Shifts in industry landscape: With uncertainty ahead, time to build enterprise resilience

Expect 2018 to be a challenging one for health care organizations. It will be notable for its persistent uncertainty and risk for the US health industry, PwC Health Research Institute’s (HRI) annual report, “Top health industry issues of 2018,” now in its 12th year of publication, predicts.

Many of the issues to be faced will be familiar, spilling over from this year, including the uncertain impact or unresolved status of health and tax reforms. Those could derail the best of corporate business plans. In order to stay ahead of the game, the industry must make strategic investments and focus on greater cross-sector collaboration to come out ahead.

As we begin 2018, collaboration is one of three strategies identified in the report that health organizations and new entrants to the field should consider in these times of uncertainty.

It is clear that many of the major challenges in health care will not be solved by individual organizations. Karen Young, US Pharmaceuticals and Life Sciences Sector leader at PwC, told BioWorld Insight that “cross-sector collaboration is certainly going to become more important and there many examples to demonstrate that innovation is accelerated when groups work together.”

Changes are happening rapidly and therefore stakeholders cannot afford to wait for them to occur and then react. They must be proactive and think strategically and invest to create efficiencies.

That is why the implementation of artificial intelligence (AI) is gaining momentum in the health care sector. “There is a great deal of excitement in the technology and ultimately it will have a big impact on cost efficiencies,” Young explained.

There will be many areas where AI will disrupt existing practices. For example, health businesses are now using it to automate decision-making, create financial and tax reporting efficiencies, automate parts of their supply chains, or streamline regulatory compliance functions, the report says.

Health care providers can also employ AI tools to help speed up routine analysis of pathology or radiology results and free up staff to see more patients and realize greater revenues.

Artificial intelligence and the accompanying analytics are also advancing to the point where those tools promise to improve the traditional drug target selection and R&D process.

Citing the results from their 2017 Global Digital IQ Survey, the report’s authors note that although three-quarters of health executives plan to invest in AI over the next three years, many say they lack the ability to implement it. In fact, only 20 percent of respondents to the survey said they possessed the technology to succeed with AI. Therefore, companies need to consider acquiring those capabilities through partnering or hiring experts in AI.

industry trends

Drawing from their analyzes from surveys of US consumers, provider, insurer and pharmaceutical executives, in-depth interviews with industry leaders and examination of data and policy trends, the PwC HRI has drawn up what it sees as the 12 top trends that are most likely to impact and shape the industry next year.

A quick fix to the report’s no. 1 issue – the opioid crisis – is unlikely. With opioid overdoses being the leading cause of death for US adults younger than 50, solutions to the problem will be complex and, as a result, too big to solve by only one player, the report says. “There is a role for everyone across the health care landscape, from prescribers, to payers, to the pharmaceutical industry, in order to reverse this trend.”

In 2018, the report predicts that the health care industry organizations will build on their strengths and collaborate to prevent opioid misuse, improve treatments for chronic pain, and support patients struggling to recover from opioid addiction.

The crisis is certainly a contributor to escalating health care costs. According to new data from the Centers on Medicare and Medicaid Services, US health care spending increased 4.3 percent to reach $3.3 trillion, or $10,348 per person in 2016. The overall share of gross domestic product (GDP) related to health care spending was 17.9 percent in 2016, up from 17.7 percent in 2015.

Although the US spends more on health care per capita annually than any other nation, it lags in outcomes. The report identifies social determinants as its second major issue. With the industry transitioning to value-based care, health care organizations need to determine how to address the social factors that affect health. That means “thinking beyond the four walls of the hospital and looking holistically at the full profile of a patient, beyond their specific health issue. Greater attention to social factors can affect care utilization patterns, strengthen prevention, and shift services from higher-cost emergency rooms and hospitals to lower-cost primary care settings.”

The internet of things

Cybersecurity is another top issue identified in the report. Highly publicized breaches this year are signaling that companies going forward should treat cybersecurity incidents as a “non-natural” disaster, and invest more in planning, defensive measures and personnel.

It continues to be a top agenda item in the boardrooms of organizations and companies, Young noted, particularly as the industry becomes more data driven.

Another issue cited in the report that is data related is real-world evidence, which will remain a growing challenge for the pharma sector.

The report notes that 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. As the 21st 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 those data to support new indications. As a result, there will be new opportunities opening up to use those data, leading to faster FDA approvals.

Real-world data are already being collected from wearables and through electronic health records (EHRs) and “those companies wishing to seize new opportunities and enjoy the resulting efficiencies will have to decide whether to build, acquire or outsource these capabilities,” according to the report.

What’s notable year over year is just how fast changes are taking place in the health care sector, Young commented. That means companies will need to be more nimble and innovative than they have been previously to continue to succeed in 2018 and beyond.

For more perspective on trends and metrics for innovative pharma and what to watch out for in 2018, especially in dealmaking, join Clarivate Analytics experts Laura Vitez and Jamie Munro for “Deals and Portfolios: State of the Industry 2017.” Choose from among four hour-long sessions held adjacent to the JP Morgan Healthcare Conference 2018 in San Francisco next week: JPMDealsReview .