Rhenu Bhuller

Senior VP, Healthcare

rbhuller@frost.com

Disrupt, Collapse and Transform

Trends Driving Growth and Innovation in the

Healthcare Industry

2

Diminishing Returns on Healthcare Spend

Health care

costs

constitute

increasing

proportions

of the GDP

In 31 of the past

40 years, health

care costs

increased faster

than economy.

30% increase in

personal income is

offset by 76% increase

in health care costs for

the last decade

An estimated

$750 B in

healthcare

spend is on

avoidable

expenses.

Source: IOM, Frost & Sullivan

3

There will be a lot more elderly people and comparatively

fewer young people to care for them by 2050

Next Generation Healthcare: Percentage Split of

Population, Global, 2000

Populationat or above60

Rest of thepopulation

11% Of the world’s

population was

at or above 60

in 2000

Next Generation Healthcare: Percentage Split of

Population, Global, 2020

22% Of the world’s

population will

be at or above 60

by 2020

0%

5%

10%

15%

20%

1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050

Pe

rce

nta

ge o

f P

op

ula

tio

n

Next Generation Healthcare: Percentage of Population by Age, Global, 1950-2050

Percentage of Population <5 Percentage of Population >65

Source: World Health Organization (WHO); Frost & Sullivan

4

Chronic disease patients account for the vast majority

of healthcare spending in the US

• Source: Partnership for Solutions. Chronic Conditions: Making the Case for Ongoing Care (Sep 2004), Frost & Sullivan analysis

Chronic Disease Cost Burden in the US

Chronic

Disease

Patient

Healthy

Person

5X

($6,032)

X

($1,206)

Comparative Healthcare Coverage Costs ($ per annum)

Chronic Disease Spending (spend on chronic diseases as % of total)

% of Medicare

spending 99%

83%

% of total public

and private

healthcare

spending

75%

% of Medicaid

spending

People with chronic conditions are the most frequent users of health care in the U.S.

91% of all

prescriptions

filled

76% of all

physician

visits

81% of hospital

admissions

5

Long-

term

Care

Hospital

Care

Staged and episodic disease management is becoming

increasingly unviable

Disease

Predisposition Early Onset

Symptomatic

Disease

Presentation

Advanced

Disease

Progression

End Stage

Wellness/ Prevention Measures

Medical Therapy (Rx) Administration

Procedural Intervention

Surgical

Intervention

Diagnostics Tests

Monitoring (Periodic & Continuous)

Primary

Care

Self

Care

•Prevention

possible

•Individual

awareness

low.

•Indicators

overlooked

•Clinical

guidance &

support

limited.

•‘Individual’

becomes

‘patient’.

• Symptoms

managed

with

therapeutics.

•Treatment

options

varied.

•Patient

uncertainty

high

•High costs of

care

•Cure often

‘worse’ than

disease.

6

Stakeholder roles in healthcare will need to be redefined

Patients:

Physicians:

Pharma:

Care Coordinators:

Medical Device

Companies:

Care Providers:

Payors:

Passive Active

Block-

buster

Niche-

buster Secondary Primary

Procedure

Based

Value

Based

Breadth

Of

Services

Targeted

Care

Models Admini-

strative Analytic

Decision

Maker

Collaborator

7

Healthcare delivery systems need stronger emphasis on

home and community care

Tertiary

Care

Center

General

Hospital

Primary

Care

Provider

Community

Care Center

Home

Care

Vo

lum

e o

f C

are

Next Generation Healthcare: Care

Delivery Structure, Global

Care Delivery Re-Engineering – Emergence of

Community Wellness Hubs

Components

• Home healthcare

supported by care-givers

and technology

• Life Enhancement Centres

(LEC) – flexible facilities

focused on improving life

style management. Could

support physician offices,

diagnostic labs, specialty

clinics, fitness centres,

cooking classes, etc.

