Presentation to HIMSS Summit of the Southeast 09.17.14
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The document discusses the disruptive changes in the healthcare sector, emphasizing how new business models and technologies are emerging from small companies that challenge traditional providers. Key insights include the importance of adapting to changing consumer behaviors, the shifting profit pools within the industry, and strategies for incumbent players to thrive amidst these disruptions. Ultimately, the need for innovation and a consumer-centric approach is critical for businesses to succeed in the evolving healthcare landscape.
Presentation to HIMSS Summit of the Southeast 09.17.14
- 1. DISRUPTION Healthcare’s New Business Models TN HIMSS 2014 Summit of the Southeast Dr. Michael Burcham
- 2. When an industry faces disruption, companies often fail to appreciate quickly enough the nature, extent, and velocity of the changes taking place. WHY? Disruptions start at an industry’s edge, among small companies that provide specialized value to emerging customer segments They bring new business models. They leverage new technologies. They are highly disruptive.
- 3. Part 1 | The Perfect Storm for Disruption HIMSS 2014 Summit of the Southeast 09.17.14 | Burcham
- 4. ACA | IMPLEMENTATION TIMELINE 2014 2015 20132020
- 5. HIGH DEDUCTIBLE PLANS GO MAINSTREAM!
- 6. ENROLLEMENT IN HIGH DEDUCTIBLE PLANS HAS TRIPLED SINCE 2009 Source: PwC 2014 Health Research Institute
- 7. AVERAGE DEDUCTIBLES FOR VISITS ARE INCREASING Out-Of-Network In-Network at Out-of-Network Deductibles In-Network Source: PwC 2013 Health & Well-Being Touchstone Survey
- 8. INDUSTRY CONSOLIDATION HAS LED TO HIGHER PRICES | FOR NOW Hospital Deals on the Rise Source: Irving Levin Associates, 2013
- 9. HOSPITAL PRICES REMAIN A MYSTERY FOR CONSUMERS
- 10. New Players Will Disrupt the $3 Trillion US Health Economy Drawing Billions from Traditional Players …While Expanding the Fitness & Wellness Space
- 11. OF FORTUNE 50 FIRMS 24 ARE NEW ENTRANTS IN HEALTHCARE In their eyes, today’s system represents $2.8 trillion in the US alone - but the New Health Economy of tomorrow will include trillions more globally as consumers shop for products and services online. Source: Fortune 50. 2013
- 12. Part 2 | 7 Core Attributes of Disruption HIMSS 2014 Summit of the Southeast 09.17.14 | Burcham
- 13. CORE ATTRIBUTES OF 7 I NDUSTRY DISRUPTION 1 | COMPETITORS CHURN Lots of new players enter the market, many fail. Although few incumbents are able to gain stronger positions, many shrink, are acquired, or disappear.
- 14. CORE ATTRIBUTES OF 7 I NDUSTRY DISRUPTION 2 | ADVANTAGES MATTER When market forces become more important than regulatory rules real Competitive Advantage determines the winners.
- 15. CORE ATTRIBUTES OF 7 I NDUSTRY DISRUPTION 3 | PERFORMANCE GAPS WIDEN As competition shifts to true sources of advantage, the difference in the financial performance of top and bottom players increases - and the gap often persists for years.
- 16. CORE ATTRIBUTES OF 7 INDUSTRY DISRUPTION 4 | PRODUCTIVITY INCREASES Strong financial performance depends not only on competitive advantage but also on operational efficiency.
- 17. CORE ATTRIBUTES OF 7 I NDUSTRY DISRUPTION 5 | NEW CUSTOMER SEGMENTS FORM New customer segments will emerge as innovative products are introduced and consumers become more aware of the diversity of their choices.
- 18. CORE ATTRIBUTES OF 7 I NDUSTRY DISRUPTION 6 | PROFIT POOLS SHIFT During disruption the most attractive industry segments become the least attractive as new entrants flock to the more attractive segments and compete away profits.
