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What connections will move health from reimagining to reality?

In the 2019 edition of New Horizons, we explore how the health sector can begin executing on a new vision of a connected health ecosystem.

Welcome to the 2019 edition of New Horizons (pdf), the EY annual collection of insights for executives that explores the pivotal health and wellness issues facing society today.

Last year we focused on the duality of growth: the challenge of strengthening today’s core business while preparing to meet the challenges of an increasingly more connected, consumer-centric health ecosystem. While that dynamic is a perennial consideration, we are shifting the conversation a bit this year. Our discussions with clients have evolved from reimagining the health ecosystem and their place in that future. Attention, instead, has moved to the how best to build that future — to executing on that vision.

The most common theme of these conversations is connection. Connecting people to the goods and services that will keep them well; to physicians when they need clinical intervention; and to each other, so that they stay engaged as they age. A key focus, too, is connecting health businesses so a more complete picture of the consumer can be seen, and the optimal, personalized care can be delivered. This year’s theme, then, is moving past reimagining to building — building for what comes next, after and beyond. For more on our view on a connected health ecosystem, view the video at

We are delighted to present you with four articles that build on this theme — connections — as well as a few captivating interviews that demonstrate how that vision is being put into practice in the market today.

Our first article deals with the promise digital technologies offer our sector and how to usefully embed them into core business operations. Using survey data gathered from several countries, we lay out consumer and physician expectations for a digitally enabled, connected health ecosystem. Although we have found a gap between those expectations and implementation to date, in the article we outline several considerations to keep in mind when building digital health capabilities that will close this gap.

In our second article we consider how to create a path from between the present, fee-for-service state to a future centered on value — one that equips providers to improve outcomes for patients at a lower cost, while reducing the risks for payers. We discuss how focusing on the patient experience can be the bridge to building a culture that embraces value-based care (VBC). By including patient and physician experiences in the VBC equation, health organizations provide better care, increase the satisfaction of their employees and keep people engaged with their health. This reduces the chance that patients will slip out of the network, thereby improving revenue and providing access to the data health organizations need to improve operational efficiency and population health.

We next turn our attention to the world of private equity (PE), which continues to demonstrate a keen interest in the health sector. We again use data gathered by EY to examine the impact PE firms are having on the sector. Notably, health businesses achieve the best outcomes when they partner with firms that have sector experience. Overall, we find these partnerships help with the business of today and the business of tomorrow. Health companies obtain ready access to capital so they may build the capabilities needed to compete in the evolving health ecosystem. And, they can also draw on PE firms’ operational expertise to improve efficiency and focus today.

In our final article, we again raise the issue that health incumbents have long acknowledged: clinical care is only a small contributor to health and well-being. The health sector is becoming more consumer-centric, participatory, outcomes-based and cost-efficient. And the technologies that will get us to a connected, wellness-oriented, anytime, anywhere health ecosystem are available today. Using those tools requires an information technology infrastructure that is built around data persistence, extensibility and true interoperability. It is an essential first step to implementing the amazing technologies at our disposal, such as intelligent automation, artificial intelligence, predictive analytics, and integrated enterprise resource and clinical operations management.

To view the complete New Horizons report, click here (pdf).


Chapter 1

Digital technologies help make the leap from promise to practice

Thinking must shift toward how to realize the benefits of new technologies in a complex care system as a pillar of business-as-usual.

Digital health technologies accelerate broad changes in the health sector on two key fronts: shifting the care model to preventive, personalized and participatory and the care location to anywhere, anytime. But to date, uptake of digital health technologies has been somewhat messy, with pockets of activity directed either toward a specific condition or an operational or administrative problem.

The market and policymakers clearly anticipate that the future of health care lies with digital. In the US, around US$8.1b venture capital investment was directed into digital health startups in 2018, a rise of 42% over the preceding year. The Netherlands and Estonia have made great strides in digital heath, and government agencies in the UK and the US have been encouraging advances through deep investment in digital health technologies and care delivery systems.

Nevertheless, in our four-country NextWave Health survey of consumers and physicians, consumers say there is room for innovation. At best, one in four judge their health system to be innovative compared with other digitally transformed industries such as retailers or banks. What’s more, both consumers and physicians consider that health systems lag in introducing digital health technologies.

