Deloitte Life Sciences and Healthcare Strategy Principal Neal Batra
➤ The U.S. healthcare system is due for a technological transformation that will put more power into consumers' hands.
➤ A disruption of the industry at this level will demand that current leaders like big pharmaceutical companies adapt to a more consumer-centric model.
➤ Ultimately, the healthcare system requires aligned incentives and transparency to disrupt the status quo.
Deloitte Life Sciences and Healthcare Strategy Principal Neal Batra spoke with S&P Global Market Intelligence at the Financial Times 2019 U.S. Pharma & Biotech Summit about disruptions to the pharmaceutical business model and the strategies healthcare leaders would need to adopt to continue to be viable and provide the kinds of services that modern consumers demand.
S&P Global Market Intelligence: What do you see as the main disruptors in the healthcare industry going forward?
Neal Batra: It's the explosion of data, it's the interoperability of that data and it's the empowered consumer being the new regulator in this system. What's interesting is you've seen a technology transformation hit a lot of other industries, and the question always is: Why has healthcare not been affected? You didn't have transparency of data, and you didn't have an individual consumer who felt empowered or confident enough to actually say they have a preference. There has been a radical education of the U.S. consumer around healthcare. All of a sudden, the consumer has a real perspective and opinion about healthcare and is empowered to make a choice.
Would you call it a democratization of healthcare?
Big time. We've tried government-run healthcare, we've tried employer-oriented healthcare. What we've not done is treat this like every other consumer marketplace, which puts the power in the consumer's hands. It's a transparency dynamic that allows you to understand value for money. And almost all those things are lacking in healthcare.
Transparency is built around access to information. How do patients gain access to data?
For one, you have the Centers for Medicare and Medicaid Services pushing for data transportability. And on the other side, you have independent players like Apple creating platforms on phones that allow you to collect your health data on your own. You're also going to have these emergent organizations, these Silicon Valley-funded organizations that are going to emerge and be born as consumer-centric, and they're going to present that data and visualize it in a way that is consumable to an individual, creating real value, which I think will also be a catalyst for the broader industry.
23andMe Inc. is a simple example: a consumer-centric business and 80% of their customers opt in to clinical trials. That's a business that's creating value literally every day as we learn more about the ecosystem. And from a science-based perspective, it's feeding back to me in a way I can actually digest and understand. You're going to start seeing that consumers will now be flying toward businesses that provide those services and, frankly, punishing those that don't.
As these new models emerge, what are the concessions that the current players are going to have to make?
I think it's going to be giving up control of the data, certainly, first and foremost. The data is the currency, and the data sits with the individual. It's my health information — I own it.
I think another major concession is going to have to be this notion of giving up the patriarchal mindset. This industry has really been that way, in part because the consumer/patient has been so poorly informed or lacked confidence to make informed decisions. This notion of dictating how you navigate the system, I think they're going to have to get rid of that. And I think this is going to be all about flexibility and all about individuals choosing the way they want to navigate the solutions they want.
How we get there is a function of the new entrants exerting pressure on the incumbents. Some of the current players are pushing frontiers, but I don't know if it's fast enough. And I don't know if it's as passionately consumer-centric as patients are going to anticipate or accept.
What does the ideal healthcare system look like in the U.S.?
The ideal system includes aligned incentives and transparency, and we lack both today. Aligned incentives will be where I can have an average American afford what is essentially going to be your average health journey in the country, and that should actually be something that is sustainable.
I think the ACA was an interesting catalyst to unleash a lot of these ideas. I think the pressure from Silicon Valley with these startups are going to really bring transparency and consumer centricity to the game and show pharma that this is what we need. To me, this is all headed in the right direction, but how fast can we get there?
Who gets hurt the most on the way there?
I think the incumbents get hurt the most. And that's only those that struggle to make these changes fast enough. What got you here won't get you there. I believe a recognition of that and accommodation for that sooner rather than later will be what dictates who survives this transition and who does not.