New funding models are key to sustaining increasing demands for healthcare

New report by Capgemini points to an increased emphasis needed on health outcomes and better collaboration between healthcare payers, providers and patient groups

Healthcare systems in the current form are not sustainable. Fundamental changes to the financing structures of healthcare over the next few years are inevitable as rising healthcare costs and quality issues become major concerns across the developed world, reveals new research from Capgemini.  Nearly 85% of key healthcare stakeholders from Europe and the US believe that sources to finance healthcare, such as tax premiums and public/private funding, will change while 88% anticipate amendments to current healthcare payment schemes. 

Although any changes to the financing structure are likely to impact all healthcare stakeholders, respondents to Capgemini’s Vision & Reality 2005 study believe that individual patients will be primarily impacted through increases in supplementary coverage and co-payments made by the patient.  Many Europeans now pay over $300 out-of-pocket per year for their healthcare, while in the US direct payments are well over $700. 

Half of those surveyed (50%) believe that patient out-of-pocket payments will increase by up to 25%.  The outlook for US patients appears even more pessimistic with 35% of US consumers expecting direct costs to increase by more than 25% over the next few years. As patients take on a greater portion of healthcare costs, they are becoming more interested in cost reducing measures, with 93% of patient respondents requesting more transparency of costs. 

The large majority of healthcare stakeholders (89% of those surveyed) agreed that basic healthcare coverage for all is an important component of any stable healthcare infrastructure in the future.  This basic coverage will almost certainly be financed through a combination of the existing systems in place today, which are managed by payers and the government.

Patients are looking for alternative sources of information on healthcare.  Although physicians and healthcare providers are still ranked as the most important source of information (87%), the Internet has made a huge jump in importance from 28% in 2003 to 84% in 2005.  As patients become better educated around healthcare matters, they are also demanding more involvement in their healthcare decision making, with more than 54% of all patients stating they had visited their healthcare provider with a specific treatment or brand of medicine in mind and 62% saying they had sufficient influence in their most recent healthcare decision.

The priorities of healthcare payers will alter too. Over 80% of payers believe that their role will shift from reactive reimbursement of services to a more proactive management of patients’ health. In particular they will be looking for an overall improvement in health outcomes, which are expected to ultimately save money. Providers will be under ever more pressure to deliver higher quality care services as competition amongst them increases. Turning to the pharmaceutical industry it is clear that changes will need to be made in terms of R&D and marketing in order to face the increased financial pressures and the demand for better treatments, such as evidence based medicine (EBM).

The survey points to the increasing importance placed on health outcomes for the pharmaceutical industry.  EBM used for therapy decisions and more provisions for chronic patients were ranked by pharmaceutical companies as the first and third most important changes to have a significant impact on the industry.  Such health outcomes will not only enable all stakeholders to contain costs but will also increase the quality of healthcare as treatments will be tailored to suit individual patient needs across the entire continuum of care, from prevention to outpatient and inpatient costs.

However, the report highlights that the move to health outcome driven systems will not be easy as changes will be required in terms of infrastructure and behaviour from the regulator, providers and consumers alike.

Although some governments have already started initiatives to encourage stakeholders to focus more on health outcomes, more needs to be done in terms of providing accurate information as well as providing the necessary incentives to all stakeholders. In particular, electronic medical records combined with e-prescribing are likely to be a key element in the successful implementation of the health outcome focused healthcare systems. Electronic medical record systems are penetrating fast in Europe , and have already been implemented in 90% of primary care practices in Norway , Sweden and Denmark . In the UK , it is expected that online records of the country’s 50 million citizens will be available by 2010.

As healthcare systems start to be driven by health outcomes, the pharmaceutical industry will need to carefully manage how to deal with this much changed environment.  An overwhelming majority (73%) identified the development of innovative products as one of the three most important challenges facing the pharmaceutical industry today and this was followed up by the introduction of new products (41%). 

In addition to financial pressures, it is also anticipated that the uptake of health outcomes will also be a disruptive force in the industry, with 93% of respondents indicating that EBM would affect all business areas and 76% stating that disease management and compliance management would require a realignment of product offers. 

The overall value that any pharmaceutical product delivers should not only be focused on the efficacy and safety and pricing transparency of treatment, but in the future must take into account the other product-related services that will help physicians to improve the treatment of outcomes for their patients. Pharmaceutical companies will also have to further demonstrate the clear pharmacoeconomic advantages of new treatments. A key point arising from the report is that the pharma industry will need to understand how to work better with healthcare payers, providers and patients groups, in order to create a truly integrated healthcare environment.

Guenther Illert, VP, Head of Life Sciences Central Europe commented: “The well-being of healthcare systems as we know them is under threat. Our findings would indicate that all healthcare stakeholders recognise the need for change and that a new focus on health outcomes is required. Our report also highlights the growing role of patients in the funding and selection of the most appropriate treatment options. Against this background it is clear that the pharmaceutical industry needs to change, with a crucial initial step being to work closer with all other healthcare stakeholders.”

“In addition, the industry needs to put in place the structural changes required to develop and market prescription products, which can be shown to contribute positively to improved healthcare outcomes. Capgemini’s pharma and healthcare expertise puts us in a unique position to assist many of the leading players in the healthcare industry to make the correct strategic decisions to ensure that they can prosper in this much changed operating environment.”

(9/12/05)