Future of Healthcare - Growth Consulting - Frost & Sullivan

Future of HealthcareA Frost & Sullivan White PaperBy Konstantinos Nikolopoulos, Director,Health Economics & Future Strategy Group,Frost & Sullivan

TABLE OFCONTENTSTABLE OF CONTENTS .......................................................................... 2OVERVIEW ............................................................................................. 3PEOPLE .................................................................................................. 3Demographics ................................................................................. 3Disease Prevalence .......................................................................... 4Expanding Middle Class .................................................................... 4Power Patients ................................................................................ 4ECONOMICS .......................................................................................... 4Cost of Healthcare Unsustainable ............................................... 4Shifting Shares of World GDP – China/India Emerging ...................... 4Changing the Financial Gravity of Health Systems............................. 5GLOBALIZATION .................................................................................. 5Health Access in Developing Markets ........................................... 5Medical Tourism .................................................................... 5Risk of Pandemics .................................................................. 5Immigration Stresses Health Structures ........................................ 5MOLECULAR & PERSONALISED MEDICINE ........................................ 6In-Silico Drug Development ...................................................... 6Individualized & Targeted Therapy................................................ 6Personalized Care .................................................................. 6PROCESSES ............................................................................................ 6Changing Health Service Frameworks .......................................... 6Increased Focus on Wellness...................................................... 6Health for All Strategies .......................................................... 7TECHNOLOGY........................................................................................ 7Rapid Inroads of Information Technology Within Healthcare ................ 7eHealth and mHealth Emerge .................................................... 7Connected “Always on” Medical Devices ....................................... 7Innovation across the Entire Technology Value Chain ........................ 7WAY FORWARD ..................................................................................... 8ABOUT THE HEALTH ECONOMICS & FUTURE STRATEGY GROUP .. 8ABOUT FROST & SULLIVAN................................................................. 92 Frost & Sullivan

There are currently 1.5 billion people in the world between the age group12-24 out ofwhich over 85% are in the developing world. It is estimated that 22% of the worldpopulation would be over 60 years by 2050. The population in the United Kingdom isestimated to be around 65 million by 2021 out of which around 23% will be ofpensionable age and 2.5% would be over 85 years old. Many European regions willexperience population growth owing to increased inward migration and naturalpopulation growth. Central and eastern European regions will face a decline inpopulation due to high outward migration and low fertility rates.Disease PrevalenceThe balance of ratios between the young and old population is shifting. Chronicdiseases, age associated ailments and dual burden of diseases are on a significant rise.It is estimated that people aged over 60 years use 4-5 times more healthcare servicesthan younger people. Chronic diseases account for more than 60% of all health carespending.Expanding Middle ClassThe balance ofratios between theyoung and oldpopulation isshifting. Chronicdiseases, ageassociated ailmentsand dual burden ofdiseases are on asignificant rise.We are in the middle of an unprecedented explosion in the ‘world middle class’, but thepace will pick up significantly further. By 2030, around two billion new people may jointhe world middle class. These shifts could be a significant influence on spendingpatterns, resource use, and environmental and political pressures.Power PatientsPatients become healthcare Kings and Queens and consumerism is putting economicpurchasing power and decision-making in the hands of patients. The continueddevelopment of consumer culture and the growing availability of information will leadto increased public expectations about how care is delivered and the quality of service.Due to the internet and other media coverage, patients are becoming more informedabout healthcare issues allowing them to take more responsibility for their own health.This calls for design of customized healthcare products and services such as home care.ECONOMICSCost of Healthcare UnsustainableBy 2020, if nothing changes, healthcare spending will significantly increase, accounting to21% of U.S. GDP and 16% of GDP in other OECD countries. Chronic diseasemanagement will be a cornerstone of future health care. Health economics dictate ashift in spending patterns – away from treating and towards predicting, diagnosing andmonitoring.Shifting Shares of World GDP – China/India EmergingOver the last two decades, the global economy has witnessed a shift in shares of worldGDP towards emerging markets including China and India. It is estimated that in 2035China and India would account to a global GDP share of 27% and 15% respectively.Frost & Sullivan 4

Changing the Financial Gravity of Health SystemsShift in investment patterns from treating chronically ill end-of-life patients topreventive care for healthy or risk susceptible patients. Reduction of administrive costsand clinical wastage are prime areas of focus and appropriate investments are made toensure cost containment and enhance efficiencies.GLOBALIZATIONHealth Access in Developing MarketsHealth coverage indeveloping marketsis on the rise thusincreasing access tocare.Health coverage in developing markets is on the rise thus increasing access to care.Cost savings and efficiency gains from locating operations in emerging economies is theway forward and there are tremendous growth opportunities in underservedpopulations of rapidly growing markets.Medical TourismGlobal medical tourism markets are showing tremendous promise. Initially cosmeticsurgeries and other elective procedures were the services medical tourism used tocater to and over time, wide range of procedures including heart valve replacement,hip/knee replacement, cancer, transplants, etc. fall into the medical tourism portfolio. Itis observed that around 870,000 Americans travelled overseas for surgery in 2010 andthe numbers are expected to grow over 1.5 million by 2012. A bit of rivalry from topforeign facilities may introduce transparency and price competition into an inefficientsystem riddled with oligopolies and perverse incentives.Risk of PandemicsIt is predicted that we are likely to encounter two to three major pandemics in the nexttwo decades. Pandemics would start in regions with low public health and rapidlyspread globally demanding quick response. SARS, Avian flu, Swine flu, over the recentpast have created major concerns at an international level. The pace at which thesepandemics can spread around the world has been significantly accelerated by increasingcross country travel. These aspects contribute to a major global threat and it calls forrobust identification and management system that efficiently identifies the onset, tracksthe progress and reports the trends along with other control measures such asoutreach, medication and support.Immigration Stresses Health StructuresImmigration especially illegal immigrants are a burden to a nation’s healthcare systembecause of uncompensated care costs. It is estimated that U.S. hospitals write-off morethan $2 billion per year in uncompensated costs. It is estimated that U.S. hospitalsFrost & Sullivan 5

