Panel
New Players Disrupting the Healthcare and R&D Landscape
Milken InstituteDan Mendelson, Marc Harrison, Thomas Moriarty, Mario Schlosser, Benjamin Seet, Sue Siegel, David Freeman, Jr., Margot Sanger
- US cost trends are projected to remain unsustainable over the next five to seven years, with healthcare spending expected to consume an additional 2 to 3 percent of GDP (an extra $250–$300 billion), driven by expanded insurance coverage under the Affordable Care Act and a shift from fee-for-service to value-based capitated models.
- Insurance market capitalization for Medicare Advantage, Medicaid, and exchange participants is anticipated to grow over the next five years, though exchange markets present specific difficulties and state Medicaid budgets, now nearly one-third of state allocations, will face pressure to shift care to lower-cost sites.
- The biomedical pipeline faces potential sustainability challenges as market capacity to pay becomes a critical constraint, necessitating a focus on generic drugs, biosimilars, and cost reductions for specialty treatments to prevent company insolvency.
- Intermountain Health plans to expand its replicable preventative model to five Western states via telehealth over the next five to six years, while its new not-for-profit generic drug venture targets approximately 600 hospitals and 10 founding systems to address critical patient needs.
- Pharmacy networks, including CVS locations, will evolve into community access points with tailored local solutions, while pharmacists will increasingly practice at the top of their license by reducing administrative burdens and engaging patients during natural contact points.
- Oscar Insurance, currently operating with over 250,000 members and revenue exceeding $1 billion, projects continued growth and plans to build a deeper network with fewer hospital, provider, lab, and pharmacy partners to enhance engagement.
- East Asian countries are forecast to experience the fastest growth in healthcare resource consumption over the next 10 years, with Singapore's healthcare spending projected to rise from 4.5% to 6% of GDP in five years (a 50% increase in dollar terms) and other Asian nations seeing 50% to 60% spending increases in a similar timeframe.
- Major and smaller M&A activity will continue to be driven by cost pressures and the transition to value-based care, with technology companies like Alibaba, Tencent, and Samsung expected to disrupt the market via digital health services, immunotherapies, and regenerative medicine, though Asian markets may adopt innovations conservatively to ensure cost-effectiveness.
- Amazon's entry into healthcare is expected to be transformative, particularly in supplying non-durable goods and dental supplies by eliminating intermediaries, though success requires weaving personal connection into services and navigating uncertain monetization strategies regarding psychographic data and digital twins.
- Care delivery models are shifting from centralized hospitals to distributed retail and home settings, moving from CapEx to OpEx for services like teleradiology, while digital technologies and wearables enable keeping patients out of hospitals, provided patient and caregiver mindsets adapt.
- High deductible health plans with deductibles over $1,000 are expected to remain prevalent, shifting costs to consumers and requiring tools at doctor offices and pharmacies to manage expenses, while self-insured employers covering over 500,000 lives must closely monitor global business models to maintain competitiveness.
- Significant barriers to digital adoption include cultural resistance among older demographics, the lack of time-of-day data in US claims formats preventing dynamic pricing, and the need for individuals to maintain longer-term relationships with insurers and hospitals beyond the current 2–3 year average.
- Future disruptions will be accelerated by partnerships rather than isolated development, with regulatory innovation likely to follow frameworks similar to Medicare Advantage, while new privacy regulations may be imposed in Washington DC in response to tech company entry.
- Algorithm-based care remains a major organizational focus, with a push toward real-time data updates and workflow interoperability to replace current quarter-cycle bulk data loads, while medical robotics is currently viewed as potentially gimmicky due to price point limitations.
- Risk will be redistributed in novel ways throughout the ecosystem as disintermediation occurs, with financial pressure on systems addicted to fee-for-service revenue becoming urgent, and a need for individualized healthcare products driven by a growing freelance economy.