2020 Global Health Care Outlook

The health care industry witnessed sluggish growth in 2019 compared to the previous year. A global health care spending of ~3.2% reflects a deceleration compared to 5.2% growth in spending in 2018. The performance could largely be attributed to the negative impact of the US-China trade conflict and the ongoing Brexit negotiations.

However, analysts predict that health care spending will grow at a compound annual growth rate (CAGR) of ~5% for the period 2019 to 2023. An improvement in the global economic scenario, rise in population (primarily the elderly population), and continuous development in the public health care systems are some of the factors that might lead to a rise in health care spending.

Also, some analysts predict that in 2020, the global health care industry will become a US$ 2 trillion industry despite the various challenges faced by the sector.

While demand for health care services is expected to increase due to an ever-increasing ageing population and improved health care access, an increase in costs is likely to put pressure on payers who will continue focusing on lowering expenses and utilization.

Predicted Trends in 2020

According to experts, some of the key trends likely to be seen in 2020 include:

Value-based care: Value-based care is a type of reimbursement where the expenditures for care delivery are dependent on the value of care provided. This reimbursement form rewards the service providers for their competency.

Europe has been at the forefront of focusing on value-based care. The region has developed advanced contracting models for the pharmaceuticals and med-tech industries. The US and the emerging markets are not far behind either.

Given the sustained pressure on prices by the health systems (including payers and insurers), the industry’s emphasis is now on outcome-based agreements. Suppliers are also likely to sign risk-sharing agreements, primarily in the emerging markets, to win contracts and formulary status.

Technology in Health Care: Technology has been playing a significant role in several industries and the health care industry is no different. There is a belief that technology has the power to change the health care sector and it is anticipated that there will be an increased focus on investments and partnerships in 2020.

However, different governments are likely to view data availability, safety, and privacy in different ways which will adversely impact technology compliance.

Some of the key trends within digital health include:

• Telehealth: Telehealth is likely to play a significant role in the health care sector. In areas where access to health services are limited, telemedicine becomes important. Also, the use of telemedicine as a source of providing convenient health care has been gaining traction.

• Internet of Medical Things (IoMT): The IoMT approach comprises the implementation of various wearables such as ECG and EKG monitors. However, Key challenges to this approach include connectivity issues and data privacy concerns.

• Cloud computing: Cloud-based solutions offer improved access to data to both providers and patients. As a result, health care organizations are investing substantially in cloud computing services.

• AR and VR: Through augmented reality (AR) and virtual reality (VR), doctors have the option of evaluating data from other upcoming technologies against real-world data. The comparison helps the specialists to better diagnose and plan for treatment method.

• AI: Artificial intelligence (AI) applications help improve the diagnosis of a disease, making the process more efficient. These applications offer specialists the opportunity to detect a disease at an early stage and initiate treatment.

• Chatbots: Chatbots play the role of a digital assistant and help specialists manage appointments, contacts and billing process efficiently.

• Predictive analytics: Predictive analytics can play a critical role in chronic diseases by helping doctors collect and analyse past data and use them for generating insights.

• Blockchain: The ability to create a common data source and providing access in a secure manner can offer a specialist instant access to patient data.

Continued emphasis on inorganic growth: Unlike organic growth, where a company grows based on its business operations, inorganic growth is the growth of a business through mergers and acquisitions.

The key players in the health care industry, including pharmaceutical companies, health care service providers, and med-tech continue to focus on mergers and acquisitions (M&A) activities and this is likely to continue in 2020.

Pharmaceutical companies are facing significant challenges ranging from pricing pressure, generic/biosimilar competition, and weak pipeline to name a few. In order to minimise the detrimental effects of such a scenario, these companies look for synergistic deals to increase their scale, diversify their offerings, strengthen their product pipeline, and expand geographical reach.

Also, vertical integration is likely to play a significant role in 2020 driven by advancements in technology and pricing pressure.

Patient Engagement: With health care consumers/patients adopting a proactive approach and seeking improved quality, easier access, better accessibility, and products and services customised to their specific needs, there is a need for the traditional care model to be more transparent and lay emphasis on prevention and well-being of patients.

It has been observed that patients want to be actively involved in the health systems and expect to have access to personal health data. There has also been a change in behaviour with consumers/patients showing more interest in preventive measures such as personal health and nutrition.

With a swing towards patient engagement and empowerment, care models are expected to concentrate more towards the economic and social environment that shapes the health outcomes.

Health care systems have created patient portals and have been leveraging telemedicine for engaging patients, with other technologies such as mobile health applications also playing a significant role in patient engagement strategies.

Pharmaceutical companies aim to emphasise on the voice of the patient in the decision-making processes. For real world evidence, these companies will focus on a higher degree of patient inclusion in order to capture patient data through wearable devices.

Also, interoperability and collaboration between various health care players including health systems, payers, plans and health organizations will help in creating strategies and making investments in new technologies and care models.

Some analysts believe that even though it is still uncertain if transparency policies will have a benefit, patient engagement is expected to be one of the key focus points in 2020.

In 2020, the health care sector will be driven by factors including growth in the elderly population, investments in infrastructure, increased prevalence of chronic diseases, significant advances in technologies, better health care systems in developing economies, and progressing care models, among other factors.

However, the ongoing global trade conflicts, coupled with the ongoing pricing pressure and challenges of maintaining financial stability by the health systems (both private and public), are likely to peg back the potential growth of the sector.

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