Although the Supreme Court's recent announcement that it would rule in 2012 on challenges to the Patient Protection and Affordable Care Act's individual mandate provision may put the future of President Barack Obama's signature legislation into some doubt, it appears that the healthcare industry -- both providers and payers -- are preparing to do business in some kind of changed regulatory landscape. In fact, according to its annual report on the top health industry issues for the year ahead, PwC's Health Research Institute says that, despite economic and political uncertainty, health organizations will move ahead to meet regulatory requirements in 2012 and respond to a host of other challenges.
These challenges, according to PwC, include mounting pressure to contain healthcare costs, new state health insurance exchanges, increasing drug shortages and new reporting requirements. "2012 will be a seminal year for the health industries as businesses wade through economic, regulatory and political uncertainty," said Kelly Barnes, U.S. health industries practice leader, PwC, in a press release about the research, which was based on a nationwide poll of 1,000 U.S. adults. "One of the ways the health industry is responding to these uncertainties is by connecting in new ways with each other and their consumers as they rethink existing business models and previous notions about competition, cooperation and collaboration."
According to the PwC, among "market-driven, private-sector solutions" that are emerging are collaborative business arrangements, strategic use of health informatics and innovative ways of connecting with consumers. Accordingly, PwC has identified 10 key areas of focus for health organizations in the year ahead:
1. Defining and paying for value: Theory becomes reality. In light of pressure to wring costs out of the health system, health organizations must demonstrate they are delivering better value; those that don't will be penalized. In 2012, health organizations will need to adapt to new performance- and value-based payment structures, and insurers will look to cut administrative costs and keep premiums down.
2. Higher deductibles and co-pays cramp utilization. As consumers continue to defer care because of rising out-of-pocket costs, health organizations must counter the resulting decline in revenue. In addition, insurers and employers will need to carefully monitor the impact of care deferral on workforce health and productivity.
3. Providers and insurers team up for population health. Health insurers committed more than $2 billion in the past year to acquire or align with physician groups, clinics, and hospitals, according to PwC. With the move toward population health, a further uptick in payer-provider relationships in 2012 is likely as these players team to integrate care, share information and participate in new payment models with incentives for shared savings. Nearly three-fourths of consumers (72 percent) surveyed by PwC said they would prefer health organizations that deliver a wide range of comprehensive health-related services versus organizations that focus on specialized areas. Thirty-eight percent of those surveyed believe an integrated approach would lower costs, and 36 percent expect that quality of care would increase.
4. The coming drug (shortage) wars. Sudden increases in demand for certain drugs, discontinued products, manufacturing delays and quality issues among generic drug manufacturers are creating a shortage of some drug supplies and raising concerns about patient care and safety.
5. Investments in health informatics ramp up. Information is king. In 2012, health organizations will invest considerably in health informatics and form data-sharing partnerships with organizations that have a mutual interest in new uses of information, such as to improve health outcomes, coordinate patient care, identify population health trends, speed targeted product time-to-market and identify and manage high-risk populations. Before data assets can be maximized, the industry will need to address issues around data collection, quality and integration, develop scalable analytical tools, address privacy and security, and overcome the shortage of skilled informatics professionals and trainers, says PwC.
6. Privacy and security become a billboard for new business. Health organizations will focus more on information privacy and security in 2012 not only because of increased risks and the threat of stiffer breach enforcement actions, but because consumers consider privacy and security issues a differentiator. Sixty percent of consumers surveyed by PwC said they would be comfortable having their health information shared among healthcare organizations if doing so would improve coordination of their care.
7. Insurance exchanges: Health plans learn to compete in a new marketplace. In October 2012, states are expected to begin certifying health plans for participation in the exchanges. Insurers planning to participate in state health insurance exchanges can expect new growth opportunities but also challenges as they shift from a wholesale to a retail approach, focus on population risk management and compete head-to-head for consumers' business. Thirty-seven percent of consumers surveyed by PwC think health insurance exchanges will make it easier to find and purchase a competitive health insurance plan and one-third (34 percent) said they would have a less-favorable impression of a health insurance company that decided not to participate in their state's health insurance exchange.
8. A slimmer pharma looks to reinvent itself. Big pharma could get smaller in 2012 as pharmaceutical companies develop new strategies to deal with the decline in patented drug sales and new regulatory realities.
9. Social media plays a bigger role in healthcare. Nearly one-third of survey respondents (32 percent), including half of people under the age of 35, have used social media channels for healthcare purposes, such as connecting with health organizations and other people with shared health interests. Healthcare organizations are experimenting with building stronger connections and communities through social media, and the trend is expected to grow in 2012 as social media becomes part of an organization's overall strategy to improve healthcare and outcomes.
10. Healthcare will take a central role in election year. With healthcare a central issue in the mid-term election, as the Congressional "super committee" considers funding issues and the Supreme Court decides on the constitutionality of the individual mandate, healthcare organizations will have to incorporate uncertainty into scenario planning. They will need to allocate resources along multiple strategic paths and plan for contingencies that might affect strategic plans and growth assumptions.
Katherine Burger is Editorial Director of Bank Systems & Technology and Insurance & Technology, members of UBM TechWeb's InformationWeek Financial Services. She assumed leadership of Bank Systems & Technology in 2003 and of Insurance & Technology in 1991. In addition to ... View Full Bio