E&Y 2012 Report: Progressions, The third place: health care everywhere

 Disruptive innovations and unsustainable costs propel life sciences companies into the behavioral change business  

The full potential of personalized medicine requires both medical and behavioral science

On March 12, 2012,  Ernst & Young released Progressions, The third place: health care everywhere, it’s annual report on the global life sciences industry.

Growing Beyond - Globalization and new strategies for growth

According to the report:

With chronic diseases now accounting for three quarters of all health care spending in developed countries, life sciences companies will face increasing pressure to demonstrate that they are helping patients adopt healthier behaviors and manage their diseases more effectively. Yet to thrive in this environment, companies will be required to fundamentally reinvent their business models to make them more patient-centric and better able to drive behavioral changes in consumers, a path that few companies to date have been able to take.                  

This new imperative for life sciences companies to better understand patient behavior and influence positive changes is being accelerated by two key trends.

  •  First, changing incentives are shifting more financial risk to providers — who will need to change patient behaviors to manage this risk.
  • Second, patient-empowering technologies such as smartphone apps, social media, sensors and monitors are giving individuals more direct control over their data and their health. This change is also leading to the emergence of what the report describes as the “third place” in health care.

By shifting the epicenter of the health care system from the hospital and doctor’s office to wherever the patient happens to be, this third place, “health care everywhere” revolution has the potential to bring greater sustainability to health care, but will also cause great disruption to companies not able to adapt their business models accordingly. 

“Almost every life sciences company, regardless of their product or offering, will soon be expected to help change behaviors and deliver better health outcomes,” shared Glen Giovannetti, Global Life Sciences Leader for Ernst & Young. “Achieving creative disruption to one’s own business model requires bold leadership on the part of companies, but for those willing to invest in understanding what truly motivates patient behavior and applying it to the creation of patient-centric business models, the opportunities and rewards in the health care system of the future will be profound.”

Technology and the “third place” in health care
The Progressions report lists several technological trends that are driving the shift to a “health care everywhere”, including:

  1. 1.    Next-generation social media Building on the emergence of health-specific social media sites that allow patients, physicians and others to discuss their conditions, side effects and relevant treatment options, new sites such as Treato by First Life Research are going even further by using natural language processing and artificial intelligence to indentify patterns and trends among discussion threads across multiple sites. Still others are empowering patients with information on cost and quality — making the economics of health care increasingly transparent. 
  2. Gamification Electronic and online games, long viewed as deterrents to healthy behavior, are increasingly being used to promote healthier behaviors such as better diet and weight control and medication adherence. Innovative start ups such as Keas and HealthPrize have developed programs combining the use of games, social media and technology to serve the growing ranks of employers seeking to motivate their workers to adopt healthier behaviors. In another approach to health gamification, Kaiser Permanente’s Garfield Health Care Innovation Center is researching games to help doctors and other medical personnel improve their skills and reduce errors. 
  3. Medicalization of consumer devices and consumerization of medical devices The line between everyday objects and medical devices is rapidly blurring. Smartphones and other objects are becoming sensor-embedded and wirelessly connected — creating increasingly empowered patients who are able to generate and monitor their own medical data and interact with health care professionals without having to visit a doctor’s office.  Meanwhile, medical devices are becoming smarter, more connected and increasingly under the direct control of patients.

 Entering the behavioral change business

To understand and influence patient behavior and successfully extend their business models in new directions, companies will need to leverage insights from the field of behavioral economics, which has made tremendous strides in the past decade at understanding the inherent decision-making biases that often prevent patients from achieving healthy changes.    

Guiding principles for translating these insights into action highlighted by Ernst & Young include:  

  • Disrupt the business you’re in – Life sciences companies need to find more patient-centric ways of creating, delivering and capturing value. This includes producing products/services with the features that most matter to patients, developing life-long relationships with patients, focusing on the customer experience and earning revenues from multiple sources (e.g., creating data insights rather than just selling drugs or devices).
  • Learn from behavioral economics – Successful companies will boost adherence, enable prevention and build brand loyalty by using behavioral economics to understand what truly motivates patients. For example, a recent pilot study by university researchers at University of Pennsylvania and Carnegie Mellon University used lottery-based incentives and other behavioral economics levers to decrease non-adherence among warfarin patients from 36% to just 3-4%. Understanding patient preferences will allow companies to “mass customize” their products and create more personalized offerings. But accounting for individual preferences will also require communicating information in more clear and neutral ways. (e.g. in direct-to-consumer advertising).

 Carolyn Buck-Luce, Global Pharmaceutical Leader at Ernst & Young, said: “Life sciences companies have reached a critical juncture where they must move beyond simply experimenting with patient engagement around the margins and ratchet up their investment in innovative business models that 
build enduring relationships with their customers. Successful companies will marry their deep
understanding of their medical science with their total commitment to health outcomes and individual consumer preferences to deliver on the promise of personalized medicine”.

Source:  Ernst & Young – Media Release – March 12, 2012

 About Ernst & Young’s Global Life Sciences Center

Ernst & Young’s Global Life Sciences Center brings together a worldwide team of professionals to help life sciences companies address their challenges at every stage of development. From the emerging biotech or medtech firm to the well-established, global pharmaceutical company, our industry teams bring deep experience in providing assurance, tax, transaction and advisory services. The Center works to anticipate market trends, identify implications and develop points of view on relevant industry issues. Whether it’s forming innovative alliances, improving operations, new regulations or exploring new markets, we can give you a clear perspective on how to drive value in an increasingly complex, competitive and risk-driven environment. It’s how Ernst & Young makes a difference.

For more information, please visit www.ey.com/progressions  or email global.lifesciences@ey.com.

About Ernst & Young
Ernst & Young is a global leader in assurance, tax, transaction and advisory services. Worldwide, our 152,000 people are united by our shared values and an unwavering commitment to quality. We make a difference by helping our people, our clients and our wider communities achieve their potential.

Ernst & Young refers to the global organization of member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit www.ey.com.

This news release has been issued by EYGM Limited, a member of the global Ernst & Young organization that also does not provide any services to clients.

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