Pharma & healthcare companies need to reinvent business models to be Patient-centric, says Ernst & Young
Mumbai, 4 April 2012 - With chronic diseases now accounting for three quarters of all health care spending in developed countries, life sciences companies will face increasing pressure to demonstrate that they are helping patients adopt healthier behaviors and manage their diseases more effectively. Yet to thrive in this environment, companies will be required to fundamentally reinvent their business models to make them more patient-centric and better able to drive behavioral changes in consumers, according to Ernst & Young's latest annual report "Progressions 2012 - The third place: health care everywhere".
Relevance of "Third Place" in India
With an increasing chronic disease burden and poor health indicators in India, there is a pressing need to influence patient behaviors to improve health outcomes. Today, India is the world's diabetes capital with 61.3 million diabetics in 2011 and projected to reach 101.2 million by 2030, Coronary Heart disease prevalence is projected to increase from 36 million patients in 2005 to 62 million by 2015.
The new imperative for life sciences companies to better understand patient behavior and influence positive changes is being accelerated by two key trends. First, changing incentives are shifting more financial risk to providers - who will need to change patient behaviors to manage this risk. Second, patient-empowering technologies such as smartphone apps, social media, sensors and monitors are giving individuals more direct control over their data and their health.
Given that India is amongst the world's fastest-growing "internet nations," with more than 100 million internet subscribers and a smartphone market to cross 80 million units per year by 2015, this would be an important enabler to improve accessibility of healthcare to a large population in the country thereby making healthcare ubiquitous.
Hitesh Sharma, Partner & National Leader - Life Sciences, Ernst & Young said, "Almost every life sciences company, regardless of their product or offering, will soon be expected to help change behaviors and deliver better health outcomes. Achieving creative disruption to one's own business model requires bold leadership on the part of companies, but for those willing to invest in understanding what truly motivates patient behavior and applying it to the creation of patient-centric business models, the opportunities and rewards in the health care system of the future will be profound. In the India context, while technology based patient behavior would yield good results for companies investing in these areas, it could also be interesting to see if a Public Private Partnership (PPP) model would be considered by the government to enable reach to the large Below Poverty Line (BPL) population from an educational/ prevention perspective using behavioral analytics."
Technology and the "third place" in health care
The Progressions report lists several technological trends that are driving the shift to a "health care everywhere", including:
- Next-generation social media - Building on the emergence of health-specific social media sites that allow patients, physicians and others to discuss their conditions, side effects and relevant treatment options, new sites such as Treato by First Life Research are going even further by using natural language processing and artificial intelligence to indentify patterns and trends among discussion threads across multiple sites.
- Gamification - Electronic and online games, long viewed as deterrents to healthy behavior, are increasingly being used to promote healthier behaviors such as better diet and weight control and medication adherence. Some innovative start ups have developed programs combining the use of games, social media and technology to motivate people to adopt healthier behaviors.
- Medicalization of consumer devices - and consumerization of medical devices - The line between everyday objects and medical devices is rapidly blurring. Smartphones and other objects are becoming sensor-embedded and wirelessly connected - creating increasingly empowered patients who are able to generate and monitor their own medical data and interact with health care professionals without having to visit a doctor's office. Meanwhile, medical devices are becoming smarter, more connected and increasingly under the direct control of patients.
Entering the behavioral change business
To understand and influence patient behavior and successfully extend their business models in new directions, companies will need to leverage insights from the field of behavioral economics, which has made tremendous strides in the past decade at understanding the inherent decision-making biases that often prevent patients from achieving healthy changes.
Guiding principles for translating these insights into action highlighted by Ernst & Young include:
- Disrupt the business you're in - Life sciences companies need to find more patient-centric ways of creating, delivering and capturing value. This includes producing products/services with the features that most matter to patients, developing life-long relationships with patients, focusing on the customer experience and earning revenues from multiple sources (e.g., creating data insights rather than just selling drugs or devices).
- Learn from behavioral economics - Successful companies will boost adherence, enable prevention and build brand loyalty by using behavioral economics to understand what truly motivates patients. Understanding patient preferences will allow companies to "mass customize" their products and create more personalized offerings. But accounting for individual preferences will also require communicating information in more clear and neutral ways. (e.g. in direct-to-consumer advertising).
Ajit Mahadevan, Partner - Life Sciences, Ernst & Young added, "As the developed economies of the world deal with spiralling healthcare costs and the challenges of universal coverage for all their people, the move from "sick care" to "health care" is a necessity to create a model of healthcare for all that is sustainable. In India, we face a large unmet need in terms of disease burden - both chronic and acute. We have the opportunity to identify the "India way" towards healthcare for all. Pursuing a strategy of moving our country towards a healthy outcomes based model will certainly be a critical enabler in achieving this. It will require the various stakeholders in this process to develop paradigms and business models that are unique to our requirements. There will be new and significant opportunities for traditional and non-traditional players in the emerging environment."
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