• Community Hospital

Stakeholders

• Governments

• Insurance

companies

• Private

healthcare

providers

• Patients and

care-givers

Source: Healthcare Design; Frost & Sullivan analysis

2050

2010

8

Wearable Devices Media Wellness Devices Smart Living

Connected Accessories

- PC Watches

Bluetooth Shirts

Smart Appliances

Connected Home

Devices

Holographic TVs

3D Immersive

Theatre

Sports Accessories –

Digital Helmets

Mobile Health - Hand

Bands

Augmented Reality

Contact Lens

Smart Thermostats

(Nest)

Flexible Media

Devices

Wireless embedded

medical sensors

Enter the age of Healthcare Consumerism

9

Creating a world of seamless collaboration

Image source: Med Tech Insider, Aurametrix, Xcluesiv, The University of Chicago Medicine, Engadget, Marathon Health

Source: Frost & Sullivan

Seamless information gathering, collation, analytics, and dissemination

10

Unleashing the power of Big Data

Imaging files

Published

research

EHR / EMR

Claims data

Genomic data

Remote

monitoring

mHealth apps

Biometric sensors

Social media

Discharge

summaries

Clinician notes

Photos, video

Registration

forms

Email, text

messages

Natu

ral L

an

gu

ag

e P

rocessin

g

An

aly

tics

Cues to

intervene

Patient

engagement

11

This will become a market for Data M

ark

et

Gro

wth

2008-2012

mHealth and Remote

Monitoring Devices

2012-2015

Integrated Disease

Management Solutions

2015-2020

Health Data Market

Time

Apple Healthbook

Source: Frost & Sullivan analysis

43% Of Americans aged 65+

were Facebook users

in 2013.

13% Of Americans aged 65+ were

Smartphone users in 2012, a growth

of 2% over the previous year.

12

Use of integrated monitoring solutions have had an

impact in lowering medical expenditures . . .

• Source: Deployment of an mHealth Patient Monitoring Solution for Diabetes — Improved Glucose Monitoring Leads to Reduction in Medical Expenditure (US

Endocrinology, Feb 2014), Frost & Sullivan Analysis

1st FDA-cleared glucose meter

launched in 2012 (Telcare)

Transmits automatically to a

HIPAA-compliant server

Wireless connectivity provided

for free

Combined with call center

based diabetes management

program

Returns clinical coaching and

guidance to the user

Priced comparably to traditional

glucose meters and test strips

(includes insurance coverage)

mHealth Monitoring Solution - Diabetes

US DIABETES

EXAMPLE

Enrolled and Used Program

$17,428

$14,044

19%

Enrolled and Did Not Use Program

$18,570 $18,852

2011 Average

Claim

2012 Average

Claim

2%

2011 Average

Claim

2012 Average

Claim

13

. . . But lack of business models which align the financial

incentives among stakeholders is a barrier

• Providers also

have to bear

mHealth and

health IT upfront

investments

mHealth Impact on Patients vs. Providers

Disease Where What Result

Diabetes Pennsylvania Post discharge

remote monitoring

42% drop in overall

cost per patient

Cleveland Cell phone size

wireless transmitter

transferring vital signs

to electronic health

record

71% increase in

number of days

between office visits

Congestive

heart failure

Trans-

European

Network-Home-

Care

Management

System

Remote monitoring of

patients who received

implantable cardiac

defibrillators

35% drop in inpatient

length of stay

10% reduction in

office visits

65% drop in home

health visits

COPD Canada Remote monitoring of

patients with severe

respiratory illness

Reduced hospital

admissions by 50%;

acute home

exacerbations by 55%;

hospital costs by 17%

Positive impact on

patients

But negative impact

on provider

revenues1

+

-

Source: “Mobility for connected health” (Accenture, May 2012), Frost & Sullivan analysis

14

Many needs many models – Moving from “Or” to “And”

