Catalysts Propelling Healthcare Industry Change 2018
John G. Baresky
Digitalization, Consolidation, Private Equity, Business Model Hybridization, Audience Migration, Amazon, Google, Apple
2018 is set to be an eventful year across the healthcare industry. It has never hovered in place; there will be an array of significant changes impacting clinician, commercial and consumer / patient interests. Looking ahead, these are primary catalysts formulating new developments, directions and marketing / sales opportunities in healthcare…
Widespread Digitalization / Data Technology Investment
Digitalization and strategic healthcare data management will become even more pivotal; healthcare organizations will be making decisive decisions regarding it. Many will be forced to bite the bullet and make long-needed, expensive upgrades just to keep up. Those with sound data management resources will be looking at ways to optimize them further. More progressive entities with robust data management resources will be forging ahead to adopt new methods; widening capabilities to accelerate processes and develop competitive advantages based on data management.
Data management in healthcare is a difference-maker to better manage organizational growth and outperform competitors
Hospitals / health systems, healthcare product manufacturers / service providers, payers and medical researchers increasingly see data management technology as a significant difference-maker in their respective clinical / business initiatives; it enables them to do more with less. Depending on the organization, data / technology investments will be in robotic process automation ( RPA ), organizational integration, telemedicine, internet of things ( IoT ), digital / mobile marketing proficiency and artificial intelligence ( AI ); select “small enhancements” will lead to digital transformation quickly.
Audience migration: broadcast vs. digital venues in healthcare audiences
Healthcare entities of all kinds are increasingly selective of how to deploy their communication, marketing and promotional funds across broadcast and digital venues. Broadcast television audiences continue to decline and shift. 2018 will see decisive changes in broadcast versus non-broadcast budget commitments by healthcare interests optimizing connections with their customers. Mobile has incredible momentum and there is an ever-increasing selection of alternative digital / social media venues offering a robust variety of content for audiences to choose from; healthcare marketers will more closely align their deployment of funding to reap more proof-positive ROI results.
The new sources of quality content and distribution venues are being embraced by a growing variety of audience members
Acorn, Amazon, DirectTV, NowFacebook, Hulu, Netflix, YouTube, Sling TV and other video / content streaming services present intriguing options for digital marketing, brand marketing, content marketing and other stakeholders to capitalize on. This increasingly challenges the status quo of traditional broadcast television promotional strategy and spend.
Reach and frequency factors still apply; advertisers / marketers can’t afford to spread themselves too thin. The grim reality is they can’t be everywhere at once and will prioritize spend accordingly. Digital offers a series of ways to accurately and quickly assess true audience engagement. Mobile via smartphone or tablet provides technically reliable, easy access to content for viewers on the go. Broadcast venues will need to re-justify themselves, (perhaps through price concessions?!) or risk having healthcare advertisers / marketers allocate even more resources and funding in favor of digital. The broadcast vs. digital forum will see sharper, distinct decisions unfold as digital accelerates fundamental changes in the way providers, payers, service companies, manufacturers, consumers and patients communicate with each other and marketing / sales strategies align with these changes.
Consolidation momentum in multiple sectors of healthcare create churn, competition and new opportunities
Favorable economic conditions with imminent financial and competitive pressures will drive stronger consideration of the merger acquisition strategy option for many healthcare entities in 2018. It will span the healthcare industry including manufacturers (pharmaceutical, medical device, diagnostic), service providers (hospital, health system, infusion services, PBM, specialty pharmacy, etc.), insurers (health insurance carriers, managed care organizations, other risk management entities) and technology firms (data management providers, software companies). Many healthcare entities are seeking ways to decisively bolster their position and do not have the right combination of time and resources to do it organically; combining ranks with a competitor, even with regulatory approval risks and ROI risks, will be an increasingly popular strategy.
Private equity stalking larger prey in the healthcare sector
Private equity flexed its muscles in the healthcare sector in 2017. STADA, PharMerica, Steward Health Care and Kindred Health are just 4 examples of private equity taking the lead or being a strategic partner in healthcare mergers and acquisitions. There is much more to come from private equity players as they can very selectively deploy their increasingly ample funds as struggling companies seek to re-position themselves and organizations seek to spin off non-core or under-performing units. The intense competition, investor impatience, sector churn and merger / acquisition fervor in the healthcare sector make for the ideal opportunistic environment private equity flourishes in.
