Tearing down Pricewaterhouse Coopers healthcare crystal ball for 2009
Were Tom Watson or Bill Gates stupid or ignorant or just plan clueless? The answer is: none of the above.
"The coming year will be a watershed for healthcare in the United States," said David Chin, MD, PricewaterhouseCoopers' Health Research Institute Leader. I have no clue what this means. Watershed is an agricultural term and using it out of context confuses more than clarifies. But this is exactly how I hear executives from most Fortune 500 companies talk time and again. I guess these execs do not realize that simplicity is key to communication. Maybe that's not their agenda.
PWC Prediction # 1: The Economic Downturn Will Hit Healthcare: This states how drop in insurance enrollment because of high unemployment, cut backs in reimbursements, hospital budgets funded by investment incomes and lower valuations on pharma and device companies will affect access to cash and thus funding of capital projects. Holly crap . . . thanks for this insider PWC! I had no clue this was going to happen. Indeed very useful. Since when did stating facts become predictive knowledge?
PWC Prediction # 2: The Underinsured Will Surpass The Uninsured As Healthcare's Biggest Headache: Ahhh . . . this was just mentioned in # 1 above; cut backs in reimbursement = underinsured. This point states hospitals will pre-qualify patients (not sure for what - are we going to deny service?) and revenue life cycle management tools will become critical to a hospital's workflow. This just means improved billing, collection and service management. Unbelievable PWC! This was great. I bet none of the financial departments in any US hospitals or product companies in the space knew this was coming. Budgets are screwed up because there isn't enough time to respond and change processes, especially in larger institutions. It's rare that something this obvious is an oversight.
PWC Prediction # 3: Big Pharma Turns to M&A to Build The Drug Pipeline: Economic fact 101 - every time the economy churns, the industry vertical with the greatest leverage turns to M&A. Private Equity folks know this, biotech start-ups understand this, investment bankers & lawyers know this, and every pharma company employee awaits this. I don't want to get into reasons why M&A activity will increase for this vertical (as it is a whole different conversation) but PWC may have a different target audience in mind for this point than the category of people I mentioned.
PWC Prediction # 4: From Vaccines to Regulation, Prevention Is On The Rise: This point was stated in # 3 above by stating newer drugs coming in the market. This point further states public policy changes and access to nutritional information will be on the rise empowering greater number of people will relevant health information. My definition of prediction is 'Tell me something I don't know so I can take appropriate steps to mitigate my future' and this point does nothing to that effect. I would term this as an inference derived from series of logical progression in supporting industries. Will someone tell me how I can use this information?
PWC Prediction # 6: The Internet and Social Networking Is A Powerful Health Extended: This is really insulting people's intelligence. It's like stating the new Blackberry ad "World's First Touchscreen Blackberry". Is anyone else making a Blackberry? Is Blackberry a noun now? Of course its the worlds first touchscreen Blackberry because you did not make it before neither does anyone else. Its like stating 'worlds first Hummer Hybrid'! This statement is as obvious as it gets.
PWC Prediction # 7: Hospitals Must Perform To Get Paid: I have worked on several pay-for-performance models across various provider organizations and all I have to say is - it never works. This point talks about improvements in processes and hospitals trying to avoid unreimbursed medical errors. In someways, this is controlled by billing which improves reimbursement management at the point-of-care - already talked about in # 2 above while bringing up revenue life-cycle.
Medicare's new Value Based Reporting (I read the damn 104 page report) is a better directive than what we have had in the past, yet our ability to report (data accessibility & reporting capability) on most of the things being discussed is difficult. There is no company I know of, with a compliance engine that can easily plug in these new Medicare rules with any outpatient/inpatient system. So while it is commendable that Medicare wants to do something meaningful, the docs don't have time or easy means of making the most of the new program. It's like buying a Ferrari and trying to drive it in Boston . . you get the point anyhow!
PWC Prediction # 8: Payers and Employees To Give Incentives For Wellness Programs: True, but this is an outcome resulting from a cash crunch. This is one of many no-brainer options employers look at to save cash. "Loose your weight and I will drop your premium by $20/Month" is a better way to incentivize than give out Dunkin Donuts gift certificates. But program enrollment has always been a tough call - a very tough call - even when you give our hundreds of dollars to your employees. I don't want my employer to know that I have issues. This point talks merely about enrollment and not about measuring the enrollment effectiveness. I want to see which employer with an active program has its members staying on board through the length of their tenure at the company, and that, the company actually saving money compared to a similarly sized firm. I think this is a hard measurement to do.
Also realize there there are no immediate benefits to such programs as people don't stop smoking in a day or improve their overall health in 1 pay-cycle.
PWC Prediction # 9: ICD-10 Will Require A Major Resource Investment: This is like saying "Implementing an EMR in a hospital will require a major resource investment". I don't think this report is aimed at a lay person as non-players in this industry will have no clue what ICD-10 stands for. Assuming this is geared towards healthcare professionals, I think any person engaged in any form of hospital system understands that ICD-10 is a far fetched idea, even for 2009 and will not see the light of the day for at least another 2 years.
We can't be thinking about new content when the old content either does not exist or exists with several gaps across disparate silo's. There is no doubt in my mind that the rate of adoption for ICD-10 will be much faster than ICD-9 (lessons learnt). In my opinion, this is no prediction, more like a fact that is being repeated over and over again.
This analysis comes by observation of commonalities between what is happening around me and what would be the most natural line of defense to stay afloat. I am no 30 year veteran in the industry. Predictions are good - it allows people to reassure themselves of a false sense of risk adherence to a pattern - as long as they feel safe enough to make a bet. Many times, predictions are made to actually change behavior. These are but mere hunches!
Now that I have severely undermined PWC's ability to predict trends in Healthcare, the natural question is what I think will be going on this year. I will let you know as soon as I have a clue . . . . :)
There is a fantastic article written by Nor Zahidi back in 2007 titled "The Art of Prediction" which I recommend reading.
Till 2010 then . . . . let's see what happens!
Labels: healthcare, medicare, prediction, pricewaterhouse coopers
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posted by Janak Joshi @ 1/02/2009 01:54:00 PM
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