[ Part I | Part II | Part III| Part IV | Part V ]

Executive Summary

At PricewaterhouseCoopers, we are advisers and consultants to the largest service business on the globe - healthcare. That's why we've invested in a far-reaching research effort to look at this important industry's future on both sides of the Atlantic and in the Pacific Rim. The result is this report, HealthCast 2010: Smaller World, Bigger Expectations. It's a comprehensive examination of the road ahead for the global healthcare industry in the next decade.

Each nation considers itself special, and so it is with each nation's healthcare system. Healthcare in the United States, New Zealand, or the Netherlands carries its own set of traditions, culture, payment mechanisms, and patient expectations.

Gaze ahead through a different lens. Healthcare will no longer be shaped by the differences of our past but by the commonalties of our future.

As we discuss in the coming pages, providers and purchasers will face similar challenges in the 2010 healthcare economy. Thanks to the Internet, telecommunications and a proactive consumer, the healthcare world is smaller. Consumers shop for healthcare information on web pages from their homes. Their appetite for healthcare service and health information is insatiable. They want more. Rather than a hindsight view - (here's what has made you ill) - screening technology and genomics will allow medicine to look forward (here's what your risks are for these illnesses).

Forecasting the future of the global healthcare industry is risky business. That's why we describe not one path forward, but many. Beware! Some paths can be foreseen and others cannot. In several sections of HealthCast 2010, we make reference to "Forks in the Road." We think the industry is moving this way or that...but new opportunities, disasters or government intervention may carve out a new path. Such "forks" could redirect the speed or path of change.

During the past decade, European government reforms have placed both health providers and social insurers in a new competitive world of contracts and limited budgets. Yet, some have failed to recognize the new challenges they face. In the same way, United States providers received a taste of this when employers moved virtually their entire workforces into managed care, a major change of direction that occurred without the approval or consent of healthcare providers and without major government legislation. Most adapted; some did not.

To research the future, we talked to more than 50 thought leaders throughout the globe. We also initiated the HealthCast 2010 survey which polled 380 top healthcare executives. Results from the survey are integrated throughout this report.

To look toward the future, we've identified what we see as Three Forces of Change and the Four Future Trends that result from those forces. Readers may notice that the three forces that we identify do not include three that often characterize futuristic healthcare reports. Obviously, aging, medical technology and drug development will have a major impact on the 2010 healthcare system. However, we have chosen to focus instead on consumerism, e-health and genomics as new, powerful forces that will work together to accelerate dynamic change in the industry.

These are the forces that will be most threatening to healthcare providers, insurers, governments, and professionals in the form of innovation, new competitors and new opportunities.

Three Forces of Change

1. An Empowered Consumerate Creates Impatient Patients.

2. E-Health Adaptability Equals Survival.

3. Genomics Shifts Healthcare from Cure to Prevention.

Four Future Trends

1. Health Insurance Trends are Converging in the United States, Canada and Europe.

2. Health Processes Are Becoming Standardized.

3. Workforces Must Adapt to Technology and Consumerism.

4. Aging, Technology and Consumerism Create Difficult Choices.

Twelve Implications

The implications of these forces are powerful. We've summed them up as follows:

1. Healthcare organizations that are consumer friendly will be winners.

2. Organizations must distinguish themselves through brands.

3. Service and speed will be keys to consumer satisfaction.

4. New e-business models will emerge and challenge traditional medicine.

5. The race for capital will hinge on the ability to demonstrate quality, efficiency and customer focus.

6. Resources must be reallocated to retrain the workforce.

7. Functional silos in healthcare must be eliminated and replaced with seamless service.

8. Payers must stress prevention because early detection and intervention will cost more.

9. Consumers will want more and won't want to pay for it.

10. Ethical dilemmas will accelerate for consumers, providers and purchasers.

11. New opportunities for private health insurers outside the United States will expand rapidly.

12. Medical professionals need to work toward global standards of medical treatment.

"You Are Here."

It always helps to know from where you're starting. So, we'll set out some facts and assumptions.

Healthcare is a growing industry

Between 1960 and 1997, the percentage of Gross Domestic Product spent on healthcare by 29 members of the Organization for Economic Cooperation and Development (OECD) nearly doubled from 3.9% to 7.6%. The United States spends the most - 13.6% in 1997. That percentage is projected to increase to more than 16% by 2010, according to the United States government. Of eight industrialized nations studied recently by the Commonwealth Fund, the United Kingdom spends the least at 6.7%.

Healthcare spending is on an upward track partly because as nations become wealthier, consumers demand they spend more on healthcare (about ½% increase in healthcare cost for each percent increase in wealth)

Technology and automation have the potential to lower costs. However, those downward pressures are more than offset by the impact of an aging society, consumerism, biotechnology and medical breakthroughs resulting in an overall increase in cost at a rate of between 2 1 /2% and 3 1 /2% per year.

As the world grows richer, it will want the best healthcare it can buy. So, how much healthcare is the right amount? That's for society to decide, but remember that every franc or pound spent on healthcare means one less spent on some other consumable item. When healthcare inflation tempered in the mid- to late 1990s in the United States, some argued that it indirectly buoyed the economic boom the nation now enjoys. As health spending held steady, Americans had more money to spend on computers, vacations and other personal items. Similarly, when European countries needed to hold back public spending to meet the Maastricht Treaty criteria, many looked towards healthcare to reduce expenditures.

So while health expenditures increase with growth, reducing these expenditures may be a key to economic growth and a source of economic advantage.

The world is graying

Though not in crisis yet, many nations will be looking down the barrel of an exploding cannon. In 1999, working taxpayers outnumber non-working pensioners in the developed world (North America, Japan, Europe, Australia and New Zealand) by 3 to 1. However, by 2030, the ratio will fall to 1.5 to 1. Will this set up generational conflict about the financial resources needed to keep the elderly healthy? In some countries, it will be 1 to 1 or lower, putting a tremendous strain on the pension and healthcare budgets of those nations.

If all sectors of the health system - payers, providers and patients - focus on prevention and provide incentives for patient accountability, can they avert the financial undertow of the elderly's medical needs?

The United States will just see the crest of this wave by 2010 when only one-fourth of the annual increase in the ratio of national health expenditures to gross domestic product will be due to aging. The bigger impact comes between 2010 and 2040.

To make any comments on this article, or to ask a question of the author, please contact the publisher. If you would like to submit an article, please contact the editors.

The opinions expressed in the articles published in this section do not necessarily reflect those of Pharmalicensing or UTEK Corporation. No actions including proposals to or agreements with other companies should be taken by any reader without obtaining specific business or legal advice. Neither the publisher nor the authors accept any liability for any actions or activities undertaken by any reader or other third party as a consequence of these articles or for any errors or omissions therein.