From robotic surgery to telehealth, digital advances are driving innovation in all areas of healthcare, a trend that can be expected to accelerate during and after this era of pandemic-caused isolation.
We see dramatic changes in these areas: (1) Sensors and wearables; (2) Virtual Reality and Augmented Reality; (3), 3D printing; (4) AI driving analytics, automation, and robotics and; (5) The rise of chatbot. In fact, we are already experiencing the impact of the coronavirus isolation in some areas, such as telehealth and 3D printing.
On the grand scale, robots have been proven to be more precise than surgeons and AI can diagnose cancers with a success rate of 99%. In 2020 cost pressures –compounded by the coronavirus initiative- and regulatory change will act as the major catalysts for digital health treatments, which have a crucial role to play in delivering effective, fast, and cost-efficient patient care.
For instance, the pandemic isolation combined with digital health advances are helping shift care to be based around people’s homes.
Local care is not just more convenient and less stressful for patients, it also makes financial sense, when you consider the average hospital stay in the US is upwards of $10,000, totaling over $1 trillion annually in hospital services, and that 60 percent of all bankruptcies in the US are related to medical expenses.
The transformation of traditional value systems in healthcare will continue to accelerate as patients increasingly become better-informed health “consumers”. Thanks to digital, the “value pool” is shifting in this industry, resulting in cost savings for patients thanks to better system efficiency. 2020 will also see the introduction of standalone 5G, which will enable the adoption of an almost limitless number of applications involving AI, big data and the IoT. Many healthcare-related high-bandwidth projects will be set free by 5G’s connectivity, bringing therapies from within hospitals into the field.
The healthcare industry is ripe for disruption and transformation. According to McKinsey & Company, U.S. pharma is “in a state of flux.” Seismic shifts are happening, from significant merger and acquisition (M&A) activity to pharmacy store closures to changes in strategic partnerships between major health insurers and pharmacy benefit managers (PBMs), and the seemingly inevitable entry of Amazon into the market. Moreover, the healthcare ecosystem continues to face challenges as it attempts to comply with regulations like HIPAA and HITECH.
During this period of change, McKinsey’s research establishes three imperatives for healthcare businesses to consider. The first is to pursue business models that deliver a lower total cost of care for consumers and employers. The second involves leveraging data aggregation and big data analytics to generate insights and create value, and the third is to put the consumer at the center of everything by creating innovative ways to bring more consumer-driven insights and actions into the business.
The growth in digital health indicates that many businesses are acting on these imperatives and are finding commercial success. The digital health sector currently is estimated at $86.4 billion and is predicted to grow by almost 30 percent year-over-year through 2025. But with such a vast and complex industry like healthcare, it is challenging to appreciate the realities of digital disruption without drilling down into specific sub-sectors and profiling some of the disruptors that are in the process of altering their landscapes.
Following are some examples of how the “value pool” is shifting in this industry, resulting in cost savings for patients through the elimination of waste.
Pharmacy benefit management value pool shifts by removing inefficiencies
Pharmacy benefit management (PBM) includes third-party administrators for prescription drug programs at insurance companies, businesses, self-insured employers and government health plans. PBMs have a vast market valuation of $368 billion, as of 2018, within the U.S. healthcare system and an expected annual growth forecast of more than 9 percent.
Despite the size of the market, however, many PBMs do not have the technical sophistication to flourish in the digital world, which has given rise to companies such as RxSense. Previously a PBM, RxSense pivoted to meet the real-time needs of customers by providing a business-to-business (B2B) digital platform for the whole PBM industry. Its goal is to bypass problems with legacy PBM systems, including a lack of innovation, inefficiencies, inflexibility and challenges around accuracy and transparency.
The next step beyond digitization for players such as RxSense will be the application of artificial intelligence (AI) and machine learning technologies to further increase administrative efficiency, drive down costs and, ultimately, improve clinical outcomes.