2018 Global Health Care Sector Outlook

2018 Global health care outlook The evolution of smart health care Proposal title goes here | Section title goes here

2018 Global health care outlook l The evolution of smart health care

Overview and outlook 03 What exactly does smart health care look like? 04 Global health care sector issues in 2018 07 Strategically moving from volume to value 11 Responding to health policy and complex regulations 16 Investing in exponential technologies to reduce costs, increase access, and improve care 18 Engaging with consumers and improving the patient experience 22 Shaping the workforce of the future 25 Appendix 27 Endnotes 28 Contacts 31

2 2018 Global health care outlook l The evolution of smart health care Overview and outlook

With quality, outcomes, and value the watchwords for health care in the 21st century, sector stakeholders around the globe are looking for innovative, cost-effective ways to deliver patient-centered, technology- enabled “smart” health care, both inside and outside hospital walls.

3 What exactly does smart health care look like?

Appropriate treatments are delivered at the appropriate time, in the appropriate place, for the appropriate patient

Clinicians use technology to more accurately diagnose and treat illness and deliver care

All care delivery stakeholders across the ecosystem effectively and efficiently communicate and use information

Patient data is in one, easily accessible place

The correct individuals do the correct work (e.g., nurses handle patient care, not administrative tasks)

Patients are informed and actively involved in their treatment plan

New, cost-effective delivery models bring health care to places and people that don’t have it

Efficiency improves; waste declines

4 2018 Global health care outlook l The evolution of smart health care

Evolving policies, processes, and capabilities home and outpatient ambulatory facilities. systems. Clinicians may, therefore, have to deliver smart health care will not be Members of the health care delivery chain difficulty coordinating appointments and easy, given global health care’s magnitude often work in multiple locations (hospital, procedures, sharing test results, and and complexity. For example, there could doctor’s office, retail medical clinic, involving patients in their treatment plan. In be significant logistical and technology diagnostics lab). Patients may reside in a obstacles to overcome. More and more city or even a country away from their care other words, care providers may be working inpatient services are being pushed to providers. And health records frequently hard but they are not necessarily working non-traditional care settings such as the reside in different formats and on disparate “smart.”

Global health care spending is projected to increase at an annual rate of 4.1% in 2017-2021, up from just 1.3% in 2012-2016. Aging and increasing populations, developing market expansion, advances in medical treatments, and rising labor costs will drive spending growth.1

Per-person health care spending will continue to vary widely, ranging from $11,356 in the United States to just $53 in Pakistan in 2021.2

Life expectancy is estimated to increase by more than a full year between 2016 and 2021—from 73 to 74.1 years— bringing the number of people aged over 65 to more than 656 million, or 11.5% of the total population. Much of the gain in life expectancy globally is due to falling infant mortality rates.3

Although the battle against communicable diseases is far from over, countries are making headway through improved sanitation, better living conditions, and wider access to health care and vaccinations. The estimated number of malaria deaths worldwide fell to 429,000 in 2015, down from nearly 1 million in 2000.4 The number of AIDS-related deaths dropped from 2.3 million in 2005 to an estimated 1.1 million in 2015, due largely to the successful rollout of treatment.5

Rapid urbanization, sedentary lifestyles, changing diets, and rising obesity levels are fueling an increase in chronic diseases—most prominently, cancer, heart disease, and diabetes—even in developing markets.6 China and India have the largest number of diabetes sufferers in the world, at around114 million and 69 million, respectively. Globally, the number is expected to rise from the current 415 million to 642 million by 2040.7

Someone develops dementia every three seconds. In 2017, an estimated 50 million people worldwide live with dementia—a number that is predicted to double every 20 years.8 By 2018, dementia will become a trillion-dollar disease.9

5 2018 Global health care outlook l The evolution of smart health care

Independently and collectively, health care stakeholders in 2018 are likely to face a number of existing and emerging issues in their quest to get “smarter” (Figure 1):

• Creating a positive margin in an uncertain and changing health economy • Strategically moving from volume to value • Responding to health policy and complex regulations • Investing in exponential technologies to reduce costs, increase access, and improve care • Engaging with consumers and improving the patient experience • Shaping the workforce of the future

This 2018 outlook reviews the current state of the global health care sector; explores trends and issues impacting health care providers, governments, other payers, and patients; and suggests considerations for stakeholders as they seek to deliver high-quality, cost-efficient, smart health care.

Figure 1. Key issues in global health care

Creating a Shaping the positive margin in workforce of the an uncertain and future changing health economy

Engaging with Responding to health consumers and Top challenges facing policy and complex improving the patient regulations experience health care stakeholders

Investing in exponential Strategically moving technologies to from volume to reduce costs, increase value access, and improve care

6 2018 Global health care outlook l The evolution of smart health care Global health care sector issues in 2018

Creating a positive margin in an uncertain and changing health economy

Improving financial performance and demand, funding limitations, infrastructure As has been the case for the past several operating margins is likely to remain a upgrades, and therapeutic and technology years, spending is expected to be driven top issue. Many public and private health advancements strain already limited financial by aging and growing populations, systems have been experiencing revenue resources. Combined health care spending developing market expansion, clinical and pressure, rising costs, and stagnating or in the world’s major regions is expected to technology advances, and rising labor costs declining margins for years. The trend reach USD $8.7 trillion by 2020, up from USD (exacerbated by many markets’ competition is expected to persist, as increasing $7 trillion in 201510 (Figure 2). for health care workers).11

Figure 2. Health care spending, 2015 - 2020

CAGR (2015 - 2020)

8,734.6 Global 4.3% 7,077.1

4,083.6 North America 4.3% 3,306.2

2,006.6 Western Europe 4% 1,645.7

1,964.9 Asia & Australasia 5% 1,537.5

400.5 Latin America 2.4% 355.7

138.9 Middle East & Africa 4.2% 112.7

246.1 Transition economies 7.5% 170.9

0 2,000 4,000 6,000 8,000 10,000

USD $ billion 2020 (P) 2015

Source: World Industry Outlook, Healtcare and Pharmaceuticals, The Economic Intelligence Unit, June 2017

7 2018 Global health care outlook l The evolution of smart health care

Health care spending by country varies widely (Figure 3). Unfortunately, higher spending levels don’t always produce better health outcomes and value. For example, the United States, at 16.9 percent of GDP in 2016, continues to spend considerably more on health care than comparable countries but it is in the lower half of the Organization for Economic Cooperation and Development (OECD) countries’ life expectancy rankings.12 US health spending now exceeds USD $3 trillion per year, with growth rates projected to accelerate through 2024. Major spending categories are led by hospital care (USD $1 trillion), physicians (USD $634.9 billion), and prescription drugs (USD $328.6 billion).13

Figure 3. Health care spending by country

Health care expenditures as a share of GDP, 2016

18 16.9

12 11.5 11.2 11.1 11.1 11 10.8 10.6 10.4 10.4 10.1 10 9.9 9.8 9.6 9.4 9.4 9.3 9.1 9 8.9 8.8 8.4 8.2 8 7.7 7.5 7.4 7.2 7.2 7 7 6.3 6.3 6 5.2

0 Italy Chile Israel Spain Japan Korea France Turkey Poland Greece Ireland Austria Iceland Estonia Finland Canada Norway Sweden Belgium Slovenia Portugal Hungary Australia Germany Denmark Switzerland Netherlands Luxembourg New Zealand United States Czech Republic Slovak Republic United Kingdom

Source: OECD

Populations, therapeutics, and infrastructure drive spending

There are various views as to the drivers of doctors and patients are prompting more health costs.16 In addition, health systems health care spending. In developed markets, (and more costly) tests and interventions are dealing with the ongoing challenges of it’s expected that aging populations will for chronic and communicable diseases. containing and treating both communicable continue to be a major factor—especially in Providers, payers, and life sciences and chronic diseases. Once a hallmark Japan, where the share of people over age companies may have to balance the of developed markets, chronic diseases 65 will reach almost 30 percent by 2021, and development and adoption of new therapies (diabetes, chronic heart disease, Alzheimer’s in Western Europe, with its share nearing and medical technologies with their potential disease) exacerbated by lifestyle risks are 21 percent.14 Changing patterns of care, quality, experience, and health outcomes. In becoming a shared health and cost issue.17 including increased visits and higher-quality developing markets, growing populations, an services, could also be major cost-drivers.15 increase in higher-income households, and Therapeutic advances and the desires of rising consumer expectations are pushing up

