By Reenita Das
Every year, our team of futurists, analysts, and consultants at Frost & Sullivan’s Transformational Healthcare Group comes together to brainstorm and predict the themes, technologies, and global forces that will define the next 12 to 18 months for the healthcare industry. We also retrospect how we did each year, and each year we are becoming more accurate in the predictions we make. For the 2019 predictions that were released in November 2018, six out of eight predictions realized as anticipated, while the two remaining predictions have not panned out exactly the way we thought.
The new vision for healthcare for 2020 and beyond will not just focus on access, quality, and affordability but also on predictive, preventive, and outcome-based care models promoting social and financial inclusion. As we are on the verge of entering a new decade of change globally, 2020 will be a reality check for long-pending national healthcare policies and regulatory reforms that must reinvigorate future strategies. China will continue to catch up to the US on some important health metrics as it strives to become the “world’s best and cheapest health system.”
The top 8 predictions for 2020 are as follows:
Prediction #1: SDOH analytics platform gains traction during 2020
By the end of 2020, 40 per cent of the US health systems and commercial payers will utilize “social determinant” data of some type in making risk assessments, patient outreach, and business decisions. The social determinants of health (SDOH) account for a larger portion of overall health outcomes than medical care determinants. Our research suggests medical care accounts for only 10 per cent-20 per cent of health outcomes while the other 80 per cent-90 per cent are attributed to demographics, environment and socioeconomic factors. Proactively engaging the right patients based on their SDOH can improve health outcomes and help healthcare organizations meet quality standards. We believe that in the coming decade, SDOH data will be critical inputs to optimize individual care costs and improve the quality of care provided by hospitals and health systems.
Prediction #2: AI develops more use cases and faces more ethical challenges, beginning with radiology
Despite AI’s performance becoming more advanced with accuracy rates for diagnosing and detecting disease, a question still remains: What happens if something goes wrong (especially from the radiology community)? We find the perceived safest way for physicians to use AI, from a liability perspective, is more as a “confirmatory tool” for existing best practices, rather than as a way to improve care with new insights. While AI applications in the medical imaging market are projected to cross US$400 million in 2020, start-ups and innovators will be forced to rethink data use and training, validation, and implementation practices to convince the community of fair, ethical and no-harm use. The market will change to solutions that leverage AI tech of some kind in their solution versus thinking about AI direct as a purchase. In the pharma sector, AI investment deals will continue to pick up, especially for drug discovery applications. We also anticipate the first molecule discovered using AI to enter early phase clinical trials in the next 12 to 18 months.
Prediction #3: Annuity-based model to catapult gene therapy commercialization
While the launch of UniQure’s gene therapy Glybera created a lot of buzz, its high cost, extremely low demand and lack of a sustainable reimbursement model (reimbursement only available in Germany and Italy) led to a below-average performance and a simultaneous withdrawal. Payment models, including outcomes-based, reinsurance, income-based or dynamic pricing, are being experimented world over, but shortcomings such as improper monitoring, long-term therapeutic impact of therapies and involvement of multiple insurance payers have prevented their widespread usage. We believe the sustainability of the annuity-based reimbursement model will unlock commercialization potential of gene therapies and achieve revenue of US$2 billion by the end of 2020. Alongside leading private insurance companies such as Cigna and CVS, leading gene therapy manufacturers like Novartis, Bluebird Bio, and Spark Therapeutics will continue to explore annuity-based specialized reimbursement programs to ease the burden of high out-of-pocket spending by patients.
Prediction #4: Continued VC funding mega-rounds make 2020 a banner year for Digital Health Unicorns’ IPO exits
There are two reasons we expect increased IPO activity in the next 12 to 18 months. First, as of mid-year 2019, there are about 38 VC-backed healthcare unicorns worth a combined valuation over US$70 billion, and the cohort’s total valuation in 2019 continues to grow as a result of continued mega-rounds to existing unicorns, such as 23andme, Tempus and Doctolib (in the US); BenevolentAI and Oxford Nanopore Technologies (in the UK); Ottobock (a German prosthetics company); United Imaging, Yitu, Henlius, iCarbon X, and We Doctor in China, and others. Second, in the past few years, M&A has been the preferred exit option when compared against IPOs. For example, between 2014-2019 (Q1), there have been 576 M&As compared to just 15 IPOs in the digital health space (despite IPOs in the digital health space performing comparably to their peers). However, this M&A may complicate healthcare start-ups’ existing contrast with core healthcare companies following acquisition by a competitor. As later-stage VC funding deal share increases and matures, along with the uptick in IPO activity during 2019, we anticipate five digital health unicorns will exit via IPOs by the end of 2020.
