The CEO s 360 Degree Perspective Healthcare 2020
Today s Presenters Dorman Followwill Partner Executive Committee Director Frost & Sullivan Konstantinos Nikolopoulos Director, Health Economics & Future Strategy Group Frost & Sullivan Sumit Sharma Senior Vice President Healthcare, EIA & MENASA Frost & Sullivan Tommy Doyle Vice President Strategy Elsevier Health Science 2
Agenda Introduction 13:45-13:50 Healthcare 2020 Dorman Followwill Konstantinos Nikolopoulos, 13:50-14:30 Healthcare Growth Opportunities Sumit Sharma 14:30-15:15 BREAK 15:15-15:45 Implications for Businesses Tommy Doyle 15:45-16:15 Panel Discussion on Who, How, Where and Why, will be Successful in the Future 16:15-17:15 3
Forces Shaping the Evolution of Healthcare Molecular & Personalised Medicine Access Cost & Quality Of Care Proficient Use of Technology Information People (ehealth) Processes 4
Access to Care Europe (EU-25) 472M population 2.8M hospital beds 4.6 beds/1000 people 3.9 Doctors/1000 people 14,819 hospitals China 1.3B population 3M hospital beds 2.2 beds/1000 people 1.4 Doctors/1000 people 60,396 hospitals USA 300M Population 1M hospital beds 3.2 beds/1000 people 2.6 Doctors/1000 people 5,794 hospitals India 1.1B population 0.8M hospital beds 0.7 beds/1000 people 0.6 Doctors/1000 people 13,896 hospitals Japan 127M population 1.8M hospital beds 9.9 beds/1000 people 2.7 Doctors/1000 people 7,785 hospitals 5
Cost of Care Private Per Capita Spending (2009) Public Per Capita Spending (2009) Spending as % of GDP (2009) Spending as % of GDP (2050) $7,000 30% $6,000 $5,000 $4,000 $3,617 $817 Compare with Defence spending 25% 20% $3,000 $1,784 $954 $1,014 $780 $1,079 $860 $1,118 $594 $1,265 $549 $452 15% $2,000 $1,000 $0 $3,307 $4,005 $2,618 $2,875 $2,541 $2,844 $2,726 $2,758 $2,266 $2,968 $2,027 $693 $531 $750 $746 $2,716 $2,446 $2,056 $2,097 $1,937 $1,917 $617 $1,552 $149 $252 $468 $491 10% 5% 0% 6
Quality of Care Canada Aging hospitals need retrofit services to lower infectious disease risk Access problems due to cost 25% Coordination problems 25% Medication errors 29% U.S. Pneumonia and blood-borne infections - killed 48,000 patients and cost $8.1 billion in 2006 Access problems due to cost 54% Coordination problems 34% Medication errors 34% United Kingdom 8% of UK patients believe that they were given the wrong medication in the last 2 years. Access problems due to cost 13% Coordination problems 20% Medication errors 20% Netherlands Access problems due to cost 7% Coordination problems 14% Medication errors 17% Australia Access problems due to cost 36% Coordination problems 23% Medication errors 29% New Zealand Access problems due to cost 31% Coordination problems 21% Medication errors 25% 7
The Balance Between Young And Old Is Shifting 8
The Balance Between Young And Old Is Shifting 40% 35% 30% 25% 20% 15% 10% 5% Percentage of Population Age 65 and Older Japan S. Korea Germany China U.S. India Africa 0% 1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050 Source: United Nations, World Population Prospects 2006 revision, Medium Variant 9
The Balance Between Young And Old Is Shifting 10
The Balance Between Young and Old Is Shifting 11
Ageing Related and Chronic Diseases, Account for Significant Percentage of Healthcare Costs 30% of the population consumes 90% of health care resources 12
One of Hundreds of Cases Where Power Patients Unite Via the Web 13
Globalisation is Changing Healthcare Healthcare demand increases in Asia & developing world Pharma and Technology R&D migrates to Asia Regulations International agencies collaborate Information healthcare payors share data on performance (clinical & financial) Diseases know no boundaries Every Healthcare company is global from day one! 14
Percent of World GDP Last 500 years China, India, Japan, Latin America, Western Europe and United States Share of World GDP in 2035 2005 15% 21% 15% 6% 27% 11% 15
Power of the Middle Class Creation of healthcare elite : those that can, will spend money out of pocket for elective procedures, executive and personalized levels of care. Growing gap between have and have not's. Wealthier patients will pay out of pocket or use premium coverage plans for elective procedures. 16