8 2018 Global health care outlook l The evolution of smart health care

Adding to the cost equation, many health percent surcharge to the cost of drugs. alternatives to contract labor; and revisiting systems are struggling to update aging Some hospitals derived as much as 40 revenue cycle strategies, such as leveraging infrastructure and legacy technologies with percent of their revenues from drug new technologies and analytics tools that already limited capital resources. sales—which could account for their help improve processes and coding to entire profit margin.21 In 2009, the Chinese reduce claims denials.25 As health care costs increase, affordability government passed the Zero-Markup Drug and insurance coverage remain problematic. Policy, to rein in out-of-control drug costs, Particularly in the United States, hospitals In the United States, deductible cost curb over prescribing, and reduce the and health systems are engaging in mergers increases are far outpacing increases in financial burden to the public, especially and acquisitions (M&A) and other partnering costs covered by insurance.18 Brazil’s private those in low-income settings. The policy schemes to achieve economies of scale. health insurance sector lost 2.5 million went nationwide in 2015 and hospital Provider organizations are working to beneficiaries between 2014 and 2016 due margins have been falling as a result.22 increase their physician networks, expand to the country’s high unemployment rate. their geographic reach, and diversify their •• In Brazil, profit margins for private health Added to that, companies in Brazil had to cut specialized offerings and talent. Growth care providers have become less attractive expenses, and changing their employees’ via M&A could provide several benefits, following a ruling by the high court, health insurance plan to a cheaper one was including increased access to capital, which Supremo Tribunal Federal, that these a popular option.19 could mean more money to invest in facilities, providers are to reimburse the Brazilian technologies, and staff.26 public health care system (Sistema Único Sector stakeholders’ efforts to manage rising de Saúde, or SUS) in the same way that costs are complicated by price controls, In another example, large medical groups private hospitals are currently reimbursed reduced funding, and misaligned incentives in China are trying to form a “closed-loop” for treating privately insured patients.23 (e.g., the longstanding fee-for-service supply chain by acquiring hospitals. CR payment model). For example: •• Many hospitals in India are discovering Healthcare currently manages 109 hospitals they need to build more financially sound with more than 11,000 beds, while sister •• The United Kingdom’s National Health operating models to offset diminishing company CR Pharmaceuticals supplies Service (NHS) is currently experiencing the margins due to price controls on drugs, the hospitals’ drugs. Chinese insurance longest slowdown in funding in its history. consumables, and medical devices, and companies are also using similar business While all four nations (England, Scotland, due to insurance companies’ use of models to promote commercial medical Wales, and Northern Ireland) share many growing patient share and buying power insurance.27 of the same challenges, the demand and to squeeze hospital pricing. In addition, financial sustainability issues appear most India’s medical workforce shortage means In April 2017, Japan’s government began acute in England. Between 2010-2011 and available doctors command a high price allowing medical corporations to create 2015-2016, NHS funding growth slowed structure, further eating into hospital nonprofit holding companies without significantly, averaging 1.2 percent per margins. corporate acquisitions as a way to promote year (in real terms), and is set to average organizational change. Under the scheme, 1.1 percent from 2016-2017 until 2020- Consolidating and collaborating a holding company can manage several 2021, compared to the long-term average to compete medical institutions/nursing care facilities in of nearly 4 percent a year since the NHS Health care providers are employing a the region. This may be especially effective for was established.20 While the first few variety of strategies to combat shrinking medical institutions in rural areas that need years of the United Kingdom’s response margins and rising costs. Case in point: to increase operational efficiency despite to the global financial crisis provided Rather than being paid more to increase declining patient populations. an opportunity to improve efficiency inpatient volume to generate revenue, of services, the last two years have many health systems are responding to Joint ventures, public-private partnerships seen NHS providers struggling to break new financial incentives to treat patients (PPPs), and other collaborative arrangements even. Meanwhile, a growing and aging outside traditional hospital settings. To are taking place within and across health care population, changing patient expectations, illustrate the impact, the proportion of sectors and geographies. and pressure on social care and public revenue from inpatient services relative Governments, providers, employers, and health budgets are increasing demands on to outpatient services in US hospitals has insurers are developing wellness programs NHS services. fallen 10 percentage points since 2004.24 to aid public health efforts. Hospitals are •• China’s policy of “zero markups” for drugs Among other margin-enhancing strategies cooperating with biotech companies to sold at hospitals is a major contributor are combining traditional workforce develop personalized therapies, especially for to eroding profit margins. For more than planning with predictive analytics to cancers. 20 years, hospitals were able to add a 15 improve efficiencies in labor costs and find

9 2018 Global health care outlook l The evolution of smart health care

Large conglomerates (e.g., services for international patients traveling abroad for care), and launching new are entering Southeast companies and philanthropic organizations— Asia (SEA) and expanding all to come up with an alternative revenue stream to subsidize government or improve laterally between life the bottom line.28 sciences and health Respondents to Deloitte’s 2017 survey care through M&A and of US health care CEOs had the following suggestions for producing and sustaining joint ventures (JVs), positive margins in an uncertain and changing and traditional medical health economy: technology (medtech) •• Increase system efficiencies beyond what is needed to be profitable. companies are moving Many hospitals and health systems have into care provision. And, reduced costs and increased efficiencies at the margins of their organizations, but nontraditional players like long-term sustainability may require a technology companies fundamental transformation of the way that services are organized and delivered. and other disruptors are •• Operate as a consolidated system. entering the health care Many health systems have grown through market and providing acquisition, and have not fully realized new efficiencies and synergies system-wide. innovative perspectives. Consolidating where appropriate and looking for synergies across the system can Considerable opportunities exist for health improve efficiency. care players to work collaboratively on • Diversify beyond the core hospital. innovative access, delivery, and financing • models to reduce health care costs and As inpatient revenues decline, many CEOs increase quality. are partnering or integrating physician practices, as well as investing in outpatient services, step-down care, urgent care, etc. Stakeholder considerations While reducing costs has long been a way for •• Improve revenue cycle systems. Despite health care organizations to offset shrinking upgrades to revenue cycle systems in margins, many are pursuing new cost-cutting recent years, many health systems are measures, such as developing alternative still leaving money on the table. They may staffing models, shifting patients to outpatient be able to leverage scale and improve services, and reducing administrative and efficiency by reducing the number of supply supply costs. In addition, health systems are chain vendors and noncritical employees.29 exploring new revenue sources. Some, for example, are looking to capitalize on their intellectual property (IP) by working with employees to develop innovations including medical devices, training videos, health information technology (HIT) tools, or patient safety solutions. Once the hospital has filed for patent or copyright protections, it can sell or license the IP to other industry stakeholders. Hospitals and health systems are also investing in JVs, commercializing their foreign assets

10 2018 Global health care outlook l The evolution of smart health care Strategically moving from volume to value

Health care is continuing its transition from fee-for-service (FFS) reimbursement to outcomes - and value-based payment models (Figure 4):

Figure 4. A continued shift from volume to value

Value • Focus on maximizing value (lower cost and higher quality) of health care delivered Volume through alignment of incentives and management of risk • Payment systems based on fee-for-service; limited ﬁnancial risk • Care coordination driven by standardized protocols; use of information technology for • Providers have incentives to increase information sharing payment rates, specialization/intensity, and volume; fragmentation of providers • Investment into supporting clinical integration, (”silos”) population health, and other cost reduction/revenue enhancement • Limited focus on outcomes and opportunities to respond to new payment information sharing systems and grow market share

In the United States, the shift toward value is Other countries are also moving from treatments, as well as assistance with social being accelerated by the Medicare Access and volume to value through reform policies needs.30 Mexico’s CASALUD primary care CHIP Reauthorization Act of 2015 (MACRA), and programs promoting operational delivery model deploys innovative medical which offers significant financial incentives efficiency, technology use, population health technologies that better engage patients for health care professionals to participate management, and wellness. For example, the and health care professionals.31 One such in risk-bearing, coordinated care models Connecting to Care program in Saskatchewan, application is the MIDO® Mobile Module and to move away from the traditional FFS Canada, uses proactive outreach to prevent Cart, an all-in-one, self-contained system system. MACRA is poised to drive increased hospitalizations and emergency room (and standardized training) that facilitates a participation in risk-bearing models across all (ER) visits by focusing on timely use of proactive approach to disease detection and payers, not just Medicare. community-based services, including support offers promise in preventing or slowing the for medical, mental health, and addiction rate of disease progression.32

11 2018 Global health care outlook l The evolution of smart health care

Japan’s government has introduced a series “beyond quality to value,” and “beyond The Unite Kingdom’s 2015 NHS Five Year of reform initiatives, the most symbolic health care to health.”34 The MOH is focusing Forward View sets a clear course of action being the establishment of an Integrated its productivity improvement projects to 2020: While the NHS is already one of the Community Care System that combines in four areas to deliver quality care and leanest publicly funded health services in health care, long-term care, housing, and better value: helping patients navigate the industrialized world, opportunities to go livelihood support services in a unified the health care system more efficiently further faster are detailed in the NHS’s Ten manner so that Japan’s elderly can receive without compromising quality of care; Point Efficiency Plan. The NHS is also seeking continuous quality care in their local automating labor-intensive activities to to leverage the potential of technology and communities33 versus the hospital. increase operational efficiency; streamlining innovation more effectively, empowering workflows, expanding job roles, and upskilling patients to take a more active role in their The Singapore Ministry of Health (MOH) health care staff to work more effectively and own health and care while also enabling NHS has categorized the nation’s top health care productively, and meet the needs of patients staff and their care colleagues to do their reform issues and trends into three broad more holistically; and empowering patients, jobs more efficiently. shifts referred to as the “3 beyonds”—moving caregivers, and volunteers to self-serve and “beyond the hospital to the community,” self-care.

