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Report: Amid Political Uncertainty, Shift to Value in Health Care Will Continue

Emerging policies, technologies, and drug pricing will fuel innovation and collaboration

According to PwC’s Health Research Institute (HRI), 2017 will be a year dominated by the continued shift toward value within health care as the industry adapts to a new era under the administration of President-elect Donald J. Trump. Traditional health organizations and new entrants will need to balance the uncertainty of the new administration’s approach to health care with the continued opportunities being created by forces greater than politics.

In its recently published annual report, “Top Health Industry Issues of 2017,” HRI highlights the top 10 forces that are expected to have the most impact on the industry in the coming year. Leveraging results from a survey of 1,750 U.S. consumers and interviews with health industry leaders, the report outlines three main strategies key health care players are expected to use to address the shift to value:

Adapt for value: The shift to a value-based world is forcing many organizations to adapt and is prompting a wave of fine-tuning across the industry. Although details of President-elect Trump’s plans to repeal and replace the Patient Protection and Affordable Care Act (PPACA) remain scarce, some health organizations are already developing models in preparation for policy changes. Pharmaceutical companies will look to better engage with patients as Trump indicates a move toward a patient-centered health care system that promotes choice, quality, and affordability. Additionally, the training wheels will start to come off of value-based payments, as MACRA’s first performance year kicks off in 2017 and the Centers for Medicare and Medicaid Services offers more bundled payment programs. Health systems will need to modernize payment systems to be low-risk, low-complexity, and secure in order to deliver more consumer-centered experiences.

Innovate for value: Health organizations, new and traditional, are addressing the shift toward value through invention and innovation. In 2017, the health care industry will need to prepare for emerging technologies—such as artificial intelligence, virtual reality, and 3D printing—and their impact on business models, operations, workforce needs, and cybersecurity risks. The battle against infectious diseases will also contribute to collaboration among public health agencies and private industry across the U.S. and Europe. In addition, growing awareness of diet as a key driver of U.S. health care costs may fuel the creation of inventive programs across the industry.

Build for value: Health organizations are building new solutions to address issues raised by the shift to a value-based ecosystem. Due to sustained market pressures, industry trade organizations and pharmaceutical executives may set new pricing restrictions in 2017. Health care mergers and acquisitions will likely continue in 2017, but the industry may also witness an uptick in alternative transactions as organizations aim to build new capabilities quickly in order to stay competitive. As the health care landscape continues to evolve, innovative programs are preparing medical students for work in a value-based world.

“Today we have a health system that is more connected, transparent, and patient-centric than ever before. Over the course of the past decade, the health care industry has witnessed significant improvements, but also consistent challenges in the New Health Economy,” said Kelly Barnes, PwC U.S. Health Industries leader. “There is still work to be done to improve the consumer experience and affordability even as a new presidential administration starts to make their mark on the health system. Our prescription for the industry—double down on more innovation, new collaborations, and the shift to value-based care."

The report also identifies additional details on the top 10 business issues the health care industry will confront in the coming year.

The full report and its associated graphics are available at: www.pwc.com/us/en/health-industries.html.

Source: PwC; December 15, 2016.

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