- 19. CORE ATTRIBUTES OF 7 I NDUSTRY DISRUPTION 7 | MORE DEALS Deal activity tends to increase during industry disruption – coming in waves as competitors attempt to keep up with one another.
- 20. INDUSTRY LEADERSHIP VOLATILITY HAS RISEN SHARPLY The “topple rate” is the likelihood that an industry leader will lose its dominant position during the next five years. Source: S&P 500. McKinsey Analysis. 2014
- 21. Consumers may well benefit from the innovations that healthcare disruption is apt to unleash—consumers typically do when disruptive changes arise. Incumbents most often falter during disruption.
- 22. Part 3 | Elements of New Models HIMSS 2014 Summit of the Southeast 09.17.14 | Burcham
- 23. WHAT IS IMPACTING HEALTHCARE CONSUMER BEHAVIOR? • Search • Big Data • Indoor Mapping • Online Scheduling • Near Field Communication • Mobile Diagnostics • Connected Devices • Wearable & Embedded Technologies • Wellness Apps • Virtual Visits | Telemedicine • Mood Detection • Gesture Recognition • 3d Printing & Bio-Printing
- 24. OPPORTUNITY | CONSUMERS WANT AN AMAZON.COM STYLE EXPERIENCE Source: HRI Consumer Survey, December 2013
- 25. 64% |on 2+ hospital websites of online consumers are comparison shopping
- 26. Opportunity cost of losing one $112,824 hospital website visitors
- 27. CONSUMERS | THEY ARE READY TO GET CARE IN NEW WAYS & IN NEW PLACES • Diagnostics • Primary Care • Online Support Source: HRI Consumer Survey, December 2013
- 28. NEW DISRUPTIVE ENTRANTS “How likely would you be to choose these options if they cost less than the traditional choice?”
- 29. 35 - 54 YEAR OLDS ARE MOST LIKELY TO CHOOSE NEW OPTIONS FOR CARE
- 30. Part 4 | Strategic Thoughts for Incumbents HIMSS 2014 Summit of the Southeast 09.17.14 | Burcham
- 31. STRATEGIES THAT CAN HELP 3 INCUMBENTS THRIVE 1. PORTFOLIO FOCUS | Shift emphasis on customers and products that will benefit from the disruption – or at least be insulated from it. De-emphasize areas of vulnerability.
- 32. STRATEGIES THAT CAN HELP 3 INCUMBENTS THRIVE 2. TRANSFORM THE BUSINESS MODEL | Make fundamental in core activities the meet the disruptive challenge head-on. New entrants often offer a “better mouse-trap” – superior benefits and lower costs. The Incumbent should exploit competitive advantages others cannot replicate.
- 33. STRATEGIES THAT CAN HELP 3 INCUMBENTS THRIVE 3. BUILD A NEW BUSINESS | Acquire or build a new business that can leverage the company’s core capabilities and scale to replace lost earnings. Often this may be a model that supports the original business and other incumbents in the space. This may be the most challenging of the three options.
- 34. THE LEADERS ROLE IN MANAGING DISRUPTION 1. Take on 2 Jobs | Run today’s business while building a strategy of the business of tomorrow. 2. Resource Allocation | Focus resources to the new strategy – strategy is only theory until resources are allocated. 3. Capacity for Change | Know the organization’s strengths; Know which assets can be leveraged or re-purposed. 4. Go Lean | Administrative efficiency is a must-have during disruption. Cost reduction is not a recipe for success – but a prerequisite.
