A Year for Building Resilience as Uncertainty Persists: PwC's Health Research Institute's Top Health Industry Issues of 2018

NEW YORK, Dec. 12, 2017 /PRNewswire/ -- According to PwC's Health Research Institute (HRI), 2018 will be distinguished by persistent uncertainty and risk for the US health industry. 2018 is likely to mirror 2017 - a year marked by raucous debates over health and tax reform and a series of crises triggered by natural disasters - in terms of volatility. To adapt to these challenges, health organizations should consider seeking greater cross-sector collaboration, fresh strategic investments and new efficiencies to build enterprise resilience.

In its annual report, "Top health industry issues of 2018," released today, PwC's HRI lists the 12 trends most likely to shape the industry next year. HRI developed its list of a dozen top issues through analyses of surveys of US consumers, provider, insurer and pharmaceutical executives, in-depth interviews with industry leaders and examination of data and policy trends. HRI's report identifies three strategies traditional health organizations and new entrants should consider in these uncertain times:

• Cross-sector collaboration: The biggest challenges in healthcare cannot be solved by working in siloes. In order to tackle complex challenges, industry stakeholders must break down barriers and work together with an eye on what's best for the ultimate end user: patients. Key challenges in 2018 include stemming the tide of opioid abuse and overdoses, the need for greater attention to the social determinants of health, state efforts to address rising healthcare costs through pricing and transparency initiatives and natural disasters that can wreak havoc on entire healthcare systems.
  
  
• Strategic investments: Stakeholders must be proactive and think strategically about how the market is changing and where to invest now ahead of potential disruptions. Key areas of investment in 2018 include increasing uptake of Medicare Advantage, continued scenario planning in preparation for healthcare reform, bolstering protection against cybersecurity attacks and improving patient experience in order to change behavior and improve health outcomes.
  
  
• Creating efficiency: In 2018, the healthcare industry will step up its pursuit of efficiency to improve performance and offset risks. Efficiency can be achieved through several key areas: harnessing artificial intelligence to streamline decision making and administrative tasks, pressing middlemen such as pharmacy benefit managers (PBMs) and wholesalers to prove their value, expanding use of real-world evidence to cut clinical development costs while bringing new drugs to market faster and rethinking business models and supply chains in light of new tax reform efforts.

"In year two of the Trump administration, stakeholders cannot hold back and take a 'wait and see' approach," said Kelly Barnes, PwC US Health Industries and Global Health Industries Consulting Leader. "They need to lean into the changes and proactively consider key areas for investment, forge partnerships and pursue efficiencies that enable the delivery of better healthcare to all. Companies that look beyond the daily news cycle churn and social media feeds to focus on their customers while remaining nimble in the face of change are most likely to succeed in 2018."

Additional details on the top 12 business issues that HRI identified include:

Issue #1: The healthcare industry tackles the opioid crisis

• Opioid overdoses are now the leading cause of death for US adults younger than 50. This is a phenomenon too big to solve by only one player – there is a role for everyone across the healthcare landscape, from prescribers, to payers, to the pharmaceutical industry, in order to reverse this trend.

Issue #2: Social determinants come to the forefront

• The US spends more on healthcare per capita per year than any other nation, but lags in outcomes. To improve health while saving money, the industry needs to expand the borders of healthcare. This means thinking beyond the four walls of the hospital and looking holistically at the full profile of a patient, beyond their specific health issue.

Issue #3: Price transparency moves to the statehouse

• With no clear legislative path for federal action on health reform, states are starting to take matters into their own hands. Over 30 states are now considering legislation that would directly control drug prices and shine a light on cost changes. It is important to watch what happens at the state level, as past state healthcare reform efforts have been brought to the national stage.

Issue #4: Natural disasters create devastation that lasts long after the event passes

• Natural disasters such as hurricanes and wildfires can wreak havoc on health systems, manufacturing supply chains, and financial operations both in the short and long-term. Health systems and pharmaceutical companies who conduct proactive scenario planning can increase the pace of recovery and avoid making premature decisions that could do harm in the long-term.

