Healthcare disrupted: four emerging business models


New technologies and new business models are transforming life science companies. A new book from Accenture maps out the fresh approaches being taken across healthcare.

Everybody knows that healthcare and the life sciences industry are undergoing huge changes, but it is often difficult to see what the long-term trends are in this constantly evolving picture.

Consultancy Accenture has just published a new research-based book entitled Healthcare Disrupted which attempts to map out the biggest forces for change – often called 'disruptive innovation'. It also identifies four distinct new business models which are already emerging and leading these changes.

Accenture says global changes in healthcare funding, the ageing of societies, scientific breakthroughs, explosions in volumes of health and digital data, and new digital technologies are all converging to transform healthcare.

They say these changes will require new definitions of healthcare, and an understanding of how it will be delivered and experienced in the future.

Anne O'Riordan, global senior managing director, and Jeff Elton, managing director, at Accenture Life Sciences, are authors of the new book.

They say it is a call to action for life science and healthcare leaders, demanding that they develop new strategies and business models in order to reshape the future for better health, outcomes and value for the healthcare system overall.

"A new order is emerging in the healthcare industry, focused on the patient, in which financial incentives will be linked to the value a product delivers, and not just the product itself," said O'Riordan.

The four emerging business models they outline are centered on patient outcomes and value:

• Lean Innovators: Companies that combine the best practices of generics companies' efficient manufacturing and lean supply chain with M&A expertise, challenging existing cost structures, productivity and operating models.

• Value Innovators: Companies that are scientific innovators, product-centric, and largely focused on speciality therapeutics and the patient journey which use complementary services to improve outcomes for patients and health systems.

• Around-the-Patient Innovators: Companies that are focused on improving patient and health systems by integrating therapeutics, devices and services with clinical management processes.

• New Health Digitals: Companies from within and outside the healthcare industry that are changing how and where patient care is delivered with economics grounded in digital, global scale and large ecosystems of apps, technologies, devices and the cloud.

So which companies did Accenture have in mind when describing these four new business models? While it is careful to not name names, it is clear that it has drawn on real life examples, albeit creating four 'types' which are very much idealised concepts.

When it comes to Lean Innovators, the above description sounds like a representation of Pfizer-Allergan. Although their merger hasn't yet been completed, the two companies demonstrate ruthless attention to profitability and M&A opportunities – Pfizer has now adopted Allergan's 'growth pharma' mantra. At the same time, Pfizer is also still investing in innovation.

One company that comes close to the Value Innovator model is Roche – it specialises in innovative cancer drugs, and is also developing cutting-edge medical devices to diagnose and monitor treatment of the disease.

An example of an Around-the-Patient Innovator would be Johnson & Johnson, which has launched its special Janssen Healthcare Innovation division. Among its numerous products is the Care4Today mobile health manager.

Finally, there are many companies which could be termed 'New Health Digitals'. Of the many and varied companies which fit this description, Google's Verity, IBM Watson Health and Apple's ResearchKit are the most high profile.

"New targeted therapeutics, smart diagnostics, advanced informatics, and digital technologies are redefining healthcare and enabling patients to become more proactive in determining their own health outcomes," added O'Riordan. "Many factors are catalysing this change, including the availability of genomic, health, and lifestyle data, and an abundance of technology solutions that can help patients monitor, measure, and adjust their habits to improve their health and treatment outcomes."

The authors say large-scale collaborations across industry boundaries are an essential part of this future. "Pharmaceutical companies, medical device organisations, payers, providers, governments, nurses, caregivers, patients, and high-tech companies – some new to the healthcare landscape – are joining forces in innovative ways, offering novel products, such as wearables, and combining them with services to improve health and wellness outcomes," explains Elton.

Similarly, there are examples of this trend towards major public-private alliances in healthcare which are already here. One of the most forward-thinking is England's 100,000 Genomes Project. This gathers full genomic data from consenting patients on the National Health Service (NHS), in partnership with private genome sequencing firm Illumina, and many other IT and pharma partners.

Meanwhile, the emergence of Accountable Care Organisations (ACOs) in the US healthcare system and similar developments in Europe point to a more integrated, patient-centric and outcomes-based approach to healthcare management. This includes greater demands for co-operation and risk-sharing between ACOs (and similar healthcare organisations in other countries) and suppliers such as the pharma and medical devices companies.

The emerging business models are breaking old boundaries, says Elton. "Traditionally, there were three distinct types of healthcare players: health providers delivering treatment and services; health manufacturers – pharmaceutical and medical device companies; and health payers which would typically be insurers and governments. But now, these lines of distinction are blurring as new approaches are deployed to improve both health outcomes and overall value to the health system."

The book also outlines how medical device companies are transforming into service entities by remotely managing specific patient populations; pharmaceutical companies are adding robust services in support of the patients and health systems using their products; and providers are extending services into post-discharge monitoring and remote care. Accenture says these services will collectively transform care models, making outcomes and value achieved their end goal, rather than simple traditional therapeutic interventions alone.

Additionally, the authors predict new types of collaborative pairings occurring – medical device and digital technology companies with pharmaceutical firms; risk-bearing providers with life science companies; and payers with digital technology companies. "Payers are moving into the direct provision of care, health providers are now directly assuming and managing risk, technology companies are connecting remote clinical monitoring technologies and advanced analytics together as a service, and medical device companies are providing direct patient care management services," noted O'Riordan.

Elton says the days of slow and steady change are over. "Radical changes are already making the industry more dynamic and unsettled than ever before. Executives and leaders at all levels will need to think differently and act as integrators. They will be indispensable to creating product and service packages of value, and interacting directly with patients and health providers, among others."

Healthcare Disrupted is published by Wiley.

About the author:

Andrew McConaghie is pharmaphorum's managing editor, feature media.

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