Top health industry issues

of 2017
A year of uncertainty and opportunity
December 2016
Health Research Institute

PwC Health Research

Institute’s annual report
highlights the forces that will
have the most impact on the
healthcare industry in 2017.

PwC Health Research Institute

 Table of contents

Introduction 1

Adapt for value

1. Under a new administration, the fate of the ACA 3
remains unclear

2. Pharma’s new strategic partner? Patients 4

3. Easing the training wheels off value-based payment 5

4. Insert your card here for healthcare 6

Innovate for value

5. Paging Dr. Drone: It’s time to prepare for 7
emerging technologies

6. The battle against infectious diseases sparks invention 8

7. Rx cauliflower: Nutrition moves to population health 9

Build for value

8. Putting the brakes – gently – on drug prices 10

9. A year of new partnerships and collaborations 11

10. Preparing medical students for work in a 12

value-based world

Acknowledgments 13
Endnotes 16

ii Top health industry issues of 2017 PwC Health Research Institute

 Introduction
A year of uncertainty and
opportunity
The election of Donald J. Trump will usher
in a new era for the US healthcare industry,
which has spent years adapting to the
Affordable Care Act (ACA). Yet, despite the
potential policy changes in Washington, the
painstaking and challenging work of shifting
to value-based care likely will continue.
President-elect Trump has said he wants to
repeal the ACA and replace it with a mix of
tax credits, health savings accounts, high-
risk pools, state Medicaid block grants and a
transference of regulatory control from the
federal government to the states.1 President-
elect Trump also has called for reforming
the US Food and Drug Administration
(FDA) and modernizing Medicare. (For a
deeper analysis of President-elect Trump’s
campaign proposals for healthcare, please
see HRI’s report, President-elect Donald
Trump: Turnaround time.)
President-elect Trump’s healthcare mission
will sound familiar to anyone working in
healthcare today: “…to create a patient-
centered healthcare system that promotes
choice, quality and affordability.”2 These
goals – patient-centrism, consumer choice,
quality, affordability – are hallmarks of
the pivot toward value-based care, one of
the most powerful forces reshaping the
industry.3 2017 will be a year dominated
by this shift toward value, which has been
underway for years, through Democratic
administrations and Republican ones.
It is the pursuit of value that led a health
system-affiliated institute to open a grocery
store in Toledo, Ohio. It is driving drug
companies to develop smartphone apps to
help customers track symptoms and side
effects. It is prompting medical schools to
retool their curricula and create positions
such as “assistant dean of healthcare value”
to help prepare young doctors for work in a
value-based world.
This shift to value can be felt in the quest
to use emerging technologies – from
artificial intelligence to blockchain to
virtual reality – to find efficiencies for
1 Top health industry issues of 2017
consumers and business operations. It is
fueling development of new armaments
for mankind’s war against infectious
diseases. The pursuit of value is laced
into partnerships between traditional
health organizations and new entrants,
and in efforts by healthcare providers to
modernize payment systems as consumers
finance more of their care.
Some of the seeds of this value shift were
sown a decade ago, before the Great
Recession, at a time when the nation was
grappling with relentless and sharply rising
healthcare costs. PwC’s Health Research
Institute (HRI) forecasted medical cost
trend, the projected percentage increase in
the cost to treat patients from one year to
the next, to be 11.9% for 2007, almost twice
what it is today.4 In 2007, the industry
was embarking on its mission to digitize
health records, the Centers for Medicare &
Medicaid Services (CMS) was starting to tie
payments to quality and consumers were
first hearing about retail clinics (see
figure 1).5
This shift to value has been a durable trend
with the potential to disrupt many players
in the industry. It is a trend that may be
magnified by the new administration, as
it seeks to reshape the industry with more
free market approaches.
Many of the top health industry issues
of 2017 highlight how this shift toward
value is occurring, and how traditional
health organizations and new entrants
are responding to it. There are three
main tactics that organizations will use to
address this shift to value – they will adapt,
they will innovate and they will build
new programs and approaches to their
work. These activities will occur against
a backdrop of uncertainty as the new
administration’s approach to healthcare
takes shape. But the industry also will
continue to be rich with opportunity, as
forces greater than politics carry on its
transformation.
PwC Health Research Institute
 Figure 1: The seeds of many of 2017’s issues were sown in 2007

Top health industry issues of 2007 Top health industry issues of 2017

Obesity is the new smoking, with employer Diet-related health issues, including obesity,
incentives considered to push employees are addressed by health organizations and
to lose weight. employers focusing on nutrition.

Industry embarks on digitalization with slow Nearly 90% of hospitals have basic EHRs.
electronic health record (EHR) uptake. Less than The question now is how to use emerging
9% of hospitals have a basic EHR system. technologies such as blockchain, drones
and artificial intelligence.

Volume to value is in early days, as CMS begins Volume to value is in full swing. CMS and
its push to tie payments to quality and drive the private plans are nudging providers to take
industry toward greater transparency. on more downside risk.

Consumer-directed health plans start to grow. Millions of Americans are in high-deductible health
Just three million Americans have plans, leading providers to modernize their
consumer-directed plans. payments systems to handle the surge in consumer
credit card charges.

Retail clinics are in their infancy. In 2006, 90 are More than 3,000 retail clinics are in operation. One
in operation and about one in 10 consumers have in three consumers have visited one. This drift to
been to one. new venues is part of the trend prompting medical
schools to rethink how they train young doctors.

Drug prices draw scrutiny as 42 blockbuster Drug prices again are facing public and political
products lose their patents in 2007, representing attention. Industry moves to regulate itself in
$82 billion in sales. response to pressure.

Source: Top health industry issues of 2007, Top health industry issues of 2017, Surviving seismic change: Winning a piece of the $5 trillion US
health ecosystem, Healthcare's new entrants: Who will be the industry's Amazon.com?

2 Top health industry issues of 2017 PwC Health Research Institute

 Adapt for value

The shift to a value-based world is forcing

many organizations to adapt, prompting a
wave of fine-tuning across the industry.

1. Under a new administration, the fate of the ACA remains unclear

2. Pharma’s new strategic partner? Patients
3. Easing the training wheels off value-based payment
4. Insert your card here for healthcare

