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2015: A Look Forward to Value
As we enter a new year, the focus on real world advanced analytics, value as an expected basis for pricing and reimbursement, and services as a means to value will accelerate.
2014 saw the pace of industry innovation at its highest level in almost two decades with 41 novel medicines approved by the US FDA versus 27 in 2013.1 Furthermore, we saw therapies advance, representing entirely new paradigms, such as the second generation of immunoncology therapeutics and curative therapies for HCV.
Also in 2014, the industry experienced a major phase shift in the operating models and goals for many pharma, biopharma and device leaders. This shift is centered on real-world insights and advanced services that complement therapeutic interventions to assure patients and health systems are strong value beneficiaries.
The definition of what it means to be sector leader - having broad influence on the business and operating models of others - is changing rapidly with the role of the innovator extending beyond the therapy to encompass aspects of the healthcare system critical to achieving outcomes and integrated services".
This, we sense at Accenture, is a shift demanded by the global reforms in healthcare reimbursement and health system economics. Consequently, the definition of what it means to be sector leader - having broad influence on the business and operating models of others - is changing rapidly with the role of the innovator extending beyond the therapy to encompass aspects of the healthcare system critical to achieving outcomes and integrated services.
At Accenture, we believe this trend is poised to accelerate globally with key countries in Europe and regions in the US taking the lead.
What we’ll see in 2015
The last two years saw strategies evolve, early pilots initiated, and broad recognition that historical operating models were increasingly time limited.
Companies now realize that few single data sources or partners provide the scope and depth and insight needed to replace existing data sources and analytic approaches. The level of effort required to advance a care management solution with a regional partner, much less a global approach, is beyond the scope of those partners’ capabilities and financial means to sustain. Yet, these early initiatives have established the credibility of real-world data as an increasingly important and relevant source of insight.
As we enter a new year, the focus on real-world advanced analytics, value as an expected basis for pricing and reimbursement, and services as a means to value will accelerate.
Significant increased investment and operating model changes to complement this evolution are planned by many of the industry pharma, biopharma, and device leaders. Payers (e.g., their analytic and health services divisions, specialty pharma, etc.), advanced health provider systems, and digital infrastructure providers (e.g., mobile platform companies, cloud CRM, imaging, and health IT) are equally advancing investments and solutions. Altogether, we believe these firms will increasingly blur the historical distinctions between where a life sciences company, payer and provider operated. This is not creating ambiguity or just white-space focused competition. Rather it represents health ecosystem participants bringing to the patient the set of capabilities required to fully deploy, manage and evolve health management services for sustainable value.
The year of 2015 will see significant increases in the financial resources allocated and executive management attention given to advanced analytics and technology enabled services. For example, on January 5th Novartis announced2a joint investment company with Qualcomm Ventures of up to USD 100 million to support early stage companies with technologies, products or services that "go beyond the pill."
While established companies are investing $100s of millions, venture investors placed $4.1 billion into 258 digital health companies last year, according to venture funding data from Rock Health.3 We are now seeing meaningful connected devices for home-based heart failure patients, acute diabetic patients, weight loss engagement and monitoring, and infectious diseases. Advanced and highly robust systems are moving closer to patient and the home – as featured at the consumer electronics show CES and being planned for the retail chain Walgreens.4 While technology and data at scale will be a critical enabler of the new operating models, the returns in investment will come from new ways of working, new modes of collaboration, and sharing in the new value realized.
With this new scale and scope of investment and partners, we project the industry will experience new approaches to efficiently resolving the fragmentation of the current environment. Increasingly, we’ll see standards for data access and sharing; common data models and big-data enabled platforms for advanced analytics; and far more efficiently structured care services contracts that build in value-sharing mechanisms.
While there will be clear competition – a good thing in these early phases of health services innovation – there will also be the emergence of ‘neutrals’ that allow these data to be shared confidently and responsibly, and for common data and analytics to be made available at reasonable cost and with increased consistency (e.g., analogous to the role of NYSE, NASDAQ, S&P/ABA’s CUSIP, etc. in financial services).
Together, these investments and collaborative operating approaches will crystalize fundamental trends in four critical areas:
- Big Insight: Big data technologies are increasingly ubiquitous and not a differentiator. The emphasis is now on data acquisition and analytic capabilities required to gain insight into new approaches and better coordinate activities around a patient requires the cooperation of multiple entities and common enabling infrastructure.
- Integrated Scale: The scope and scale of a beneficial care management solution for most patient populations is beyond what any one provider and any one life science company can take on.
- Value Exchange: Where value is realized may be different than where costs are incurred, requiring exchange and contracting mechanisms bettering balancing beneficiaries, risk bearers, and investors. A real benefit of life sciences, provider and payer collaborations is the definition and enabling of these new value-based structures.
- Leaders and laggards: The definition of ‘preferred partner’ will evolve and create a greater separation between those that lead and those that follow. Leaders will bring a combination of scale, technology depth, analytic aptitude, advanced partnerships and open operating models to bear.
Evidently, the patient will be at the center and the beneficiary of all of these changes, with the local ecosystem of participants, and often even new partners, coming together to create new services and greater value. Accenture predicts that 2015 will see the transition from pilots and learning to full scale deployment of highly targeted solutions, increasingly more reliable and robust digital infrastructure connecting devices and across settings (e.g., home, clinic, car, etc.), where leaders accelerate investment, fully evolve their operating models toward a value-centric architecture, and create differentiating and distinctive partnerships.
1. Reuters, Jan 1, 2015; Pharma and biotech on a roll as drug approvals hit 18-year high
2. PR Newswire, Jan 5, 2015; Qualcomm announces strategic collaboration with Novartis to optimize global clinical trials
3. xconomy, Jan 15, 2015; Qualcomm-Novartis Deal Portends Wave of Clinical Trial Innovation
4. Chicago Tribune-BlueSky, Jan 9, 2015; CES: Walgreens, Qualcomm team up on devices that link to pharmacists
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