Untangling the knotty problem of low-value health care

Wasted spending on low-value health care—services that offer little or no expected benefit or that are inefficiently delivered—can total billions of dollars a year. The Institute of Medicine (IOM) calculated that roughly $765 billion of US medical spending in 2009 was wasted on unnecessary services, excessive administrative costs, fraud, and other problems.35

Programs such as the ABIM Foundation’s Choosing Wisely Initiative36 (the European Federation of Internal Medicine has also launched its own Choosing Wisely campaign),37 which seeks to advance a national dialogue on avoiding wasteful or unnecessary medical tests, treatments, and procedures, aim to reduce low-value health care services, but it’s a knotty problem to untangle. Generally, there is a lack of consensus on how to incorporate clinical nuance, patient preferences and priorities, and cost-benefit tradeoffs in provider and consumer-facing initiatives to reduce low-value care.38 Also, evidence is lacking for best practices to operationalize programs and emerging technologies to reduce unnecessary and inefficient care.

According to IOM, incremental upgrades and changes by individual hospitals or health systems will not be enough. Achieving high-value care, reducing waste, and lowering costs could require an across-the-board commitment to develop a “learning” health care system that continuously improves by capturing and sharing lessons from every care experience and research discovery. Stakeholders should consider strategies that include adopting value- and outcomes-based payment models; embracing new technologies to collect and analyze data at the point of care; engaging patients and their families; and establishing better teamwork and transparency within and across organizations.39

12 2018 Global health care outlook l The evolution of smart health care

Population health management and The goals of population health management Encouraged and incentivized by employers, wellness are critical: improving clinical effectiveness, health care practitioners, and even Sector stakeholders, particularly in advanced lowering costs, sharing accountability, governments, more and more consumers health systems, are advocating the shift enhancing safety and, most importantly, are taking their health and wellness into from a “break-fix” model of health care to keeping an entire population healthier. their own hands. In an evolution to what one focused on prevention and the overall But striving to achieve these goals is Deloitte calls an informed and empowered holistic health of populations rather than both challenging and complex. Countries’ “quantified self,” consumer engagement in episodic and transaction-based treatments. population health efforts range from minimal and expectations of health care are growing, to robust and are as diverse as combating especially as individuals become better Population health— health opioid addiction to planning future care for informed about their genetic profile, the aging citizens. diseases they have and might develop, and policy for specified groups, the effectiveness of health interventions. •• The opioid crisis plaguing many nations They are embracing prevention and devoting from prevention to diagnosis is inciting widespread action by health time, energy, and money to staying healthy, systems, insurers, families, communities, and treatment of chronic including using regulated and validated and all levels of government. Initiatives health applications (apps) and wearables.43 disease—takes a broad include more funding for interventional programs to reduce overdoses, increased look at the management of One indication of the emerging “quantified efforts to integrate health and social self” is the increasing popularity of mobile outcomes for all of a health care to support vulnerable populations communication devices for health services being impacted by opioids, and enhanced system’s patients, including and information.44 From wearable fitness support for recognizing and treating trackers to smart devices to cyber networks, efforts to use health care mental health issues and addictions. the mHealth market has doubled in just four resources effectively and •• In July 2016, Japan’s government released years.45 In fact, there are more than 100,000 46 efficiently to improve the the “Asia Human Well-Being Initiative,” mHealth apps currently available, and which aims to apply aspects of the health app market revenue was projected to lifetime health and well-being Japanese health care/nursing care system grow to USD $26 billion by the end of 2017.47 of a specific population.40 in other aging Asian countries. With the While these devices and services encourage initiative, it is expected that Japanese consumers to be engaged participants in providers will expand their overseas managing their own health, fitness, and Activities include promoting health and well- footprint, especially in Asian countries that general wellness, broader benefits may being; primary, secondary, tertiary care; and are facing rapidly aging societies. be reaped as well. From the perspective disease prevention. of population health, where 75 percent of •• Some Southeast Asian nations are all health costs derive from preventable taking a holistic approach to addressing Population health requires data and conditions,48 feedback devices like these current and future health care needs analytics to identify at-risk patients and could be enormously helpful in facilitating with initiatives designed to expand care target services that reduce their use of healthy behavior change.49 options (e.g., home and community-based expensive and low-quality care. Under a care, long-term care, virtual care), increase population health model, providers manage access, reduce costs, and empower care—from preventive and maintenance patients. care to acute and long-term care—for a defined population. •• In late 2016, China’s National Health and Family Planning Commission (NHFPC) Those who are most successful often deploy announced “Healthy China 2030,” innovative delivery models; analyzing data the country’s first long-term strategic and trends in a population’s health, quality, population health plan. The plan aims to and costs, and bearing financial risk. Value- grow investments in the “Big Health” sector based payment contracts reward providers to 16 trillion RMB by 2030.42 for successfully executing these processes.41

13 2018 Global health care outlook l The evolution of smart health care

Combining the power of analytics and mHealth devices, wearables, and other nontraditional sources of data collection could add even more value to wellness programs by helping to identify new care pathways and high-risk individuals.50 Unfortunately, lack of interoperability among devices currently limits big data’s promise and, by extension, overall wellness and prevention initiatives. Interoperability has the potential to decrease costs51 and improve care coordination.52 With the advent of more open systems, data sharing should improve53 and analytics use increase.

Social determinants’ impact on health care Health care stakeholders have long recognized that factors outside the system—the social determinants of health—influence an individual’s health and well-being (see sidebar). Health-related social needs have been shown to affect individuals’ health outcomes to a large extent.54

The social determinants of health Health-related social needs generally refer to factors that affect health outside of the health care system and that are beyond an individual’s control.55 Typical categories include:

Housing instability/homelessness: e.g., having Interpersonal violence: Being exposed to difficulty paying rent or affording a stable place intentional use of physical force or power, of one’s own, living in overcrowded or run-down threatened or actual, that results in or has conditions a high likelihood of resulting in injury, death, psychological harm, etc. Food insecurity (hunger and nutrition): Not having reliable access to enough affordable, Family and social supports: Not having nutritious food relationships that provide interaction, nurturing, Transportation: Not having affordable and and help in coping with daily life reliable ways to get to medical appointments or Employment and income: purchase healthy foods Not having the ability to get or keep a job, or gain Education: Not having access to high school steady income or other training that might help someone gain consistent employment

Utility needs: Not being able to regularly pay utility bills (e.g., electricity, gas, water, phone) and/ or afford necessary maintenance or repairs

Source: Social determinants of health: How are hospitals and health systems investing in and addressing social needs? Deloitte Center for Health Solutions, 2017

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Across all developed countries, “vulnerable” There are amazing programs and And while addressing social determinants or “troubled families,”—defined as those innovations being developed and is still outside the core of health care,64 the that are in contact with several departments implemented right now, but efforts are shift to value is spurring more investment of the local authority including the child fragmented, incremental, and there’s no and activity around addressing social or youth welfare system—are a growing blueprint.61 Hospitals often lack dedicated needs. Taking a holistic system and life concern. These families rarely succeed funds for all of the populations they want cycle approach to address care inequalities in breaking the negative spiral, which to target, and finding sustainable funding and social needs can ease the burden leads to persistent poverty, deprivation, to address social needs can be difficult. on vulnerable individuals, families, and and transgenerational dependency Determining return-on-investment communities, and improve outcomes at all on public support. Living in vulnerable (ROI) for social need activities is another stages of life.65 There is also an economic families accentuates the risks of poor life challenge; it requires hospitals to identify rationale for investing in the social outcomes for those most dependent on meaningful measures, such as quantifiable determinants of care: healthier individuals family structures, especially children and improvements in health outcomes and cost contribute more to the economy, increasing adolescents. The current failure to address savings. Generally, hospitals that are further government tax revenues and a country’s the social determinants of health for these along in the journey to value-based care GDP. vulnerable families is creating avoidable cost report the largest investments and most and social pressures on society.56 activity around addressing social needs. These organizations are also more likely to Social determinants also can affect health engage in public and private partnerships, outcomes and payments for health systems. employ innovative solutions, and measure For example, while a top-rated hospital more aspects of their social needs activities, might be highly effective at treating an acute including health outcomes, cost outcomes, health issue, the patient’s condition could and patient experience.62 deteriorate when he returns home to an unhealthy environment. Factors there— Stakeholder considerations unstable housing situation, food insecurity, The needle is moving from treatment to violence in the patient’s home or personal prevention as health care costs continue to relationships, or others—may contribute to escalate, and governments, health systems, the patient’s eventual return to the hospital health plans, and other stakeholders for declining health, which can make it understand that it makes clinical and difficult for the hospitals to receive incentives financial sense to invest in keeping and/or avoid financial penalties.57 individuals and populations healthy. Value- based payment models that reward health Increasingly, hospitals and health systems systems for improved quality and other are working to navigate the challenges of outcomes have the potential to improve effectively linking community and clinical outcomes and margins, and reduce total services to improve health outcomes in costs of care.63 the long term. For instance, many hospitals now screen for social needs, although some However, a successful transition to value- of this screening appears to be occasional based care requires that stakeholders— and ad hoc rather than consistent and including consumers—move beyond health 58 systematic. Some health systems employ care to health; from treatment to prevention/ community health assistants (CHAs), non- wellness; and from individual to population licensed professionals who assess patients’ health. Already, providers are leveraging needs, connect with primary care and technology advances to expand care beyond case management teams, and coordinate brick and mortar locations by establishing 59 referrals. Other hospitals and medical digitally enabled, integrated community care providers are partnering with ride-hailing systems. services to overcome transportation barriers.60