3 Top health industry issues of 2017 PwC Health Research Institute

 Adapt for
value 1 Under a new administration, the
President-elect Trump has made repealing
and replacing the ACA one of his top
priorities.6 A few weeks after his election,
details of his plans were scarce, though he
said in interviews that consumers would not
experience lapses in coverage should the law
be repealed.7 Some health organizations
already are developing models in preparation
for policy changes that could have a
significant impact on the industry.
A complete repeal of the law, a daunting
task due to Republican lawmakers’ slim
majority in the Senate, would eliminate
the ACA’s health insurance exchanges and
reverse the expansion of Medicaid, adding
20 million to the ranks of the uninsured.8
Hospitals, especially those in states that
expanded Medicaid, could experience a
dramatic increase in uncompensated care.9
Meanwhile, insurers likely would lose most
of the $1.9 trillion in federal ACA-related
subsidies slated to be doled out over the
next 10 years.10 ACA-fueled efforts to push
the industry toward value-based care could
wither.
A review of Republican efforts to repeal the
law since it passed in 2010 shows that any
dramatic moves likely would be followed by a
transition period for some provisions.11
For example, in 2015, Republican lawmakers
passed a budget reconciliation bill, vetoed
by President Barack Obama in January of
2016, that called for a two-year delay in
ending ACA provisions such as Medicaid
expansion, premium assistance tax credits,
reduced cost-sharing and the small employer
health insurance tax credit. However,
other provisions were to be eliminated
immediately, such as the individual mandate,
fate of the ACA remains unclear
comers, also known as guaranteed issue.
No longer able to deny individuals coverage
based on health status or age, guaranteed
issue draws consumers with more serious
illnesses and higher costs into the market.
This generally causes premium costs –
consumers’ most important consideration
when choosing a health plan – to climb (see
figure 2).
Implications:
• Health systems should scenario plan:
Even if a transition period is included
in the new administration’s healthcare
plan, insurance gains that would have
otherwise been made under the ACA in
the next couple of years could be eaten
away. For example, South Dakota Gov.
Dennis Daugaard already said that he
will no longer pursue an expansion of
the state’s Medicaid program in 2017.13
Efforts underway by lawmakers and
regulators to shore up the ACA exchanges
are likely to be halted. This could lead
to higher premium increases on the
exchanges during a transition period.
Health organizations should map out
Figure 2: Under any healthcare reform, consumers care
most about their premiums
Consumers pointed to the cost of their monthly premium, coverage of services and
medications, and provider network as their most important considerations when
choosing a plan from a health insurance company.
100%
90%
Percentage of consumers who said
potential gains and losses of insured
consumers around multiple scenarios.
• Education and advocacy will be critical:
Industry players should educate the new
administration on the interplay between
premium costs, essential benefits and
guaranteed issue. They should explain
how certain actions have far-ranging
consequences, such as the links between
the individual mandate and the size of
premiums on the exchanges and between
levels of uninsured and the balance
sheets of hospitals and health systems.
• 2017 may create strategic opportunities:
According to AHIP’s Merritt, “insurers
will continue forward with what they
had planned for the year ahead. So far
there hasn’t been a significant impact
on enrollment.” Heading into open
enrollment for 2017, several insurers
scaled back their exchange efforts. Exits
by Aetna, Humana and UnitedHealthcare
put about 1.6 million lives and over $8
billion in premium revenues up for
grabs for 2017, according to an analysis
by HRI.14

shared responsibility payments by large 80%

employers, the annual fee on insurers and 69%
66%
excise tax on medical devices.12 70%
factor was important

56%
“This isn’t flipping a switch,” David Merritt, 60%
executive vice president of public affairs 49%
50%
and strategic initiatives at America’s Health
Insurance Plans, told HRI following the 40%
election. “You can’t move from one approach
to another just by passing legislation. It takes 30% 23%
time. Consumers need to be informed in 15% 14%
advance. Insurers need to be able to plan for 20%
7%
it. That’s why the real question will be what 10%
happens in 2018 and beyond.”
0%
President-elect Trump also has indicated he
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4 Top health industry issues of 2017 PwC Health Research Institute