There are five trends to understand to unlock the power of digital to improve health outcomes:

  1. Data will be better connected, combined and shared across the health ecosystem.
  2. A “digital backbone” will emerge across the industry, transforming the patient-consumer end-to-end experience.
  3. Workforce engagement and patient interaction augmented by virtual agents (often behind the scenes) frees up valuable face-to-face time.
  4. Digital underpins the shift in care location to the home.
  5. A demand-driven global marketplace based upon digital platforms will deliver network effects, value and benefit.

The case for change is clear, driven by a curiosity about how to meet people’s health needs by doing things better, smarter and faster and, at an acceptable cost. Thinking needs to shift to a more tactical focus: how to introduce and realize the benefits of digital technologies in a complex care system as a central pillar of business-as-usual.

Both consumers and physicians in our survey consider that remote monitoring technologies and artificial intelligence technologies will be central to health care provision within the next 10 years. The management of chronic and complex diseases will likely be underpinned by digital technologies that enable remote teams to care for people in their homes.

While a mobile device is of limited benefit in isolation, it provides real value when it’s connected to a suite of services through a platform. Both consumers and physicians expect that the smartphone will become a portal — the gateway by which we access data, make informed decisions and interact with the health care system.

What gets in the way?

While there are some clear success stories around how digital health technologies can effectively improve care quality and enterprise efficiency, there are some considerable barriers to adopting such technologies.

Health care organizations are not naturally digital natives. Their strengths typically don’t lie in building new businesses that combine digital know-how with clinical, administrative and health system expertise. A dynamic marketplace and a policy environment that requires safety and quality to be confirmed inevitably has broad-ranging barriers to uptake and diffusion. Some of the constraints:

  • Big-picture policy issues concerning the definition and regulation of digital health technologies
  • Differing perspectives regarding evidentiary standards (gold-standard randomized controlled trial evidence versus the “fail fast and often” approaches of entrepreneurs)
  • The timing and scale of capital investment required, not to mention cost and reimbursement

Human factors such as clinical appropriateness and the fit with the patient are paramount. Key influences on digital health technology adoption or abandonment include cultural resistance to changing practice patterns, professional roles and career trajectories; clinical concerns around efficacy and potential liability; and staff and patient digital literacy.

Pressing forward with an innovation and change agenda

It was clear in our research that, over a relatively short time, health care is expected to be digitally driven. Consumers and physicians view the widespread deployment of these technologies as convenient and beneficial. A growing body of evidence suggests positive clinical and operational outcomes.

At the same time, health care systems and consumers are still learning, but are open to and accepting of vastly different new care models that are technology-driven, such as virtual hospitals. Clearly, one future and vital challenge for the health industry to address is how to retain the human touch of health care while absorbing all the many advantages that digital innovations will offer.

Health care organizations need to have more than just a strategy for innovation. Getting the technology elements right more often demands a great clarity around what is being solved and clear articulation of what success will look like.

The road ahead

A change in culture is vital. Health organizations will need to become more agile and look to build, buy or partner for solutions that bring the organization up to speed and are compatible with the organization’s purpose.

Health care organizations and health systems contemplating change will need to weigh three conditions that we believe are necessary to achieve this:

1. Creating an overarching strategy of digital transformation. 

A new digital ecosystem will demand a new operating model built around digitally enabled products and services, routinely and efficiently used in daily practice. Technologies and innovation systems are needed that move services and facilities from connected, to digital, to smart.

2. Optimizing performance through agile business transformation.

Design, digital and data must work in combination to focus on enterprise performance and support operations and care delivery through intelligent automation of front- and back-office processes. Build, buy or partner to create an ecosystem to bring the best services and solutions to the patient-consumers and population.

3. Pursuing deep-seated cultural change. 

Through user experience strategies and human-centered design, deeply understand the customer — the health care consumer, the physicians and administrator stakeholders. Embed trust, risk management and cybersecurity into products and services from the outset to deliver end-to-end consumer and staff return on experience.