Competition for people 17
Consumer Demand for personalised Medicine: Safer, More Effective Drugs End of one-size-fits-all drugs. New drugs will be safe and effective for specific populations Faster Time to a Cure Using genomic information to find disease targets. Speedier clinical trials based on high responder population. Cost-Effective Healthcare Reduced costs, due to avoidance of futile treatments and improved clinical outcomes 18
How do we get the right treatment to the right person at the right time for the right disease? 19
Milestone for Personalized Medicine: FDA recommends genetic test for Warfarin / Coumadin One of the most widely prescribed drugs in the world 1/3 of patients metabolize warfarin more slowly than others and therefore experience a higher risk of bleeding Warfarin is the 2nd most common drug (after insulin) implicated in ER visits for adverse drug events 2007 FDA approves updated warfarin prescribing information to recommend genetic test to estimate optimal use of warfarin 20
Many more targeted treatments coming 21
Healthcare 2000 Years Ago vs. Today 2000 Years Ago Today 22
A Look At The Future: Patient Centric Health & Wellness Care EcoMedicine EcoMedicine Web of Care NanoMedicine NanoMedicine Pre-emptive Pre-emptive emptive Medicine Medicine Regenerative Regenerative Medicine Medicine Doctors & Medical Team Coaches & Advocates ehealth Advisor Network NanoCare Friends & Family Online Support Communities Digital Digital Medicine Medicine Mobile EHR Self Self Care Care My Health & Wellbeing Databases Implantable ecare Diet & Nutrition Humour & Joy Smart ehomes Lifestyle & Stress Reduction Mind Body & Spirit Exercise & Fitness Wearable BioSensors Health Robots Decision Support 23
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Consumer Apps to Mobile Devices Driving Wellness Shift In 2010 Apple itunes app store had 185,000 apps 5,000 (2.7%) categorized as HC apps Android had 38,000 apps with 600 (1.5%) being Healthcare applications Blackberry App World had 6,700 apps 235 are Health and Wellness applications Source: Frost & Sullivan 25
Medical Tourism is Already Here... Mexico StarMedica hospital groups built 7 hospitals in last 5 years; GrupoAngeles (largest private hospital group in Mexico) spending $700 million to build 15 hospitals in the next 3 years Thailand One Bangkok hospital (Bumrungrad) served over 500,000 health tourists last year Taiwan Government has identified medical tourism as one of six new industries to focus on 85,000 medical tourists in 2010 Costa Rica One in five visitors is a medical tourist India Government investing $3.6 Billion in medical tourism infrastructure. Estimates show Indian medical tourism at $2.3B by 2012 Singapore More internationally accredited hospitals 665,000 medical tourists in 2010 26
Healthcare Paradigm Shift A modern healthcare system is on the horizon, demanding a paradigm shift From......To One Size Fits All Approach Personalized Medicine Fragmented, One-way Patient Info Flow Integrated, Two-way Provider Centric Focus Patient Centric Centralized Hospital Monitor De-Centralized Shift to Community Invasive Treatment Less Invasive, Image-based Procedure-based Reimbursement Episode-based, Outcome-based Treating Sickness Objective Preventing Sickness Wellness 27
Many Stakeholders, Many Motivations Patients Clinicians Provider Policy makers Payer Politicians 28
Implications & Possible Future Scenarios
Shifting the Financial Gravity of the System $$$$ $$$ Investment $$ Healthy At Risk Undiagnosed Chronically Ill Managed Chronically Ill Unmanaged End of Life Continuum of Care 30