 Adapt for
value 2 Pharma’s new strategic partner?
Facing increasingly challenging
reimbursement and regulatory
environments, as well as new trends in
consumerism, pharmaceutical companies
in 2017 will better engage with patients
to justify prices, show value and satisfy
calls by regulators who want them to work
more closely with the people who use their
products.
Amidst these changes and challenges,
companies are developing inventive ways to
engage with patients, including mobile apps
and other services. A mobile app developed
by Eli Lilly helps patients remember to take
its once-per-week diabetes drug Trulicity at
the appropriate times and learn how to use
the drug’s injection mechanism correctly.15
Takeda launched a program, iBData, to help
patients with inflammatory bowel disease
track their symptoms using a smartwatch
application.16
These apps and services are being developed
as engagement with consumers is written
into regulations and contracts. Patient
engagement will become a core part of
the FDA’s regulatory approvals process as
part of the planned reauthorization of the
Prescription Drug User Fee Act in 2017.17
Insurers such as Harvard Pilgrim Health
Care, Aetna and Cigna are entering into
Figure 3: Many consumers with chronic health conditions are willing to share data with drug companies
Percentage of consumers who said they would
share data with drug companies about how well
their treatments are working
80% 79%
70% 66%
60%
50%
40%
30%
20%
10%
0%
Frail Consumers
elderly with
consumers complex
chronic
disease
Source: PwC Health Research Institute Consumer Survey, 2016
5 Top health industry issues of 2017
Patients
deals with drugmakers to pay for products
based on performance.18 19
Consumers, facing higher deductibles,
are looking to drug companies for added
benefits and assurance that their products
are worth the money. They also are looking
for personalization, which is only possible
with deeper understanding of consumer
preferences. For example, when HRI
asked consumers ages 25 to 34 whether
they would be willing to incorporate a
videogame into their treatment if they were
diagnosed with a mental health problem,
78% said yes. Older consumers were far
less open. Unique needs lend themselves to
unique solutions, and companies should be
prepared to think creatively. A solution that
works for younger patients may need to be
reimagined for the elderly.
Implications:
• Don’t wait to reach out to patients:
Companies can position themselves
for post-market success by engaging
with patients early and often,
says Fran Kochman, director of
advocacy and alliance development
at GlaxoSmithKline. “Everybody
wins when engagement takes place,”
Kochman said. “Pharmaceutical
Percentage of consumers who said they would
share data with drug companies about their daily
symptoms and their best and worst days
78%
66%
Consumers Frail
with elderly
chronic consumers
disease
companies would learn more about how
patients manage their medications, and
insurers could appreciate that patients
are more likely to be adherent and
meet their outcomes. There’s a domino
effect.”
• Engagement for regulatory success:
Government emphasis on patient
engagement may increase the value
of pharmaceutical companies offering
services to providers that help patients
collect, analyze and understand their
own health data and health conditions.
Companies able to identify and meet
patients’ needs may have more success
with regulators who increasingly are
focusing on patient engagement.
• Build trust for effective engagement:
While consumers are less open to
sharing their data with drug companies
than with their doctors, there are
nuances to their positions (see figure
3). Partnerships, such as with advocacy
organizations, may help companies
access these data more effectively.
62%
58%
Consumers Consumers
with with
complex chronic
chronic disease
disease
PwC Health Research Institute
 Adapt for
value 3 Easing the training wheels off
The march toward paying for value over
volume has been a gradual one.20 Up until
this point, new programs and payment
models have largely involved upside risk
for healthcare providers. But this will begin
to change in 2017 as the training wheels
for these risk-based arrangements are
eased off.21
2017 is the first performance year for the
Medicare Access and CHIP Reauthorization
Act of 2015, the physician payment reform
law also known as MACRA, and healthcare
providers will be asked to participate in
one of two payment tracks, both of which
emphasize downside risk. One applies
to clinicians participating in traditional
Medicare and will put 4% of payments at
risk in 2019, an amount that will grow in
subsequent years. The size of the payment
adjustment – which could be positive,
neutral or negative – will partially depend
on how much data the clinician submits to
CMS and how well they perform on quality
metrics in 2017.
The other track targets healthcare providers
already bearing downside risk for patients’
outcomes. CMS estimates that 70,000 to
120,000 clinicians will participate in this
track in 2017, making them eligible for 5%
bonus payments in 2019.
CMS also offers other payment models, such
as bundled payments. Under this payment
model, hospitals are responsible for cost and
quality beyond discharge into post-acute
care. CMS’ oncology bundled payment will
qualify for MACRA’s 5% bonus in 2017. New
bundle programs for cardiac and orthopedic
care also launch next year, allowing
providers to qualify for bonuses in 2018.22
Figure 4: Many organizations may be more prepared for downside risk than they realize
An HRI analysis of 2015 CMS data shows that many Medicare Shared Savings Program (MSSP) accountable care organizations
(ACOs) would have earned bigger bonuses had they taken on downside risk.
Actual performance in 2015
ACOs receiving shared savings bonus:
Average shared savings bonus:
Program cost for CMS:
Source: PwC Health Research Institute analysis of CMS MSSP ACO performance year 2015 results
6 Top health industry issues of 2017
value-based payment
At the same time, CMS is nudging
accountable care organizations under its
Medicare Shared Savings Program to put
more money at risk in exchange for the
5% bonus. HRI found that many of these
organizations have left money on the
table so far. Analyzing the performance
of Medicare Shared Savings Program
accountable care organizations in 2015,
HRI found that more accountable care
organizations would have qualified for
bonuses in 2015 had they been subject to
downside risk (see figure 4).
Healthcare providers that are best
positioned to take on risk have been laying
the groundwork for years. For example,
Texas Health Resources has been building
a network of affiliates and partners across
North Texas since the early 2000s to
better manage patients along the care
continuum. The health system joined forces
with University of Texas Southwestern
Medical Center to form an accountable care
organization under the Medicare Shared
Savings Program.
Building on their success, the duo created
Southwestern Health Resources in April
2016, an integrated health network. Both
systems believe this new entity positions
them to participate in risk-based contracts.23
And – motivated by MACRA – they decided
to take on more downside risk and transition
their accountable care organization to
one of CMS’s more advanced payment
models. In 2017, Texas Health Resources
also will take the next step into the world
of risk-bearing models, launching a health
plan that it jointly owns and operates with
national health insurer Aetna.24
2015 performance had all MSSPs shifted to two-sided risk models
119 ACOs receiving shared savings bonus:
$5.4M Average shared savings bonus:
$216M Program profit for CMS:
Implications:
• Know where you stand: With downside
risk on the horizon, physicians must
understand where they stand in terms
of quality and cost today. “The solution
is not at the payer level. It’s not at the
government level,” Dr. Daniel Varga,
chief clinical officer at Texas Health
Resources, told HRI. “The onus is on the
providers.”
HRI’s analysis found that providers
may be more prepared to commit to
downside risk than they realize. Strong
actuarial capabilities can help accurately
measure performance, while strong
leadership to set priorities can accelerate
the pace of change.
• Scale-up infrastructure: Delivering
higher quality, lower cost care requires
an analytics-driven approach that
segments patient populations and
delivers tailored care management
solutions based on specific needs.
Achieving this requires a robust
infrastructure of technology and clinical
skills, which will take time to build
and operationalize. Providers should
consider partnerships and alliances to
acquire both.
• Don’t forget about doctoring: Physicians
spend an average of 785 hours a
year dealing with quality measure
reporting.25 Opportunities could arise
for companies in the platforms and
support market. They are poised to
develop remedies for doctors drowning
in data.26 Such solutions can help
minimize the administrative burden
on doctors, allowing them to do what
they’re trained to do – care for patients.
143
$5.65M
$58M
PwC Health Research Institute
 Adapt for
value 4 Insert your card here
Consumers are swiping their credit cards
at hospitals and health systems now more
than ever. With higher deductibles across
a broader set of services, they owe more,
more often, and they can buy a wide range
of products and services, from soy milk lattes
to overnight parking to genetic lab testing
to prescription drugs. PwC estimates that
5% of healthcare provider revenue today
comes through credit card transactions, a
percentage that likely will double by 2020.
2017 is the year health systems begin
to modernize payments in preparation
for creating more consumer-centered
experiences. Many consumers hunger for
better experiences – one in four consumers
in poor or fair health told HRI that their
experiences with hospital billing and
payment damaged their opinions of the
organizations.27 But customer experience
transformations should be built atop
standardized, low-risk, low-complexity,
secure and modern payments systems.
The need for modernization is pressing.
Most health systems maintain a patchwork
of credit card processing devices, systems,
vendors and operations, often allowing
each business unit and location to choose
their own. This issue is compounded as
health systems consolidate. The result is a
multiplication of financial risk, complexity
in complying with industry regulations and
opacity in the day-to-day flow of revenues.
At the same time, hackers are targeting
health systems more than ever. PwC’s recent
survey of global healthcare provider and
insurer executives found that phishing
topped the list of cyber-incidents (see figure
5). Breaches also have been reported at major
American healthcare providers.28
Mayo Clinic sought to address these issues
when it embarked on an 18-month plan to
modernize its credit card payments system.
The institution, which had expanded beyond
its original Rochester, Minn.,-based location,
maintained hundreds of merchant IDs and
dozens of vendors, gateways and processors.
Trying to implement one secure standard
across all of the systems required for
compliance with new industry standards
was a gargantuan task, said Darrell Sandeen,
chair of the Mayo Clinic Office of Risk
Management. Mayo Clinic’s goal was to
reduce merchant account management,
mitigate financial risk, simplify payment
processing solutions, secure cardholder
7 Top health industry issues of 2017
for healthcare
information and move to a point-to-point
encryption solution.
In the end, the project replaced more than
1,400 devices, reduced in-scope requirements
for compliance with industry security
standards, and involved the successful
engagement of hundreds of employees
handling credit cards, Sandeen said.
Beyond reducing risk and laying the
groundwork for customer-oriented payments,
modernizing means financial savings.
Operationally, money can be saved by
bringing together processes that often are
spread across business units and even states.
Merchant processing fees, once negotiated
piecemeal, can be negotiated with greater
leverage. And a modern system offers a
clearer view of revenue flow and serves as
a solid foundation for consumer-oriented
systems.
Implications:
• Modernization is a continuous process,
not a once-a-decade renovation:
Healthcare providers should plan on
creating a dedicated group to keep
payment processes up to date once the
project is complete. Mayo Clinic created a
Credit Card Protection Office with eight
full-time employees who manage credit
card payment processing, identify new
entry into credit card payment markets
Figure 5: Phishing, email compromise and ransomware top list of
healthcare security issues
Percentages of payers and providers reporting each type of security incident
16%
Ransomware
Source: PwC The Global State of Information Security Survey 2017
and comply with industry credit card
security requirements. “It’s not one time,
and I walk away,” Sandeen said.
• Recognize consumers’ trust in provider
security: Consumers feel healthcare
providers do as good a job as online and
big box retailers, fast food restaurants
and utilities in keeping their financial
data secure, according to a 2016 HRI
survey. A substantial percentage of
consumers feel providers do a better
job. Consumers also trust providers
with their health data more than other
organizations. Healthcare providers
have the opportunity to use this trust as
an asset to leverage in partnerships with
new entrants.
• Consider payments to be a key part
of the patient experience: Healthcare
providers should consider payments
as a way to differentiate themselves.
Retailers, airlines, restaurants and others
have used payments to attract customers
and build loyalty. Walmart’s Walmart
Pay allows customers to pay seamlessly
using the store’s mobile app, which can
be linked to credit cards, debit cards
and gift cards. Amazon.com features
one-click shopping. Providers can do the
same, using payments as a way to build
consumer trust, loyalty and satisfaction.
31%
22% Phishing
Business email
compromise
PwC Health Research Institute
 Innovate for value

Health organizations, new and traditional,

are addressing the shift toward value
through invention and innovation.

