US Healthcare industry analysis. Major drivers of the industry and qualitative forecasting.

2. FT151015 TONY RICHARDS C
FT151095 VENKATESH K G
FT152051 MEADHA BATRA

3. PROBLEM STATEMENT:
To analyse the healthcare industry in U.S.A. and ways to improve it.
How IT can be used to better serve the SME in enabling their employees to get insured?
BACKGROUND INFORMATION:
The analysis is done taking into consideration four major factors affecting the industry currently
1)Patient Protection and Affordable Care Act(2010)
2)Digital & IT & Infrastructure
3)Rapid Advances in Omics Sciences
4)Rise of global middle class
Of particular interest to us is the digital revolution as it creates enormous opportunities.
Since the industry is in a state of flux opportunities exist to create and capture value.
RECOMMENDATIONS:
Obamacare mandates compulsory insurance for all. This forces the small employers to provide insurance for their
employees. The IT companies can target and customize their solutions to create unique solutions for SME.

4.  The GDP of USA is $16.8 trillion
 Population: 316.8 million
 There are 50 states and 14 union territories having
their own laws
 Besides the state laws there are federal rules as well
 There are only two political parties Republican and
Democrats
 The Democrats are currently the ruling party
INDUSTRY
PLAYERS
INVOLVED
CHALLANGES ANALYSIS SUGGESTIONS
COUNTRY – U.S.A.
HOFSTEDE
DIMENSIONS
POWER DISTANCE
INDIVIDUALISM vs
COLLECTIVISM
MASCULINITY vs
FEMINITY
UNCERTAINITY
AVOIDANCE
LONG vs SHORT TERM
ORIENTATION
INDULGANCE vs
RESTRAINT
U.S.A. 40 91 62 46 26 68
MAP OF U.S.A.

5.  The global spending on healthcare industry is $6.45
trillion
 The U.S. accounts for $2.86 trillion
 The United States spent 17.2% of its GDP on
healthcare which is more than any other country in the
world
 By 2020, U.S. will spend $4.6 trillion on health care –
approximately 20 percent of U.S. GDP
 The U.S. spends $8,608 per capita on healthcare which
is the highest in the world
 This high spending has not converted into improved
health of the population
 The U.S. ranks 38th when compared with other
developed nations in terms of health outcomes
 The healthcare industry is in a state of change due to
the approval of the Obamacare Act.
 Lack of insurance causes nearly 48,000 deaths
HEALTHCARE INDUSTRY
INTRODUCTION
PLAYERS
INVOLVED
CHALLANGES ANALYSIS SUGGESTIONS

6. PORTER 5 FORCES
-Hospitals
BARRIERS TO ENTRY
More capital intensive (high cost
of medical equipment & surgical
devices.).
INDUSTRY COMPETITION
Post PPACA, because of
protocolization, there is high
competition not only in small/large
scale hospitals but across all
hospitals in this industry.
POWER OF SUPPLIERS
AMA restriction on adding doctors
to the system is fixed (100,000)
making doctors & medical schools
more powerful.
POWER OF BUYERS
Lesser involvement of patients
because of lesser transparency in
hospital charges - insurance
agencies act as intermediaries.
THREAT OF SUBSTITUTES
Medical tourism -treatments
offered at lower charges in other
nations (Indonesia, Thailand & India
to mention a few.)
INTRODUCTION
PLAYERS
INVOLVED
CHALLANGES ANALYSIS SUGGESTIONS

7. INTRODUCTION INDUSTRY CHALLANGES ANALYSIS SUGGESTIONS
Hospitals
Insurance
companies
Employers
Employees
INDUSTRY STRUCTURE

8.  High expenditure of healthcare is not followed by
increase in health of population
 Cost of healthcare is shooting up
 The number of doctors being added to the system is
fixed at 100,000 by American Medical Association
(AMA) leading to a shortage of doctors for primary
care
 The average wage of doctors is double that of the
doctors in Europe
 Cost of administration is 33% of the total expenditure
which is nearly double that in other countries
 A major problem is the fact that insurance companies
are used to settle the bills and patients do not actually
know the cost of healthcare
 The uninsured patients often do not get adequate care
 Due to this emergency wards in the hospitals are used
by uninsured patients for treatment creating a drag on
the system
 True emergency cases are difficult to treat because of
crowding in the system by uninsured patients
 25% of senior citizens filed for bankruptcy due to
medical bills
 The younger population is becoming unhealthy
especially the issue of chronic obesity
CHALLENGES
INTRODUCTION INDUSTRY
PLAYERS
INVOLVED
ANALYSIS SUGGESTIONS