15 2018 Global health care outlook l The evolution of smart health care Responding to health policy and complex regulations

Creating a positive margin in an uncertain and changing health economy The new legislation is expected to drive Three developments are helping health care Growing health care market complexity leads development and widespread promotion of organizations mine insights from myriad to more regulatory complexity and increases a comprehensive medical database to aid data sources: the need for heightened stakeholder risk research for drug discovery using artificial •• Cognitive computing. Turning the vast management. And while health systems intelligence (AI) and other advances. volume of available health care data—from worldwide share overarching health policy medical devices, smartphones, activity and regulatory goals—ensuring quality care United Kingdom—The tax-funded NHS trackers, electronic health records (EHRs), and patient safety, mitigating fraud, and operates within a very complex regulatory and more—into insights that enable cyber threats—regions and countries are environment. England, for instance, has personalized medicine necessitates grappling with their own specific challenges. both a national financial (NHS Improvement) new aggregation, storage, and modeling and quality (Care Quality Commission) approaches. Cognitive computing Brazil—Brazil is experiencing a profound regulator; they provide ongoing evaluation (machine learning, neural networks, deep movement in its corporate management of performance against agreed-upon learning, etc.) is a common technique culture, moral conscience, and ethical criteria and publish the findings. There are for dealing with large volumes of rapidly action across all industries. In recent years, also professional group regulators and all changing data. It allows for a variety of there have been a number of corruption organizations have to comply with financial statistical algorithms, can involve a large cases in Brazil, even in companies that and data protection regulations. While number of highly granular models, and apparently had clear and well-established fulfilling requests for data and information can quickly generate new models for new compliance and other initiatives to mitigate can be burdensome for health care data. It can be used to predict (disease inappropriate conduct and practices. The stakeholders, regulatory pressure is a facet onset, for example), detect patterns in health sector was not immune to these of the larger financial, demand, and staffing data (a drug’s effects on populations or cases. Several scandals have been widely pressures under which the NHS operates. individuals, for example), or to classify reported in the major press, especially in the populations (patient subpopulations, for last three years, such as the so-called “Mafia United States—Although significant example). Machine learning can also be of Orthotics and Prosthetics.” 66 legislative, industry, and public attention used to combine data across disparate is heavily focused on the debate over the data sources—say, to create a Patient 360 China—The number of private hospitals in future of the Affordable Care Act (ACA), view.70 China surpassed public hospitals in 2015,67 health care stakeholders face other prompting more regulatory supervision of significant strategic and compliance •• Cloud-based, interoperable electronic the registration, drug management, medical challenges related to government programs, health records. Interoperable EHRs environment, and physician certification health care payment and delivery system coupled with AI could create process of private hospitals. Adding to the need reforms, and new billing and coding efficiencies and improve decision making for oversight, the number of illegal private requirements. necessary to boost quality. Data could medical institutions is also growing, be better integrated into daily care, and accompanied unfortunately, by an increase Data management and security patients could play a role in curating in medical negligence incidents. Digital health care (mobile health, wireless their own data. The data could include health, connected health, etc.) technology is genetic, social, and behavioral patient Japan—In May 2017, Japan introduced a delivering solutions to tackle the increasing information, as well as financial, clinical, and law establishing a standardized rule for need for better diagnostics and more administrative records. It could be securely anonymously processing medical care personalized therapeutic tools.69 It also is stored in the cloud and accessed on an information.68 The law’s purpose is to creating challenges for governments, health as-needed basis—perhaps on a blockchain promote R&D and advanced medical studies. systems, and insurers, which must collect, (a distributed, immutable record ledger analyze, and store more and more data. of digital transactions that is shared and editable by various stakeholders).71 16 2018 Global health care outlook l The evolution of smart health care

•• Internet of Things (IoT). Development of •• Who is responsible when the health care Until recently, medical institutions in the IoT in the health care market (where it is technology a consumer chooses to buy—a Japan generally used closed systems also called the Internet of Medical Things, or self-monitoring device, for example— to help reduce cyber threats. However, IoMT) has been proving particularly valuable produces faulty information and sends it to implementation of the national health in remote clinical monitoring, chronic the consumer’s primary care physician? system’s new medical ID and data-sharing disease management, preventive care, scheme will require medical institutions to •• Who owns patient information and who is assisted living for the elderly, and fitness upload data to external servers, heightening responsible for keeping it safe, especially monitoring. IoT’s application is lowering the importance of cybersecurity. when it is shared across clinicians, facilities, costs, improving efficiency, and bringing the and geographies? focus back to quality patient care.72 Stakeholder considerations •• Realistically, how much of a health plan or Ineffective data management, compliance The cybersecurity conundrum provider’s confidential clinical, business, issues, and cyber risks are often linked WannaCry, a recent, widespread and patient data can a cybersecurity with not having systematic approaches ransomware attack, infected computers in program (no matter how sophisticated) to investments in people, processes, and tens of thousands of locations, including protect? technology. Dated technology is everywhere hospitals and telecom companies.73 In May, and connected to everything— not just a malware variant called Wanna Decryptor •• How can data monetization opportunities on desktop PCs. And while government hit Britain’s NHS and infiltrated major (already in use by health plans and of policies and regulations seek to strengthen international corporations such FedEx, interest to providers) move forward amid health care security and safety on a macro Telefónica in Spain and Portugal, and privacy constraints? level, individual organizations need to focus computers in Russia, Ukraine, and Taiwan.74 executive attention on compliance, ethics, Among new legislation designed to mitigate and risk. These and other recent cyberattacks have data access and security concerns is the moved the issues of cybersecurity and data European Commission’s General Data Many employees at hospitals, health plans, risk management front and center. Health Protection Regulation (GDPR), which reforms life sciences companies, and governments care is second only to the finance industry in data protection rules in the European Union lack awareness of and training to manage the number of cyberattacks annually.75 (EU). financial, operational, compliance, and The objective of the new set of rules, which cyber risks. Led by senior management, An average of one health care breach came into force in May 2016 and will apply organizations should perform a thorough incident per day was reported in the United beginning in May 2018, is to give citizens assessment to understand how recent States during the first half of 2017, with at back control over their personal data, and and upcoming policy changes will impact least half of the incidents perpetrated by to simplify the regulatory environment for organizational priorities and explore 76 hackers. Globally, the average total cost of business in the digital economy.78 Similarly, strategies to build second-line defenses to a health care data breach to an organization the United Kingdom has “Patients Know reduce their administrative, financial, and reached USD $3.62 million per incident in Best”—a platform on which the patient reputational exposure. 77 2017. controls who accesses their health record.

As patients take more active control of their In May 2017, Japan’s Ministry of Health, Labor health, they will likely be accessing public and Welfare released the latest edition of its and private health care in component parts Security Guidelines for Health Information (e.g., software applications, devices) and in Systems. This edition incorporates measures nontraditional settings (e.g., at home). to address the risk of cyberattacks targeting This independence is likely to complicate medical institutions. Following the guidelines quality assurance and cybersecurity efforts, is not mandatory, but is recommended. prompting such questions as: 17 2018 Global health care outlook l The evolution of smart health care Investing in exponential technologies to reduce costs, increase access, and improve care

There is no doubt that change is coming to health care. Exponential technologies are helping to drive that change by making care delivery less expensive, more efficient, and more accessible on a global basis. Consider: Beginning in 1999, scientists spent five months and approximately USD $300 million to generate the first initial “draft” of a human genome sequence. The cost to generate a human genome sequence is now less than USD $1,000,79 and could eventually drop to less than USD $1. In coming years, exponential technologies have the potential to dramatically disrupt the systems and processes that have historically defined the industry (Figure 5).

Figure 5.

