BDO’s Healthcare Rx Newsletter: Future of Healthcare Lies in the Data

Healthcare looks dramatically different than it did two years ago. It’s moving from a system of mandates to choice, regulation to competition, and subsidies to actuarial soundness. At the same time, the five revolutionary forces we’ve seen take the industry by storm—including the growth of mobile technologies and the convergence of molecular and computer coding—are picking up speed.

Under these lenses, data has become the most valuable resource in healthcare. Tech giants like Amazon and Google are no longer just circling healthcare—they’ve entered it. The never-ending spate of M&A and partnership activity is proof that the days of traditional healthcare business models are numbered.

In our revamped newsletter, BDO’s Healthcare Rx, we look at how these variables are changing healthcare, and where future opportunities may lie. One clue? Start by looking at Medicare Advantage.

Happy reading!
 


BDO Knows:

Latest insights from The BDO Center for Healthcare Excellence & Innovation and around the firm

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3 FOUNDATIONAL SHIFTS IN HEALTHCARE

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CONSUMERS, HEALTHCARE ORGS UNALIGNED ON VALUE-BASED DRUG PRICING: BDO/NEJM CATALYST SURVEY

Medtronic, the largest medical device maker in the world, is the latest to move to value-based care. But in our recent survey with NEJM Catalyst, we found that the industry is broadly still catching up to consumers’ desire to align care outcomes with pricing.
 

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Six months after Hurricane Maria hit Puerto Rico, along with its electrical grid and infrastructure, its pharmaceutical manufacturing industry is still recovering. U.S. healthcare is facing a shortage of Puerto Rican-produced IV bags and is monitoring a list of 10 drugs for hurricane-related shortages. Here’s why the storm highlights the pharma industry’s need to balance its supply chain.
   

PERSPECTIVE IN HEALTHCARE: A YEAR IN REVIEW FOR PE
We look at PE-related M&A deals in 2017 compared to 2016: The number was down year-over-year, but skyrocketing valuations caused deal volume to soar in the same period. Here’s three predictions we now have for 2018 activity.
   

U.S. HEALTHCARE COULD BE THE BOOSTER SHOT XI JINPING'S 'HEALTHY CHINA' PLAN NEEDS
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Prescribed Reading:

Healthcare news and analysis from around the web

Urban Institute: Why Does Medicare Advantage Work Better Than Marketplaces
 

BDO’s Quick Take: Medicare Advantage (MA), a private-sector solution, has accomplished what in many ways the public sector has struggled to do: cut healthcare costs while improving the quality of care. CMS has already shown support for MA plans. In its latest budget, Congress expanded the purview of MA. As the government pushes more people into MA to control healthcare spending, the move to value-based care will speed up. In an MA world, hospitals will have to refocus the quality of their service offerings to remain financially viable.

The New York Times: Are Hospitals Becoming Obsolete?
 
BDO’s Quick Take: Hospitals are disappearing as the five revolutionary forces take hold. The advancement of treatment modalities through science and new care protocols is moving much of the care historically provided in hospitals to non-hospital settings. As mobile technologies continue to become more advanced and the healthcare supply chain consolidates further, this trend will only quicken.

Accounting Today: SEC Wants Cybersecurity Disclosures
 
BDO’s Quick Take: Regulators are intensifying the spotlight on cybersecurity for good reason. We estimate that the cost of cybercrime could reach $2.1 trillion globally by 2019. Three risk mitigation steps are crucial: implementing a risk-based, threat-driven patch management program, putting in place continuous threat monitoring and analytics tools, and introducing an employee training program.
 


The Center Weighs In…

 On why the frenzy of healthcare M&A is all about data:

  • Data-rich Facebook and Google make their money on advertising—a business worth $200 billion. “Healthcare is 15 times bigger than that. We spend $3 trillion. In theory, if this is done right, you’ll have 15 Facebooks and 15 Googles. That’s what’s up for grabs.” – Dr. David Friend tells Fortune Magazine
 
  • “[The Cigna-Express Scripts deal] is another example of how the battle for data is driving disruption in healthcare. For example, if Cigna or another insurer knows a patient is on a more expensive drug and can switch that patient to a cheaper version, the insurer can save a lot of money—and the consumer could too.” – Dr. David Friend tells Fortune Brainstorm Health
     
On the Amazoning of healthcare:
  • “The supply chain in healthcare is really now up for grabs. I think it’s pretty clear that Amazon is going to get into this business if you look at the deal now with JPMorgan and Berkshire Hathaway. They are a great master of disrupting the supply chain.” – Dr. David Friend tells CNBC Nightly Business Report
 
  • “My advice to healthcare boardrooms is to take a very serious look at how things are changing around you. You cannot sit there and expect business as usual. They’re pouring gasoline on the fire, so you better do something.” – Dr. David Friend tells HealthLeaders
     
On the future of drug prices:
  • “So-called value-based pricing remains in its infancy. But biotech entrepreneurs should adopt the mind-set that delivering better outcomes and lowering the cost of care go hand-in-hand.” – Patrick Pilch tells The Wall Street Journal (sub. required)
     
On new entrants in the healthcare industry:
  • “Healthcare is being changed by people who are not in healthcare... that to me is very significant.” – Dr. David Friend tells FoxBusiness
 


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