While healthcare, as a whole, continues to evolve in its capabilities and scope, so do its opportunities for accessibility, efficient delivery, cohesiveness between providers and clients, and ultimately value for all involved parties. Though healthcare innovation is still in its infancy, various market trends are driving and shaping healthcare and opening the door for promising mainstream solutions to a myriad of health and wellness challenges in the U.S. and abroad.
Drivers of the Healthcare Market
There are significant drivers and shapers that continue to change the implications of healthcare at large and create demand for innovative solutions. These factors include the following 17 drivers and shapers that act as catalysts and influence the future of healthcare innovation. These factors contribute heavily to marketing and process strategies and tactics, which lead to the company’s differentiation strategy and competitive advantages.
1. Rising Costs
America spends nearly $3.8 trillion a year on health care, approximately 18 percent of the GDP and significantly more than any other country. Health spending is projected to grow at an average rate of 5.8 percent from 2012–2022. Cost controls such as the Affordable Care Act (ACA) are shifting overall liability from care provider to consumer self-care, intervention, and wellness solutions. Moving from Meaningful Use (MU) Stage 1 to MU Stage 2 requires greater patient outreach and engagement with care technologies (Centers for Medicare & Medicaid Services, 2014).
2. Payment Reform
The healthcare system is moving from fee-for-service volume-based reimbursement models to value-based healthcare. Accountable Care Organizations (ACOs) have demonstrated the ability to improve the quality of healthcare and decrease costs. ACOs generated $380M+ in savings after 12 months in operation (Stauffer, 2014).
3. Higher Deductible – Account-Based Plans (HDHP)
Eighty percent of employers with >1k employees offer a single high deductible policy linked to a health savings account for medical expenses. More employers are offering a-la-carte benefit plans based on individual coverage needs, which is driving market attrition for wellness services and early intervention tools (Andrews, 2013).
4. A New Generation of Physicians
The new generation of physicians is tech-savvy. They cannot imagine their lives without mobile devices or constant connectivity. And in school, they were trained to work in teams – unlike their elder colleagues (Pearl, 2014).
5. Internet and Mobile Usage
The number of Internet users is approaching 3 billion worldwide and 7 billion mobile subscriptions were predicted by the end of 2014 (Number of Internet Users, n.d.). Younger consumers embrace technology: mobile first, social sharers, and quantified self.
6. Worker Shortage
According to the World Health Organization (WHO), the world will be short an estimated 12.9 million doctors and nurses across the globe. In the U.S alone, the shortage is projected to reach 45,000 PCPs and a little over 46,000 surgeons and medical specialists. Health and Human Services data indicated 5,800 primary care Health Professional Shortage Areas (HPSAs) and roughly 3,700 mental health HPSAs. Moreover, highly specialized services are not always centrally located (Association of American Medical Colleges (n.d.).
7. Consumer Power
The rise of the Internet, technology, social media, and smart phones has lowered barriers to knowledge and changed the balance of power. Consumers now have the upper hand with more options, more information, and simpler transactions. High patient empowerment is driving Remote Patient Management (RPM) or patient self-management through remote monitoring and personalized feedback (Brody, n.d).
8. Chronic Disease
By 2023, the U.S. is expected to see a 40 percent increase in heart disease and a 50 percent increase in cancer and diabetes. The rise in chronic conditions is creating opportunities for chronic care management, independent living, and caregiver needs (Bush, 2014). Chronic care management is expected to reach $9 billion+ by 2017.
9. Rapidly Aging Population
Twenty percent of the U.S. population will be >65 by 2020 with two billion people over 60 by 2050 (United Nations, 2013). Baby boomers prefer to stay at home rather than spend time in hospitals and mobile technologies are bringing healthcare to these patients.
The consumer wellness and fitness market is predicted to reach $6.5 billion by 2018 (without Apple’s Impact). Research also indicated that 69 percent of Americans used some form of complementary or alternative medicine in the last year. According to the Rand Corporation, in a 2012 study, 92 percent of all employers with >200 employees reported offing onsite wellness programs. Employee wellness programs generally encompass wellness interventions, wellness education, health assessments, and health coaching; however, 85 percent of patients are not receiving “Well Patient” visits.
11. Home Care
In 2012, about 58,500 providers served roughly 8 million people in the U.S (12,200 home health agencies, 3,700 hospices, 15,700 nursing homes, and 22,000 assisted living communities). By 2020, home health and personal care aides are projected to reach more than 1.3 million (Centers for Disease Control and Prevention, 2013). Independent living is expected to reach $1.2 billion in revenue by 2018.
12. Public Investment
Hundreds of billions are being invested in healthcare IT. $2.3 billion was invested into digital health startups in the first half of 2014 alone (Griffith, 2014).
13. Privacy and Security
As more systems for sending and storing patient information are developed, the risk of losing that information or having it stolen rises. With such important data at stake, it is essential for medical networks to employ proper privacy and security measures for telehealth technology (GlobalMed, n.d).
14. CMS Covers Telehealth
Medicare began paying for telehealth services in under-served areas and continues to expand coverage for telemedicine payments. Medicaid was mandated to cover telehealth in many states and private insurance coverage was mandated in 6 states in 2013 and 21 states in 2014, plus D.C. Federal legislation mandated telehealth coverage for military veterans who are 40 miles from a VA hospital or clinic, or waited at least a month for appointment (American Telemedicine Association, n.d.)
CMS recently proposed adding wellness and behavioral health visits to the list of Medicare-reimbursable telehealth activities. Providers also would be paid for telehealth services in rural areas nearer big cities under a geographical expansion in the proposed rule (American Telemedicine Association, n.d.; Kaiser Health News, 2014)
15. Virtual Health Consultations
The number of households using video consultations with physicians will grow from 900,000 in 2013 to 22.6 million in 2018, according to a report from Parks Associates (2014). Parks Associates (2014) added that video consultation revenues will grow from under $100 million in 2013 to $13.7 billion in 2018. Healthcare is being taken into the home, car, and workplace via wireless wearables and mobile technology.
16. Uninsured and Out-of-Pocket
Estimates show that over 41 million individuals were uninsured in 2013. Most of the uninsured are in low-income working families. Due to the ACA, 11 million Americans are projected to gain health insurance coverage, predominantly through either Medicaid or the Health Insurance Marketplaces (U.S. Department of Health & Human Services, 2014).
In 2012, out-of-pocket spending was estimated to have grown 4.1 percent to $320.2 million, but projected to decline by 1.5 percent in 2014 as a result of the ACA’s coverage expansions. While out-of-pocket spending is projected to grow faster over the remainder of the projection period, reaching a peak of 5.6 percent in 2020, the out-of-pocket share of health spending is projected to fall from 11.4 percent in 2012 to 9.1 percent by 2022 (U.S. Department of Health & Human Services, 2014).
17. Digital Health Tools
By 2018, the wireless wearable's market is expected to reach 112 million units (Facts and Statistics on Wearable Technology, n.d.).The digital health revolution is driving a substantial number of consumers to use digital tools to manage their health (Parks Associates, 2014). Remote monitoring and mHealth extends and adds value to telehealth services.
- 38% of consumers looked up health information online
- 27% used their care provider's or insurer’s website
- 26% used a website to make an appointment, check lab results, or manage prescriptions
- 25% used at least one health app
- 22% used a device to track their health patterns
- 22% stored health information electronically
- 20% communicated electronically with a healthcare or health insurance professional
- 13% participated in an online support group
- 6% of consumers in Baby Boomer households reported owning and personally using a digital pedometer or fitness tracker.
- 5% are very likely to buy a fitness tracking device in the next 12 months
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