The New Health Economy comes of age
The US health industry has often lagged other industries when it comes to modernizing. Once thought to operate outside the greater US economy, the industry—with its byzantine payment system, complicated regulatory barriers and reliance on face-to-face interactions—is being disrupted. Finally, there’s robust evidence that what PwC calls the New Health Economy is kicking into gear.
In 2019, new entrants and biopharmaceutical and medical device companies will bring to market new digital therapies and connected health services that can help patients make behavioral changes, give providers real-time therapeutic insights and give insurers and employers new tools to more effectively manage beneficiaries’ health.
Two years into the Trump administration, the Affordable Care Act (ACA) remains law, although elements of it have been reshaped through legislative, regulatory, budgetary and legal actions by Republican lawmakers and the administration. In 2019, these actions will create new winners and losers.
In 2019, healthcare companies will identify which employees have to be upskilled or reskilled to get the most out of new and impending technologies such as artificial intelligence (AI) and robotic process automation (RPA). These technologies will be critical in helping companies continue their shift into providing care anywhere through telehealth, as well as reducing transactional tasks for the 63% of US health workers that say the work they do requires a great deal of manual entry or analysis.
The healthcare industry will begin to feel substantial effects of the 2017 Tax Cuts and Jobs Act in 2019. The law will create both new possibilities for companies looking to turn their tax savings into competitive advantages, and novel challenges for organizations facing new taxes. At the same time, emerging trade pressures may create uncertainties for companies hoping to maintain the status quo.
In 2019, a health industry increasingly pressured to do more with less will take lessons from emerging companies that have figured out how to deliver value to the uninsured and underinsured—who have been traditionally deemed unprofitable—while turning a profit.
Private equity firms have been investing in healthcare for years but now the pace is quickening as they step up their presence in a highly fragmented health industry. Private equity’s acquisitions and investments in the health sector have become increasingly diversified and frequent. HRI expects this trend to accelerate in 2019, giving traditional healthcare companies opportunities to sell all or portions of noncore assets and double down on their core competencies.
Karen C. Young
US Pharmaceutical and Life Sciences Leader, PwC US
Health Services Leader, PwC US
US Health Industries Advisory Leader, PwC US
US Health Industries Tax Leader, PwC US
US Health Industries Assurance Leader, PwC US