5. Paging Dr. Drone: It’s time to prepare for emerging technologies

6. The battle against infectious diseases sparks invention
7. Rx cauliflower: Nutrition moves to population health

8 Top health industry issues of 2017 PwC Health Research Institute

 Innovate for
value
The health industry lags behind
other industries, such as retail and
telecommunications, in the deployment
of emerging technologies such as artificial
intelligence, drones and virtual reality. Yet
these technological innovations loom on
the health industry’s horizon with great
potential to disrupt. 2017 is the year to
prepare for the eventual arrival of these
technologies and their impacts on business
models, operations, workforce needs and
cybersecurity risks (see figure 6).
Careful observers already will have
noticed early signs of these technologies’
appearance in the health industry. Eighteen
years ago, Align Technology won FDA
clearance for its 3D-printed orthodontic
system.29 Since then, the company has
treated millions of consumers, generating
revenues of $845 million in 2015.30 3D
printing also is used to customize hearing
aids and dental work and even print
epilepsy medication.31
In Sweden, pharmacy chain Apotek Hjärtat
hands some clinic customers stress-busting
virtual reality headsets that immerse users
into a serene lakeside scene. By staring at
objects in the environment, patients can
trigger music, or beckon a sea monster.32
And next year, Qualcomm Tricorder
XPRIZE will name a winner in its $10
million contest to invent a working “Star
Trek”-style “tricorder.” The consumer-
friendly device must be able to diagnose
13 health conditions and capture five
vital signs without help from a healthcare
worker or facility.33 Six teams have built
working tricorders, said Grant Campany,
senior director of the contest.
Figure 6: Eight technologies with great potential to disrupt the US health industry over the next decade
1 Artificial intelligence (AI)
Software algorithms able to perform tasks
normally requiring human intelligence
Digitized supply chain, efficient
billing, accelerated R&D
5 Internet of Things (IoT)
A connected network of objects that
collect and exchange data
Inventory control, care coordination,
remote patient monitoring, digital supply
chain, digitized operations
(Sample use cases)
Source: PwC Tech breakthroughs megatrend: How to prepare for its impact, PwC Health Research Institute analysis
9 Top health industry issues of 2017
5 Paging Dr. Drone: It’s time to
prepare for emerging technologies
A consumer-operated tricorder could
perform work now handled by primary care
workers, increasing efficiency. “There is
no reason to go to the hospital and spend
the first 15 minutes answering questions
and getting weighed,” Campany said.
“Tricorder technology can already do these
things—these devices can be engineered in
the near future to integrate existing health
technologies in the home and combine
various data points to generate actionable
information for patients and physicians
alike. The physician sees the screen and
gets to the heart of the matter, figuring out
what to do to make you healthier.”
These technologies also are beginning to
revolutionize supply chains, which can help
pharmaceutical companies address issues
such as increasing regulatory complexity
across the globe, tightening competition,
rising demand for personalized treatments
and the persistence of counterfeits.34
A digitized supply chain weaves together
people, machines, data and other
resources to enable greater efficiency,
customization and security throughout the
value chain, from planning to sourcing to
manufacturing to delivering. For example,
a digitized supply chain could slash
manufacturing downtime by 30% to 40%,
boosting equipment effectiveness.35 3D
printing could become the backbone of a
decentralized supply chain able to produce
small, custom batches for personalized
treatments.36
Implications:
• Consider these technologies together:
Healthcare organizations should avoid
making the common mistake of adopting
technologies individually, as point
2 Augmented reality (AR) 3 Blockchain
Virtual additions to the physical world to Distributed electronic ledger that can record
change the user experience and confirm transactions securely
Fitness and wellness gaming Consumer identity management,
apps, guided tours of grocery Medicare and Medicaid fraud prevention,
aisles, surgical guidance personal health data protection
6 Robots 7 Virtual reality (VR)
Machines or virtual agents that automate, Interactive simulation of a 3-D image
augment or assist human activities or complete environment
Digital supply chain, remote patient Patient distraction, stress relief, medical
patient monitoring and care, digital school education tools, consumer and
behavioral health services clinician training, scenario planning
solutions, rather than exploring how
they work together. The best value for
all of these will be when they are applied
in coordination with one another, or in
coordination with services delivered by
human beings. Organizations should
develop comprehensive strategic plans
that define their roles in a wider digital
health ecosystem.
• Plan for new talent: As these
technologies make their ways into the
health industry, organizations will
need to hire new talent, or partner with
enterprises stocked with these skilled
employees. Health organizations should
be prepared to compete with technology,
financial services and retail companies
for workers, such as engineers and
designers. Health organizations may
find it hard to lure top talent away from
the tech world, and also should plan
to identify partners that can supply
workers with needed skills.
• Don’t short cybersecurity: These
technologies also are wellsprings
of valuable data. But, as the health
ecosystem becomes an interconnected
web of consumer and medical devices,
clinical equipment and more, hackers
will find multiplying opportunities to
exploit vulnerabilities, physical and
virtual. Health organizations should
make investments in cybersecurity
commensurate with their adoption
of emerging technologies to avoid
costly breaches and meet regulator
expectations.37 Forty-five percent of
healthcare providers and payers are
investing in a security strategy for the
Internet of Things, according to PwC’s
Global State of Information Security
Survey 2017.38
4 Drones
Pilot-free vehicles and devices
Digitized supply chain, delivery of
healthcare goods to consumers,
emergency and disaster response
8 3D printing
Additive manufacturing techniques used
to create three-dimensional objects
based on digital models by layering or
“printing” successive layers of materials
Customized implants, prosthetics and
transplants, distributed supply chain,
on-demand inventory
PwC Health Research Institute
 Innovate for
value 6 The battle against infectious
As the war against infectious disease and
antimicrobial resistance expands across
borders, public health agencies and
private industry in the US and Europe
are pouring money into the development
of new weapons to fight back. In 2017,
millions of dollars will be earmarked for
drug and device industry projects aimed at
combating the spread of infectious diseases.
At the same time, industry and regulators
are working together to develop rapid
diagnostics aimed at infectious diseases that
have grabbed headlines.
Through collaborations, industry is
addressing the spread of antibiotic-resistant
bacteria, which infect two million Americans
a year, and kill 23,000.39 In June, the
Combating Antibiotic-Resistant Bacteria
Biopharmaceutical Accelerator (CARB-X)
collaboration announced plans to spend
$500 million to research and develop
antibiotic drugs.40
In September, 13 global biopharmaceutical
companies signed an “industry roadmap”
proposing market entry rewards, among
other things, to promote development of
antibiotics, diagnostics and vaccines to fight
