Worldwide the healthcare industry is going through a period of profound disruption, according to research carried out by PwC. The way in which healthcare is financed and delivered is transforming. But most CEOs expect to master the challenges, with 77% saying they are confident of generating higher revenues in the next 12 months, and 86% are confident of doing so over the next three years.
PwC recently interviewed 90 healthcare CEOs in 31 countries, as part of its 16th Annual Global Survey.
Etienne Dreyer, an Associate Director within PwC’s Advisory Practice, South Africa says: “As the healthcare industry adapts to new demands, businesses and governments will have to change the way they deliver and pay for healthcare.”
Three key trends are transforming the way in which healthcare is financed and delivered, and they are common to almost every health system in the world, according to the survey report:
1. There is a rebalancing of the public and private sectors in the financing and delivery of care. The dialogue between the public and private sectors is changing, as the global population ages and the prevalence of chronic disease rises in mature and growth countries alike. Both the public and private sectors realise they can’t address these challenges alone.
2. The healthcare sector is industrialising. Healthcare payers and providers are beginning to manage their operations as organisations in other industries do. Most sectors are also using ‘disruptive’ technologies, such as mobile devices and the Internet, to engage with consumers in new ways. Likewise, healthcare payers and providers are following suit.
3. Healthcare is becoming a precision-based industry. With advances in geonomics and mass customisation, the healthcare industry is gradually moving away from population-based care to personalised care, with the ‘right treatment for the right person at the right time’. Precision medicine is still in its infancy. But it will eventually allow practitioners to prescribe drugs based on patients’ genetic profiles, thereby eliminating inappropriate or unnecessary treatments, reducing the incidence of adverse reactions, and ultimately, improving health outcomes.
In short, the healthcare industry is grappling with significant socioeconomic, structural and clinical changes, and those changes apply almost everywhere, states the survey.
Targeting pockets of opportunity
The survey shows that healthcare CEOs are concentrating geographically, and investing in new technologies to attract and serve patients, honing their processes and collaborating with other entities both to develop precision therapies and to deliver better, cheaper care.
Nearly three-quarters of the healthcare CEOs in the survey sample are focusing on a few carefully selected initiatives. But they’re tending to stick closer to home than their peers in other industries: 42% see organic growth in existing domestic markets as their main opportunity for expansion in the next 12 months. Only 12% are looking abroad.
A few foreign investors have also been testing the waters in China, now that the central government has started phasing out the restrictions on overseas ownership of private healthcare facilities. The economies of Indonesia, South Africa and some parts of Latin America are also picking up speed.
Dreyer says: “For South African healthcare organisations, the impact of new markets in Africa and a highly competitive domestic market has resulted in several new product offerings, geographic expansions and mergers/partnerships occurring. With the approach of the National Health Insurance (NHI) legislation in the pipeline, healthcare organisations and their CEOs are following the global healthcare trend of innovating and providing solutions that will differentiate them from their competitors and position themselves for an active role in the NHI and across the African continent.”
Healthcare CEOs are also increasing their customer base, with 82% planning to change their strategies for acquiring and retaining patients over the next 12 months. Four-fifths of CEOs also plan to spend more on technology in the next 12 months.
More than half of CEOs (56%) say that improving operational effectiveness is one of their top investment priorities.
What worries CEOs most
A significant percentage (72%) of healthcare CEOs are worried about the recent economic uncertainty in that it could threaten their prospects. They are also concerned about over-regulation. The majority of CEOs (79%) are generating anxiety about how governments will respond to debt and deficits – CEOs have a fear governments could slow down growth.
Last year 84% of CEOs in the healthcare sector said they were planning to cut costs. This year, the same number said they had implemented costs reductions over the past 12 months. Outsourcing was also popular with CEOs.
Thriving under stress
CEOs in the healthcare sector realise they’re facing major challenges: the pressure to provide better, faster and cheaper care is mounting as the world evolves demographically, socially and economically. Patients are also becoming more demanding, as consumerism takes hold.
also clear from their responses that CEOs foresee future growth and know what’s
needed to thrive amidst this turbulence. Dreyer concludes: “They must make their organisations more
agile, more appealing and more economically viable. And they’re working hard to
achieve these goals.”