Health reform will accelerate strategic shifts across the U.S. healthcare industry.   Firms must re-think historic approaches to win in the new landscape.  While some of the industry changes may take years to play out, now is the time to plot the business model innovation required for that challenging road ahead.

With 32 million new patients, reduced differentiation among insurance plans, enhanced patent protection for biologics, and myriad other changes to the healthcare system, the Patient Protection and Affordable Care Act (ACA) will re-shape priorities and the balance of power within the industry’s web of stakeholders:

• Physicians will be capacity constrained and eager to adopt efficiency-enhancing innovations
• Facilities will need to coordinate with physicians more closely to deal with global payments, the medical home, and other ACA-related changes
• Payers urgently need to create and commercialize programs that differentiate their plans in new ways, while greatly boosting their capabilities to win in the retail market
• Medical device manufacturers must examine their roadmaps and marketing approaches in light of comparative effectiveness, greater 510(k) scrutiny, restrictions on marketing to physicians, and increasingly assertive hospitals
• Pharma has a much-needed boon from several ACA provisions, and must use the breathing space to adjust business models to support both personalized medicine and the provision of true disease state solutions

To win on this shifting ground, companies need to look objectively at where profits will lie in coming years.  If firms can address the coming “pain points” in medicine, they will do very well.  For instance, healthcare firms tend to be Balkanized by product class – drug makers, device manufacturers, IT integrators and so on – while their customers are seeking over-arching solutions to address increasingly complex care pathways, pay-for-performance incentives, and patient self-management.  If pharmaceutical firms can move beyond the pill, for example, to help physicians evaluate patients, decide about referrals, monitor disease progression, and substantially improve compliance, they will make their drugs preferred even in crowded therapeutic classes.  Such a broad look at options may show that sectors that were once uninteresting – such as diagnostics, information technology, and disease management – offer substantial promise, while dangers lurk in the cash cows of the past.

New Markets has extensive experience in healthcare and sees an urgent need for firms in this industry to think freshly about their strategies.  Moreover, they will need to approach commercialization in a more nimble fashion than usual, given how quickly change is happening. 

Healthcare has tremendous headroom for profitable innovation.  Complete our short form and we will send you thoughts on how to navigate these new markets.