Adoption of exponential technologies in 5-10 years 12 key exponential technologies may reach varying levels Telemedicine of adoption and transformation within the next decade Ambient computing Cognitive computing Data democratization Robotics

Additive manufacturing

Virtual reality/augmented reality

API/gig economy Blockchain Genomics & proteomics

Digital medicine Degree of uncertainty Syntheticbiology & nanotechnology Low Medium High

Experimental Early adoption Early majority Late majority Laggards

Source: Deloitte analysis

18 2018 Global health care outlook l The evolution of smart health care

Already, Japan is experimenting with care Planning today for the hospital of For instance, spending on new hospital robots to assist its elderly.80 In China, tomorrow infrastructure in India is expected to reach clinicians are using AI to support imaging With aging infrastructure in some USD $200 billion by 2024, and China plans to diagnosis in lung, ophthalmic, and skin developed countries and the lack of add 89,000 new hospital beds by 2020.91 92 diseases. A US startup is using AI to take all robust infrastructure in emerging markets, the data flowing through a hospital to learn governments and private health care Demographic and economic trends, coupled how to free up doctors and nurses to see providers (driven by consumers) are with advancing technologies, could have more patients and improve outcomes: One of rethinking how to optimize inpatient and significant implications for how hospitals its clients has been able to treat 3,000 more outpatient settings, and are planning of the future will be staffed, sized, and patients a year with the same resources, an how to integrate digital technologies into designed. For example, more health care increase of 18 percent.81 traditional hospital services to reduce costs, services are taking place in outpatient increase access, and improve patient care settings and in the home (Figure 6), although As individual exponentials combine with in the future. In the coming decade, many some types of patients—for example, others, the convergences push technology U.S. and European hospital executives complex cases and the very ill—likely will still 82 ahead even more quickly. Among areas plan to renovate or rebuild outdated require inpatient hospital care. where exponentials are beginning to help infrastructure.88 89 90 Similarly, increasing reshape health care: health care demand in emerging economies •• Synthetic biology. Synthetic biology (an should drive considerable hospital planning interdisciplinary branch of biology and and construction. engineering) and the ability to create DNA, genomics, and proteomics are advancing Figure 6. Health care expenditure by function—average of OECD countries rapidly. Applications for life sciences companies are phenomenal, particularly when considering how these technologies could be combined with cognitive computing, AI, and others.83

•• 3D printing and nanotechnology. Once scientists understand DNA sequencing at a detailed level, it reaches a point where they can print actual tissue—there are people today who have at least one ear that was printed. Through nanotechnology, innovators could develop a customized 31% 28% white blood cell that is specifically designed to hunt down and attack cancer cells at a 31% 46% molecular level.84 31% 28% •• Companion diagnostics. When paired 38% with targeted therapies, companion 26% 31% diagnostics (an in-vitro diagnostic device or 46% an imaging tool that provides information 2001 2015 that is essential for the safe and effective Hospital inpatient38% services 26% use of a corresponding therapeutic product85), can help physicians to select an optimal treatment the first time, avoiding Oupatient services and long-term care the costly and risky practice of trial-and- Hospital inpatient services error prescribing.86 Other (includes drug spending and government services)

•• Biosensors and trackers. Biosensors Oupatient services and long-term care included in rapidly shrinking wearables and medical devices allow consumers Other (includes drug spending and government services) and clinicians to monitor and track more aspects of patients’ health, enabling earlier intervention—and even prevention—in a way that is much less intrusive to patients’ 87 lives. Source: OECD

19 2018 Global health care outlook l The evolution of smart health care

To learn what a hospital of the future may has 79 digital hospitals, with 90 percent operational insights.95 Facing a continuous, look like, the Deloitte US Center for Health of them built after 2016. Most of these ever-growing influx of data from internal Solutions conducted a crowdsourcing digital hospitals are located in economically and external sources, hospitals will come simulation in May 2017 with experts from undeveloped provinces.93 to depend on cognitive analytics to sort across the globe. Participants included through and find the most important data health care CXOs, physician and nurse But there is no need to wait for a building points and trends, analyze the data, and leaders, public policy leaders, technologists, boom to integrate emerging technologies present actionable insights to clinicians, and futurists. Their charge was to come into hospital operations. Numerous digital patients, and caregivers in an easy-to- up with specific use cases for the design of solutions could be implemented now or understand format that seamlessly fits into digital hospitals globally in 10 years (a period in the near future to improve operational their daily activities. that offers hospital leaders and boards time efficiencies and clinical outcomes. Hospitals to prepare). The crowdsourcing simulation could implement remote patient monitoring, Hospital expenditures on analytics are developed use cases in five categories: telehealth, advanced analytics, and anticipated to reach USD $18.7 billion by wearables to more fully engage with patients 2020, up from USD $5.8 billion in 2015, •• Redefined care delivery: Emerging for improved quality and outcomes. Many as hospitals focus on quality and cost features including centralized digital back-office functions—finance, supply reduction.96 But health care lags other centers to enable decision making, chain, human resources, and revenue cycle, industries in applying technology and data continuous clinical monitoring, targeted among them—could benefit from robotics, analytics to daily activities. Three functional treatments (such as 3D printing for advanced analytics, sensors, and automation areas that may need immediate attention: surgeries), and the use of smaller, portable to drive cost efficiencies. These functions operational (clinical coding, nursing support), devices will characterize acute care also could be digitally improved by using clinical (decision support tools to de-risk hospitals. cloud-based enterprise resource planning processes), and back office (HR, payroll, •• Digital patient experience: Digital and AI (ERP) solutions to make them shorter, faster, supply chain, patient/customer interface). technologies will help enable on-demand and more responsive.94 And as health care moves outside the interaction and seamless processes to hospital and into the home and community, improve patient experience. Where budgets allow, numerous countries providers are expected to need analytics are investing in tools and programs to to address the challenge of measuring •• Enhanced talent development: Robotic digitize their health systems. Many Canadian outcomes in nontraditional settings. process automation (RPA) and AI will allow jurisdictions and individual and regional caregivers to spend more time providing groups of hospital providers are working No single organization has all the data care and less time documenting it as well toward enhanced hospital information required to look at a patient or targeted as help enhance their development and systems to allow them to better manage population in a holistic manner. This can learning. patient care in the hospital setting. A limit the abilities of the health system that’s •• Operational efficiencies through number of Mexico’s health systems are using providing the care and the payer that’s technology: Digital supply chains, wearables, personal devices, and apps for financing the care—directly impacting the automation, robotics, and next-generation knowledge transfer and communication with patient journey. In the United States, many interoperability will drive operations physicians and patients. In the Netherlands, health systems and health plans that are management and back-office efficiencies. patient-centered health care enabled by making value-based care a priority are e-health solutions is a top agenda item investing in population health analytics to •• Healing and well-being designs: The within hospitals and care organizations. enable their strategies. well-being of patients and staff members— However, Deloitte research suggests that with an emphasis on the importance of most organizations aren’t yet sufficiently experience in healing—will be important in Data and analytics focusing on cross-sector collaboration future hospital designs. Health data is the new health care currency, approaches that could unlock the synergistic as organizations increasingly use advanced benefits of combining the best of what each Most of these use case concepts are already digital and cognitive technologies to mine stakeholder has to offer.97 in play. For example, as of early 2017, China vast amounts of data to produce clinical and

20 2018 Global health care outlook l The evolution of smart health care

To increase the potential for health care A well-crafted strategy should lay the Stakeholders, therefore, should consider innovation, the constraint of limited data- foundation for near- and long-term how to plan for strategic investments in sharing among stakeholders will need to be investments to aid care delivery. people, processes, and premises enabled by broken. A new construct between health digital technologies.98 systems and payers might accelerate the Health care leaders should consider building necessary transformation. This includes new technology ecosystems that embrace provider payment methodologies, clearly nontraditional players and sources of defined roles and responsibilities, evidence- knowledge outside their own four walls. They based patient engagement approaches, also should consider building pilots before workflow and collaboration tools, and investing in scale; embracing change; and an ability to align each organization’s evaluating new technology-aided revenue investment in analytics to improve health sources. Additionally, organizations should care outcomes. strive to be agile in anticipating and adjusting their strategies as innovations continue Stakeholder considerations to evolve. From a tactical perspective, Any decision by governments and private incorporating digital health care and health systems to upgrade, replace, and analytics into daily practice can help develop their clinical infrastructure should hospitals and health systems to streamline include acknowledging the importance of care pathways, reduce costs, increase exponential technologies in advancing new patient satisfaction, and improve quality. care delivery models and powering care facilities. Keeping pace with rapid technology Even though technology will underlie most developments is likely to require massive aspects of future hospital and health system investments in supporting systems (ERP), operations, care delivery—especially for primary systems (electronic patient records), complex patients and procedures—will likely hospital information systems, connectivity/ still require hands-on human expertise. interoperability, eHealth/mHealth, and big data.

