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Drive Innovation September 13, 2018

11 Disruption Market Scenarios from the Outside In

Partner, Health & Life Sciences, Oliver Wyman
Partner, Health & Life Sciences, Oliver Wyman
Former Partner, Health & Life Sciences and Digital Practices, Oliver Wyman
Principal, Health & Life Sciences, Oliver Wyman
Key Takeaway
Traditional primary care goes away, and we become a society that manages health guided by robo advisors or digital doctors. #OWHealth

A decade out, disruption may change the foundation of competition. Our team has spent considerable time envisioning myriad scenarios for the considerable way changes may come to how care is delivered, administered, purchased, and managed. Here’s a detailed view on what this looks like regarding disruption from within and from outside the industry:

Hypotheses of Disruption WITHIN the Current Healthcare Market Paradigm:

1. Healthcare access becomes the product. Employers go direct to providers and/or configure their own networks and services with coalitions of value chain players. Providers commercialize risk-based products and maximize brand power and consumer touch, and change physical footprint to be closer to consumers and employees. Healthcare localization accelerates.

Examples: Imagine Health, CareConnect, Health Transformation Alliance

2. Distribution as king maker. Distribution players take control by shifting from advisory to being product creator and developing and delivering benefits portfolio. Digital capabilities make it easy to substitute payer with distribution platforms that control employer access, product suite, and consumer mindshare through superior guidance and value-based choice algorithms.

Examples: Namely, Gusto, Zenefits

3. Product of the people emerges, upending traditional network and benefit design. Simple, easy, affordable, and on-demand become the name of the game as traditional health insurance deductibles max out and regulation loosens. End of single year underwriting. Real-time rate adjustment and direct link to ancillary products. Accelerated shift to self funding. Proliferation of sculpted networks and skinnied benefits. Large pools of underserved and growth of high risk pools.

Examples: Clover, Oscar Health, Tencent

4. Healthcare to wellbeing. Definition of health services broadens and role changes. Consumers embrace “wellbeing” value prop with players increasingly connecting care delivery, wellness, social, psychological, lifestyle aspects as important components, along with other holistic protection approaches (such as ancillary) into platform offerings.

Examples: Eliza, Keas, Jiff

5. Engagement becomes the product. Consumer engagement companies organize the market. Personalization, anticipation of needs, data custody and consumer intimacy and trust are the new value currency, empowering these companies to control access and define benefit stack of the future. Community linked.

Examples: Welltok, Castlight, Accolade

6. New front door takes command. Sites of care will continue to diversify beyond the traditional hospital and physician office setting – to include interactions with the “health system” in retail, the workplace, the home, and via purely virtual and tele-med platforms - redefining consumer engagement at the expense of providers and redefining benefits.

Examples: Walmart, Amwell, Pager

7. Population health managers dominate, reinventing sick care market with predictive models and global payments. Full shift to value-based care as Population Health Managers and Accountable Care Organizations succeed, scale, develop 2.0 models, and insurance products.

Examples: Alignment Healthcare, ChenMed, Iora Health

Hypothesis of Disruption CHALLENGING the Current Healthcare Market Paradigm

1. Reinvented financial protection models redefine insurance. Shifting axis of health insurance role to be folded in and part of larger financial services driven total risk protection schema. Includes life, accident, home, and more. Highly customized with interlocking benefits, some of which are tied to behavior modification.

Examples: Fidelity, AXA

2. Genomics and personalized medicine rule, and other technologies break traditional model of care delivery, making portions of the current health market obsolete. Pivots from respond / repair cycle into plan / predict / prevent. Personalized health plans include alternative care therapies. Eliminates portions of bricks and mortar care. Traditional primary care disappears. Drives subscription funding model for virtual primary care with catastrophic facility coverage only.

Examples: 23andMe, Newtopia Inc.

3. Virtual, “robo” care and consumer self management dramatically shifts the delivery model. Social and mobile platforms achieve dominance with consumers and build a highly integrated new front door. “Software as a drug” becomes the norm and digital therapies proliferate. Consumer tech companies enable consumers to navigate their health and wellness. Transparency is norm. In the home is norm. Traditional primary care goes away, and we become a society that manages health through tele / retail / urgent care guided by robo advisors or digital docs, with (self)referral out for specialist care. Specialists then become managers of chronic conditions, with payer CM/DM operating in a heightened role of air traffic control.

Examples: IBM Watson, Canary Health, PatientsLikeMe

4. In Amazonia we trust. Customers cede huge chunks of mindshare and wallet share to bricks and clicks retailers or other platform aggregators who have proven value and convenience. Consumers trust them to own their data and all aspects of health and wellbeing including financing, food, and lifestyle. Multiple incentives for healthy living and product tie ins. Value-transparent organized markets emerge. More physicians owned by retailers (new and existing) than by hospitals. Makes it easy and convenient to adapt wellbeing mind set and change behavior and outcomes.

Examples: Google, Amazon, JPMorgan Chase

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