PricewaterhouseCoopers Identifies Top Seven Health Industry Trends of '07

NEW YORK, Nov. 30 /PRNewswire/ -- The year ahead will be a watershed for the health industries, according to PricewaterhouseCoopers LLP, as health savings accounts reach a tipping point, states act where the federal government hasn't and pressure on pricing amid demand for transparency forces pharmaceutical companies, hospitals and health plans to rethink their strategies. These are among the top issues identified by PricewaterhouseCoopers' Health Research Institute, which today released its report, "The Top Seven Health Industry Trends of '07."

The report also includes findings of a nationwide survey of 1,000 Americans about their perceptions of the U.S. healthcare system. The survey identified significant differences between what the public and industry believe to be key issues, including:

  -- Nine out of ten Americans (90 percent) believe that greed is a major
     reason that U.S. healthcare costs are rising, a greater number than
     those citing drug prices, care for the uninsured, business
     inefficiencies or malpractice costs.
  -- Nearly one-quarter (24 percent) of Americans don't yet believe that
     having an electronic health record will improve the quality of
     healthcare, and four in ten consumers (42 percent) are unsure.
  -- Only one in six (17 percent) agrees that a very important way to reduce
     the cost of healthcare in the United States is for consumers to share
     more of the cost, which is the strategy behind high-deductible health
     plans with Health Savings Accounts.  More than half of those surveyed
     (51 percent) believe that better, more advanced medical technology and
     diagnostics is the answer.

"Every health organization across the health industries is responding to pressure to reduce costs, meet growing demand and do more, better and faster with less," said David Chin, MD, partner and leader of PricewaterhouseCoopers' Health Research Institute. "Our survey, however, found a disconnect between what the American people, policy makers and industry think is wrong with our nation's health system and how to fix it. It appears that consumers may not appreciate the complexity of healthcare as a business, and therefore the industry's messages about itself and the challenges it faces are failing to resonate in the court of public opinion. This disconnect must be addressed before real progress can occur."

PricewaterhouseCoopers has identified the following as the top seven trends in the health industries for 2007, based on its work with leading employers, policymakers, associations, advocacy groups and organizations across the health industries, including hospitals, health systems, physician groups, government and commercial health insurers, pharmaceutical companies and life sciences firms:

  1. States Take the Initiative:  In the presence of federal gridlock,
     states are taking the lead on divisive issues such as stem cell
     research, health insurance coverage for the uninsured and oversight of
     advertising and promotion by pharmaceutical companies.  Responding to
     local social and fiscal concerns, states are developing innovative
     insurance programs, forming public-private partnerships to spur
     innovation and passing legislation to drive greater accountability and
     transparency from hospitals, physicians and pharmaceutical
     manufacturers.  According to PwC, such state-led initiatives will
     likely expand in 2007, but the risk is a patchwork quilt of local
     programs and regulations.
  2. Transparency Could be Revealing:   The demand for transparency around
     pricing, quality measures, safety standards and community benefit is
     being driven by and is supportive of consumer-directed healthcare and
     pay-for-performance.  In 2007, the health industries will focus on
     becoming more transparent, but government, insurers and employers need
     to educate consumers about the availability and use of such
     information.  Providers will need to dedicate more resources to
     reporting, a strategic issue that can no longer be delegated down in
     the organization.
  3. Time to Walk the Talk on Technology:   Developing a digital backbone to
     support electronic health records, interoperability and transparency is
     a national priority, but the public mandate is unclear and the industry
     is struggling with the cost and return on the investment.   According
     to PwC's research, nearly one-quarter (24 percent) of Americans don't
     yet believe that having an electronic health record will improve the
     quality of healthcare, and four in ten consumers (42 percent) are
     unsure.  Progress will take an investment of resources from the
     government and/or the private sector.
  4. Consumers Take the Wheel:  The shift toward consumer-driven healthcare
     as a way to control costs will continue, but the year ahead will be the
     tipping point for HDHPs and HSAs. Insurers, employers, and to some
     extent the government have been proceeding in favor of consumer-
     directed health plans in the absence of strong support from the
     consumers themselves and from strong data on the results of such
     changes in benefits. PwC's consumer research found that only one in
     seven Americans (17 percent) surveyed by PwC thinks that increased
     cost-sharing is a "very important" way to reduce healthcare costs. With
     a critical mass of people now enrolled in these plans, 2007 will be the
     year to see whether they really have results to offer, and for
     consumers to weigh in on what they think of them.
  5. Price Check for Pharmaceuticals: Forty-two blockbuster drugs will lose
     their patents in 2007, opening the door to generic equivalents and
     potentially creating an enormous loss of revenue for brand name
     pharmaceutical manufacturers.  PwC's consumer survey indicates that the
     public is quite aware of and sensitive to drug prices, perhaps due to
     relatively high cost sharing and price transparency of pharmaceuticals,
     relative to other health services.  Nearly three quarters (72 percent)
     of consumers surveyed said they would be willing to take a generic
     versus brand--name prescription drug.  According to PwC, drug pricing
     will come under continued pressure from generics, and pharmaceutical
     companies will have to develop innovative pricing strategies to
     compete.
  6. Obesity is the New Smoking:  First smoking, now weight. There is a
     culture shift around healthy eating sweeping the United States, as
     evidenced by the number of fast food chains cutting out transfats and
     U.S. companies introducing health and wellness programs.  Two-thirds of
     U.S. adults are overweight, and obesity's impact on chronic health
     problems is stirring healthcare organizations and employers to
     aggressively promote weight loss. Public attitudes have yet to catch
     up: While three in five Americans (61 percent) believe health insurance
     should cost more for smokers, only 40 percent believe it should cost
     more for those who are overweight because of poor lifestyle habits. In
     2007, expect public health campaigns to push the envelope on obesity
     through wellness programs and financial incentives to lead healthier
     lifestyles.
  7. Small is Big:  The competitive landscape will change as healthcare gets
     smaller, more focused and patient friendly under consumer-directed
     healthcare.  Physicians and hospitals are now competing with retailers,
     several of whom have announced plans to open mini-health clinics within
     their walls.  Consumers like the idea: Four in ten people surveyed by
     PwC (42 percent) said they would seek non-emergency care from a retail
     health clinic.  In addition, large general hospitals are seeing
     competition from increasing numbers of smaller, specialty hospitals,
     surgery centers and outpatient clinics, the result of regulatory action
     overturning the specialty hospital ban. There already are 130 specialty
     hospitals in operation and more under construction, predominantly in
     the South and West.

"Though there is disagreement about priorities, most everyone agrees that our current health system is ailing and isn't sustainable without major changes," said Sandy Lutz, director of PricewaterhouseCoopers' Health Research Institute. "There are a myriad of issues facing health organizations and opportunities for executives to address them, but they need to also focus on closing the gap between how consumers view the industry and how the industry views itself. Healthcare is a people business and must become more consumer- centric. To be sustainable, health organizations must communicate and connect with their customers through innovative approaches and fresh perspectives - beginning in 2007."

A copy of The Top Seven Health Industry Trends of '07 is available at http://www.pwc.com/healthcare under "Publication/Thought Leadership."

About the PricewaterhouseCoopers Health ResearchInstitute

PricewaterhouseCoopers' Health Research Institute provides new intelligence, perspective and analysis on trends affecting all health-related industries, including healthcare providers, pharmaceuticals, health and life sciences and payers. The Institute is part of PricewaterhouseCoopers' larger initiative for the health-related industries that brings together expertise and allows collaboration across all sectors in the health continuum.

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