With the rise and maturity of healthcare consumerism, the dawning of wearable technology, and an ever-increasing investment for companies bringing new technology to healthcare; many analysts believe that trillions of dollars are at stake, and traditional companies will need to adapt or fall.
In “The Next Wave: A New Generation of Tech Innovators Leads Shift to Consumerism,” the IHCC shares a brief history of the consumerization of healthcare, and the technologies looking to revolutionize the multi-trillion dollar industry that is healthcare.
The Decade-Plus Shift to Consumerization
With the signing of the Medicare Modernization Act in 2003, the complexities deterred many from adapting consumer-focused plans such as health savings accounts, and many Americans were not prepared to make the decisions associated with health savings accounts and high deductible health plans.
However, there were groups, albeit small, which began to urge businesses to step back from the ‘maternal’ approach to employee benefits taken for decades prior. This idea was slow to take off, but with the rise of healthcare costs came the realization that this ‘maternal’ model was becoming unsustainable and that shifting the costs to the consumer without offering decision support tools was insufficient.
Fast forward to today. With healthcare costs continuing to rise, the ACA passing in 2010, and the increase of information available to consumers; it seemed there was a ‘perfect storm’ brewing for innovators to make their move, with three factors pushing the technology adoption:
- Mobile Device Availability
- Introduction of Exchanges
- The Rise of Wearable Technology
Technology, Healthcare IT, and The Greatest Value Shift in History
Today, analysts are starting to take notice of technology’s role in the consumerization of healthcare, with several global consulting firms releasing reports in the past few months highlighting the growth and future of consumer-focused health care and benefits technology.
But what is driving this technology trend? For this, we turn to Accenture’s report, “Fueled by Healthcare IT Start-Up Funding, Digital Disruption is Knocking,” the reason is simple—growing consumer expectations. Americans are realizing their role, and are demanding control of both the financial and wellness side of their healthcare.
Accenture is not alone in their findings. Reports from Oliver Wyman and PwC confirm that this, the increase of consumer expectation in the marketplace (Patient-to-Consumer Revolution), is the driving factor for what Oliver Wyman calls, “the greatest value migration in history with trillions of dollars at stake.”
A New Center of Gravity?
PwC’s recent analysis of the “New Health Economy” suggests significant consumer-focused changes ahead. According to analysts at PwC’s Health Research Institute, the consumer is the “new center of gravity” in the health care world, and new entrants are already drawing revenue from traditional health care companies.
So, why does this affect traditional healthcare businesses?
Already finding that consumers are spending $2.8 trillion in healthcare, PwC also found that Americans are spending an additional $267 billion on supplemental health products and services including gym memberships, supplements, wearables, and health apps.
Companies that have not already made the move to cater to the needs of consumers in the marketplace can become obsolete. Whether it’s a startup or a Fortune 50 company, preparation plus opportunity equals success, and ‘incumbents’ are feeling the pressure.
Even a decade into this shift to consumerism, it seems that we are barely scratching the surface of change. In 2017, funding is expected to rise, nearly doubling to$6.5 billion for healthcare technologies startups. The industry is maturing before our eyes, and the drive to consumerization will only increase with continued legislation and technology.
Private exchanges, telehealth, wearables, you name it. All of this will continue to be part of a trillion-dollar shift.
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