Healthcare business model hybridization strategies are emerging more
Pure play business models in healthcare could be a thing of the past. Plenty of companies are going over the wall to diversify and verticalize. CVS / Aetna, UHC / SCA and Humana / Kindred are prime examples of companies going outside of their comfort zone when it comes to bolting on new assets. Health systems are developing / acquiring more physician specialty groups, partnering with semi-competitors (example: Walgreens / Take Care Clinic and Advocate Health) or marketing their own health insurance plans often times with a carrier partner.
“Both the health insurance and the hospital business are being reshaped by M&A”
The FTC and other government regulators frowned upon the mega-billion Anthem / Cigna and Aetna / Humana mergers and derailed the Walgreens / Rite Aid / Fred’s deal (forcing Walgreens to acquire a lesser number of Rite Aid stores and left Fred’s out in the cold without it gaining any Rite Aid units). This sets the stage for companies risk-averse to antitrust scrutiny to consider an alternative to competitive consolidation — yet still apply assertive merger & acquisition strategies. Business model diversification through acquisition will have increasingly popular acceptance in creating innovative and competitive organizational combinations accompanied by intricate integration challenges.
The Amazon factor is being weighed by many healthcare industry stakeholders
2018 will reveal Amazon’s healthcare strategy with greater clarity. It has widened its variety of healthcare items and applied for pharmacy-related licensing in several states yet there are rumors it will be more focused on medical devices.
Either way, a variety of pharmacy and managed care partnerships (UHC / IngenioRx, Walgreens / Prime Therapeutics) have gotten underway plus the pending CVS acquisition of Aetna demonstrates retailers assertively solidifying market access strategies with payers — something Amazon has not yet demonstrated. Amazon will soon take the next big steps in its healthcare initiatives and generate a ripple effect of competitive responses — perhaps this will trigger Walmart to reveal its hidden healthcare / pharmacy strategy to assert itself against Amazon as well as CVS and Walgreens.
Google and Apple accelerate the pursuit of consumer / patient sector
Google and Apple have each explored ways to further their reach into healthcare. Google acquired Senosis Health and made other strategic deals as did Apple. The FDA cleared AliveCor’s Kardiaband as the first “medically-approved device” accessory for the Apple Watch. Apple and Google are vying for the lead in engaging the dual consumer / patient marketplace. It’s a tricky environment as patient privacy is paramount, accuracy / reliability critical and the healthcare industry is deeply regulated. They will have to win over consumers / patients, clinicians as well as regulators with technology that consistently measures and communicates health data on the fly while keeping it confidential. Don’t be surprised if one or both of these companies develop advanced strategic alliances with established medical diagnostic / patient monitoring manufacturers like Abbott, Boston Scientific, GE, Medtronic, Philips or Roche.
Healthcare’s inertia for change and improvement will be driven by clinicians supported by better technology
On the bio side, there are several industry-changing drivers offering amazing potential including gene therapy, tissue regeneration and organ transplantation. Technology is an amazing enabler when it comes to healthcare developments, its impact cannot be overstated. Clinician intellect is the paramount resource in aligning technology with patient care; medical practitioners and researchers continue to be the core catalysts in formulating bio breakthroughs. Technology and process improvements are still greatly needed to reduce the data burden on nurses, doctors and other medical professionals so they can continue to focus on their primary role as patient care leaders.
Combined with the above factors, the stage is set for another “traditional” year of the new and unexpected in the healthcare industry. Those companies which more quickly recognize opportunities based on these changes will have the advantage in their marketing / sales initiatives and revenue goal achievement.
Thank you for reading this story
Learn more about the healthcare industry; read my articles about its medical and business trends, content marketing and digital strategy, brand and product management, mergers and acquisitions, consumer wellness, managed care and market access strategy.
About me
Hi, my name is John Baresky ( pronounced “ buh — ress — key “) and I have over 25 years of experience in healthcare.
Throughout my career, I have been writing about healthcare while developing and sharing important information with physicians, nurses, pharmacists and other clinicians plus consumers, patients, healthcare business professionals, investors and other stakeholders.
Healthcare is a vast industry. I organize its clinical, business, academic, technical and consumer topics into precise messages and stories that are easily understood and immediately useful. The content I write resonates across audiences with objective accuracy and clarity.
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