9. KEY DRIVERS OF HEALTHCARE INDUSTRY
INTRODUCTION INDUSTRY
PLAYERS
INVOLVED
CHALLANGES SUGGESTIONS
1.PATIENT PROTECTION AND AFFORTABLE CARE ACT (2010) – OBAMACARE – PPACA
– ACA
2.DIGITAL AND INFORMATION TECHNOLOGY AND INFRASTRUCTURE
3.RAPID ADVANCES IN THE OMICS SCIENCES
4.RISE OF THE GLOBAL MIDDLE CLASS
The healthcare industry in U.S.A. is primarily affected by four major factors recently

10.  Increase quality and affordability of health insurance
 Lower uninsured rate by expanding public and private
insurance coverage
 Reducing cost of healthcare for governments and
industries
GOALS - PPACA
• Prohibits insurers from denying insurance coverage due to
pre-existing medical conditions excluding tobacco usage
• Medicaid eligibility expanded. Several states have opted
out of this
• Pays for preventive, curative and palliative care
• Comparison of insurance plan prices across different states
• Minimum standards for health insurance are established
• Independent payment advisory board to recommend
changes to Medicaid system
• Community health organizations provide healthcare locally
FEATURES
MANDATE: Employer mandate and Individual mandate. Employers with more than 50 employees are required to insure their
employees or pay additional tax. Each individual is also required by law to get insured or pay penalty.
SUBSIDIES: Individuals who are below 400% of federal poverty level have various subsidies by which the government transfers
a large portion of the premium back to their bank account.
INSURANCE EXCHANGES: Websites will be used for this (healthcare.gov). Companies can list only approved plans here. The
offerings must contain options for the economically weker segments.
INTRODUCTION INDUSTRY
PLAYERS
INVOLVED
CHALLANGES SUGGESTIONS
IMPLEMENTATION: The plan is getting implemented in phases and final implementation happens only in 2020.
LEGAL AND LEGISLATURE: The courts have ruled that each state has to decide on implementing the plan. Republicans have
opposed the PPACA and are actively trying to repeal the law.
1.OBAMACARE

11. PATIENT PROTECTION AND AFFORTABLE CARE ACT (2010) – EXPECTED IMPACT
INTRODUCTION INDUSTRY
PLAYERS
INVOLVED
CHALLANGES SUGGESTIONS
The expected impact of PPACA on the healthcare industry are as follows:
1)AFFORDABLE CARE ORGANIZATIONS (ACO): Group of agencies working together to reduce costs (Section 3022, PPACA)
2)INDUSTRY TRANSPARENCY: Increase in information sharing among all the involved parties
3)INDUSTRY COLLABORATION: PPACA encourages the various players to collaborate and provide value to the patients
4)PROTOCOLIZATION: Industry best practices become protocols for treatment. Patients have more control over
healthcare
5)BUNDLED PAYMENTS: Drives the industry to explicitly link cost to value and then to quality outcomes. Reduce costs
6)TIERED DELIVERY MODELS: A range of plans will emerge to cover the whole population irrespective of income
7)HEALTH ECOSYSTEMS: Linking together of companies will change the way industry operates
8)HEALTH PLATFORMS: Various IT solutions will emerge to provide support to the companies and individuals
9)DIGITAL & IT INVESTMENTS: Increase in investments in the digital domain and software purchases

12.  Digital revolution has changed the way the all industries
operate
 It has transformed the healthcare industry in three
fundamental ways health consumer level, enterprise level
and industry level.
DIGITAL REVOLUTION 1)HEALTH CONSUMER LEVEL: Three major factors have
changed the way industry operates.
a)Social networking: The rise of health social networks like
Patients Like Me make the customers aware
b)Mobile: Devices and wearable technology which enable
providing consistent customer experience. MedAdherence
c)Analytics: Data about the patient can be collected
continuously through monitoring systems
INTRODUCTION INDUSTRY
PLAYERS
INVOLVED
CHALLANGES SUGGESTIONS
2.DIGITAL AND IT AND INFRASTRUCTURE
2)ENTERPRISE LEVEL:
• Care organizations have used IT for managing patient
records, lab test reports, administration, etc.
• Providers have used it in developing new drugs,
manufacturing, mobility and cloud based solutions.
• Organizational structures have to evolve from industrial
era models to elastic organizational structures.
3)INDUSTRY LEVEL:
• Use of cloud technologies (Eg: Athena Health)
• Establish cross-industry collaboration, physician to
physician collaboration, patient history and education.
• Privately funded platforms to support many aspects
including insurance.
• Enabling linking of various service providers in a
common platform.

