Healthcare Disruptors Beyond COVID-19
The healthcare industry has been significantly challenged and disrupted in the last two years. Thrusted into a crisis by COVID19, although acting as an accelerator of change for the industry, the pandemic exposed several broken aspects of the legacy healthcare system and the pharma industry, mainly incoherent technology initiatives, a long-established traditional mindset, and an outdated business model. COVID-19 became a transformational moment for the health sector. It has forced companies to re-examine, at multiple levels, the way they do business.
Moreover, beyond COVID-19, the digital transformation, the rise of the Internet of Things and the Internet of Medical Things — well underway prior to the pandemic — and the increasing pressures to lower costs and prices have also forced consumer habits and their expectations to evolve. Patients are also consumers, and as such, today they expect more from their doctors, health organizations, hospitals, pharmaceuticals, products and services. At that, more patients are wanting to take a much more active role in their own health and virtualization choices.
For the past several decades, health systems, hospitals, private physician practices and insurance health plans have run in a consistent manner; however, the average patient has had to deal with confusing processes, unexpected costs and a limited number of services, regardless of segment — public or private. Healthcare disruptors know there is more than one way to run a business in this sector, and as such, they have taken the opportunity to shake up and disrupt the segment, causing radical change and potentially resulting in new leaders in the field.
New incumbents in the market, from different sectors (retailers, technology, telecommunications, wellness, and others) are already searching for overlooked gaps in the value chain and creating innovative solutions to bridge those “holes,” potentially snatching billions of dollars of revenue from traditional healthcare/pharma companies; quickly setting themselves apart as healthcare industry disruptors and significantly blurring traditional boundaries between industries and areas of specialization.
The sector then, should be ready for transformation. Moving from an inefficient and overwhelmingly costly system into one that prioritizes value above all. Healthcare businesses will thrive only if they contribute to the delivery of high-quality and cost-effective care, digitizing health information and ultimately pulling the patient into the center of the dialogue.
These new players in the market are making big changes that significantly redefine the way care is delivered and are already starting to nibble at the edges of the traditional healthcare ecosystem, as patients become more willing to abandon traditional care venues for more affordable, accessible, and convenient alternatives – i.e., at-home, online and/or retail options in the case of minor health problems. Although some current players have recognized the threat and have acted, often by buying companies, partnering, or creating new business lines, they still lag and lack agility to evolve and provide products and services in the new setting consumers want.
Companies such as Amazon, Apple, CVS, Walmart, DuPont, General Electric, Google, IBM and Samsung, are already stirring up the life sciences industry and gaining traction by challenging the status quo. These new players approach challenges and opportunities in unconventional ways. They are empowered by technological advancements and bring insights that are borrowed from other industries, so they will not be burdened by traditional or outmoded business structures and motivations that have hindered the health sector’s ability to evolve faster. They are integrating new technologies, streamlining processes, and simply refusing to do things the way they’ve always been done. They bring a data-driven approach, connectivity, and customer-centricity that the life sciences industry needs to stay relevant in the market.
Nontraditional companies that have entered this market have learned from years of experience in ruthless cut-throat environments, where products change practically every month or so. Companies such as Amazon, Google, and Apple leverage information from multiple platforms to better understand their consumer and rapidly adapt and adjust to meet their hastily changing customer needs. Their focus on the customer literally means frequently connecting to them and improving the user’s experience.
As more of these companies move into the space, traditional healthcare and pharma businesses will look and feel more like other consumer-oriented, technology-enabled industries. The future of healthcare expects these new savvy, entrepreneurial players to bring relevant expertise and solutions for the industry’s legacy ills.
So, what are they doing different? What can traditional health/pharma companies learn from them?
First, they are playing a critical role in a broad-based transformation of healthcare by positioning themselves to fill the gaps created and neglected — for various reasons — by many healthcare incumbents. Filling gaps between consumer expectations and the current medical ecosystem provides many opportunities for new entrants to move in with fresh ideas and skills.
One instance is offering transparent and authentic customer choices for customization, which in turn has aided them in gaining fast traction and building trust with the “consumer,” whoever that may be — patient, hospital, service provider, physician, government. To this end, some have established transparent pricing models (i.e., new subscription models, concierge medicine) and clear policies that allow the consumer to literally choose from an array of options and know exactly what they are getting into before they invest their time and money into a new healthcare organization, care service, app or product.
Another approach is by bringing more affordable and convenient care and/or treatment options, together with wellness and fitness, thus increasing their value proposition. Consumers are receptive, particularly those in markets where access to quality care is a prevailing concern. They want a healthcare experience that is less complicated and less invasive; one that maybe mirrors the convenience and transparency of their banking, retail/e-commerce, transportation options, or simply their typical purchasing experience.
Second, they develop strategic alliances, they build capabilities and business models that will allow current incumbents to transform the industry, hence shaking it up even further. They engage with key stakeholders and leverage their network, rather than going at it alone. They partner with major companies, healthcare technologies, startups, up-and-coming organizations, and even independent doctors and hospitals to make all this possible. They make sure the right people are involved and engaged in every step of the continuum, as they recognize they cannot change the industry without making these connections along the way. Partnerships with incumbents are key to achieve broad-based transformation.