21 2018 Global health care outlook l The evolution of smart health care Engaging with consumers and improving the patient experience

Many entrepreneurs and health care prices and a payment model before the on technology-driven disruptors more consumers are asking fundamental patient gets involved? These are questions quickly than incumbents.99 According to questions about why the patient experience that established health care stakeholders the Deloitte 2017 Survey of US Health Care isn’t more personalized and why the system should consider addressing if they hope to Consumers, personalized care from their isn’t more convenient. Why do patients preserve and grow their existing customer providers—including clear communication have to go to a centralized location to relationships. Meanwhile, agile competitors and sensitivity—is respondents’ top health see a doctor? Why can’t the health plan, not hindered by established processes and care priority (Figure 7): the hospital, and the doctors all agree to systems may be able to detect and capitalize

Figure 7. Consumers report their first priority in health care is the personalization of care from their providers

Preferences for care personalization diﬀer by age group

0 Age 16 - 24 65+

Prioritizes clear communication with providers, during an oﬃce visit and through follow-up

Prioritizes provider communication and sensitivity in oﬃce, during an exam

Source: Deloitte 2017 Survey of U.S. Health Care Consumers

22 2018 Global health care outlook l The evolution of smart health care

Hospitals can provide more personalized •• Virtual reality/augmented reality: VR/AR stories about other patients who had a similar care, better engage with consumers, and can engage patients in low-risk, artificially diagnosis. Such accessible AI technologies will elevate the patient experience by using digital generated sensory experiences that help empower patients and their families.103 solutions to aid omni-channel patient access, could accelerate behavior change in a way including customer apps, patient portals, that is safer, more convenient, and more What’s good for consumers also can be personalized digital information kits, and accessible to the consumer.102 good for providers. Enhancing the patient self-check-in kiosks.100 Other digital channels experience is regarded as a potential driver of and tools to enhance provider-consumer In the future, digital technology may improve hospital performance, since it can strengthen interactions include: the patient experience by providing real-time customer loyalty, build reputation and brand, access to medical knowledge and assistance and boost utilization of hospital services •• Leveraging social media to improve (see sidebar, next page). Imagine a voice- through increased referrals to family and patient experience: Social media offers activated system for an impatient patient—an friends.104 Furthermore, research has shown health care organizations a potentially rich AI-powered, bedside virtual care assistant that better patient experience correlates source of data to efficiently track consumer that can answer or direct queries to the most with lower medical malpractice risk for experiences and population health trends appropriate person at the hospital. This physicians105 and lower staff turnover ratios.106 in real time, much more efficiently than virtual assistant will be able to answer the current approaches. patient’s routine questions about diagnoses, A Deloitte analysis found that improving the •• Telehealth: Telehealth provides a more expected recovery experiences and times, patient experience can help improve hospital convenient way for consumers to access and daily medication schedules. It also operations and financials (Figure 8): care while potentially reducing office visits will be able to direct specific questions to and travel time. This convenient care specialists. In addition, the virtual assistant model has the potential to increase self- can act as a data repository for the patient’s care and prevent complications and ER medical history, test results, consultation visits.101 times, appointment schedules, and even

Figure 8. Hospitals with excellent patient ratings have higher profitability Our analysis found that providers who deliver exceptional experience often demonstrate strong financial performance and efficient operations

Improved ﬁnancial Improved operational eﬃciencies performance Net patient revenue (per adjusted patient day)

Excellent vs. Moderate Ratings Low ratings Moderate ratings Account for this difference in financial Excellent ratings performance Patient satisfaction accounts for a difference of 60% USD $444 of net patient revenue (per adjusted patient day) A 10% increase in between excellent and moderate hospitals patients rating hospitals as EXCELLENT increases 1.5% margin by:

Source: Deloitte: Value of Patient Experiences, 2016

23 2018 Global health care outlook l The evolution of smart health care

Improving the patient flow pathway

Technology disruption is transforming both clinical and operational processes within today’s health care systems. D.Assist, part of the Deloitte Smarter Health Care Solutions suite across the patient flow pathway in hospital settings, covers “classic pinch points” such as admissions, operating theater and ICU utilization, length of stay, the discharge process, clinical coding, and outpatient scheduling.

One D.Assist application is a lean, enhanced patient-to-nurse communication system that replaces the existing call button system used in most of the world’s hospitals and aged care facilities. The solution captures a spoken request for assistance in the patient’s room, which is understood by the system and converted to text. The message is then assessed using AI services and processed to identify the patient’s request and determine how best to respond. In many cases D.Assist is able to respond to the patient from a database of FAQs, relieving nurses’ workload. Where physical assistance is required, the request is assigned a priority, and routed to the most appropriately skilled team to respond to the patient, displaying the patient need with a target time in which to respond. While this is happening, the patient receives a confirmation that their request has been made to the nursing team, providing them with important emotional reassurance.

D.Assist provides nurses and the medical team with critical information needed to effectively respond to patients and save lives. For patients, D.Assist is also capable of connecting them with entertainment services such as music and books, and can be combined with intelligent room automation to enable smart controls of the patient environment. Patients can access D.Assist from anywhere in the room, calling for assistance even when the call button is out of reach, such as after a fall.

Stakeholder considerations •• Designing and utilizing innovative, Yet the industry also needs to narrow the Health care organizations should consider technology-enabled customer programs gap between rapidly increasing consumer extending their focus beyond price and that take behaviors and preferences demands and clinical appropriateness: quality of care to create a customer-centered into consideration to deliver the right Are providers delivering the right level of relationship by: experience at the right time diagnostic services and interventions? Just because there’s a demand doesn’t mean •• Focusing on customer engagement and •• Defining the market segment(s) their brand there is a need. Also, how can stakeholders experience using the same principles and and services will become recognized and create a business case to effectively and practices that successful, customer-driven valued for delivering efficiently deliver on patient expectations? businesses use Health care has an opportunity to learn Technology is making consumers more •• Acknowledging that attracting and from other industries (consumer products, active in the health care decision-making retaining customers impacts the bottom financial services, and hospitality, as process. Providers and payers should line examples) how to more effectively target, capitalize on this trend and improve serve, communicate with, and retain •• Understanding that health care is communications and the patient experience customers. “shoppable” and that consumer life cycle (research, diagnosis, treatment, and expectations are increasingly high follow-up).

24 2018 Global health care outlook l The evolution of smart health care Shaping the workforce of the future Health care workforce challenges are One hundred percent of providers surveyed Changing the proximity of where care can being felt across more and more countries. in the 2017 Deloitte Human Capital Trends be provided—remotely, in a patient’s home, Staffing shortages are evident in a number of report say they plan to make significant or by specialists that are 100 of miles from hospital specialties (emergency medicine and progress in adopting cognitive and AI the patient’s location —allows certain geriatrics) and in general practice; there are technologies in the next three to five years. clinicians to see more patients, attend to also growing nursing shortages across both Additionally, 33 percent say they consider it more complex episodes of care, and serve health and social care. Compounding the a priority to develop employees so they can populations across a wider geography problem is a scarcity of leaders with strategic, work side-by-side with robots; as a result and in hard-to-reach locations. It also next-generation skills to guide and support of those workflow-enhancing applications, enables clinicians to “practice to the top of the transformation to becoming patient- individuals can and will need to take on more their license” and spend more time doing centric, insight-driven, and value-focused advanced skills. However, despite the heavy impactful and fulfilling work. organizations. emphasis and awareness of the changes, none of the providers surveyed responded Health care organizations have an Digital technology, robotics, and other that they have made significant progress in opportunity to help talent and technology automated tools have enormous potential adopting these technologies.109 join forces rather than compete with each to resolve current and future health care other, and should coordinate human and workforce pain points—if stakeholders Innovative new solutions that can address technological resources from the outset. are willing to embrace an augmented present-day provider pain points and focus Already, leading health systems are workforce, the concept that all of the work organizations on mission-critical activities demonstrating the benefits of an augmented that employees do will be augmented; will be to support the quadruple aim—enhance workforce. For example, Automated Guided extended in different ways. the patient experience, improve the health Vehicles (AVGs) at Sydney, Australia’s Royal of populations, reduce the per capita cost, North Shore Hospital deliver about 2,000 In Deloitte’s view, the future of work is likely and enhance the caregiver experience meals a day for patients and carry 25,000 to be powered by technology advancements of health care—will spring from different kilograms of linen, freeing staff to focus more and an augmented workforce that combines combinations of technology and talent. on patient care. The next chapter of Chinese people and machines to get things done in a Nurses could use digital technology, health care reform is “balancing health way that’s not only more productive, but also robotics, and other tools to redirect their care resources,” with the goal of improving more rewarding. From a hospital or health time from rote administrative tasks toward public hospitals’ operational efficiency. One system perspective, it means addressing “healing-touch activities” and decision potential strategy: adopting a technology- pain points including a dispirited workforce making, while minimizing potential costs aided enterprise management model in with growing staff shortages and high levels and improving care related to human error which hospitals use professional managers of burnout, a reduced ability to attract and resulting from manual activities, overwork, instead of senior doctors to manage retain top skills, a reduction in the quality and lack of resources. For example, home operations, implement clinical pathways, and of care, and a loss of position as a patient’s voice-activated devices could be used optimize the care delivery process. provider of choice.107 to support oral chemo symptomatology management and enhance outcomes. When planning for the future of work, health What stands in the way of more rapid Robotic support for lifting patients could care organizations will need to assess the progress in the move toward augmenting reduce physical burdens and injuries. And an trajectory of specific jobs and workflows, today’s workforce? One factor may be application-based crowdsourced scheduling evaluating the mix of factors that combine to that many leaders of health care provider software can enable more flexibility in shift operate those jobs and processes, and how organizations anticipate that the scale management, reduce last-minute shift they can be re-envisioned by using enabling and pace of change will overwhelm their changes, and improve coverage.111 technologies and new talent models such as: workforce and compound current talent issues. What these executives may not be In addition to easing current concerns, considering is that technology-fueled shifts in the future of work also represents a huge the nature of work represent a tremendous opportunity to evolve the ways in which care opportunity to help resolve today’s challenges is delivered. For instance, health systems are and build tomorrow’s capabilities.108 beginning to take advantage of telemedicine technologies that enable virtual care.