Shifting the Health Focus of the System Prevention/Wellness Early identification and prevention Access to new forms of care delivery to improve patient knowledge, self-help and health Size of Impacted Population Goal: Keep People Healthy Longer Goal: Manage or Mitigate Risk Goal: Diagnose and Reduce Treatment Delay Connection to benefits design to increase coverage for those services which prevent disease and improve health over long term Reducing administrative and clinical waste Disease/Care Management Goal: Move to Self- Managed Goal: Manage Goal: Informed Decisions Healthy/ Worried Well At Risk Undiagnosed Chronically Ill Managed Chronically Ill Unmanaged End of Life Continuum of Care 31
Care Delivery will be provided in or near the home 100% Healthy, Independent Living Chronic Disease Management Community Clinic Doctor s Office HOME CARE Quality of life RESIDENTIAL CARE Assisted Living Assisted Living Skilled Nursing Facility Skilled Nursing Facility Specialty Clinic Community Hospital Community Hospital ACUTE CARE ICU ICU 0% $1 $10 $100 $1,000 $10,000 Cost of care per day 32
What Does This New Healthcare World Look Like? More emphasis on diagnosis, monitoring, preventative care = INCREASED COLLABORATION Tighter cost constraints, declining reimbursement, more expensive tools = BETTER FINANCIAL MANAGEMENT P4P, more public scrutiny, evidencebased medicine = TRACK AND DOCUMENT OUTCOMES Greater info flows to support training, supply chain, patient education COMMUNICATIONS AND CONTENT 33 33
Scenario 1: Competence based Network - Pyramid Structure Centers of Excellence Regional Facilities General and specialized hospitals with a regional (and sometimes national) catchment area. General Hospitals Structures having E.R., A.C.U. and general medical departments. These will be linked for specialized topics Regional Facilities and Centers of Excellence. Primary Care Linked only with general hospitals, in these structures only basic procedures will be carried out. 34
Scenario 2: Technology based network - Satellite structure For this scenario to become true, a technologic leap by all public and Private HC structures is required. Satellite Hospitals Remote Hospitals where surgeries are carried out through technologies (Remote patient monitoring, telehealth) and robotics. Main Hospitals Centralizing hospital activities (Departments, E.R., A.C.U., etc.), research and academia. Territorial Units Home care units, assisting patients at their houses through advanced technologies such as Assisted Living systems. 35
Scenario 3: Resources based network - Spin-off structure Exit Spin-off Low specialization Low costs High specialization High costs This scenario, in summary, places a greater weight on the private sector, following the lines of the American model. 36
Growth Opportunities & Implications for Markets, Companies & Products
Industry Focuses on Innovations in Products Volume of innovation efforts across all industries Strategy Process Product Delivery Business model Partnerships Enabling process Core process Product performance Product system Service Channel Brand Customer experience Volume of Innovation Efforts Last 10 Years Hi Lo 38
But Product Innovations Produce the Lowest Yield Value creation from innovation (all industries) Strategy Process Product Delivery Business model Partnerships Enabling process Core process Product performance Product system Service Channel Brand Customer experience Cumulative Value Creation Last 10 Years Hi Lo 39
Ten Types of Innovation across the entire value chain 1.Business Model how the enterprise makes money 2. Partnership enterprise s structure / value chain & partnering 5. Product performance basic features, performance and functionality 6. Product system extended system that supports an offering 7. Service how you service your customers Strategy Process Product Delivery Business Partnerships Enabling Core Product Product Service Channel Brand Customer Model process process performance system experience 3. Enabling process assembled capabilities you typically buy from others 8. Channel how you connect your offerings to your customers 9. Brand how you express your offering s benefits and ideas to customers 4. Core process proprietary processes that add value 10. Customer experience how you create an integrated experience for customers 40
