- The new year will be dominated by six major trends, according to consultancy PwC's Health Research Institute: A boost in use of connected health, artificial intelligence, private equity, organizations looking at a Southwest Airlines approach and changes to the Affordable Care Act and tax changes.
- The trends suggest the industry is shedding its image as an outlier in the economy and starting to look and behave like other industries do, according to Top Health Industry Issues of 2019: The New Health Economy.
- Nearly three-quarters polled said they would be more likely to stay with an employer offering training in AI, robotics and data analytics and one in three reported general satisfaction with the health law.
PwC paints a hopeful picture of the industry stepping up to modernize in the year ahead, predicting a 'coming of age' in several respects.
Among them are new digital therapeutics and connected devices that will target atrial fibrillation, substance abuse, diabetes, epilepsy and other conditions, the consultancy contends.
"The arrival of digital therapeutics — an emerging health discipline that uses technology to augment or even replace drugs in disease management — is reshaping the landscape for new medicines, product reimbursement and regulatory oversight," the report says. "This means that new data sharing processes and payment models will be established to integrate these products into the broader treatment arsenal and regulatory structure for drug and device approvals."
Meanwhile, investments in AI and robotic process automation will force healthcare organizations to invest in and train employees to get the most out of these technologies. "For companies concerned about disruption, upskilling and reskilling make for a nimble, sustainable strategy," the report says. "More specialization will be needed, and competition for the talent with those skills will be fierce."
During 2019, organizations will start to feel the effects of big corporate tax cuts enacted at the end of 2017, with tax savings for some and new challenges for others. While for-profit organizations see lower tax rates on earnings and the chance to repatriate foreign cash at favorable rates, nonprofit hospitals could face greater tax liabilities that require them to include the value of employee fringe benefits as unrelated business taxable income.
Emerging trade pressures will also create uncertainties for some companies in 2019, the report says.
The medical device trade group AdvaMed, for example, told PwC that tariffs recently imposed by China in retaliation for U.S. tariffs targeted $3.5 billion in products, totaling $754 million in new taxes.
With the average health insurance deductible triple what it was a decade ago, PwC believes 2019 could also be the year for value line products and services — àla the Southwest Airlines approach. Denver-based Ardás Family Medicine and Cityblock Health in New York City are examples of startups that are offering lower-cost delivery models.
With private equity firms flush with cash, healthcare companies should look at selling noncore business units and consider partnering with PEs to increase growth and scale.
According to Rock Health, digital funding hit an all-time high in 2018, totaling $8.1 billion across 368 deals — a 42% increase over 2017’s haul. The momentum carried over into January with Alphabet’s life sciences arm Verily snagging $1 billion in a funding round led by PE firm Silver Lake.
Finally, Republican tinkering with the Affordable Care Act will create new winners and losers in 2019, the group said. Poised to gain are healthy people and small businesses seeking cheaper premiums, payers selling limited plans and new entities focused on underinsured and uninsured individuals. On the losing end are providers and payers with high volumes of Medicaid or ACA-insured patients living in conservative states.