Top Trends For Healthcare Executives In 2024
Over the past couple of months, Oliver Wyman’s Health and Life Sciences practice has put a spotlight on some long-term trends facing the industry. Our Designing for 2035 report lays out a roadmap for organizations to future-proof healthcare, including increased adoption of digital tools, shifting care from the hospital to the home, and bolstering value-based care. We also partnered with the World Economic Forum for an in-depth look at climate change’s impact on human health. The key takeaway: climate change could put as many as 14.5 million people at risk of dying by 2050.
Leaders are adapting to several near-term issues as well, including the ubiquity of artificial intelligence, rising cost pressures, and, of course, the 2024 US election. How organizations respond to these forces will set the stage for remaining competitive now and in the future. Leaders from Oliver Wyman’s Health and Life Sciences practice identified a handful of hot topics that leaders must watch in 2024:
Sam Glick, Global Head of Health and Life Sciences
On AI:
“There's going to be a lot of activity around business model innovation, including broadening the use of artificial intelligence. Being an AI-enabled healthy system or an AI-enabled health plan or an AI-enabled life sciences company is like saying you're digital. It’s a big generic statement. What are we doing about the labor shortage? How are we going to do drug development differently? How are we thinking about equity differently? Artificial intelligence is part of the toolkit for all those issues. This is as big of a revolution as the Internet was and how we use that toolkit is going to be very exciting.”
On industry consolidation:
“There's more scrutiny by regulators on consolidation and some of that is good. M&A is sometimes necessary to get scale around purchasing and the supply chain, to be able to perform better in value-based care, or to be able to make investments in technology. But it often emerges as a solution in search of a problem. My hope is that this year we’ll see more strategy around advancing access in all communities, advancing innovation, and addressing affordability. It’s about partnering and executives being thoughtful about why they need deals, where they need or don’t need scale, and ensuring that they have the right resources to be sustainable long term.”
Marie-Lyn Horlacher, Partner, Health and Life Sciences, Oliver Wyman
On cost pressures facing drugmakers:
“Price pressure is one of the dominating topics across every region. In the US, prices for several drugs are being negotiated under the Inflation Reduction Act and there is a contagion risk to commercial plans. There is legislation in Europe that would put more pressure on price. Companies are looking to China but there’s also price pressure under the government’s National Reimbursement Drug List.”
On growth areas for drug development:
“There’s a lot of focus on oncology, especially targeted therapies. We see lots of activity in immunology, autoimmune diseases, and of course the obesity epidemic. We are still only at the beginning of that journey and lots of companies have products in the pipeline.”
Andy Eggert, Partner, Health and Life Sciences, Oliver Wyman
On strategy development:
“We have an evolving ecosystem where we're not only treating illnesses but we're also preventing them in a whole different way. We have an ecosystem of digitally enabled tools that are helping us to live healthier lives. We an ecosystem that is changing rapidly, probably like nothing we’ve seen before. Smart life sciences companies are factoring all of this into their strategy development.”
On scenario planning:
“Today is much more about thinking in scenarios and pressure testing how pipeline will hold up — what the innovation needs to look like, what the value chains need to look like, and what the overall corporate set up needs to look like to support those efforts. That’s something that has changed and that will happen in a more pronounced way this year.”
Martin Graf, Partner, Health and Life Sciences
On the 2024 US election:
“The federal budget is just over $6.5 trillion. Almost $1 trillion of that is Medicare spending. When you add in Medicaid, it grows to nearly $2 trillion. Cost pressures will mount with the age wave coming at us, pushing Medicare spending to $2 trillion over the next decade. So increased spending and finding ways to improve the system for everybody will get more attention as the campaigns pick up. Healthcare may not be the first issue on the agenda but it won’t be far behind the economy.”
On changes to Medicare Advantage:
“Model changes and increasing compliance requirements on risk adjustment, moving the goal posts on Star ratings, and changing some of the measures and weights have made that program more challenging to manage for health plans. The internal workings have gotten tighter and therefore plans have had to become better at some core capabilities like managing cost of care; managing risk scores; managing their Stars score; and doing a great job on product development, sales, and marketing. Plans that are good at those core functions will be better prepared for future changes to MA.”