Healthcare’s newentrants

Who will be the industry’sAmazon.com?

pwc.com/us/healthcare-new-entrants

April 2014

PwC HealthResearch Institute

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A new health economy is emerging

Altered funds flow

New care deliverymodels

Realignment ofexisting players

Disruption bynew entrants

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New economicprinciples arebeginning to prevail.

Value will become thedriver of success, ratherthan volume.

Demographic andsocioeconomicchanges are creating anew role for empoweredconsumers.

HRI Knowledge Sharing * Healthcare’s new entrants

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New entrants are moving toward building a newhealth economy centered around the consumer

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Over time these newer players will draw billions from traditional healthcare systemswhile expanding the fitness and wellness space.

HRI Knowledge Sharing * Healthcare’s new entrants

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Key findings

A new HRI survey found that consumers are willing toabandon traditional care venues for more affordable andconvenient alternatives.

This simple shift in the market threatens at least $64 billion intraditional provider revenue.

New entrants will propel the democratization anddecentralization of healthcare, empowering consumers toaccess care anywhere.

New entrants are fueling growth in the fledgling price andquality transparency market.

New players are reshaping and expanding the $267 billion USfitness and wellness industry.

HRI Knowledge Sharing * Healthcare’s new entrantsSlide 4

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An in-depth discussion

HRI Knowledge Sharing * Healthcare’s new entrantsSlide 5

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Consumers are ready to abandon traditional caremodels

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In late 2013, HRI sought togauge consumer readiness fornew entrants offerings andestimate their impact ontraditional provider revenues.

HRI surveyed 1,000 US adultson perceptions of healthcareand comfort with optionsbeing developed by newentrants.

HRI Knowledge Sharing * Healthcare’s new entrants

Check for an earinfection at homeusing a deviceattached to a phone

Have a wound orpressure sore treatedat a clinic in a retailstore or pharmacy

Get an MRI at aclinic in a retail storeor a pharmacy

Have chemotherapyat home

Have a pacemaker ordefibrillator checkedat home by yourphysician

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US providers received $64 billion+ in 2011 fordelivering the services highlighted in the survey

HRI Knowledge Sharing * Healthcare’s new entrantsSlide 7

$796m for

debridement

$796m for

debridement

$358m for

evaluation ofcontact dermatitis

and otherminor rashes

$358m for

evaluation ofcontact dermatitis

and otherminor rashes

$694m for

urinalysis by dipstickor tablet reagent

$694m for

urinalysis by dipstickor tablet reagent

$2.9bfor routine ECG

$2.9bfor routine ECG $42.1b

for office andoutpatientclinic visits

$42.1bfor office and

outpatientclinic visits

$110m for

pacemakerevaluation

$110m for

pacemakerevaluation

$3.3b for

chemotherapyadministration

$3.3b for

chemotherapyadministration

$11.6b for MRI

without contrast

$11.6b for MRI

without contrast

$1.9b for at home

kidney treatment

$1.9b for at home

kidney treatment

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Nearly half of the Fortune 50 companies are newentrants

Slide 8HRI Knowledge Sharing * Healthcare’s new entrants

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Do-It-Yourself healthcare is growing as conditionsbecome simpler and cheaper to manage at home

HRI Knowledge Sharing * Healthcare’s new entrantsSlide 9

“We’re our own construction workers andwe can do our own contracting jobs. We’re

our own travel agents. We’re our ownmovie producers. We’re accepting all of

these technologies to do things forourselves and I think healthcare is the

next frontier.”

“The big opportunity is working together,playing to all of our strengths.”

Dr. Roni Zeiger,CEO of Smart Patients

Dr. Joshua Riff,Chief Medical Officer of

Target Corporation

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Case study: The CellScope Oto is among many DIYtools threatening to disrupt the health sector

CellScope was born in 2010 withthe goal of building a homemedical kit of devices that makeuse of the smartphone’scapabilities.

The company’s debut product isthe Oto, a smartphoneotoscope.

CellScope is betting parents willpay for the Oto out-of-pocket.

HRI Knowledge Sharing * Healthcare’s new entrantsSlide 10

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A cautionary tale: Hospital at Home has failed tospread widely due to industry bias and lack offinancial incentives

The Hospital at Home modelenables patients to avoidinpatient admission.

However, the model hasfailed to spread due to theindustry’s bias toward facility-based care and a lack offinancial incentives for adoptionin a fee-for-service world.

The rise of value-basedmodels may change that.

HRI Knowledge Sharing * Healthcare’s new entrantsSlide 11

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Consumer interest in price transparency maypartially explain the popularity of retail clinics

In 2007, proportion of HRI consumersurvey respondents who had visited aretail clinic:

In 2013, proportion of HRI surveyrespondents who had visited a retailclinic in the last 12 months:

HRI Knowledge Sharing * Healthcare’s new entrantsSlide 12

9.7%

35%

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Case study: Wal-Mart is exploring whether it canmake price matter in basic medical care

HRI Knowledge Sharing * Healthcare’s new entrantsSlide 13

“How do we introduce serviceand access at fundamentally

transformative price points sothere is no one in America who

can’t have access to care?”

Marcus OsborneVice President of Health &Wellness Payer Relations

Wal-Mart Stores, Inc.

Last year, partnering with Kaiser Permanente,Wal-Mart opened micro-clinics calledKaiser Permanente Care Corners in twostores in California.

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$59.20Bfor sportinggoods

$93.62Bfor nutrition

$11.25Bforalternativehealthcare

$61.6Bfor weightloss

$40.33Bfor fitness

$1.30Bfor mobilehealth apps

HRI estimates Americans spent an additional $267billion on the fitness and wellness market in 2012

HRI Knowledge Sharing * Healthcare’s new entrants

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Questions?

HRI Knowledge Sharing * Healthcare’s new entrantsSlide 15

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For more information

Slide 16

www.pwc.com/us/healthcare-new-entrants

www.pwc.com/us/newhealtheconomy

www.pwc.com/hri

HRI Knowledge Sharing * Healthcare’s new entrants