The road ahead is shaped by several givens — people will always form the core of why health and care exists, and technologies will always improve and open new horizons. Pivoting toward a new future requires establishing a solid base of foundational and advanced digital health technologies that turn promise into practice.

Consumers are unlikely to wait for the health system to catch up — with their ever-present and always-on devices, they don’t have to.

About the survey

In 2018, EY undertook a four-country online health survey. Total respondents were 688 physicians and 8,541 health care consumers in Australia, England, the Netherlands and the United States. Physicians included GPs/primary care practitioners and specialists, and respondents worked in a variety of practice settings including solo, group and hospitals. Consumer data were weighted to reflect population and geographic distributions.


Chapter 2

How redefining value in health care is leading to new ways of delivering care

Amid the decline of fee-for-service payment models, providers see more of their revenue stream becoming tied to value-based metrics.

Aging populations, higher chronic disease rates, greater demand for care and rising costs are pressuring health systems around the world, creating the sense that ruthless efficiency is required for success. But many health stakeholders are moving toward a different mindset: value-based care, which rewards and reimburses providers for quality care rather than for the amount of care provided.

This shift requires a new approach to care delivery and new business models. In the fee-for-service model, in which payments are made based upon the quantity of care provided, health consumers and payors can struggle to determine the components of care that are most predictive of good outcomes, and physicians may experience harm from trying to balance their desires to serve the needs of their patients against following the revenue-driven policies that keep a health system running.

Given the intensely entrenched culture of fee-for-service and supply-driven models, new approaches will take time to introduce and be adopted. How do we bridge the gap between the present state to a future state centered on value — one that equips providers to improve outcomes for patients at a lower cost while reducing the risks for payors? Here are four areas.

1. Never lose sight of patients and providers

Countries around the world are implementing value-based approaches to care. Some, such as Sweden and the UK, are using a broad definition of “value” and tailoring these concepts to best suit their health care needs, while others, such as the Netherlands and Germany, are focusing more narrowly on costs.

But the focus on cost alone can create pitfalls and highlight the importance of defining what “value” means for your organization. Dr. Abi Sundaramoorthy, System High Reliability and Safety Officer at University Hospitals in Cleveland, OH, says that attaching too much weight to cutting costs isn’t sustainable; at some point it begins to decrease the patient experience and health outcomes. She also sees a related impact on physician burnout.

“Over the last 20 years, the workload of physicians has decreased, particularly during training, and yet we see higher levels of burnout,” Dr. Sundaramoorthy says. “I think the conflict between operating in a very revenue-conscious environment and truly caring for our patients is contributing to this exhaustion.”

Removing barriers that may cause moral injury (psychological distress arising from perceived breaches of one’s moral or ethical code) and supporting the kinds of activities that matter to physicians and their patients will improve value. And the currently fragmented health care system can benefit from value-based health care (VBHC) only if patients’ perspectives are considered. A patient-centric definition of VBHC is an important stopgap to prevent a too-narrow focus on cost reduction. 

2. Rethink teaming and incentives

On an operational level, the shift from care being delivered by a siloed single provider to coordinated, team-based care is key to a VBHC approach.

Dr. Sundaramoorthy puts it like this: “Historically, physicians were operating largely on their own and could only see the outcomes of their individual practice. Taking a collective approach offers the chance to examine the natural variation in the way physicians deliver care.”

“With these insights, we can eliminate unwarranted care — the kind that can lead to increased costs and/or negatively impact outcomes and identify the most effective methods. As our organization works together to improve quality, cost reduction will naturally follow.”

As payors shift reimbursements away from fee-for-service, providers are seeing a greater share of their revenue stream becoming tied to value-based metrics. In the US, some have turned to provider-payor relationships to develop payment models and incentives that reward high-quality outcomes and achieve savings, seeking to strike the right balance between cost and quality. Still others have added incentives based on population health metrics and individual incentives.

Iora Health’s care teams include a doctor, a nurse and a health coach (who build relationships between the patients and their care teams). In most arrangements, the company receives a flat monthly payment for each patient and, if it saves the company money on overall health spending, it takes a percentage of what is saved.

