A new report that attempts to gaze into healthcare's future indicates the forecast remains mostly sunny. More precisely, it looks like an industry filled with golden business opportunities, at least for those with the right knowledge and skill sets.
The report, The new gold rush: Prospectors are hoping to mine opportunities from the health industry, was published by the Health Research Institute at consultancy PricewaterhouseCoopers.
Among key takeaway points, the report notes that healthcare—projected to account for 19.6% of gross domestic product by 2019 compared with 17.4% for 2011, according to updated CMS estimates—is already witnessing a growing presence from nontraditional healthcare companies. Amid such a sluggish economy, it seems everyone wants to get in on the action.
For example, 76% of the Fortune 50 companies are already in the healthcare industry or have health divisions. Only 24% would be considered traditional healthcare companies, but 52% are entering the industry in nontraditional ways, such as retail operations and playing new roles as catalysts. They include integrating information and technology to help patients and providers make better decisions on health issues, as well as services that aid in navigating the complex maze that constitutes our healthcare “system,” especially concerning government programs.
These new offerings hold the potential to not only improve the quality of healthcare delivery but also help contain costs. The latter, the Holy Grail for healthcare organizations in the current political environment, is going to only grow in importance as pressure mounts, especially on the governmental side of the payer equation, to budge a seemingly unbendable cost curve. The pressure is on to slash the thick slice of GDP that healthcare consumes year after year.
But this leads to another interesting finding in the PwC study: When it comes to new healthcare products and services coming into the market, survey data cited show that consumers are collectively willing to spend quite freely, nearly $14 billion a year on these new products, which include things such as services that rate healthcare providers, apps for mobile devices specific to healthcare and health-related video games. And this discretionary spending is all out-of-pocket. No government stimulus program required.
Certainly the purveyors of such new products and services need to deliver real value for the money. The marketplace should reward only true innovations that help solve the diverse problems that have long plagued our healthcare system.
The report includes a caveat: “The healthcare industry is not for the faint of heart. It is complex and turbulent, and it operates on basic principles foreign to companies in other industries. … Many examples exist of companies with failed healthcare entry attempts because of lack of industry knowledge and understanding.”
Let's see if the healthcare newcomers can master the art of financial alchemy. It won't be easy.
Follow David May on Twitter at twitter.com/MHdmay.