outpatient
increase access, and improve patient care settings and in the home (Figure 6), although
As individual exponentials combine with in the future. In the coming decade, many some types of patients—for example,
others, the convergences push technology U.S. and European hospital executives complex cases and the very ill—likely will still
ahead even more quickly.82 Among areas plan to renovate or rebuild outdated require inpatient hospital care.
where exponentials are beginning to help infrastructure.88 89 90 Similarly, increasing
reshape health care: health care demand in emerging economies
•• Synthetic biology. Synthetic biology (an should drive considerable hospital planning
interdisciplinary branch of biology and and construction.
engineering) and the ability to create DNA,
genomics, and proteomics are advancing Figure 6. Health care expenditure by function—average of OECD countries
rapidly. Applications for life sciences
companies are phenomenal, particularly
when considering how these technologies
could be combined with cognitive
computing, AI, and others.83
•• 3D printing and nanotechnology. Once
scientists understand DNA sequencing at
a detailed level, it reaches a point where
they can print actual tissue—there are
people today who have at least one ear
that was printed. Through nanotechnology,
31% 28%
innovators could develop a customized
white blood cell that is specifically designed
to hunt down and attack cancer cells at a 31%
46%
molecular level.84
31% 28%
•• Companion diagnostics. When paired
38% 26%
with targeted therapies, companion 31%
diagnostics (an in-vitro diagnostic device or 46%
an imaging tool that provides information 2001 2015
that is essential for the safe and effective
Hospital inpatient
38% services 26%
use of a corresponding therapeutic
product85), can help physicians to select an
optimal treatment the first time, avoiding Oupatient services and long-term care
the costly and risky practice of trial-and- Hospital inpatient services
error prescribing.86 Other (includes drug spending and government services)
•• Biosensors and trackers. Biosensors Oupatient services and long-term care
included in rapidly shrinking wearables
and medical devices allow consumers Other (includes drug spending and government services)
and clinicians to monitor and track more
aspects of patients’ health, enabling earlier
intervention—and even prevention—in a
way that is much less intrusive to patients’
lives.87 Source: OECD
192018 Global health care outlook l The evolution of smart health care
To learn what a hospital of the future may has 79 digital hospitals, with 90 percent operational insights.95 Facing a continuous,
look like, the Deloitte US Center for Health of them built after 2016. Most of these ever-growing influx of data from internal
Solutions conducted a crowdsourcing digital hospitals are located in economically and external sources, hospitals will come
simulation in May 2017 with experts from undeveloped provinces.93 to depend on cognitive analytics to sort
across the globe. Participants included through and find the most important data
health care CXOs, physician and nurse But there is no need to wait for a building points and trends, analyze the data, and
leaders, public policy leaders, technologists, boom to integrate emerging technologies present actionable insights to clinicians,
and futurists. Their charge was to come into hospital operations. Numerous digital patients, and caregivers in an easy-to-
up with specific use cases for the design of solutions could be implemented now or understand format that seamlessly fits into
digital hospitals globally in 10 years (a period in the near future to improve operational their daily activities.
that offers hospital leaders and boards time efficiencies and clinical outcomes. Hospitals
to prepare). The crowdsourcing simulation could implement remote patient monitoring, Hospital expenditures on analytics are
developed use cases in five categories: telehealth, advanced analytics, and anticipated to reach USD $18.7 billion by
wearables to more fully engage with patients 2020, up from USD $5.8 billion in 2015,
•• Redefined care delivery: Emerging
for improved quality and outcomes. Many as hospitals focus on quality and cost
features including centralized digital
back-office functions—finance, supply reduction.96 But health care lags other
centers to enable decision making,
chain, human resources, and revenue cycle, industries in applying technology and data
continuous clinical monitoring, targeted
among them—could benefit from robotics, analytics to daily activities. Three functional
treatments (such as 3D printing for
advanced analytics, sensors, and automation areas that may need immediate attention:
surgeries), and the use of smaller, portable
to drive cost efficiencies. These functions operational (clinical coding, nursing support),
devices will characterize acute care
also could be digitally improved by using clinical (decision support tools to de-risk
hospitals.
cloud-based enterprise resource planning processes), and back office (HR, payroll,
•• Digital patient experience: Digital and AI (ERP) solutions to make them shorter, faster, supply chain, patient/customer interface).
technologies will help enable on-demand and more responsive.94 And as health care moves outside the
interaction and seamless processes to hospital and into the home and community,
improve patient experience. Where budgets allow, numerous countries providers are expected to need analytics
are investing in tools and programs to to address the challenge of measuring
•• Enhanced talent development: Robotic
digitize their health systems. Many Canadian outcomes in nontraditional settings.
process automation (RPA) and AI will allow
jurisdictions and individual and regional
caregivers to spend more time providing
groups of hospital providers are working No single organization has all the data
care and less time documenting it as well
toward enhanced hospital information required to look at a patient or targeted
as help enhance their development and
systems to allow them to better manage population in a holistic manner. This can
learning.
patient care in the hospital setting. A limit the abilities of the health system that’s
•• Operational efficiencies through number of Mexico’s health systems are using providing the care and the payer that’s
technology: Digital supply chains, wearables, personal devices, and apps for financing the care—directly impacting the
automation, robotics, and next-generation knowledge transfer and communication with patient journey. In the United States, many
interoperability will drive operations physicians and patients. In the Netherlands, health systems and health plans that are
management and back-office efficiencies. patient-centered health care enabled by making value-based care a priority are
e-health solutions is a top agenda item investing in population health analytics to
•• Healing and well-being designs: The
within hospitals and care organizations. enable their strategies.
well-being of patients and staff members—
However, Deloitte research suggests that
with an emphasis on the importance of
most organizations aren’t yet sufficiently
experience in healing—will be important in Data and analytics
focusing on cross-sector collaboration
future hospital designs. Health data is the new health care currency,
approaches that could unlock the synergistic
as organizations increasingly use advanced
benefits of combining the best of what each
Most of these use case concepts are already digital and cognitive technologies to mine
stakeholder has to offer.97
in play. For example, as of early 2017, China vast amounts of data to produce clinical and
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