- 35. CONSUMER PREFERENCES IN HEALTHCARE SHOPPING Prefer an online shopping site with different options at different prices Prefer to use their health insurer’s website Prefer to use healthcare provider website Prefer calling around to get prices Prefer a website provided by their employer Prefer “other” methods to shop for healthcare Source: PwC 2014 Health Research Institute
- 36. CONSUMERS ARE DISCOVERING THAT CONVENIENT CARE IS EFFICIENT CARE
- 37. ENROLLEMENT THEY’RE LEARNING IN | DRUGS HIGH COST DEDUCTIBLE MORE IN PLANS CERTAIN HAS TRIPLED SETTINGS SINCE 2009 Oncology drug Z costs $1000 in a physician office setting Oncology drug Z costs $2000 in a hospital-outpatient setting Physician Hospital Percent office outpatient difference Alimta Herceptin Avastin Example oncology drugs Total payment ($) per claim Source: PwC 2014 Health Research Institute
- 38. AS HEALTHCARE GOES RETAIL | THERE’S ROOM FOR GROWTH Have you (or someone in your household) ever sought healthcare treatment in a retail clinic? Would you (or they) go to a retail clinic again in the future?
- 39. 80 Million Wearable wireless sensors for fitness and wellbeing by 2016. Adoption is driven by device availability & new social patterns that encourage people to record and share fitness data
- 40. WELLNESS & FITNESS MARKET THE $267B
- 41. CONSUMERS TURN TO TECHNOLOGY TO COMMUNICATE WITH PROVIDERS How would you like to communicate with your doctor, nurse or caregiver?
- 42. THE PROVIDER COMMUNICATION PROBLEM Super-Sized Health Systems have outdated communications leading to confusion, loss of information and decreased engagement.
- 43. Why It Matters Engaged staff are 50% more likely to show an attitude of genuinely caring about patients than non-engaged staff. Hospitals with above median HCAHPS scores report 37% high operating income. Towers Watson, 2013
- 44. AN IDEAL EXPERIENCE PROMPTS 34% OF CONSUMERS TO SWITCH PROVIDERS The ideal experience is increasingly being defined by non-clinical elements, such as convenience, amenities, and communications. Source: PwC 2013 | Customer Experience Radar Research
- 45. Part 5 | Business Model Principles HIMSS 2014 Summit of the Southeast 09.17.14 | Burcham
- 46. FIVE BUSINESS MODEL PRINCIPLES 1 | FOCUS ON THE BUSINESS MODEL Base your business models on generating value in the New Health Economy.
- 47. BUSINESS MODELS | 7 CORE TYPES There are 7 core business model types from which every business model is created.
- 48. FIVE BUSINESS MODEL PRINCIPLES 2 | TURN THE TABLES Consider a Consumer-to-Business (C2B) Strategy. Use consumer data to refine business models, enhance consumer experience and earn greater loyalty.
- 49. MOST CONSUMERS HAVE A MULTI-CHANNEL LIFE Customers
- 50. FIVE BUSINESS MODEL PRINCIPLES 3 | COLLABORATE Blend the best of Emerging ventures and incumbents. Fill skill and asset gaps.
- 51. HEALTHCARE STAKEHOLDERS ARE ALIGNING AROUND THE CONSUMER EMPLOYERS SEARCH PROVIDERS SERVICE VENDORS HEALTH PLANS APP MAKERS Customers You are competing with every other type of healthcare entity for “shelf space” with the consumer.
- 52. FIVE BUSINESS MODEL PRINCIPLES 4 | BIGGER THAN A WEBSITE Healthcare’s next generation consumer is mobile and lives online. It will take more than a website to thrive in the New Health Economy.
- 53. MOBILE | THE FUTURE OF HEALTHCARE
- 54. FIVE BUSINESS MODEL PRINCIPLES 5 | THINK VALUE Challenge traditional thinking in healthcare – focus on the customer, whose wants and needs change.
- 55. CONSUMER CHOICE IS OFTEN MADE IN CONTEXT OF TIME & ACCESSIBILITY Source: The New Multi-Screen World Study | Google, August 2013
- 56. “The difficulty lies not in the new ideas… …but in escaping from the old ones.” John Maynard Keynes
- 57. DISTRUPTION Healthcare’s New Business Models TN HIMSS 2014 Summit of the Southeast Dr. Michael Burcham michael@michaelburcham.com http://www.slideshare.net/michaelburcham