The U.S. population grew by only 7.4 percent over the past decade, the smallest increase since the 1930s, the Census Bureau reported. What will be the impact on innovation and entrepreneurship, and , more importantly to you, the impact on your innovation initiative or product?
Like economic change, sick care change happens in long term and short term cycles. We are experiencing a long term cycle that is running coincident with other demographic, economic and technologic ones.
They include :
Population (aging population, dropping fertility rates and immigration)
Democratization of technology
Transformation from sick care to prevention and wellness
At the same time, according to a recent research report, short cycle factors are driving transformation:
- 81% of consumers in the U.S. are dissatisfied with their healthcare experience, according to a study conducted by Prophet and GE Healthcare Camden Group. Rising costs for prescription drugs and long wait times at the doctor’s office are just a couple consumer grievances. Here are 5 reasons why patients are dissatisfied with sickcare practices.
Increased Cost Sharing
Over just the past five years, out-of-pocket medical expenses have doubled for employees. In turn, a 2015 study by PwC found that the number of consumers declining medical care has risen to 40%. And when skeptical consumers turn down medical services, their employers and healthcare companies both take a hit. Nationwide out-of-pocket spending jumped 10% in 2021. Expect that growth to continue through 2026
Skyrocketing Prescription Drug Costs
- A 2013 report from CVS Health estimated that specialty drug costs would quadruple from $87 billion to $420 billion by the year 2020. These skyrocketing costs could ultimately have a domino effect. If consumers can’t afford the drugs, they won’t buy them, which means facilities won’t carry them. At the end of the chain, you have pharmaceutical companies limiting how much they can spend on research and development of new drugs.
- 43 million Americans have unpaid medical debt on their credit reports, and over half of debt collections are related to medical expenses, according to the Consumer Financial Protection Bureau. Between medical facilities, doctors, insurers, and pharmaceutical companies, healthcare billing quickly gets overly complicated. In many cases, consumers simply don’t understand who they owe and for what.
Access and Digital Transformation
- People growing up in the digital age expect convenience. You can hail an Uber, order food for delivery, and book a hotel room all from your smartphone. But the patient experience hasn’t caught up with these consumer expectations. In major U.S. cities, for example, the average wait time for an appointment is 18.5 days.
- The Affordable Care Act of 2010 marked a turning point in the overall industry by opening the floodgates to a whole host of new technology companies. Since 2010, health technology start-ups have raised $7.65 billion from VC firms. While these new entrants are driving many healthcare companies to rethink and retool their businesses, no one should wait for the threat of disruption to start innovating.
- All of these trends and drivers are opportunities for physician and non-physician entrepreneurs to add user defined value through the deployment of innovation in many different ways serving in many different roles. For physician entrepreneurs, most do not require creating a business.
COVID Induced Business Model Changes
Innovation may drive outpaced growth in three categories: segments that are anticipated to rebound from poor performance over recent years, segments that benefit from shifting care patterns that result directly from COVID-19, and segments where growth was expected pre-COVID-19 and remain largely unaffected by the pandemic. For the payer vertical, we estimate profit pools in Medicaid will likely increase by more than 10 percent per annum from 2019 to 2022 as a result of increased enrollment and normalized margins following historical lows. In the provider vertical, the rapid acceleration in the use of telehealth and other virtual care options spurred by COVID-19 could continue.5 Growth is expected across a range of sub-segments in the services and technology vertical, as specialized players are able to provide services at scale (for example, software and platforms and data and analytics). Specialty pharmacy is another area where strong growth in profit pools is likely, with between 5 and 10 percent compound annual growth rate (CAGR) expected in infusion services and hospital-owned specialty pharmacy sub-segments.
McKinsey sees seeds being sown of a similar acceleration in healthcare during the COVID-19 era. As US healthcare leaders set the direction for their organizations, six trends stand out.
Developments today promise to take things an exciting step further. Here are some of the most fascinating examples of health technology that may well shape the medical industry of the future.
Others are low trust digital soup and the quest for the virtual health whole product solution, medical education reform, the growing iniquity of inequity and the growth of Sickcare, Inc driven by revenue targets and new business models by BIG TECH, BIG RETAIL and BIG MEDIA companies.
Those that embrace the opportunities will ride the wave until the next ones force them to do it again. Those that don’t will be under water.
Arlen Meyers, MD, MBA is the President and CEO of the Society of Physician Entrepreneurs