antimicrobial resistance.41 While a number
of new antibiotics are being tested in
clinical trials, many more will be needed to
successfully prevent the erosion of antibiotic
effectiveness (see figure 7).
One of the most persistent and pernicious
challenges associated with treating
infectious diseases is rapid and effective
diagnosis. Public health experts also have
noted the need for commercially available
consumer tests that could help fight the
spread of diseases such as Zika, which has
gained a foothold in the southern United
States. The Zika virus, for example, is
asymptomatic in as much as 80% of the
infected population.42
The FDA has granted at least 10 Zika
diagnostic tools Emergency Use
Authorization, which allows unapproved
medical products to be used in an
emergency to diagnose, treat or prevent life-
threatening diseases or conditions. So far,
however, none are commercially available
for purchase by consumers.
10 Top health industry issues of 2017
diseases sparks invention
In early August, the US Department of
Health and Human Services awarded $9
million to InBios International, Inc., to
develop a Zika diagnostic test that returns
results in four hours or less, compared with
two to three days for existing diagnostic
tests.43 InBios received FDA authorization to
market the test three weeks later.
Implications:
• Partner with public agencies to
overcome market barriers: Millions
of dollars are being made available
through public agencies to accelerate
development of new treatments and
diagnostics for infectious disease. Close
collaboration with health agencies in the
US and Europe, such as HHS’ Biomedical
Advanced Research and Development
Authority and the European Innovative
Medicines Initiative, can help
pharmaceutical and device makers
secure funding and expedite research and
regulatory approval.
Figure 7: Public and private sectors are working to boost
the antibiotics pipeline
Antibiotics in development
by clinical phase
11
Phase 1
13
Phase 2
13
Phase 3
Source: HRI analysis of Pew Charitable Trusts data, May 2016
• Use mobile technology to locate
and diagnose patients: Smartphone
ownership is growing across the globe,
which can help healthcare providers
and drug and device makers reach
global populations at risk of contracting
infectious diseases while better
surveilling their spread. Data collected
through mobile programs can be shared
to help inform public health officials
about geographic areas and populations
that are experiencing spikes in outbreaks
and disease symptoms.
• Educate medical staff about
fighting disease in a global context:
Agricultural practices and over-the-
counter availability of antibiotics in
global markets can lead to new disease
outbreaks and antibiotic resistance.
Companies selling drugs and devices
that target infectious diseases and
antimicrobial resistance should
provide strong educational resources
for healthcare workers to share with
consumers to help prevent the spread of
new pathogens and the development of
antibiotic resistance.
Most common indications among
antibiotics in clinical development
8
Acute bacterial skin
and skin structure
infections
6
Complicated urinary
tract infections
6
Bacterial infections
PwC Health Research Institute
 Innovate for
value 7 Rx cauliflower: Nutrition takes
a more central role in health
The drive toward value-based care is Implications: • Invest in a nutrition-related workforce:
prompting established health organizations Primary care teams of the future likely
and new entrants to focus on nutrition as a • Understand the market: Providers, will be comprised of many different
way to prevent costly medical problems and health insurers, and provider-owned professionals, including dietitians and
improve the overall health of the populations health plans should carefully consider nutritionists. Primary care doctors cite
they serve. This growing industry awareness the unique diet-related needs of the these experts as among those they most
of diet as a key driver of healthcare costs populations they serve, including want on their teams, and consumers
for many Americans is fueling creation of prevalent chronic diseases, access to echo their enthusiasm. Investing in
inventive programs and collaborations in 2017. healthy foods, nutritional needs and talent that brings nutrition knowledge
social factors affecting health. will help organizations, from healthcare
The statistics are familiar, and yet still
• Don’t go it alone: Traditional health providers to new entrants, address
alarming. Nearly 40% of American adults are
players should look to new entrants as diet-related health issues that cannot
obese. Twenty-four percent of all Americans
44
partners in nutrition-related programs. be solved by the occasional visit to the
have at least one diet-related medical
Retailers, tech companies and even doctor. Holistic solutions – such as food
condition. And about 20 million Americans
45
entertainment companies can offer pharmacies and recipe demonstrations
live in so-called “food deserts,” communities
unique capabilities that can help address – can help consumers make difficult
lacking access to nutritious foods.46 Most
consumers’ diet-related issues. For lifestyle changes that could ultimately
consumers surveyed by HRI said they would
example, it is not hard to imagine a prevent expensive health issues down
like to see a dietitian or nutritionist, and
retailer partnering with a tech company the road.
yet 75% said they had not seen one of these
professionals in the past year. and a health system to bring consumers
an augmented reality game revolving
And this growing awareness is what led around nutrition and marketed to teens
ProMedica, a health system based in Toledo, at risk of developing Type 2 diabetes.
Ohio, to launch the ProMedica Ebeid
Institute with the help of local philanthropist
Russell Ebeid. The institute opened a full- Figure 8: Consumers want more nutritional advice, especially from
service grocery store last December in an their healthcare resources
area of Toledo that had been a food desert.
The grocery store building also houses a Consumers were asked whether they would take advantage of free advice for weight
demonstration kitchen and multipurpose management or help with diet-related medical conditions from a nutritionist or dietitian
rooms for nutrition classes and other from each of these entities. Percentage of respondents answering yes:
programs that include job training, financial
counseling, as well as health, wellness and Doctor Pharmacy Gym
other educational programs, said Barbara
Petee, ProMedica chief advocacy and
government relations officer.
ProMedica also incorporated two screening
questions into the intake portion of its
electronic medical record system to help
identify patients who could benefit from
deeper conversations about food insecurity,
Petee said. The system also operates two “food
pharmacies” that fill prescriptions, good for 79% 59% 41%
six months at a time, for nutritious food to
patients with diet-related issues as well as their
families. In 18 months, the food pharmacies Employer Grocery Store Big Box Store
have served almost 10,000 people, she said.
“Healthcare has been the missing piece of this
conversation,” Petee said.
Nutritional guidance also has become more
common at grocery store chains, such as
Publix and HEB, which provide access to on-
site dietitians and nutrition-related offerings.47
Publix and HEB are not alone. Dietitians serve
about 11,000 grocery stores nationwide.48 38% 28% 17%
And, surveys indicate consumers are hungry
for these services (see figure 8).
Source: PwC Health Research Institute Consumer Survey, 2016

11 Top health industry issues of 2017 PwC Health Research Institute

 Build for value

Health organizations are building new

solutions to issues raised by the shift to a
value-based health ecosystem.