Issue #5: Medicare Advantage swells in 2018

• Medicare Advantage is projected to cover nearly 21 million people in 2018, a 5% increase over 2017, providing a new competitive opportunity for health insurers. However, many eligible consumers don't know these plans exist, so insurers must work to raise awareness of options, and tailor those options to best meet patient needs.

Issue #6: Health reform isn't over, it's just more complicated

• While the chance to repeal and replace the Affordable Care Act (ACA) through a single piece of legislation may be dead, the Republican party will likely continue to pursue health reform in 2018 through a more fragmented approach. 2018 will likely bring continued efforts to reduce and cap federal Medicaid spending, expand access to lower-premium health insurance, loosen ACA consumer protections, soften the employer and individual mandates and repeal ACA taxes and fees.

Issue #7: Securing the internet of things

• Following a year marked by major, industry wide cybersecurity breaches and a 525% increase in medical device cybersecurity vulnerabilities reported by the government, hospitals must take quick, decisive action to maintain data privacy, secure the thousands of connected medical devices on their networks and protect patients. Companies should treat cybersecurity incidents as a "non-natural" disaster, and invest more in planning, defensive measures and personnel.

Issue #8: Patient experience as a priority and not just a patient portal

• Today's consumer is used to sophisticated shopping experiences, in which retailers harness consumer information to tailor how they interact with customers. As the healthcare industry turns toward paying more for value instead of volume, health companies will need to take this same approach and make strategic investments to improve patient experience.

Issue #9: Meet your new coworker, artificial intelligence

• Utilizing artificial intelligence (AI) could help put the human touch back into health by reducing bureaucracy and administrative duties that can take time away from personalized care. Companies are bringing in AI to make administrative tasks a lot quicker, such as screening drug candidates, streamlining finance processes, adverse event reporting and more.

Issue #10: Healthcare's endangered middlemen

• Under increased scrutiny, intermediaries such as PBMs and wholesalers must prove value and success in creating efficiencies or risk losing their place in the supply chain. To prove their worth and prevent having their businesses disrupted by new entrants such as Amazon, intermediaries must evolve to be more than just a pass-through serving a contracting function, by increasing price transparency and taking responsibility for more of the value chain.

Issue #11: Real-world evidence a growing challenge for pharma

• Changes at the FDA will prompt pharmaceutical and life sciences companies to adjust their approach to collecting and using real-world data gathered outside of randomized controlled trials, something that could potentially save the system millions of dollars. As the 21^st Century Cures Act takes effect, the FDA will be required to consider additional uses of real-world evidence for drugs and medical devices, including incorporating this data to support new indications.

Issue #12: Tax reform moves forward

• Changes such as a corporate tax rate reduction and a shift to a territorial system will require new strategies from health organizations, and may demand rethinking of business models and supply chains.

For the full report and graphics illustrating each issue, visit: https://www.pwc.com/us/en/health-industries/top-health-industry-issues.html

About PwC's Health Research Institute (HRI)
PwC's Health Research Institute (www.pwc.com/hri) provides new intelligence, perspectives and analysis on trends affecting all health-related industries. The Health Research Institute helps executive decision makers navigate change through primary research and collaborative exchange. Its views are shaped by a network of professionals with executive and day-to-day experience in the health industry. HRI research is independent and not sponsored by businesses, government or other institutions.

About PwC's Health Industries Group
PwC's Health Industries Group (www.pwc.com/us/healthindustries) 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. Follow PwC Health Industries at @PwCHealth.

About PwC US
At PwC US, our purpose is to build trust in society and solve important problems. We're a network of firms in 157 countries with more than 223,000 people who are committed to delivering quality in assurance, advisory and tax services. Find out more and tell us what matters to you by visiting us at www.pwc.com/US.

© 2017 PwC. All rights reserved. PwC refers to the US member firm or one of its subsidiaries or affiliates, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details.

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SOURCE PwC US

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