3. Enable visibility across the care continuum

Better care coordination leads to better outcomes and happier health consumers. Technology has a large role to play here.

According to the Future Health Index (FHI) study by Royal Philips, advanced data collection and analytics play an important role in the new care delivery model and can speed up implementation of VBHC. By looking at 16 countries around the world, the report found higher adoption of VBHC in countries using digital technologies.

Improving consumer engagement, physician communication and remote monitoring are all essential, beyond greater facilitation through electronic health records.

A holistic data strategy and the technologies that feed into it enable visibility across the care continuum. Together they empower payors and providers with the right tools to coordinate patient care and reduce unwarranted variation, waste and error.

4. Consider broader factors

As health systems adopt value-based models, the role that social determinants of health (SDoH) — which include economic, emotional, educational and environmental factors — play in health outcomes has become more apparent. According to a study published by the National Center for Biotechnology Information, allocation of more resources to social services has substantially improved health outcomes.

Policymakers, health systems and social entrepreneurs are increasingly acting to integrate health and social services and find new ways to finance those efforts. Removing the barriers that SDoH put in the way of obtaining care or following treatment plans have become a central part of many value-based care strategies.

Bearing the patient perspective in mind and adopting a flexible engagement style are important parts of a broad definition of VBHC. Every patient is an interplay of complex emotional and psychological factors (which are also impacted by his or her surroundings). Hence, physicians need to be flexible and empathetic in their approach to ensure adherence and compliance.


Chapter 3

How does private equity affect the health of health care?

Improvements in tracking patient satisfaction, securing key talent and enhancing compliance are among the benefits. But complexities remain.

Strong and growing interest in the health sector by PE investors shows little sign of easing. In fact, the reality is quite the opposite. PE funding continues to flow into the sector from investors who are attracted by its resilience in the face of potential market volatility and the perceived opportunity for attractive returns.

The year 2018 was a stellar one for health sector PE, with US$32.9b invested in 647 transactions in the US — an amount double that of 2014. In addition, in 2018 alone, US$10.7b was invested in 279 deals outside the US. Moreover, one in seven PE firms made at least one health care investment in 2018.

The wasteful, siloed and fragmented nature of health delivery are a natural match for the traditional PE skills of enhancing value by eliminating inefficiencies, improving operating models and consolidating markets. And future opportunity will likely be strong. Health care is poised to continue not only as a significant economic force, but one subject to ongoing disruption.

However, PE and health care can make for an uncomfortable pairing. Concerns have been expressed about possible implications of PE investments, including the potential for conflicts of interest. PE is often viewed as a force that will, at best, have limited impact on clinician behaviors, clinical outcomes and patient satisfaction.

To gauge the market’s perceptions, we turned to a group of founders and executives who have lived through a PE investment in their business.

The outlook of those with direct experience of PE investment is largely favorable

We spoke with and surveyed more than 80 health care company founders and executives with direct experience of PE investment in their physician practice management companies. The good news: 90% of those we surveyed said PE involvement with their company has been positive overall, with over 80% of those surveyed highly likely to consider PE investments in the future.

Not only is PE perceived to have a beneficial overall impact on health care businesses, it is also considered to positively influence the focus on quality and clinical services.

As well as providing greater access to capital, PE investors are credited with introducing leading practices from companies in their investment portfolios, especially with respect to improved management, clinical metrics and compliance systems.

Some apprehension about PE persists, however. One home care company CEO sums it up well: “I think some in PE are spread pretty thin, and as such don’t grasp the nuances of clinical care. In health care, sometimes a subtle issue can lead to underperformance, but PE folks [make] changes before it can be properly addressed.”

Looking ahead

What may not be clear at the beginning of a PE deal is that a prime concern should be to figure out how to make the relationship work, by confronting and resolving any potential conflicts between investors and business owners on expectations. If handled well, it seems clear that partnerships between PE and health care companies can produce highly successful outcomes.

Executives and business owners and PE investors contemplating entering into a PE transaction will need not only to weigh the need for a ready source of capital, but also to consider the following:

What will unlock value for both parties?

Value creation brings the promise of transforming the company and creating long-term viability by making the business better. Pathways to value differ — through digital transformation, reconfiguration of assets or repositioning to enter new markets.