25 2018 Global health care outlook l The evolution of smart health care

•• Physical proximity: Must this job happen As individual health care organizations in person or on-site? Does the physician, seek to map out their workforce strategy, nurse, or other caregiver need to be it is important to realize that each part of present at the site of service delivery? the workforce will evolve not along a single What about the patient? Can the care linear path, but in response to a collection or service be delivered virtually or in a of forces. Breaking down the clinical work location that has hard-to-find skillsets or steps and evaluating opportunities to more affordable labor? leverage automation and alternative talent models can identify opportunities for •• Automation level: How much of the work augmentation in clinical workflows, pinpoint is made up of tasks that can be delivered where clinicians, patients, and their families through robotics, cognitive intelligence, AI, will benefit from new technologies, identify or other technologies? What skill-based how alternative talent models can reduce parts of the job must remain in human burnout, and expand locations where care is hands? How can humans and robots work delivered for a better-served population.113 in concert with one another to optimize performance?

•• Talent category: Is this a full-time, in- house job? To what extent can different categories, such as contract, off-balance- sheet (e.g., external consultants), or crowdsourcing, accomplish this?112

Stakeholder considerations As health care technologies’ reach and influence begin to transform longstanding clinical and administrative processes, the workforce structure will inevitably change. Jobs which involve repetitive or administrative processes may be automated and replaced; for example, the use of mobile applications for appointment booking could potentially reduce many receptionist jobs. On the other hand, an augmented workforce should enable clinicians and other staff to focus more on their core responsibilities and improve treatment efficiency and quality. Also, an AI- or robotics-augmented health care workforce may be able to make better decisions, reduce errors, and increase productivity.

From a technology perspective, the future of work is already here. But in many health care organizations, the plan for working in that future is still on the drawing board.

26 2018 Global health care outlook l The evolution of smart health care Appendix

Explore the latest health care sector Supporting healthy communities Hospital mergers and acquisitions: When research from Deloitte members or visit: As health care shifts toward treating people done well, M&A can achieve valuable www.deloitte.com/us/healthsolutions before they get sick, community partners outcomes www.deloitte.co.uk/centreforhealthsolutions and government agencies are becoming With a rise in the number of mergers and www.deloitte.com/healthcare involved, aiming to address social factors acquisitions in the health care industry, such as education and housing. More we conducted a study with the Healthcare Time to care: Securing a future for the players, though, means more complications, Financial Management Association to hospital workforce in Europe particularly in funding. One possible learn more about the factors that lead to There is widespread recognition across solution: a hub model. increased value following a hospital merger Europe of the growing mismatch between or acquisition. demand for hospital care and the supply Addressing social determinants of health of staff and other resources to meet that in hospitals: How are hospitals and health Cognitive health care in 2027: Harnessing demand. The quality of care is dependent systems investing in social needs? a data-driven approach in personalized on having the right professionals with the Our survey of 300 hospitals and health health care right skills in the right place at the right time; systems explores how factors outside the “Precision medicine” or care that is highly however there are concerns that the current health care system—the social determinants personalized for each person’s genome workforce model is unsustainable. of health—affect patients’ long-term well- is likely to revolutionize health care of the being and what health care organizations future. And cognitive technologies will play The future awakens: Life sciences and health can do to address these challenges. a pivotal role, as handling the enormous care predictions 2022 amounts of data—one of the imperatives of The year is 2022. The quantified self is Deloitte 2017 survey of US health system cognitive health care—requires much more alive and well, digital technologies have CEOs: Moving forward in an uncertain than just “artisanal” analytic capabilities. transformed the culture of health care environment and new entrants have disrupted delivery CEOs at hospitals and health systems models. We offer some predictions that, are faced with increasing headwinds as if they come true, will shake up the life they look to move forward in an uncertain sciences and health care industry in the next environment. So what are the key issues and five years. trends CEOs are facing? While none of the key themes emerging from our interviews The digital hospital of the future have really changed since we last spoke with In 10 years, technology may change the face health system CEOs in 2015, the urgency of global health care delivery. As the cost of certainly has. Instead of thinking about these care continues to rise, many hospitals are issues in a futuristic sense, CEOs are ready looking for long-term solutions to minimize to address and tackle them now. inpatient services. Learn how technology and health care delivery will merge to influence Can emerging technologies improve hospital the future of hospital design and the patient performance? Strategies for healthier experience across the globe. operating margins Hospitals are anticipating tighter operating Breaking the dependency cycle: Tackling margins in 2017 and beyond, due to health inequalities of vulnerable families increasing financial pressure from policy, Vulnerable families face significant health industry, and market changes. This report inequalities, despite rising life expectancy discusses innovative technologies and across Western Europe. While access to good cost-reduction strategies that hospitals health care is important, it only accounts for can consider to enhance revenue, increase 15-25 percent of health inequalities. A range efficiency, and achieve long-term financial of social determinants crucially drives trends stability. around mortality and ill-health, including quality of education, housing, employment, working conditions, and welfare.