write-off more than $2 billion per year in uncompensated costs. According to the U.SCongress, it is noted that hospitals in counties along the Mexican border provided $190million in uncompensated care to illegal immigrants. The high immigration trendsobserved and the illegal routes associated with it stress the healthcare systems to agreat extent.MOLECULAR & PERSONALISED MEDICINEIn-Silico Drug DevelopmentIn-silico technologies predict failure in drug development and prevent wasting time,money and resources. Late-stage (phase III or post approval) drug failures off late havebecome a scenario of the past with In-silico drug development gaining prominence at afast pace.Wellness is a keyarea of increasedfocus, and is drivinga shift fromremedial topredictive andpreventative care.Individualized and Targeted TherapyMolecular Diagnostics and disease sub-typing would be the future line of therapy anddrug choice based on comprehensive molecular profiling of individuals is gainingprominence.Personalized CareThere is a shift towards integrated framework of longitudinal data on individual healthstatus. There is a compelling need for real time remote health status monitoring therebytracking patient’s health status periodically to achieve high degrees of clinicalexcellence. Healthcare delivery models are transitioning towards disease predictionand pre-emption programs thereby controlling long-terms costs associated withtreatments.PROCESSESChanging Health Service FrameworksEarly identification and prevention of diseases and access to new forms of care deliveryto improve patient knowledge enables shift in outcomes of a health system. Reducingadministrative costs and clinical wastage would be a prominent aspect of the new caredelivery setting.Increased Focus on WellnessWellness is a key area of increased focus, and is driving a shift from remedial topredictive and preventative care. Benefits design of a health system are moving towardsincreasing coverage for those services which prevent disease and improve health overlong term.Frost & Sullivan 6

Health for all StrategiesAccording to the WHO, Out-of-pocket payments in healthcare push more than 100million people into poverty every year in countries that heavily rely on this mode ofhealthcare financing. Governments of virtually all countries are striving towardsachieving health for all in varying degrees. These initiatives include expansion ofinfrastructure base, alterations in service delivery approach and so on.TECHNOLOGYRapid Inroads of Information Technology within HealthcareRiding on a wave of technical innovations, healthcare will change from an acute “find itand fix it” system to a “wellness tracking” system. Developments in information andbiomedical technology in the field of sensors and remote monitoring will mean thatbasic diagnostics, interventions, rehabilitations and nursing care will move out ofhospitals into home and community settings. 80% of healthcare is currently provided inor near the homes and technology would continue to push care delivery in thisdirection.Strong foundationsrequired to fosterwidespread adaptationof e-health models,medical technologiesindustry has theopportunity to buildand shape the future.eHealth and mHealth EmergeStrong foundations required to foster widespread adaptation of e-health models,medical technologies industry has the opportunity to build and shape the future. Videoconferencing will be developed at a number of levels. They could range between the“home and the clinical worker” to “primary and specialist care”. ‘Store and forward’systems such as emailing text, images and sound recordings will allow medicalinformation to be sent from primary to specialist care for opinion.Connected “Always on” Medical DevicesRemote monitoring of care using information and biomedical sensor technologies willprovide information about the patient’s condition and allow patients to self-administermedication using automated drug delivery systems.Innovation Across the Entire Technology Value ChainConvergence in healthcare enables personalisation, targeted medicines, new drugdelivery mechanisms, virtual patient monitoring tools, allowing a preventative approachto healthcare. State of the art healthcare infrastructure with system integrations wouldresult in regional/country-wide connectivity and would eliminate inefficiencies and costwastages out of the system.Frost & Sullivan 7

WAY FORWARDWith smarter drugs, virtual hospitals and cyber documents, the healthcare industry ispoised for a radical change with information technology taking the forefront inresearch & development, diagnostics and monitoring. In the future, diagnostics willbecome less invasive, preventative, and image based and medicines will be marketed asmolecular and personalized drug cocktails.Frost & Sullivan believes that the uncertainty of these trends and developments doesnot preclude the ability – or the necessity – to explore them in a strategicallymeaningful way. Thinking proactively about the future of Healthcare will informdecisions today and lay the groundwork for a competitive advantage tomorrow.We would be more than happy to discuss any of this further and explore ways we canwork together in realising your preferred future.ABOUT THE HEALTH ECONOMICS & FUTURE STRATEGY GROUPThe Frost & Sullivan Health Economics & Future Strategy Group provides fact-basedstrategic support for senior executives on critical healthcare issues and globalmegatrends. The group brings together partners, principal consultants, strategists andhealth economists to provide advice on current and future developments inhealthcare, assist companies with their strategic planning and strengthen theirvisionary power.Frost & Sullivan 8

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