The litmus test is whether a potential investor partner will bring the right entrepreneurial and management talent to complement the owners’ domain expertise to reinvigorate the company to achieve its full potential. Alignment includes:

  • Agreeing on validated business fundamentals that will release value
  • Sustaining relationships and governance including an openness to collaborate on a journey of constant reinvention to remain relevant to the future
  • Understanding that in health care, value creation will likely have a long-term investment horizon. Market segments and new technologies will grow at differing rates, so where should bets be placed that capture optimal alignment among market, product and timing?

Is risk a two-way street?

Both sides need to do due diligence, in commercial, operational, IT, human capital and cyber areas. In addition to the traditional financial, operational and tax diligence, environmental, social and governance diligence should be covered. Bringing partners along is vital, including:

  • Aligning expectations and requirements for risk and reward
  • Paying attention to the often-invisible cultural factors and organizational alignment that are vital for establishing a firm foundation for any business relationship
  • Managing business continuity and risk and accurately assessing the complexity of scaling a business across multiple geographic areas or market segments

Does familiarity matter? 

The complexity of investing in health care (e.g., the science, the regulatory factors or the intricacy of payment mechanisms) gives an edge to PE firms that specialize in the sector. Evidence from our research suggests that people who know the health industry best appear to navigate it more successfully. Mastering the health industry includes:

  • Acquiring deep industry knowledge and a high degree of comfort operating in a highly regulated environment
  • Understanding that health is a people business and, as achieving outcomes for the patient motivates practitioners within the industry, this should also be a key concern for investors
  • Challenging and validating working assumptions about market trends, target company performance and new and expanded opportunities for both the company and its owners

Managing clinical processes can be complex, and health institutions can move slowly. Appreciating the constraints of the sector and a willingness to understand the complexities of each other’s businesses can lead to an enduring relationship with PE that positively affects the health of health care companies.

About the survey

This study was conducted between July and November 2017 using a mixed-methods approach which consisted of an online, self-administered survey of 84 executives (fielded in July 2017) who are either currently working or have recently worked at a PE-backed health care company in the United States. More than 80% of respondents were C-suite executives, including CEOs, CMOs, CFOs and COOs, and a similar percentage had experienced two or more rounds of PE investment.

The second phase of the research consisted of a follow-up survey of 49 respondents (in November 2017) providing further detail on questions of clinical operations. Finally, in-depth personal interviews were also conducted with 12 current and former health care executives.


Chapter 4

Building health tech for the now, next and beyond in consumer-centric care

We have the technology. But we need the infrastructure to connect stakeholders and support the easy, permission-based flow of information.

Health incumbents have long acknowledged that clinical care is only a small contributor to health and well-being. However, as we live longer and chronic diseases become more prevalent, care has become more complex, moving away from the home and local community to specialized facilities capable of handling diagnosis and treatment.

While that focus has brought incredible results, the cost has been a system devoted almost overwhelmingly to sick care — and which is unsustainable.

As you’ve read, the health sector is being reimagined to become more consumer-centric, participatory, outcomes-based and cost-efficient. And the technologies that will get us to a connected, wellness-oriented, anytime, anywhere health ecosystem are available today.

An essential feature of a connected health ecosystem is missing, though: an information technology (IT) infrastructure that connects all the stakeholders and supports the easy, permission-based flow of information. This infrastructure is an essential precursor to participatory health, along with common data models (that go beyond application programming interfaces) and clinical data models.

The vision of anytime, anywhere care requires frictionless, but permission-guided, data sharing among stakeholders (whether they are consumers, who are increasingly recognized as owners of the data, or businesses who provide the tools that capture the data). Data sharing, in turn, necessitates a health IT platform that has a few key features: it must allow for the storage and linkage of structured and unstructured data; the data has to exist independently of the applications that generate it; and the data must be accessible by a variety of interfaces.

Making digital work

The technologies being implemented today — such as artificial intelligence (AI), robotic process automation and blockchain — are needed to deliver a true wellness focus. But they require data sets of sufficient size, quality and data variety to deliver accurate or optimal results. To be effective, these tools require platforms that integrate the structured and unstructured data generated by consumers, providers, payors and new entrants to health.