13. INTRODUCTION INDUSTRY
PLAYERS
INVOLVED
CHALLANGES SUGGESTIONS
The expected impact of digital revolution on the healthcare industry are as follows:
DIGITAL AND IT AND INFRASTRUCTURE– EXPECTED IMPACT
1)HEALTH PLATFORMS: Technology and business care platforms that will support various functions and bring the
stakeholders together.
2)HEALTH ECOSYSTEM: The platforms will bring the various players together and enable them to get into collaborative
relationships and deliver value to the patients.
3)PERSONALIZED MEDICINE: Each individual will have their own customized plan due to Omics (Mass customization)
4)PARTICIPATIVE MEDICINE: All involved parties can be involved to take the right decision
5)PREDICTIVE MEDICINE: More emphasis will be placed on preventing the patients from falling sick
6)MASS DATA SETS: The data generated by the industry has to be analysed to make business sense
7)COGNITIVE COMPUTATION: SAP, HANA, IBM Watson

14. Omics sciences include genomics, proteomics, microbiomics, pharmacogenomics, etc.
INTRODUCTION INDUSTRY
PLAYERS
INVOLVED
CHALLANGES SUGGESTIONS
3.RAPID ADVANCES IN OMICS SCIENCES
Advances in targeted treatments for previously thought to be incurable diseases is expected to continue
Microfluidic systems have enabled new forms of diagnostics (Theranos offers blood testing)
Detailed genetic map of each individual and their family members leading to preventive treatments
P4 Medicine: Predictive, Preventive, Participatory and Personalized care can be provided to patients

15. INTRODUCTION INDUSTRY
PLAYERS
INVOLVED
CHALLANGES SUGGESTIONS
The expected impact of new methods on the healthcare industry are as follows:
RAPID ADVANCES IN OMICS SCIENCES – EXPECTED IMPACT
1)HIGH SPEED SEQUENCING: Each persons genomic map can be obtained rapidly
2)MICRO FLUIDICS: Ability to identify and isolate molecular level particles
3)SINGLE CELL ANALYSIS: Ability to study single cells and stem cells
4)SYSTEMS BIOLOGY: Treats the human body as composed of several sub-systems
5)REALTIME DIAGNOSTICS: Continuous monitoring of the individuals biological condition
6)PERSONALIZED MEDICINE: Each person will have a customized treatment plan
7)PREDICTIVE MEDICINE: The genome map can be used to predict diseases before they occur
8)PREVENTATIVE MEDICINE: Preventive medicine will have a lot of emphasis

16. INTRODUCTION INDUSTRY
PLAYERS
INVOLVED
CHALLANGES SUGGESTIONS
4.RISE OF GLOBAL MIDDLE CLASS
The global middle class healthcare market will soon become larger than the US market in both dollars spent and number
of patients
Companies will have to change their business models to survive
Players in the U.S. market will eventually become global players and will have to change their strategies to face
competition
The growth of BRIC nations is rapidly increasing the size of the middle class
In 2012 the middle class ($4,000 - $20,000) consisted of 2 billion people worldwide

17. INTRODUCTION INDUSTRY
PLAYERS
INVOLVED
CHALLANGES SUGGESTIONS
The expected impact of digital revolution on the healthcare industry are as follows:
RISE OF GLOBAL MIDDLE CLASS – EXPECTED IMPACT
1)NEW MARKETS & SCALE: The growth of middle class will create new markets on a global scale
2)EPIDEMIOLOGIES: With technology enablement the study of patterns will become common
3)MASSIVE DATA SETS: Each individual will be continuously monitored which will generate data
4)MASS DIFFERENTIATION: Each individual will have their own customized plan due to Omics
5)ELASTIC BUSINESS MODEL: Organizational structures have to evolve from industrial era models to elastic organizational
structures.
6)REVERSE INNOVATION: Innovations made in developing countries to reduce cost can be implemented in U.S.A.
7)INDUSTRY GROWTH: The increase in middle class population will lead to increase in demand for healthcare globally

18. INTRODUCTION INDUSTRY
PLAYERS
INVOLVED
CHALLANGES ANALYSIS
Measures have to be taken to reduce the high cost of service. The limit on number of doctors has to be increased
to decrease primary care costs.
The number of people insured has to be maximised to reduce strain on emergency rooms. The PPACA envisages to
achieve this.
The administrative costs have to be brought down by usage of optimal usage of information technology packages.
The number of preventable deaths in U.S.A is 45,000. This can be avoided by decreased by offering better priced
plans.
The number of preventable deaths in U.S.A is 45,000. This can be avoided by decreased by offering better priced
plans.

19. INTRODUCTION INDUSTRY
PLAYERS
INVOLVED
CHALLANGES ANALYSIS
• Obamacare mandates for small companies to provide healthcare insurance to its employees. Large companies
were already providing this.
• Now due to PPACA, companies with 50 to 300 employees have become a new target segment.
• Technology is rapidly making customized plans available and bringing the players together. Huge amounts of
data are being generated.
• Software has to be customizable and be able to handle large sets of data.
• Genomic mapping will bring about a revolution in how people are treated.
• The software has to be customizable to accommodate frequent changes in the insurance plan structures.
• The growth of middle class has several issues. The companies for which service is provided may expand into
other countries. The IT service provider may also look to customize the offering for different countries.
• The software has to be available in different languages.