Shared costs

and risks

15

Disrupt

16

Top Technologies

Web

Regenerative Medicine

Next-Gen Sequencing

Biomarkers

Personalized Medicine

Targeted Drug Delivery

Genetic Cosmetics

General Illumination LEDs

Energy Efficient Processors

Next-Gen Non-Volatile Memory

Smart Haptics & Touch

Flexible Electronics

OLED Displays

Carbon Fibers

Biocomposites

Superhydrophobic Coatings

Smart Packaging

Lightweight Composites

Polymer Chameleons

Alternative Feedstocks

Nanocoatings

CBRNE Detection

Energy Harvesting

Nanosensors

Ubiquitous Wireless

Sensors

Roll-to-Roll Manufacturing

3D Printing

Composites Manufacturing

Micromanufacturing

Remote Patient Monitoring

Surgical Robots

Interventional Radiology

Neuromodulation Technologies

Virtualization

Cloud Computing

Big Data Analytics

Semantic Search

Data Visualization

Context-Aware Mobility

Augmented Reality

In-Memory Computing

Information &

Communication

Technology

Health &

Wellness

Microelectronics

Materials & Coatings

Sensors & Controls

Medical Device &

Imaging Technology

Advanced Manufacturing &

Automation

Source: Frost & Sullivan

Key Technology Disruptions to Watch

17

Top 10 Disruptors in Med Tech

Frugal Innovation

Cloud

Big Data

Aging in Place

Regenerative

3D Printing

Private Labeling

Consumer Power

Optimizing Delivery

E-Commerce

18

Competitive Success Factors Change Who Will Win

Last Decade Current Decade Next Decade

Technologies geared

towards extending life

Technology to improve

outcomes and mitigate

risk

Integrated platforms to

provide comprehensive

continuum of care. Focus on

quality of life.

Companies that

advanced standard of

care.

Companies that could

make treatments safer

and easier to perform.

Companies that understand

consumer behavior, needs,

and pain points.

Types of

Companies

Who Excel

Success

Drivers

19

Who’s At-Risk? Many Layers of Analytics In Preventive

Care

Reduce utilization

by ‘frequent flyers’

Avoid readmission

penalties

Avoid catastrophic events

in diagnosed patients

Better disease management

to reduce long term costs

Reduce the number who

develop chronic conditions

20

Collapse

21

Healthcare Re-imagined

In Person In Home

Prescriptive Reactive Semi-reactive

Monitored

Predictive

Preventive

Break-Fix Connected

Precision

Streaming

22

Business Model Focus Creates Higher Rate of Return

Strategy Process Product Delivery

Business model

Partnering Enabling process

Core process

Product performance

Product system

Service Channel Brand Customer experience

Cumulative Value Creation

Last 10 Years

Volume of Innovation Efforts

Last 10 Years Hi

Source: Doblin analysis, Doblin Inc.

Lo

Hi

Lo

23

Business Models Must Adapt

23

Yesterday Tomorrow?

Start with the need, not with the

technology

Look beyond your core customer

base

Know when to fold

Applying techniques from other

industries to healthcare

Frugal innovation, tiered product

markets

24

Direct To Consumer Models

Convenience Engagement Personalization

• Breaking down “bricks and

mortar” approach to healthcare

• Diagnosis, testing and treatment

in the home

• Preference-based

care vs. evidence-

based care

• Shared-decision making

• “I want all my information in

one place so my community

has access”

Consumer

Analytics

25

Transform

26

How Quickly Can We Move to N = 1?

“Within __ years, it will be

considered malpractice to

treat a patient without

consideration of their

individual genomic and

proteomic data”

27

Multiple Ways To Create Value for Multiple Stakeholders Moving from ‘or’ to ‘and’

28

Capturing the Value from Data Growth in Clinical Utility

Data Info Knowledge Clinical

Utility

• Beyond data integration

to clinical integration

• It’s not about the app, the

interface, or even the

analytics – it’s how

clinicians use the

knowledge

• The biggest gap to be

breached is not in

creating more data and

analytics, it is in

transforming the process

of providing healthcare

29

Bending the Cost Curve, Not Just the Payment Curve

• Device spend is less than 10%

of total healthcare spend, the

costs are not the device itself

as much as it is the cost of the

healthcare professional

resources

• Bring healthcare costs down

not only through lowering

device costs, but by reducing

hospital labor costs through

efficient use of resources

• Leverage artificial intelligence,

robotics, and connected

platforms to improve device

accessibility

Specialists

General Practitioners /

Hospitalists / Internal Medicine

Nurses

Patient Self Management

30

Changing Business Models

30

31

Questions to Consider?

What could the world of healthcare look like in the future?

What changes are threats?

What opportunities will result from the changing environment?

What is your gameplan?

Performance

Technologies

Markets

Customers

Collapse Converge

Partnerships

Value Finance

Delivery

Process

Brand Customer Experience

Channel

Business Model

Service Solutions

Unmet Needs

Efficiency

32

Target Markets

End User Need Global Appeal

Value Creation

White Space Partner or Alliance

Your Technology Play

Vectors

Evaluate your ability to disrupt or transform

The Issue Vector is a tool to provide a more structured approach to the brainstorming of strategic options. The Vector assumes that there are eight main categories of growth options into which any ideas can be mapped.

32

Vectors Competition

Exists

Vectors

33

"If change is happening on the outside faster than on the

inside the end is in sight.” Jack Welch

34

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