Prediction #5: Interoperability by pure-play solution vendors will gain ground against standalone systems
We anticipate during 2020, interoperability will finally take a major step forward in terms of government policies, vendor acceptance and strategic focus by healthcare IT buyers. Solutions that stand alone and do not enable data mobility will lose significant ground or won’t be purchased. The US government will take significant steps forward to force the industry to enable interoperability in patient medical records, reigniting the shift to personal health records versus enterprise health records. In the European region, interoperability solutions will garner strong demand as progressive health systems in the European Union plan to achieve EU eHealth Action Plan 2012-2020 (EHAP) milestones, including cross-border exchanges of patients’ health data and General Data Protection Regulation. Most of the emerging countries in regions such as Asia and Africa are often know to be “data-rich but information-poor.” Many of these countries are developing their national eHealth policies (e.g., India) and are likely to embrace interoperable systems from the beginning stage to ensure future scalability. The healthcare industry strives to expand the use of open systems and frameworks, including standards such as APIs and platform integration, to solve HIT system interoperability and data integration challenges. By the end of the coming decade, blockchain-based personal health records (PHR) will be considered foundational for ensuring access and ownership of individual health data.
Prediction #6: Telehealth will gain mainstream adoption in the overall mix of healthcare services and will expand beyond the current focus on chronic conditions
We project that by the end of 2020, progressive health systems will start to view telehealth as a standard of care option for primary care virtual consultation. In the next 2-3 years, telehealth will have full regulatory approval and clinician support. Telemedicine promises to solve the most challenging problems in the healthcare system in the years to come, allowing access to care in a cost-effective way. With the opening of the reimbursement door for telehealth services in these major countries, the outlook has improved sharply, and the landscape is changing with several projects being conducted in recent months. We believe the US healthcare payers will offer patients more out-of-network options, whereas China plans to cover 70 per cent of the nation’s public hospital under the government-backed telemedicine programme by 2022. In the next 2-5 years, 5G wireless will increase the potential for telehealth by adding more capabilities beyond the home.
Prediction #7: Precision medicine-led approaches will pave the way for next-gen health data analytics solutions
We believe, in the coming decade, cognitive analytic platforms capable of leveraging genomic, clinical, and lifestyle data available to deliver actionable clinical insights will bridge the last mile for precision medicine into clinical practice. We estimate that the precision medicine informatics service market will cross the US$5 billion mark by the end of 2020. A precision medicine SaaS-based cognitive insight platform with desired interoperability, security, and multi-modal functionally in an intertwined ecosystem of payers, providers and pharma will gain market traction. Both plug-in application providers and vendors with integrated analytics solutions tied to popular EHR or PHM platforms are expected to gain market acceptance, as large health systems, in the shift to value-based care, are compelled to utilize multiple analytics partners for comprehensive patient data analysis at an enterprise level. Companies offering tools and infrastructure for handling real-world data and real-world evidence (RWD/RWE) will see high growth potential during 2020 and robust solutions that can reliably stratify patient populations and recommend treatment plans that will succeed in the long run.
Prediction 8: 2020 will be a year of ‘Retailization’ for the healthcare industry, promoting the ‘Comparison Shopping’ consumer mindset
One of the momentum shifts we are starting to see in the healthcare industry is “healthcare consumerism,” where patients/consumers demand a retail-like buying experience for availing healthcare services and products. The “Retailization” of the healthcare industry is largely driven by empowered patients. Digitization of products, services, and commerce models is democratizing current healthcare systems, manifesting the concept of the “Comparison Shopping” consumer mindset. We believe 2020 will be the year of new or expanded health services offerings from new “entrants.” For example, CVS and Walgreens from the pharmacy perspective; Walmart, Costco, and Best Buy from a retail store perspective; and Amazon and Ali Health from a digital marketplace all are areas where we will continue to see major developments happening throughout 2020. Consumer-driven care delivery models such as telehealth, e-pharmacy, retail care, price transparency, D2C tests, and care at the point of the person, among others, will achieve high market traction in the coming decade.
2020 is a highly anticipated milestone and will definitely be an exciting year for healthcare to recalibrate strategic milestones and visions for the coming decade.
- Reenita Das is a partner and Senior Vice President of Healthcare and Life Sciences at Frost & Sullivan
- This article was written with contributions from Kamaljit Behera, Transformational Health, Senior Industry Analyst at Frost & Sullivan.