Example 1: Social business 41
Example 2: business approaches 42
Business Models Permeating Healthcare Apple Start with the need, not with the technology Phillips Tata Products for the Masses Generic Drugs Facebook Social Networks and Online Communities to Exchange Ideas Google Health Microsoft Health Vault Polaroid Know when to fold Kodak Nintendo Looking beyond your core customer base Novartis, GSK 43
The new age health industry: very wide range of sectors, products, services Patient 44
CHINA $124B stimulus 2010/2011; will spend $170B in 2017 (from $26B 10 years earlier) Approximately 400M people lifted out of poverty (active, capital rich, growing middle class) Energy demands up 4x in next 10 years Rampant capitalism Public equity markets hot 3 biggest IPOs (in history) in China/Brazil One 1M person city created every two weeks 45
Massive country with considerable variation in language and culture. China is best thought of as Europe like rather than one country. Beijing: 15,380,000 Capital of Beijing: 15,380,000 Capital of China China Belgium: 10,348,276 Capital of Belgium: 10,348,276 Capital of the the European European Union Union Shandong: Shandong: 92,480,000 92,480,000 Source Source of of significant portion of the military significant portion of the military leadership, leadership, rapidly rapidly industrializing, industrializing, home home of Confucius. of Confucius. Germany: Germany: 82,424,609 82,424,609 Industrial Industrial engine of Europe engine of Europe Hong Kong: 6,860,000 Hong Kong: 6,860,000 Switzerland: Switzerland: 7,450,867 7,450,867 Both financial centers Both financial centers Hunan: Hunan: 63,260,000 63,260,000 largely largely agricultural agricultural with with a a capital capital city, city, Changsha, of nearly 1.6 million inhabitants Changsha, of nearly 1.6 million inhabitants France: France: 60,424,213 60,424,213 traditionally traditionally agricultural agricultural with with a a capital capital city, city, Paris, of over 10 million inhabitants Paris, of over 10 million inhabitants Every year for Chinese New Year, the most important Every year for Chinese New Year, the most important holiday holiday in in China, China, there there are are around around 350,000,000 350,000,000 domestic domestic travellers, travellers, which which is is equal equal to to the the population population of of Europe. Europe. 46
Growth Areas (China) 2010-2015 Growth Areas Expanding Customer Base Acceptance of of Multinationals Tier 2/3 City Hospitals ehealth Uptake of new Technologies Sophistication of rural Healthcare Access & Affordability Local acquisition targets Chinafication of MNCs localised portfolio Dedicated R&D activities Improved IP protection Outsourcing 47
The Medical Infrastructure in India Distribution of beds by hospital type, 2009 4 Government Hospitals Managed by medical officers Largely for low income patients; Select flagship hospitals have a positive reputation and a high income patient base ~4000 hospitals 50-500 beds 3 Large Private Hospitals Mostly corporate hospitals Professionally managed 20-30% premium over other setups Cater to Premium and High income patients 38% 100% = ~1.5 mn beds 26% ~2500 hospitals > 100 beds 23% 13% 1 Private Nursing Homes 30-35,000 hospitals Owned and <30 beds managed by a physician Cater to mass affluent and high income patients 2 Medium Private Hospitals ~4000 hospitals Traditional family 30-100 beds owned hospital Cater largely to mass affluent and selective high income patients 48
Growth Areas (India) 20010-2015 Launch of global brands by MNCs Eg. Viagra, Allegra Emergence of private and corporate hospitals Eg. Columbia Asia Emergence of organized retail chains Eg. Apollo, Medicine Shoppe, Reliance Retail India Changing legal framework Move to specialized care Eg. SuperSuperspecialiststhyroidologists Increase R&D investment by local companies Alliances on the rise Eg. Roche with Cipla and Ranbaxy for prodn of TamilFlu vaccine 49
Health as a global economic driver: Kondratieff-Cycles 50
Healthcare... it s a fascinating area! 51