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December 11, 2019 06:00 AM

Health systems weigh return on investment as they ramp up tech

Alex Kacik
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    As healthcare executives look to prepare their organizations for a digital overhaul, many are still uncertain about the return on investment while they seek more effective ways to use all the incoming data, according to a new report.

    Training employees to use digital tools was the top priority among 300 health system executives surveyed by PricewaterhouseCoopers' Health Research Institute in September, followed by automating tasks previously performed by employees and hiring tech-savvy individuals. But efforts to implement new technology and automate processes are hampered by the fact that many organizations have yet to realize a meaningful return, according to PwC.

    "Last year, a lot of these digital investments were piloted and tested. This year, we expect to see much more scrutiny on the ROI for those efforts," said Gurpreet Singh, a partner at PwC and its health services sector leader. "We're still at an inflection point."

    Singh noted a disconnect between employees and employers when it comes to artificial intelligence and data analytics. About three-quarters of new healthcare employees indicated that a major reason they joined a company was the expectation they would be crunching data through AI and machine learning. But only about a quarter or organizations said they offer related training programs, he said.

    Weaving data into operations, business models and approaches to consumers remains a priority despite uncertainty over whether these investments will lower costs and improve care delivery, PwC's annual health trends report said. Poor data reliability, data protection and privacy regulations, the inability to adequately protect and secure information, and a lack of analytical talent hold healthcare organizations back, researchers found.

    "You can get consumers to use the apps, but how do you get the combination of a doctor and the health system or practice setting to change how they are doing things?" Christopher Khoury, the American Medical Association's vice president of environmental intelligence and strategic analytics, told PwC.

    The report illustrates a central debate in healthcare over the utility of digitization endeavors and the push toward a more consumer-driven approach.

    Healthcare executives are using online portals, remote monitoring devices, virtual consultations, and scheduling and billing tools to try to get individuals more involved in their health. But critics contend that consumers don't have access to the information to best steer their care and that health systems are not yet equipped to scale and standardize those efforts.

    Only 21% of healthcare companies employ a chief digital officer compared with 32% of financial services firms and 41% of insurance companies, PwC found. That could indicate a lack of investment in how these digital investments will be appropriately managed, Singh said.

    "We are now seeing data interoperability as a major topic," he said. "That means reliability, protection and privacy are key investments there."

    Health systems are increasingly turning to tech companies like Google to help them understand and use data. Those announcements were met with concerns over privacy.

    Access to new technology was the main driver behind provider mergers and acquisitions, 24% of executives polled by PwC said. The next-highest goals were cost synergies and affordability at 16%.

    Yet, PwC found that many systems are failing to use many strategies to help consumers pay for their care. Only 77% of provider executives said they are directing patients to lower-cost care options and half do not offer payment plans without interest. Less than half said they are developing programs focused on high-cost patient populations.

    It will be hard to develop those programs without a diverse workforce. To date, most diversity, equity and inclusion efforts have focused more on diverse representation than on equity and inclusion, researchers said. Only 8% of healthcare organizations said in a 2019 PwC survey that the primary objective of their diversity, equity and inclusion initiatives is to respond to customer expectations and needs.

    "There's been an inflexible model of medical education for over 100 years, which has led to some maladapted behaviors," Dr. John Andrews, vice president of graduate medical education innovations at the American Medical Association, told PwC.

    Engaging traditionally underserved populations will be key to curbing costs. In 2019, the average employer-sponsored family insurance plan grew 5% to $20,576. That number may continue to rise given the pipeline of gene and cell therapies that cost hundreds of thousands of dollars.

    The Food and Drug Administration expects to receive 200 investigational new drug applications for gene and cell therapies in 2020, with 10 and 20 approvals per year by 2025. As of September, the FDA had approved just four gene therapies, according to PwC.

    Health systems are increasingly looking overseas, in part, to secure new revenue streams in pharmaceuticals and other technology. Around half of the largest for-profit providers and all of the largest not-for-profits have international research and education activity, venture capital funds, philanthropy support or business operations, PwC found.

    "For those that can afford it, it can be a big payday," Singh said. "But there is some trepidation as to what the tax laws are going to do."

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