27 2018 Global health care outlook l The evolution of smart health care Endnotes

1. World Industry Outlook, Healthcare and Pharmaceuticals, The Economic 25. The uncertain road ahead: Could technology offer hospitals relief from Intelligence Unit, June 2017 increasing margin pressures?, Deloitte Center for Health Solutions, 2. Ibid 2017, https://www2.deloitte.com/us/en/pages/life-sciences-and-healthcare/articles/hospital-financial-performance-emerging-technologies. 3. Ibid html?id=us:2sm:3ab:dohcg:eng:lshc:111017&pkid=1004787 4. World Industry Outlook, Healthcare and Pharmaceuticals, The Economic 26. Ibid Intelligence Unit, June 2017, citing the World Health Organization (WHO) 27. CR Group website 5. World Industry Outlook, Healthcare and Pharmaceuticals, The Economic Intelligence Unit, June 2017, citing the Joint UN Programme on HIV/AIDS 28. Deloitte 2017 Survey of US Health System CEOs: Moving forward in an (UNAIDS) uncertain environment. Chapter 3: Margin pressure and the search for new revenue streams, Deloitte Center for Health Solutions, 2017 6. Ibid 29. Ibid 7. World Industry Outlook, Healthcare and Pharmaceuticals, The Economic Intelligence Unit, June 2017, citing the International Diabetes Federation 30. High-value health care: Innovative approaches to global challenges, Deloitte, 2016 8. The future awakens: Life sciences and health care predictions 2022, Deloitte UK Centre for Health Solutions, November 2017, https://www2.deloitte.com/uk/ 31. High-value health care: Innovative approaches to global challenges, Deloitte, en/pages/life-sciences-and-healthcare/articles/healthcare-and-life-sciences- 2016, citing Roberto Tapia-Conyer, Héctor Gallardo-Rincón, and Rodrigo predictions.html. Dementia statistics. Alzheimer’s Disease International, 2017. Saucedo-Martinez, “CASALUD: an innovative health-care system to control and See also https://www.alz.co.uk/research/statistics. prevent non-communicable diseases in Mexico,” Perspectives in Public Health 135, no. 4 (2013), p. 180-90, DOI:10.1177/1757913913511423. 9. Ibid 32. High-value health care: Innovative approaches to global challenges, Deloitte, 10. World Industry Outlook, Healthcare and Pharmaceuticals, The Economic 2016, citing Roberto Tapia-Conyer et al., “Enablers and inhibitors of the Intelligence Unit, June 2017 implementation of the Casalud model, a Mexican innovative healthcare model 11. Ibid for non-communicable disease prevention and control,” Health Research Policy 12. OECD Health Statistics 2016 http://www.oecd.org/health/health-data.htm and Systems 14, no. 51 (2016), DOI:10.1186/s12961- 016-0125-0. 13. Centers for Medicare and Medicaid Services (CMS) “NHE Tables” and “Historical 33. Future of the Integrated Community Care System: from Care by Society to Care and Projections 1960-2024” National Health Expenditure Projections, 2016–25: in Local Communities. https://www.researchgate.net/publication/242172161_ Health Affairs Future_of_the_Integrated_Community_Care_System_from_Care_by_Society_to_ Care_in_Local_Communities 14. World Industry Outlook, Healthcare and Pharmaceuticals, The Economic Intelligence Unit, June 2017 34. (https://www.moh.gov.sg/content/moh_web/home/pressRoom/ speeches_d/2016/speech-by-minister-fo-health--mr-gan-kim-yong--at-the- 15. “Grattan Institute: ageing population ‘will not cause collapse of health moh-commit.html) system,’” The Guardian, 21 July, 2016, https://www.theguardian.com/australia- news/2016/jul/21/grattan-institute-ageing-population-will-not-cause-collapse- 35. “Transformation of Health System Needed to Improve Care and Reduce of-health-system Costs,” news release, National Academies, 6 September, 2012, http://www8. nationalacademies.org/onpinews/newsitem.aspx?RecordID=13444 16. World Industry Outlook, Healthcare and Pharmaceuticals, The Economic Intelligence Unit, June 2017 36. http://www.choosingwisely.org/ 17. Ibid 37. https://www.efim.org/about/efim-choosing-wisely 18. Peterson-Kaiser Health System Tracker, Analysis of Truven Health Analytics 38. “Reducing Low-Value Care,” Health Affairs Blog, 20 September, 2016, Market Scan healthaffairs.org/blog/2016/09/20/reducing-low-value-care/ 19. ANAHP – Observatório 2017 39. “Transformation of Health System Needed to Improve Care and Reduce Costs,” news release, National Academies, 6 September, 2012, http://www8. 20. https://www.england.nhs.uk/five-year-forward-view/next-steps-on-the-nhs- nationalacademies.org/onpinews/newsitem.aspx?RecordID=13444 five-year-forward-view/executive-summary 40. Es Nash, “Defining and delivering population health,” A View from the Center, 21. “China’s ‘zero markup’ hospital reforms mixed bag for patented drugs,” Deloitte Center for Health Solutions, 15 October, 2015. Available at [http://blogs. BioWorld, 2017, http://www.bioworld.com/content/chinas-zero-markup- deloitte.com/centerforhealthsolutions/definingand-delivering-population- hospital-reforms-mixed-bag-patented-drugs-2. health/] 22. “The impact of China’s Zero-Markup Drug Policy on county hospital revenue 41. Hospital CEO series: Chapter 2: Population health and value-based care, and government subsidy levels,” ResearchGate, February 2015, https://www. Deloitte Center for Health Solutions, 2017 researchgate.net/publication/273485851_The_impact_of_China%27s_Zero- Markup_Drug_Policy_on_county_hospital_revenue_and_government_subsidy_ 42. The State Council of the People’s Republic of China levels 43. The future awakens: Life sciences and health care predictions 2022, Deloitte 23. BMI Research – Brazil Pharmaceuticals & Healthcare Report 2017 3Q UK Centre for Health Solutions, November 2017, https://www2.deloitte.com/uk/ en/pages/life-sciences-and-healthcare/articles/healthcare-and-life-sciences- 24. 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Wullianallur Raghupathi and Viju Raghupathi, “Big Data In Health Care: Using Analytics To Identify And Manage High-Risk And High-Cost Patients,” Health 70. Cognitive health care in 2027: Harnessing a data-driven approach in Affairs 33, no. 7 (2014): pp. 1123-1131, DOI: 10.1377/hlthaff.2014.0041. personalized health care, Deloitte University Press, 2017, https://dupress. deloitte.com/dup-us-en/focus/cognitive-technologies/cognitive-health-care- 51. Jesse Pines, David Newman, Randy Pilgrim, and Jeremiah D. Schuur, “Strategies in-2027.html for Integrating Cost-Consciousness into Acute Care Should Focus on Rewarding High-Value Care,” Health Affairs 32, no. 12 (2013): pp. 2157-2165, DOI: 10.1377/ 71. The hospital of the future: How digital technologies will change hospitals hlthaff.2013.0685. globally, Deloitte Center for Health Solutions, 2017 52. Michael Furukawa, Vaishali Patel, Dustin Charles, Matthew Swain, and 72. “A revolutionary digital tool for the healthcare industry: The Internet-of-Things,” Farzad Mostashari, “Hospital Electronic Health Information Exchange Grew Inside Magazine - Issue 15, Deloitte, June 2017, https://www2.deloitte.com/tr/ Substantially in 2008-12,” Health Affairs 32, no. 8 (2013): pp. 1346-1354, DOI: en/pages/life-sciences-and-healthcare/articles/digital-health-iot.html 10.1377/hlthaff.2013.0010. 73. The Daily Dot, 12 May, 2017, https://www.dailydot.com/debug/wanna-cry- 53. https://www2.deloitte.com/content/dam/Deloitte/us/Documents/life-sciences- ransomware-malware-attack-nhs/ health-care/us-lshc-dchs-convergence-of-trends.pdf 74. “UK NHS ransomware cyberattack spreads across the globe,” Clinical Innovation 54. Robert Wood Johnson Foundation, “Why we need a culture of health,” March + Technology, 12 May, 2017,http://www.clinical-innovation.com/topics/privacy- 2016 security/uk-nhs-ransomware-cyberattack-spreads-across-globe 55. Health Policy Brief: The Relative Contribution of Multiple Determinants to 75. “2017 Data Breach Investigations Report,” Verizon Communications, 2017. Health Outcomes,” Health Affairs, 21 August, 2014 [http://www.verizonenterprise.com/verizon-insights-lab/dbir/2017/]. 56. Breaking the dependency cycle: Tackling health inequalities of vulnerable 76. “2017 on Track to Exceed 2016 Trend of ‘One Health Data Breach Per Day,’” families, Deloitte UK Centre for Health Solutions, June 2017, https://www2. 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82. “My Take: In an era of exponentials, health care is on the cusp of a potential 106. Rave N, Geyer M, Reeder B, Ernst J, Goldberg L, Barnard C, “Radical Systems major transformation,” Health Care Current, Deloitte Center for health Change: Innovative Strategies to Improve Patient Satisfaction,” The Journal of Solutions, 3 October, 2017, https://www2.deloitte.com/us/en/pages/ Ambulatory Care Management, April/June 2003 - Volume 26 - Issue 2 - p 159– life-sciences-and-health-care/articles/health-care-current-october3-2017. 174, http://journals.lww.com/ambulatorycaremanagement/pages/articleviewer. html?id=us:2em:3na:hcc:awa:chs:100317#1 aspx?year=2003&issue=04000&article=00008&type=abstract, 83. Ibid 107. “The future of work in health care: When talent and technology join forces,” A 84. Ibid View from the Center, Deloitte Center for Health Solutions, 7 November 2017, http://blogs.deloitte.com/centerforhealthsolutions/the-future-of-workin- 85. “Precision medicine: Bridging the gap between potential and reality,” A view health-care-when-talent-and-technology-join-forces/ from the Center, Deloitte Center for Health Solutions, 23 July, 2015; citing FDA definition http://blogs.deloitte.com/centerforhealthsolutions/precision- 108. Ibid medicine-bridging-the-gap-between-potential-and-reality/ 109. Deloitte 2017 Human Capital Trends report 86. 2016 Global health care outlook: Battling costs while improving care, Deloitte, 110. IHI Triple Aim Initiative, Institute for Healthcare Improvement, http://www.ihi. 2016 org/engage/initiatives/TripleAim/Pages/default.aspx 87. 2017 Global health care outlook: Making progress against persistent challenges, 111. “The future of work in health care: When talent and technology join forces,” A Deloitte, 2017, citing Top 10 health care innovations: Achieving more for less, View from the Center, Deloitte Center for Health Solutions, 7 November 2017, Deloitte Center for Health Solutions, 2016 http://blogs.deloitte.com/centerforhealthsolutions/the-future-of-work-in- 88. http://www.beckershospitalreview.com/facilities-management/34-most- health-care-when-talent-and-technology-join-forces/ expensive-hospital-expansion-renovation-projects-of-2016.html 112. Ibid 89. europa.eu/rapid/press-release_BEI-06-41_en.doc 113. Ibid 90. http://www.euro.who.int/__data/assets/pdf_file/0011/297938/France-HiT.pdf 91. https://www.ibef.org/download/Healthcare-January-2017.pdf 92. http://www.reuters.com/article/us-china-health-idUSKBN14V034 93. VCBeat Research 94. The hospital of the future: How digital technologies will change hospitals globally, Deloitte Center for Health Solutions, 2017 95. The future awakens: Life sciences and health care predictions 2022, Deloitte UK Centre for Health Solutions, November 2017, https://www2.deloitte. com/uk/en/pages/life-sciences-and-healthcare/articles/healthcare-and-life- sciences-predictions.html, citing mHealth app developer economics 2016. Research2Guidance, 2016. See also: https://research2guidance.com/product/ mhealth-app-developer-economics-2016/ 96. “Healthcare analytics market to reach USD18.7 billion by 2020,” news release, Medical Market Research, August 2016, https://www.whatech.com/market- research/medical/192126-healthcare-analytics-market-worth-18-7-billion- by-2020 97. Analytics to improve outcomes and reduce cost: Health systems and health plans can work together to jointly win the shift from volume to value. Findings from the Deloitte Center for Health Solutions 2017 US Health Plan Analytics Survey, https://www2.deloitte.com/us/en/pages/life-sciences-and-health-care/ articles/population-health-analytics.html 98. The hospital of the future: How digital technologies will change hospitals globally, Deloitte Center for Health Solutions, 2017 99. Ibid 100. The hospital of the future: How digital technologies will change hospitals globally, Deloitte Center for Health Solutions, 2017 101. Top 10 health care innovations: Achieving more for less, Deloitte Center for Health Solutions, 2016 102. 2017 Global Health Care Outlook: Making progress against persistent challenges, Deloitte, 2017, ttps://www2.deloitte.com/us/en/pages/life-sciences- and-health-care/articles/global-health-care-sector-outlook.html 103. Ibid 104. Ibid 105. Ed Lionberger, “Patient satisfaction and physician communication: Drivers of medical malpractice costs,” Becker’s Hospital Review, January 2015, http:// www.beckershospitalreview.com/finance/patient-satisfaction-and-physician- communication-drivers-of-medical-malpractice-costs.html 30 2018 Global health care outlook l The evolution of smart health care Contacts

Terri Cooper, PhD Stephanie Allen, PhD Global Health Care Sector Leader Global Public Sector Health Care Leader [email protected] [email protected]

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