8. Putting the brakes – gently – on drug prices

9. A year of new partnerships and collaborations
10. Preparing medical students for work in a value-based world

12 Top health industry issues of 2017 PwC Health Research Institute

 Build for
value 8 Drug companies put the brakes –
Three years of sustained pressure on the
biopharmaceutical industry’s drug pricing
practices may lead to new pricing restrictions
in 2017. But these new rules may not come
from regulators, but from the industry
trade organizations and the C-suites of
pharmaceutical companies themselves.
Public demand for drug pricing
accountability, pushback from drug
purchasers and the potential for new
price control regulations are prompting
drug company executives to embrace
voluntary codes of conduct to rein in
the kinds of pricing practices that have
led to congressional shaming, executive
resignations and global drug access barriers.
The threat of legislative action is real. Voters
in California narrowly rejected a November
ballot measure that would have prevented
state-run health plans from paying more
for medications than the US Department
of Veterans Affairs.49 But 52% percent of
surveyed American consumers told HRI that
they would support similar laws in their
own states.
During his campaign, President-elect Trump
unveiled a multi-point plan to overhaul the
US healthcare system, aiming to lower the
cost of care through market and tax reforms.
After the election, the President-elect stated
his intention to “reform the Food and Drug
Administration, to put a greater focus on
the need of patients for new and innovative
medical products,” and to “modernize
Medicare,” among other healthcare goals.50
Figure 9: Average out-of-pocket spending on drugs is shrinking for privately insured consumers
Average out-of-pocket prescription drug costs among privately insured individuals, 2005-2014
$1,400
$1,200
$1,000
$800
$600
$400
$200
$0
2005 2006
Mean total spending on prescriptions
Source: PwC Health Research Institute analysis of the US Department of Health and Human Services Medical Expenditure Panel Survey data
13 Top health industry issues of 2017
gently – on prices
Pharmaceutical executives are responding.
In September, Allergan CEO Brent Saunders
published a “social contract with patients,”
which includes, among other things, a
commitment to limit percent price increases
to single digits, once a year.51 In April,
KaloBios Pharmaceuticals Inc. announced
a new product pricing model that will limit
price increases to no more than the rate
of inflation or the Consumer Price Index,
no more than once a year.52 “We have to
be thoughtful and engaged about how we
explain our position and how we try and
make the [pricing] situation work better,”
Andrew Witty, CEO of GlaxoSmithKline,
told The New York Times in October.53
While consumers purchasing medications
for conditions such as multiple sclerosis,
diabetes or hepatitis C may have
experienced sharp out-of-pocket increases
due to high-deductible health plans or
co-insurance payments, out-of-pocket
spending for privately insured patients has
trended downward over the last decade,
on average (see figure 9). This is largely
due to cheap generic alternatives entering
the market, cool comfort for consumers
filling prescriptions for expensive, branded
medications.
Implications:
• Commit to transparent and
responsible pricing practices: Industry
commitments to refrain from frequent
price increases may help to rebuild trust
with consumers, physicians and health
2007 2008 2009 2010 2011
Mean out-of-pocket spending on prescription drugs
insurers, and demonstrate goodwill
to legislators. Being more transparent
about the justifications for drug prices
and educating consumers about the
other stakeholders that influence drug
prices – including employers, insurers,
pharmacy benefits managers and
pharmacies – may help to put the price
of drugs into a deeper context.
• Review financial assistance programs:
Investigations into charities offering
financial assistance to consumers have
revealed questionable funding practices,
in some cases.54 Pharmaceutical
companies should use caution in
choosing partner organizations, and
carefully review financial assistance
programs to ensure they are operating
appropriately.
• Experiment with cross-sector
partnerships: Insurers and health
systems are tasked with improving the
health of their covered populations
while lowering costs. A partnership
between drug makers and the
Academy of Managed Care Pharmacy,
for example, is working to address
predictability in drug pricing by sharing
prices with insurers up to 12 months
prior to launch.55
2012 2013 2014
PwC Health Research Institute
 Build for
value 9 A year of new partnerships
The health industry will continue to
consolidate through mergers and acquisitions
in 2017, but the new year also likely will
bring an uptick in alternative transactions,
such as joint ventures, partnerships, strategic
alliances and clinical affiliations.
The broad industry shift to pay for value
over volume and a growing interest in
wellness – the two forces identified by HRI
as reshaping the New Health Economy most
swiftly – are driving organizations to build
new capabilities quickly to stay competitive.56
Although it sometimes makes sense to buy
or sell these capabilities through traditional
mergers and acquisitions, increasingly
companies are looking to borrow them
through alternative transactions. Traditional
mergers also have been impacted by
challenges by the US Department of Justice
and the US Federal Trade Commission.57
These partnerships often make it possible to
scale faster and stay nimble while reducing
the potential downside risk of full ownership.
Select Medical, a Mechanicsburg, Pa.,-
based provider of inpatient rehabilitation,
outpatient physical therapy, long term acute
care and occupational medicine, saw the
writing on the wall. With growing demand
on healthcare providers to track their patients
across the care continuum, the company
recognized an opportunity to partner
with hospitals to help them better manage
post-acute care. “You can’t be Switzerland,”
said David Chernow, Select Medical’s CEO.
“You can’t be out there alone and expect to
manage patient populations, improve quality
and control costs. We know the future of
value-based payment will necessitate us to be
in the same boat.”
In a little over two years, the company
has entered into more than six strategic
partnerships and joint ventures with the likes
of Ochsner Health System and the Cleveland
Clinic.58 By using a joint venture structure,
Select Medical has been able to expand
its footprint more quickly, capitalizing on
the momentum behind the industrywide
transition from volume to value. With a
partnership strategy, these hospitals can
grow their brands and optimize their core
capabilities, while preserving their not-
for-profit identities. And perhaps most
importantly, they are afforded platforms
for exploring new models of care delivery
alongside capable partners.
Health systems also are expanding use of
joint ventures with real estate investment
14 Top health industry issues of 2017
and collaborations
trusts to free up capital to scale programs
focused on the volume to value shift. Last
fall, Boston-based Steward Health Care
System announced a partnership with
Medical Properties Trust Inc. to help fund
the expansion of its accountable care
organization model.59 Six other health
systems made similar announcements
in the first nine months of 2016. These
transactions show no signs of abating
heading into 2017.
As sector-specific silos crumble and an
intertwined health ecosystem emerges,
working with partners in other sectors and
other industries likely will become the norm.
Last fall, national insurer Aetna announced
a first-of-its-kind partnership with Apple to
provide smartwatches to its nearly 50,000
employees as well as select plan members.60
While Aetna has analytics and care
management functions, it needed a platform
to bring them together. If successful, this
relationship could be a boon for Apple,
helping to cement its place as a platform of
choice in the health ecosystem.
Implications:
• Define the partnership’s value
proposition: Partnerships can be
market differentiators if a compelling
value proposition can be articulated to
consumers. Unfortunately, this often
Figure 10: Most consumers don't have strong feelings
about healthcare mergers
Consumers were asked whether consumers benefit, lose, or neither benefit nor lose
when one healthcare organization mergers with another. They also were given the
option of answering that they were unsure. Percentage of respondents for each option:
56%
50%
40%
30%
20%
10%
0%
Consumers neither benefit
nor lose, or respondent
was unsure of impact
Source: PwC Health Research Institute Consumer Insights Survey, fall 2016
gets lost in translation. In a recent HRI
survey, most consumers failed to see a
benefit when health organizations come
together (see figure 10). A strong value
proposition hinges on first ensuring
the deal aligns with overall strategy,
defining a governance structure and
operating model to support it and
considering how the deal’s benefits will
be marketed to consumers.
• Engineer for flexibility: Deals should be
designed from day one to change with
unanticipated dynamics—operational,
economic or strategic. Potential levers
may include economic terms that are
reset upon meeting certain milestones
and shared governance models with
defined steps to break deadlocks. In
addition, clear performance measures
should be established with mechanisms
to evaluate success and clear exit
strategies in place.
• Remember the “4 C’s”: According to
Select Medical’s Chernow, alternative
transactions are like marriages. “You
need the ‘4 C’s’ - communication,
collaboration, compassion and
compromise,” he said. Without these
four elements – coupled with close
alignment of vision and values –
partnerships could end in divorce.
27%
17%
Consumers lose Consumers benefit
with mergers from mergers
PwC Health Research Institute
 Build for
value 10
Medical students who matriculate in 2017
will graduate into a health industry shaped
by the shift to value-based care.61 The value-
based payment models of the future will
require physicians to be able to work on cross-
discipline teams – often as leaders – and to
measure and continually improve upon the
value, cost and quality of care. Until recently,
this complete toolbox of skills has rarely been
offered in medical education. But in 2017,
medical schools and residency programs
are building innovative training programs
to prepare students for a new healthcare
landscape.
Working physicians acknowledge that
value-based care will likely impact how
they practice medicine in the future.
According to a 2015 HRI survey of clinicians,
physicians believe they will spend more
time on activities such as leading teams and
coordinating care in the next 10 years (see
figure 11).
Already, the Liaison Committee on Medical
Education (LCME) and the Accreditation
Council for Graduate Medical Education
(ACGME) – the accrediting bodies for
medical school education and residency
programs, respectively – require these
programs to prepare students to function
on cross-disciplinary healthcare teams.62
“There is no single make-up of a team,” Dr.
Ken Shine, former executive vice chancellor
for health affairs of the University of Texas
System, told HRI.
While newer medical schools are able to
start from scratch and incorporate these
requirements more immediately and
holistically, established medical schools
across the country have been modifying their
curricula as well.
Future physicians also will need to measure
and continually improve quality of care while
managing costs. The ACGME has introduced
cost considerations such as minimizing
unnecessary diagnostic and therapeutic
tests and risk-benefit analysis to its Common
Program Requirements and Internal
Medicine Reporting Guidelines.63 64 While
not as direct and detailed as the ACGME’s
considerations, the LCME allows for training
in the financing of healthcare through
its standards.65 66 Education and training
programs are following suit by increasing
attention on cost-effectiveness when
delivering high-quality patient care. And,
some leading institutions have programs
in process.67
15 Top health industry issues of 2017
Medical students prepare to
enter value-based world
For example, some schools have begun to
talk about value-based decision-making as a
facet of students’ training.68 Students learn
how to measure the effects of interventions
on patient outcomes, continuously improve
care and lead teams of caregivers.69 The
University of Texas at Austin’s Dell Medical
School, which welcomed its first class of
students this year, is building its value-
based care curriculum from the ground
up. The school even created a new position
– Assistant Dean of Healthcare Value – to
develop a value-based care curriculum
and a complementary value improvement
program.70
Implications:
• Prepare physician executives: As
Travis Singleton, senior vice president
of physician placement firm Merritt
Hawkins & Associates, said: “Physician
executives, at any level, are becoming
one of the most important roles in
healthcare.” Innovative programs are
preparing students for these roles. At
Rowan University’s Cooper Medical
School, for example, all first-year medical
students become yellow belts in Six
Sigma. Taught by Cooper Health System
black belts, students learn about topics
Figure 11: Clinicians: Primary care docs will spend more time
analyzing data, triaging
HRI asked clinicians whether they believe primary care physicians will spend more or
less time on the following activities
Percentage of clinicians who believe that in 10 years primary care physicians will spend...
More time on the following activities
100%
90% 85%
80%
70% 67%
60%
50%
40%
30%
20%
10%
0%
Using data Triaging
from apps patients
& wearabies
Source: PwC Health Research Institute Workforce Survey, 2015
such as systems engineering, central
sterile supply and other non-clinical
operations.
• Model the change: Medical schools and
residency programs should search for
the right clinical partners to reinforce
these concepts during training and once
clinicians have entered the workforce.
Programs such as the Association of
American Medical Colleges’ Teaching for
Quality, which trains faculty in quality
and safety improvement, along with
other educational opportunities that
offer a broader perspective of value-
based care, will become increasingly
important.71 72
• Make it stick: Developers of continuing
education programs also should recast
appropriate training programs for work
in a value-based world. Continuing
medical education and post-graduate
medical education training, including
board certification requirements, should
build on these newly-acquired skills and
keep physicians up-to-date on industry
developments, particularly as state and
federal agencies continually issue new
requirements and opportunities.
Less time on the
following activity
65%
55%
Managing Conducting
medically- in-person
complex care
patients
PwC Health Research Institute