Like Amazon, they believe that there is a way to make healthcare less confusing for everyone and as such are trying out unconventional business models. Organizations are partnering with nutritionists, gyms, technology leaders, and more, to create a new business of healthcare that considers a person’s total well-being, Quality of Life (QoL) and health journey. They are strengthening their companies' position in the future by building business models that drive better care management and solve customer needs holistically, focusing beyond a suggested treatment or therapy option, but rather around the entire well-being and care delivery (such as digital medicine or sensors for appropriate care), data and platforms (for example, AI-based predictive analytics platforms), and care enablement (personalized financing tools, access tools); all aimed at enticing their value proposition.
Third, their nimble innovation and product development cycles are the status quo for many of these entrants, whereas current pharma companies often take 10-plus years to develop and launch products. New entrants have a great opportunity to improve healthcare delivery, while partnering with researchers and manufacturers to develop and commercialize health treatments and solutions more effectively. They can help improve the development cycle, saving time and costs, and enhance the process by which products and services are designed to meet the needs and expectations of specific patient targets; expectations that are constantly changing and evolving more than ever.
In the coming years, strong R&D and innovation will continue to bring great new therapies, solutions, products, and services to improve the health of people around the globe. But obviously, to make those advances marketable, companies must remain profitable. And the soundest road to profits is to improve corporate capabilities in partnering — orchestration and visibility — thus bringing the operational excellence that can improve efficiency, performance, and profits across the entire value chain. Companies need to move from the operator model (vertical integration) to the orchestrator model (among all key stakeholders) as a core competency.
Collaboration allows for leveraging strengths and resources from both sides to reap clear benefits at the end. Current incumbents bring their industry expertise, capital, and regulatory know-how; new atypical players, offer their nimble, tech-enabled, data-native, analytics-driven, and consumer-centric approach. Together, they will push the industry toward re-envisioning and re-imagining the future of health.
A move beyond relying on operational silos — physician, pharmacy, inpatient, outpatient, ICU, patient — to making treatment decisions based on a holistic, big-data, patient-centric approach, which uses data beyond what is currently captured by the provider and relying on an interconnected ecosystem, will deliver better health and financial outcomes. Consequently, physicians will become more connected to their patients, to research, and to the broader care community; and with patients being more involved in their treatment process, will in turn improve their patient journey and health outcomes.
The most relevant examples of these disruptors in healthcare include:
- Amazon, leveraging its strength and resources in packaging and fast shipping, acquired PillPack, an online pharmacy. Additionally, it has launched a line of over-the-counter health products, secured several partnerships for its Amazon Web Services (AWS) with several health technology companies and is now looking to tap into the primary care sector with Amazon Care, offering 24/7 access to high-quality medical care and advice. Moreover, it has just partnered with Berkshire Hathaway and J.P. Morgan to create Haven, aimed at improving healthcare for its employees.
- CVS acquiring Aetna and vowing to shift the consumer healthcare experience and ensure people rely less on hospitals and emergency health services.
- Apple has shaken up the healthcare industry with its Health app in many ways, including the ability to integrate its health information into EHRs (Electronic Health Records).
- Walmart Care Clinics are designed to offer a primary healthcare option, expanding access at an affordable price. Furthermore, it is now partnering with Novo Nordisk to produce its own discounted private label insulin.
As these examples of disruptive innovations in healthcare show, digital technologies, increased consumer expectations of affordability, convenience, customization and personalization, and the abundance of data, will all affect how healthcare/pharma companies adapt, compete and partner. All this will improve patient satisfaction and health outcomes. As such, players must anticipate how to better connect with customers, frequently, thinking about what they need, envisioning ongoing enhancements, investing in the right technologies and business models while using internal culture to spark innovation, growth, and disruptive mindsets.
However, a word of caution: companies must be hyper-aware and cognizant of patient privacy regulations, as many of these innovations that rely on technology — wearables, mobile phone apps, AI, EHRs, IoT, big data, blockchain, and more — have a direct impact in this area. Companies need to protect patients’ integrity and build their trust. Technology is the biggest driver of many disruptive innovations in healthcare since every aspect of healthcare is dependent on some form of tech. The powerful combination of this technology coupled with AI and blockchain is reinventing how data is shared and utilized, so clear privacy protocols and policies are of the utmost importance. Unauthorized collection, careless processing or inadequate protection of personal data introduces multiple risks to compliance regulations and patients’ safeguarding.
Having acknowledged this sensitive area, companies that recognize and embrace the power of technology and data will be in the strongest position to benefit from the changes that will inevitably come in patient care optimization and reimbursement, as the industry moves toward a value-based care model. Technology will increasingly be a tool that allows providers to spend more time with patients and less time on arcane processes, like capturing patient notes or complying with administrative procedures. The industry will need to rethink its approach to care and eliminate operational inefficiencies.
In summary, this disruption and crisis of the healthcare sector is offering momentum for change and innovation that is very compelling. Emerging consumer expectations will permeate the entire segment. As patients take charge of their health and continue embracing new disruptive technologies, the industry’s traditional business models will have to change to accommodate patients’ more proactive role and to meet their expectations for cost-effective, individually tailored treatments and services based on their medical history and other personal preferences.
The future promises to increase wellness, reduce disease, lower overall costs and set new standards for both, managing human health, and conducting business across sectors. To seize the opportunities and realize the best possible next generation healthcare, multiple challenges will have to be overcome, collaboration will need to be built, and the health ecosystem will have to evolve to then be able to capture customers and realize value.
Uncertain times are wellsprings of opportunity and call for new paths and action. Companies that want to thrive, have impact, and win in the age of COVID-19 — and beyond — will certainly have to think anew and act anew.
Why not rise with the occasion and be one of them.