When asked in 2014 which new industries companies had entered, or were considering entering, over the previous three years, business leaders came back with a surprising response…
Technology, at 15% of respondents, was perhaps an obvious choice. What we didn’t expect to see rank so highly was healthcare, pharmaceuticals and life sciences – which tied at first place.
The move to digitisation and business model disruption is creating a new focus on the healthcare industry. It’s an attractive proposition: almost a tenth of Australian GDP is currently spent on healthcare and we face a growing, ageing population.
The healthcare industry is also faced with a new type of customer – one that is impervious to the traditional boundaries of healthcare and generally open to sharing their previously sacred health record and data, as well as keen to experience non-traditional forms of service delivery.
A new era of healthcare providers –
transitioning through trust and loyalty
These shifts have led to new entrants making their move into the healthcare industry. In the US, for example, pharmacies in Target department stores and GP clinics across the retail giant Walmart’s chain, aim to be a customer’s ‘primary medical provider’ at an affordable cost.
Shadowing the way supermarkets had previously moved into selling banking and insurance services, large retailers are confidently stepping into the healthcare arena, not because they had significant expertise in this industry but because they boast a trusted brand with a loyal following.
Statistics suggest that anyone who ‘owns’ a consumer is a prime candidate for luring them from their existing health providers. In a 2014 study by Strategy&, 40% of respondents said they would trust a large retail company to manage their health – a remarkable statistic when you consider healthcare providers hit 39% and pharmacies just 26%.
ripe for collaboration?
More widespread, however, is the digital move into healthcare. New entrants are often able to innovate at a faster pace and at lower cost than traditional healthcare companies. If they already have a customer base then they can engage a following for their products faster. And if outsiders choose to collaborate with existing healthcare providers and governments to engineer new solutions, they can improve outcomes, too.
The healthcare sector is ripe for such collaboration. Towards the end of 2014 Philips announced it was transforming its business, traditionally known for electronics, into two enterprises. The larger of these would be focused on health tech, which generated Philips $15 billion in sales in 2013. Last month, the company announced that it was partnering with West Moreton Hospital and Queensland Health Service to provide digitally connected home care services that utilise Philips technology.
Also in Queensland, pharmaceutical company Johnson & Johnson last month announced a competition with prize money of $300K to attract medical tech startups to the region. A couple of months previous to this, Telstra launched ReadyHealth, a remote GP service accessed via telephone and internet, in conjunction with Swiss healthcare provider MedGate.
Collaboration overcomes the key issues for each party. Healthcare providers have ready access to the right staff, skills, and equipment, as well as a history, understanding of and ability to work within a regulated environment. New entrants by and large bring the technology acumen to the table.
A perfect match –
Digital devices and health
While such changes in health service provision and treatment are largely being driven by the initiatives of major technology companies, there is another side of the tale emerging. In advance of booking in to see a doctor, there are a wealth of predictive and preventative tools and services to aid the modern consumer in managing their health.
There is of course the fitness tracker phenomenon, which has witnessed an influx of new entrants and continues to feed the growing appetite for personal health stats.
The rise of the internet of things, in which more and more devices are enabled to transmit data to others in their network, as well as mobile apps, are just two ways in technology is also increasingly employed to automatically monitor and track health.
These types of devices are often developed outside of existing healthcare providers by technology-focused enterprises, which are able to intimately understand patient and customer needs and develop solutions fit for purpose.
What are the opportunities
to win hearts?
Where 30 years ago, personal details and data were only shared with an intimate selection of qualified health professionals… today, driven by increased awareness and proactivity around managing health outcomes, the appetite to share this information is growing exponentially. In addition to this, the trust and loyalty that individuals have with a brand or organisation plays a pivotal role in what and how much of this information they will share, as well as how they will engage.
In the healthcare industry (and beyond), there is a shift in terms of businesses recognising that they may not necessarily have ‘all the answers’ in terms of knowledge, capability or technology to support the needs of their customers and forming strategic partnerships to best fill these gaps.
Current providers must also be open to challenging their existing practices or beliefs in order to accommodate innovative new approaches and solutions.
Those businesses looking to move into the healthcare sphere or find a new niche, need to take into account the consumer change in behaviour and attitude, shift in perception, loyalty and trust, as well as the appetite to open up and work with non-traditional healthcare providers. Therein lies the opportunity.
Nikhil de Silva is a former partner in PwC’s Customer Consulting practice.