Acknowledgments
About this research
About the PwC network
About the PwC Health
Research Institute
16 Top health industry issues of 2017
Grant Campany Dr. Kenneth Shine
Qualcomm Tricorder XPRIZE Former Executive Vice Chancellor for Health
Affairs of the University of Texas System
David Chernow
Select Medical Dr. Daniel Varga
Texas Health Resources
Fran Kochman
GlaxoSmithKline
David Merritt
America’s Health Insurance Plans
Barbara Petee
ProMedica
Darrell Sandeen
Mayo Clinic
Travis Singleton
Merritt Hawkins & Associates
This annual report discusses the top issues for healthcare providers, health insurers,
pharmaceutical and life sciences companies, new entrants and employers. In fall
2016, PwC’s Health Research Institute commissioned an online survey of 1,750 US
adults representing a cross-section of the population in terms of insurance status,
age, gender, income, and geography. HRI also oversampled to obtain data on specific
market segments. The survey collected data on consumers’ perspectives on the
healthcare landscape and preferences related to healthcare usage.
At PwC, our purpose is to build trust in society and solve important problems. PwC
is a network of firms in 157 countries with more than 223,000 people who are
committed to delivering quality in assurance, advisory and tax services. Find out
more and tell us what matters to you by visiting us at www.pwc.com/US.
PwC’s Health Research Institute (HRI) provides new intelligence, perspectives
and analysis on trends affecting all health related industries. The Health Research
Institute helps executive decision makers navigate change through primary research
and collaborative exchange. Our views are shaped by a network of professionals
with executive and day-to-day experience in the health industry. HRI research is
independent and not sponsored by businesses, government or other institutions.
PwC Health Research Institute
 Kelly Barnes Elise Hamilton
Health Research Institute Partner Research Analyst
US Health Industries and Global Health elise.hamilton@pwc.com
Industries Consulting Leader
kelly.a.barnes@pwc.com
Sarah Levi
Research Analyst
Benjamin Isgur sarah.levi@pwc.com
Health Research Institute Leader
benjamin.isgur@pwc.com
Harrison Swinney
Research Analyst
Sarah Haflett william.h.swinney@pwc.com
Director
sarah.e.haflett@pwc.com
Jeffrey Taylor
Research Analyst
Trine Tsouderos jeffrey.w.taylor@pwc.com
Director
trine.k.tsouderos@pwc.com

