Health care may look very different in 2030 — or not at all
Will existing health care stakeholders lead the wave of disruption, or will outside entrants take over?
It’s anybody’s guess what health care will look like in the year 2030, but management consulting company Oliver Wyman narrowed the list of possibilities down to four scenarios.
The article, published recently online, was written by Fritz Heese, a partner in Oliver Wyman’s Health & Life Sciences and Organizational Effectives Practices and David Fries, a senior knowledge expert in the company Health and Life Sciences division. Per their findings, U.S. health care presently makes up 18% of the total gross domestic product, with 38% of that spending going to hospitals, 23% to physician services and 12% to prescription drugs.
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The four possible futures Heese and Fries see:
1. The status quo continues
Under this scenario, health care is still primarily a fee-for-service proposition, with Medicare and Social Security remaining solvent while government deficits continue. Meanwhile, total health care costs would eventually level off in conjunction with gross domestic product growth and value-based reimbursement models would be only slightly more common than they are now.
According to Heese and Fries, “Next-generation delivery models (like Iora, Amazon, and Omada) with potential for massive disruption exist, but still at the margins. Innovation happens in pockets. Nobody develops scalable, innovative solutions. Costs increase, but not faster than the system can withstand. Medicare and Social Security remain solvent. Industry economics are largely unchanged.”
2. ‘No profit zone’ health care
The next scenario revolves around the possibility of health care as a no-profit zone, the result of political reform the Heese and Fries argue could be driven by an increase in deductibles and out-of-pocket spend. In response, the government would launch a “Medicare for All” single payer option, where “payers play only a small, back office processing role.” Incumbents would begin to consolidate as margins compress, while innovative startups might not be able to generate the profit or scalability necessary to bring disruption.
According to the duo, “Incumbents’ margins are dramatically compressed. Consolidation pushes as far as regulators allow, leaving a few incumbents with razor thin margins, as price and earnings multiples enter mid-single digits. … Despite enough well-funded investors to spark competition and drive lower prices, a killer solution doesn’t thrive and prosper in the end.”
3. Incumbents drive “value” to a tipping point
A third scenario is centralized around an incumbent-led “triumph of value” that unfolds across several key fronts such as shifts in consumer behavior that prioritize healthy living, the emergence of a centralized platform that manages all of the public’s interactions with the health care system and the creation of tools that drive “best practitioner choices.” Science could also play a role, with advances in genomic therapies placing a greater emphasis on personalized prevention and virtual health care becoming interchangeable with brick-and-mortar office visits.
“The health care ecosystem achieves nearly optimal incentives across stakeholders and universal access, creating necessary tools that drive best practitioner choices,” Heese and Fries write. “Industrialized Factories compete to deliver the highest quality, lowest cost care possible, leading to more efficient best practices and standardization.”
4. New market entrants take over
The final scenario instead focuses on how new market entrants could disrupt the health care system. Products or platforms that proffer quality consumer experiences and integrate various health care services would flourish. The rise of digital comparative shopping tools could also drive providers to lower pricing, while patients begin to seek virtual or retail clinic care for all but the “highest acuity care episodes.”
“For incumbents, results mirror the ‘Health as a No Profit Zone,’ Scenario 2 as they cede wallet share to out-of-industry players, now earning only a small profit portion in health care’s new market,” Heese and Fries note. “Meanwhile, companies considered ‘non-health care’ in 2019 will accumulate well over a trillion dollars in health care market cap by 2030.”
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