PwC report: Top healthcare issues of 2008
“The future strategies of hospitals, commercial insurers, pharmaceutical companies and life sciences firms will be influenced by big changes ahead in government policies, market pressures and global trends," said R. Carter Pate, global and U.S. health industries and government services leader at PwC. “With healthcare costs taking a bigger bite out of the assets of individuals, businesses and the U.S. economy, there is a demand for greater accountability from the health industries and a demonstration of the value they create.”
PricewaterhouseCoopers' Health Research Institute identifies eight issues that it believes will dominate the healthcare industry in 2008:
- Retirees will play a greater role in funding their healthcare coverage. Based on a survey of executives at multi-national companies, 75 percent said that they no longer should be expected to pay for healthcare. PwC's report suggests that in 2008, employers may reexamine their approach to retiree healthcare by capping and/or eliminating traditional retiree benefits from their balance sheets and shifting toward defined contribution or no contribution approaches.
- New Medicare payment system will create hospital winners and losers. The Centers for Medicare & Medicaid Services (CMS) changed its hospital payments, adding 200 diagnosis codes, identifying the severity of patient illness. Due to CMS' new stance to not pay for certain conditions resulting from medical errors, and maladies acquired in a hospital, some hospitals may see a revenue decline.
- Retail health clinics will challenge primary care models. The number of U.S. retail clinics in discount chain stores, grocery stores and drugstores is expected to quadruple, from 700 today to more than 3,000 in five years. In the next year, U.S. states, payors and policymakers will be crafting legislation and policies applicable to this type of healthcare provider, which lacks regulation and quality controls.
- Individual health insurance could take off. Individual health insurance could see market growth as more states mandate health insurance. Individual mandates or additional tax incentives may come from Republican and Democratic presidential candidates. Hospitals and other providers may suffer if the plans offer limited benefits, but less Americans would be uninsured.
- FDA tightens drug and medical device safety standards. Congress granted the FDA increased authority to require increased safety standards from drug companies, giving the FDA increased authority over post-market drug safety. Under new FDA guidance, the healthcare industry will face even more regulatory burdens, which could be costly.
- IRS to seek full accounting of hospital community benefit. The IRS wants hospitals to submit a full accounting of the benefits they provide to the community, reported in a uniform manner, as part of their annual tax return to the IRS, submitted on the proposed 2008 Form 990, available for public inspection. In 2008, tax-exempt hospitals will need to start tracking community benefit efforts so that they can accurately report their activities for the year.
- Increased merger and acquisition activity between pharmaceutical and life sciences companies. Revenue growth is down for Big Pharma: The drug pipeline is thinning, big revenue-drawing brand drugs are coming off patent and the cost of bringing new, innovative drugs to market is increasing. To confront the woes, Big Pharma is joining forces with life sciences companies.
- Asia plays bigger role in the pharmaceutical industry, but safety concerns loom. Asia is poised to become one of the largest pharmaceutical consumers and producers. The rising cost of drug discovery has led pharmaceutical companies to look outside the United States to outsource clinical development, manufacturing operations and a less expensive workforce. Significant concerns still arise about Asia's uneven protection of intellectual property rights and drug safety.