Business model transformation
Using technology to create virtual capacity and lower costs
The promise of technology is to increase value for consumers and alleviate resource constraints on healthcare entities by creating virtual capacity. Virtual capacity is created by supplementing the labour force and shifting care away from traditional, more costly settings such as hospitals and emergency rooms to clinics and homes, and investing in technologies that reduce costs. Across the globe, countries are increasingly using these new tools.
Implications
Use multiple approaches to get ahead of costs. Investing in digital solutions can avoid additional costs down the line by improving client engagement, reducing human error, producing safer care and optimizing operations by reducing redundant processes. Digital solutions can free up time for human capital to engage in activities that add value. The global shortage of healthcare professionals is expected to rise from 7 million in 2013 to 13 million by 2035.
Invest in patients and their communities to keep costs low. With clinical care representing just 20 percent of an average individual’s health, technology can be used to address the remaining 80 percent, which includes health behaviours, physical environment, and social and economic factors. Collaborate with nontraditional partners to collect the appropriate data and address these social determinants of health. In the US, ProMedica’s screenings and interventions for food insecurity were associated with a 3 percent drop in emergency visits, a 53 percent drop in hospital readmissions and a 4 percent increase in primary care visits.
Layer technology with human support. Consumers prefer to speak to a person when making health decisions. The most used and preferred customer service channel is a customer service agent on the phone, according to PwC’s survey on customer care evolution. When creating digital capacity, factor in where human interaction is valued and invest in technology that supports and enhances such interactions. To get a broad picture of members, payers can invest in flexible data platforms and business intelligence tools that integrate claims data, actuarial analysis, case management and other data.
Call to action for policymakers and regulators
Expect value-based care. Some governments are encouraging value-based investments with social impact bonds, as in Australia and the UK. In the UK, investors who can demonstrate outcomes-based solutions and products are reimbursed by government payers with a premium, lowering the risk for payers and creating incentives to innovate.
Providing value beyond the medical device
As technology has advanced the practice of medicine, medical devices have expanded access, improved care and enhanced convenience. Medical device companies are moving beyond delivering just the device: They are offering services to hospitals, patients, clinicians and more in response to a changing industry that responds to consumer needs and desires.
Implications
Decide whether to offer solutions or discrete products. Established players planning to broaden their service offerings to become solutions-based should consider value-based contracting in specific product segments while monitoring changing customer needs among health systems and other providers. New entrants are creating commercialization models with robust, consumer-centric services. Those who decide not to become solutions companies still should focus on building the customer and patient perspective into product design efforts.
Prepare to enter into value-based contracts and assume risk for outcomes. Medical device manufacturers have a unique opportunity to help healthcare providers fulfil value-based contracts with insurers and government payers. Special attention should be given to navigating potential regulatory and distribution gaps, which can disrupt value chains.
Develop devices with the capability to feed data back to providers and patients. Medical device-makers should integrate their data and insights into physician workflows. Physicians will view devices that deliver data as far more valuable than devices that don’t. Giving patients access to their data will increase patient engagement and yield insights about the patient journey for device-makers.
Call to action for policymakers and regulators
Provide guidance to organisations to navigate data privacy regulations. Regulations such as the European Union’s Data Protection Regulation (GDPR) have the potential to significantly affect how data are shared across regions or countries. Work with organisations to define the data types and protocols to share data and remain compliant.
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