Many of these technologies are already a part of care delivery. Automation and algorithms that can parse and process natural language are already being used to fill in health records. Medical imaging is being transformed by the use of machine-learning algorithms. Problem-free images are identified and triaged, offering radiologists the chance to focus on the trickiest cases. Inevitably, they will become “smart” enough to augment the physician decision-making process.

AI will increasingly be used for diagnosis and treatment. For example, IDx’s proprietary algorithm IDx-DR is a new tool for diagnosing diabetic retinopathy. Its product is the 13th AI-based algorithm to win FDA approval since Arterys’ MRI cardiac imaging interpretation in January 2017. But IDx-DR differs from the previously approved algorithms in that it is the first ever to make screening decisions without the need for any additional human interpretation. Supporting the higher level of evidence required, this is also the first algorithm to be approved based on a prospective clinical trial.

A focus on consumer and physician experience, using digital tools operating by a data platform is essential. Doing so can encourage consumers to stay engaged with their health and reduce the load of mundane work providers must do, while increasing their job satisfaction. Customizing interfaces, health nudges and treatment plans all require a better understanding of individuals (and their environments) than the health sector currently has.

Blockchain and cloud solutions offer the kind of safeguards and data security that build stakeholders’ trust while enabling fluid, permission-backed data sharing. They allow for the secure (and verifiable) storage and transmission of data within and across an enterprise. They offer the promise of streamlining operations and business processes and increasing protection against cybersecurity threats.

Building the bridge to tomorrow

Platform-based businesses will incentivize consumers to share data, integrate it and use these new tools to deliver solutions focused on wellness and prevention. This will allow them to extend their reach into the consumer’s everyday lives. They will also capture revenue earlier in the value chain, working with health consumers before they are sick.

Health organizations — incumbents and new entrants alike — need to know how they will fit into a platform-based health ecosystem in a way that allows them to support the highest-quality care, be competitive and generate revenue.

Below are some points that health organization should keep in mind as they consider how to operationalize this transformation.

1. Start with a transformation-minded strategy

How will you interact with the wider health ecosystem? Set a transformation agenda that optimizes the business of today while innovating and growing the business of tomorrow. Use a multi-horizon approach to iteratively introduce game-changing services to the market, focused on the individual person. Build purpose company-wide and use best practices from change management and operational redesign to march consistently toward that goal.

2. Shrink the core and build for agility

The way forward is to maintain core functionality where IT infrastructure already exists (in health, the enterprise system environment includes both ERP and EMR) while investing in adaptable infrastructure that supports a connected ecosystem.

Health businesses can look for legacy system optimization while transitioning to open architecture and blockchain-enabled solutions and developing customer-focused health care applications built within vendor-neutral platforms.

Starting anew is an opportunity to build the right way the first time. Create an adaptable health IT system that:

  • Supports frictionless, permissioned data sharing
  • Stores data separately from the applications that collect, edit and display it
  • Has interfaces designed for particular users and use cases
  • Is accessible when and wherever needed

3. Build intelligent automation

Intelligent automation is the integration of robotics with multiple components from different emerging technologies. In health care, this includes robotic process automation of both the back and front offices (i.e., patient interaction), cognitive analytics, other digital automation tools enabled by technologies such as the Internet of Things, and a portfolio of health AI solutions that support both operations and care delivery.

4. Design for trust

Instill a risk optimization mindset and embed trust into services and products from the outset. This means:

  • Mapping the flow of data through your organization
  • Analyzing business processes for risks
  • Carefully assessing new products or services before implementation
  • Building controls into the management of every project

This will help organizations make the right strategic decisions and facilitate the growth and future success they are looking for. In health, this includes cybersecurity solutions that extend to medical devices and wearables, as well as traditional risk services enabled by analytics.


We are all challenged to evolve from reimagining what is possible in health to executing on a new vision of a connected health ecosystem. To do that, focusing on connections is key, especially connecting health businesses so a more complete picture of the consumer can be seen, and optimal, personalized care can be delivered for lifelong wellness.

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