Healthcare Industry to Undergo Big Changes by 2040

A report from Deloitte, released last month, predicts that although healthcare spending will continue to grow in the United States in coming years, the growth will be lower than some experts have predicted.

The report, “Breaking the Cost Curve,” notes that healthcare spending in 2019 topped $3.8 trillion, which is nearly 18 percent of the nation’s gross domestic product (GDP). The Centers for Medicare and Medicaid Services (CMS) projected at that time that healthcare spending would continue to grow at a rate of 5.3 percent per year. By 2040, CMS estimated, healthcare spending could reach $11.8 trillion annually.

Deloitte’s prediction, however, is that the upward trend will moderate due to changes in technologies, treatments, and consumer engagement. They summarize the future of healthcare by outlining three future realities:

1. The well-being dividend

The Deloitte report predicts a $3.5 trillion “well-being dividend” by 2040. Healthcare spending growth will slow over the next two decades through a combination of “new tools, systems, or protocols to help consumers to take an active role in their health and well-being.”

The Deloitte report defines “well-being” as a whole-person approach to health, which includes not only physical health but mental health, “spiritual, social, emotional, equitable, and even financial health.” The success of treating healthcare as a consumer product has been mixed, at best, but there has been a movement toward use of personal devices, online care, and other health technology innovations that have consumer appeal.

“Achieving and maintaining a state of well-being might encompass everything from a healthy diet and exercise to addressing drivers of health and inequity, to using cell and gene therapy, and other advanced therapies, to prevent, treat, or cure today’s illnesses,” the report says.

2. Redirecting healthcare spending

The study notes that, by some measures, as much as 25 percent of healthcare spending in the United States is wasted. Duplicative care, administration, unnecessary treatments, high drug prices, and hospital re-admissions are common examples of wasteful spending. The report estimates that if waste were cut out of the equation, health spending in the U.S. would account for 13.9 percent of GDP, so more than 4 percentage points less. The report says nearly a trillion dollars a year ($935 billion) is wasted in the U.S.’s healthcare spending.

The report goes on to say that the country is on track for an “unstoppable transformation” in how healthcare is accessed and provided. “This future will likely be driven by new business models, scientific and technological breakthroughs, consumers armed with highly personalized data, and regulations that encourage change,” the report says. Some of those changes will emphasize preventive care and healthy lifestyles, the report says, as well as addressing social determinants of care such as housing, access to food, and community resources.

“Our models show that spending in these well-being–focused areas will eclipse treatment-related expenses by 2033,” the report says. “By 2040, we expect spending on well-being to account for nearly two-thirds of total health spending—or 11.3 percent of GDP—and spending on treatments and diagnostics to make up the rest.”

3. New models for the healthcare economy

The Deloitte report predicts some rather significant changes to healthcare business models, based largely on technological advancements and changes in consumer habits.

One prediction is the end of the general hospital model: The Deloitte report predicts that some health conditions which require hospitalization, such as heart attacks, will become less common as preventive care and in-home care options become more common. “Patients who do need care will likely receive it in highly specialized settings that are tailored to service a specific need rather than being a ‘one-stop’ for all disease states and specialties,” the report says.

The report also predicts more personalized care, which will reduce the use of mass-produced therapies and lead biopharmaceutical companies to focus on individualized therapies instead.

Healthcare financing will also change, the Deloitte analysts predict, mirroring the changes in care models. As care becomes more personalized, consumers will seek benefits products that are tailored to their needs and lifestyles.

“Business models that focus on well-being and care delivery, data and platforms, and care enablement are already emerging. These new models are likely to proliferate quickly and would represent the bulk of health revenue in a future that rewards well-being and provides efficient and effective care when required,” the report says.

From: BenefitsPro