"The new gold rush: Prospectors are hoping to mine opportunities from the health industry," is the latest report from PwC that focuses on the changing dynamics of the healthcare system, and suggests ways in which businesses can approach healthcare's burgeoning opportunities.
The report said that in 2010, providers spent $88.6 billion on developing and implementing electronic health records, health information exchanges, and other health information technology initiatives. Driving the healthcare sector's focus on health IT has been new government regulations, tight deadlines in which to meet them, and penalties if hospitals and physicians don't implement health IT such as electronic medical records on time.
However, to succeed in the healthcare sector, companies must find and exploit the right niches by building innovative healthcare business models. Technology companies that support the integration of information across healthcare sectors and can address HIPAA and other regulations regarding patient privacy will flourish, the report said.
Communication companies that introduce a range of telehealth services, including mobile technologies to help medical professionals monitor, store, and share patient data, also will prosper. The report also mentioned other areas where companies can reap rewards such as health applications developers that create software to help patients access health-related information and monitor symptoms, as well as software that analyzes data to help healthcare delivery organizations improve operations.
With consumers willing to spend $13.6 billion a year on new health-related services and products, the study projects that new spending will include an estimated $4 billion on health-related video games, $8.9 billion on resources that rate physicians and hospitals, and $700 million on mobile health applications.
Consumers also are driving healthcare markets in different directions. By spending their own money for nontraditional healthcare services and products, new revenue streams will be developed that are independent of government and health insurance reimbursement.
Younger Americans also are influencing the creation of new health markets. PwC's figures show that 42% of consumers aged 18 to 24 prefer to use an independent company or one owned by a retail pharmacy to receive primary care services, as opposed to obtaining such care from a traditional doctor's office. By comparison only 15% of consumers 55 and older felt the same way.
The study also found that younger respondents are three times more interested in health-related video games and two times more interested in mobile health applications or programs, compared with respondents aged 65 and older.
Part of the spending on nontraditional health services and products will create new markets. For example, consumers are willing to spend approximately $43 billion on home health and remote monitoring devices, PwC said.
Another thriving opportunity exists in providing online health information services. Fifty-six percent of consumers use media and information service companies as their primary online healthcare resources rather than government or traditional health company resources. PwC found that consumers are three times more likely to get information from media and information services companies, such as WebMD, than any of the other sources.
Many large companies have already realized the abundance of opportunities that exist in the healthcare sector. The report noted that 76% of Fortune 50 companies are in the health industry or have a health division. These companies are gearing up for the decade-long plan to implement the Patient Protection and Affordable Care Act (PPACA), which will bring "waves of opportunities as it changes the business models of insurers, providers, and pharmaceutical companies," the report states.
This will open up even more opportunities for companies providing services and products. "For example, the government is attempting to redesign the health system through outcomes-based payments, health insurance exchanges, comparative effectiveness research, medical homes, and accountable care organizations," the report concludes.
Nevertheless, success is not automatic even with a plethora of opportunities, and companies are advised to learn more about the healthcare sector before embarking on business ventures.
"Healthcare is an opportunity area that should be attractive and easy to get into. In reality, it is attractive and very difficult to get into. There are many failures in this sector, and the landscape is littered with them," Sean Kenny, senior vice president of industry services at HP Enterprise Services, said in a statement. "New companies coming in must know the areas where they can contribute a best practice or other ways of facilitating healthcare. This is where you find the opportunity."
The Healthcare IT Leadership Forum is a day-long venue where senior IT leaders in healthcare come together to discuss how they're using technology to improve clinical care. It happens in New York City on July 12. Find out more.