By Reenita Das, Forbes, Contributor
The Top Trends Shaping the World of Healthcare
JANUARY 22, 2015 – Every year I sit down with our team of healthcare futurists to carefully choose the right cards and place our bets on what we can expect to see in the coming year. It’s always both a terrifying and exciting experience because at the end of the year, you can always go back to validate what trends our team was able to key in on and the degree it shaped the events of that year, and, yes, even identify what might have caught us by surprise.
Without getting into a deep retrospective, unequivocally the rate and scale to which the Ebola pandemic spread was an unforeseen game-changer for 2014. In terms of predictions that came to pass, our team really was honed in on some of the major players that would become involved in mega multi-billion dollar M&A transactions, a trend that should continue into 2015. However, I believe there is plenty of time to look back at 2014. But for now, onwards into 2015. Here’s what you can expect this year.
- Landslide Acceptance of Private Exchanges
We expect growth of nearly 300% for 2015 in terms of the number of enrollees who will select their health plans through private healthcare exchanges. While Healthcare.gov and the clunky roll out of the public insurance exchange got all the attention in 2014, the real action is in the private exchanges. While reports of employers dropping healthcare benefits for their employees en masse following approval of the Affordable Care Act were more hype than reality, businesses are definitely looking at making significant changes to the types of plans and defined contributions they make available to their employees. Negotiating options through private exchanges is fast becoming one of their primary means to accomplish that goal. Serving approximately 2.5 million enrollees in 2014, according to the Kaiser Family Foundation, many more businesses are expected to buy into the model over the coming years.
- Employers Incentivizing mHealth
As a carrot on the other end of the stick that is employers pushing a greater degree of the healthcare cost burden to its employees, we project as many as 70-80% of large businesses will soon or already provide employees vouchers or discounts for mHealth products and service platforms by the end of 2015. The obvious rationale behind these initiatives is that employers are hoping their employees will have greater awareness about their health and take more preventative measures to avoid more acute outcomes. For example, in 2014, energy giant BP America purchased 25,000 Fitbit devices for North American employees in order to encourage a healthier lifestyle.
- Consumers Spending Out of Pocket on Health & Wellness
Just this week (January 20), the FDA put out new guidance on where it believes the delineation exists between clinical wearables that fall under the regulatory scrutiny of its agency and those geared to more general well being and healthy living. It’s a preliminary guidance report that is not binding in its statements, but we believe this preliminary release speaks to the agency’s expectations for the explosion of new wearables that will be launched and used by consumers in 2015. We project consumer out-of-pocket spending on non-clinical health, wellness, and self-disease management technologies and services to grow by 60-70% from 2014. High-profile launches like the Apple AAPL +0.47% Watch and its hyped Health Kit are among a confluence of factors that make 2015 the year wearables and mHealth-centric applications reach significant mass.
- Boom or Bust for Wearables
While seemingly contradictory to our previous prediction, we see the market as being over saturated with me-too products with similar functionalities, lacking a distinctive value proposition to the consumer. As our analysts walked the halls of the consumer electronics show (CES) this past month, they were amazed at the number of product developers with wrist-wearable products that tracked similar metrics and lacked a distinctive value proposition for consumers. Traditional dynamics of consumer markets dictate that the market will contract over the next year, settling on only a handful of developers with distinct feature sets and capable of catering to defined user segments. In context of our previous prediction, what we are saying is that there will be more business for fewer companies. In either case, smart investors know the real money is in the apps ecosystem.
- E-commerce Giants Take First Steps in Healthcare
In their quest to be everything to everyone, Alibaba and Amazon have truly disrupted the traditional business model for a wide spectrum of markets and industries. While they currently have some minor services geared toward healthcare customers, we believe that 2015 is the year both companies introduce dedicated services around healthcare. Capable of servicing both institutional organizations as well as individual customers, the traditional healthcare supply chain is about to witness a new breed of competition. In a more patient-centric healthcare model, it is possible these types of retailers are better suited to meet the needs of customers.
- Healthcare Hacked
It is almost inevitable that a high-profile healthcare stakeholder will experience a significant data breach on the scale of high-profile attacks we have witnessed by Target TGT -0.15% and Sony in recent history. Industry watch groups have long pointed out that many hospital networks continue to rely on outdated software systems, have less than robust redundancies in their security measures, and lack a coordinated strategy across all its departments and personnel. The influx of new mobile technologies and connected medical devices are only further straining the limits of existing security measures. According to the Identify Theft Resource Center, attacks on hospitals and other healthcare organizations accounted for 42.4 % of all major data breaches in 2014. The Department of Health and Human Services estimates that the top breaches could have affected nearly 7.4 million individuals in some form or another. Despite these red flags, either due to bureaucracy or costs, many care networks are highly susceptible to outside attacks.
- Cognitive Analytics Becomes Commercial
Healthcare analytics and cognitive computing markets are expected to grow by 27% in 2015 with the commercial launch of several SaaS modules that, to date, had been only in academic or pilot use.Issues preventing prior use such as cost, product maturity, scalability, and demonstrated track record are now at a point enabling commercialization. The most high-profile participant is, of course, IBM, which in 2014 announced access to customers of the Watson analytics engine for specific B2B initiatives. The ability to process natural language and unstructured data offers a functionality to healthcare analytics that is currently not addressed by more dedicated HCIT vendors.
- Opportunity Meets Promise in India
India will continue to see growth in private-sector healthcare delivery despite investments made by the government in public health, as there is an under served population for which the government needs to develop healthcare access. With the largest CAGR expected in HC expenditure up to 2020 at 19.8 percent, India is expected to become the third-largest in APAC in terms of total HC expenditure; the private sector is expected to continue to increase share from the current 65% as more investments pour into private primary care services, diagnostic services and hospitals from within the country and international investments.
- Chinese Competitors Stake Claims in Global Markets
By offering capabilities and functionalities at price points 20-30% lower than their other global competitors, Chinese medical technology and healthcare IT manufacturers establish a significant footprint in fast-growing emerging markets. Chinese manufacturers of medical imaging and other capital equipment have already begun to chip away at the share of larger multinational corporations based in the US, Europe, and Japan. Similarly, it’s is projected China will lead the tech disruption in APAC, with its share of the APAC healthcare IT market forecasted to grow from 21% in 2013 to 32% by 2020.
Undoubtedly, in addition to these predictions, there are a number of other key trends and topics that we will be keeping our eyes on in 2015. I’ll be discussing these and other during an expert panel webinar that might interest you: “2015 Healthcare Industry Outlook.” Here is the info to register: http://bit.ly/1yAT4NN
I’d love to hear what you are expecting for 2015. Maybe around this time in 2016 we can get together and compare notes to see how we did.
The article was written with contribution from Frost & Sullivan Advanced Medical Technologies Principal Analyst Venkat Rajan.