The Volume-to-Value Revolution

This inaugural report of the Oliver Wyman Health Innovation Center (OWHIC) explores the future of healthcare between now and 2025.

Here, Oliver Wyman offers an overview of three major waves of innovation that over the next decade will bring us to a new patient-centered and value-based approach to healthcare delivery. This healthcare revolution will not only improve the quality of care and reduce its cost, it will also lead to a transformation of the field, as traditional providers and new entrants compete on cost and quality—and more than a trillion dollars in value shifts from old models to new.

Volume-to-Value Revolution

The Volume-to-Value Revolution explores how the health marketplace will be redesigned from the patient’s perspective — with an unrelenting focus on improving patient value. Unlike any other industry, the healthcare market value equation is completely broke. Technology- powered businesses reduce costs by as much as 25 percent each year while tripling value every three years. Healthcare increases costs by 8 percent and reduces value by 10 percent a year. That dynamic needs to be reversed and Oliver Wyman research showcases the possibilities.

The first step toward change is to embrace population health, focusing on high-need and high-cost patient segments that represent the best opportunity to improve health and lower costs – then use those savings to generate resources to fund investment in coordination and prevention throughout the pyramid.

1Why has healthcare gone so far astray?

One big cause is the fee-for-service system we use to pay for healthcare. Doctors and hospitals are rewarded for delivering more services, not for achieving better results. We need to turn that system on its head and enable a system of competition based on quality, value, and patient outcomes.
2What are these waves you’re talking about?

The first wave – patient centered care, which has already begun, will shift healthcare from a fragmented, provider-centered model to one that’s much more coordinated and focused on putting the patient first, as providers align incentives with the patient and pivot to new care models that drive better outcomes at lower costs. The second wave – retail and the engaged consumer, will see consumer power unlocked and retail-focused healthcare players racing to meet currently unmet needs. Innovators will form new high value consumer relationships and develop new engagement models aligning incentives and integrating social media, convenience care, transparency, access and mobile apps, empowering consumers to take control of their health. Finally, we expect the third wave – genomics and the science of prevention, to improve diagnosis, personalize treatment, allow us to better prevent disease, and shift the population health pyramid.
3We’ve heard ambitious plans for healthcare before. Most failed. Why will this be different?

Partly because it isn’t a top-down project like most of the others. Instead, we’re taking proven insights about healthcare—such as the idea that the best way to control costs is to take better care of the chronically ill—and we’re building healthcare organizations around them that can go into the marketplace and compete. That’s a formula for innovation. And the pioneers in the field are producing amazing results today.
4What do you wish more people understood about healthcare?

In the debate over healthcare, you constantly hear the assumption that the only alternatives are higher costs and less care. But that’s not true, as the example of companies like CareMore, Kaiser, and Geisinger prove. We can have better care and better health for more people and for less money.