Benjamin Comer
Senior Manager
benjamin.comer@pwc.com

Alexander Gaffney
Senior Manager
alexander.r.gaffney@pwc.com

Laura McLaughlin
Senior Manager
laura.r.mclaughlin@pwc.com

Eric Furry
Research Analyst
eric.s.furry@pwc.com

17 Top health industry issues of 2017 PwC Health Research Institute

 Karla Anderson Doug Strang
HRI Advisory Principal Partner
Kelly Barnes Michael Swanick
Partner Partner
Igor Belokrinitsky Robert Valletta
Principal Principal
Angus Buchanan Michael Wright
Principal Principal
Mike Cohen David Allen
Principal Director
Marcus Ehrhardt David Church
Principal Director
Stacey Empson Christoph Dankert
Principal Director
Daniel Farrell Bradley Dollens
Partner Director
Kulleni Gebreyes, MD Kareem Elwakil
Principal Director
Jeff Gitlin Derek Gaasch
Principal Director
Kevin Grieve Andrew Madock
Principal Director
Chan Harjivan Susan Maerki
Principal Director
Sandi Hunt Sheel Malaviya
Principal Director
Vaughn Kauffman Tim Pantello
Principal Managing Director
Katherine Kohatsu Angelina Payne
Principal Director
Thad Kresho John Utz
Partner Director
Steve Moore Cindy Vanderlinde-Kopper
Partner Managing Director
Greg Rotz Brian Williams
Principal Director
Gurpreet Singh Terri Workman
Principal Managing Director
Warren Skea David Kreutter
Principal Executive Advisor
Margaret Stover
Principal

Kristen Bernie Jamie Mumford

Additional Contributors Tiffany Bredeson Jack Rodgers
Todd Hall Steven Sachs
Ryan Lasko Kelly Sutherland
Sunny Loeffler

18 Top health industry issues of 2017 PwC Health Research Institute

Endnotes

1. President-elect Donald J. Trump, “Healthcare,” accessed Nov. 11, 2016, https://www.greatagain.gov/policy/healthcare.html.

2. President-elect Donald J. Trump, “Healthcare,” accessed Nov. 11, 2016, https://www.greatagain.gov/policy/healthcare.html.
3. PwC Health Research Institute, “Surviving seismic change: Winning a piece of the $5 trillion US health ecosystem,” 2016, http://pwchealth.com/cgi-local/hregister.
cgi/reg/pwc-hri-health-industry-changes.pdf.
4. PwC Health Research Institute, “Medical cost trend: Behind the numbers 2017,” 2016, http://pwchealth.com/cgi-local/hregister.cgi/reg/pwc-hri-medical-cost-
trend-2017.pdf.
5. PwC Health Research Institute, “Top seven health industry trends in 2007,” 2006, http://www.pwc.com/us/en/health-industries/top-health-industry-issues/
assets/2015/pwc-hri-2007.pdf.
6. PwC Health Research Institute, “President-elect Donald Trump: Turnaround time,” 2016, http://pwchealth.com/cgi-local/hregister.cgi/reg/pwc-hri-election-2016-
trump-report.pdf.
7. “Donald Trump shifts position on Obamacare in ‘60 Minutes’ interview,” CBS News, Nov. 11, 2016, http://www.cbsnews.com/videos/donald-trump-shifts-position-
on-obamacare-in-60-minutes-interview/.
8. The Commonwealth Fund, “Donald Trump’s Health Care Reform Proposals: Anticipated Effects on Insurance Coverage, Out-of-Pocket Costs, and the Federal
Deficit,” 2016, http://www.commonwealthfund.org/publications/issue-briefs/2016/sep/trump-presidential-health-care-proposal.
9. PwC Health Research Institute, “Medicaid 2.0: Health system haves and have nots,” 2014, https://www.pwc.com/us/en/health-industries/health-research-institute/
assets/pwc-hri-medicaid-report-final.pdf.
10. Congressional Budget Office, “Federal Subsidies for Health Insurance Coverage for People Under Age 65: 2016 to 2026,” March 2016, https://www.cbo.gov/sites/
default/files/114th-congress-2015-2016/reports/51385-HealthInsuranceBaseline_OneCol.pdf.
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13. James Nord, “Governor ditches Medicaid expansion after Mike Pence meeting,” Sioux City Journal, Nov. 15, 2016, http://siouxcityjournal.com/news/state-and-
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implements value-based contract with Novartis for heart drug Entresto,” Feb. 8, 2016, http://www.cigna.com/newsroom/news-releases/2016/cigna-implements-
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21. Center for Medicare & Medicaid Services, “Medicare Program; Merit-Based Incentive Payment System (MIPS) and Alternative Payment Model (APM)
Incentive under the Physician Fee Schedule, and Criteria for Physician-Focused Payment Models,” 81 FR 77008 (2016), https://www.federalregister.gov/
documents/2016/11/04/2016-25240/medicare-program-merit-based-incentive-payment-system-mips-and-alternative-payment-model-apm.
22. Andy Slavitt, “A Letter from CMS to Medicare Clinicians in the Quality Payment Program: We Heard You and Will Continue Listening,” The CMS Blog, Oct. 14, 2016,
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27. PwC Health Research Institute, “Money matters: Billing and payment for a New Health Economy,” 2015, http://pwchealth.com/cgi-local/hregister.cgi/reg/pwc-hri-
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28. Carolyn Y. Johnson and Matt Zapotosky, “Under pressure to digitize everything, hospitals are hackers’ biggest new target,” The Washington Post, April 1,
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32. Ike Swetlitz, “Swedish clinics use virtual reality to reduce the sting of shots,” STAT, Oct. 27, 2016, https://www.statnews.com/2016/10/27/virtual-reality-pain-app/.
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34. Marcus Ehrhardt and Peter Behner, “Digitization in pharma: Gaining an edge in operations,” PwC Strategy&, Oct. 19 2016, http://www.strategyand.pwc.com/reports/
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37. PwC Financial Services, “Technology 2020 and Beyond: Embracing disruption,” 2016, http://www.pwc.com/gx/en/industries/financial-services/publications/
financial-services-technology-2020-and-beyond-embracing-disruption.html.

19 Top health industry issues of 2017 PwC Health Research Institute

38. PwC, “The Global State of Information Security Survey 2017,” 2016.
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49. Evan Sernoffsky, “California voters reject drug-price measure Prop 61,” San Francisco Chronicle, Nov. 9, 2016, http://www.sfgate.com/bayarea/article/California-
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20 Top health industry issues of 2017 PwC Health Research Institute

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