January 7, 2016  |  Team Bloom

Healthcare & Life Sciences Outlook for 2016

Healthcare is a quickly evolving industry as companies compete to keep up with technology advances, while simultaneously attempting to provide patients with personalized care and reduce out-of-pocket costs. Innovation in both pharmaceuticals and medical devices allows for improvements to many current healthcare practices, but we’ve also seen the change expose vulnerabilities to the success of corporations and private physician practices. The 2016 industry outlook continues to be full of shifts like in 2015. Health systems and private practices are finding mergers and acquisitions necessary to survive among larger competitors, data is an ever-important element to health as we now collect behavior through wearable technology, and pressure is felt throughout to do more with less in order to reduce costs for patients.

In 2016, hospitals of all sizes continue to experience pressure in every department to pay fair wages to staff while providing top-notch service to every individual that walks through the door. More rural hospitals are finding it necessary to invest in improvements with their technology on and offline to compete with larger metropolitan hospitals. All health systems must work to retain positive ratings through customer experience and quality control reporting to earn sufficient reimbursement through our current healthcare structure. Many companies are recognizing that teamwork is necessary to get the job done and therefore continue to explore the benefits of mergers and acquisitions.

Image Source: 2016 Global Life Sciences Outlook via Deloitte Image Source: 2016 Global Life Sciences Outlook via Deloitte

In Deloitte’s 2016 Global Life Sciences Outlook, they identified the following as the underlying goals of the merger and acquisition trend: “consolidating in the face of pricing pressure; strengthening existing product portfolios; replenishing pipelines depleted by patent expiry; deepening capabilities in priority areas; entering new and/or emerging markets; and acquiring innovative technologies to leverage current assets or generate cost-saving synergies.”

Though these goals are identified for life sciences globally, it’s apparent through the behavior of various healthcare industries that the siloes are becoming more and more difficult to distinguish in the US as well. In the Forbes article, 2016 Predictions: Digital Health’s Second Wave and Thirteen Transformative Healthcare Trends, Unity Stoakes explains, “In healthcare, there are industry siloes like health IT, med-device, biotech, life sciences, consumer health and wellness. More and more of these sectors will collide as biotech companies become data companies, the enterprise becomes consumerized, and digital integrates into everything. The idea of a “digital health” company will expand to encompass the cross pollination of biotech and life sciences, often with computer science and the consumer at the core. We’ll see more healthcare ‘mashups’.”

Hospitals & Health Systems

Given that hospitals are often a hub of many levels of patient care, performing everything from life changing research to acute care, it makes good business sense to invest in the areas of technology that can improve procedures. The hope is to reduce costs through partnership, ultimately benefiting the hospital as well as the patient. Technology isn’t the only area where close affiliation can be profitable. Many hospitals see health insurance plans, for example, as a viable arm to their brand. These endeavors are expensive to start, so partnerships, mergers, and acquisitions can prevent the need of starting from the ground up.

Private Practices

Hospitals aren’t the only sector striving to maintain profitable growth. Independent physicians are feeling pressure to seek employment through larger hospital brands rather than function as a private practice. Accepting to adopt the hospital’s brand and rules reduces risk and in most cases, overhead expenses.

Image Source: Southern Medical Association Image Source: Southern Medical Association

In a Southern Medical Association article, Jackson Healthcare President Shane Jackson stated, “This trend toward employment has been several years in the making, but what we are seeing with this generation of young physicians is that most want to do what they went into medicine to do – to take care of patients – and then they want to go home and be with their families.”

Physicians who choose to remain independent must adapt to the changing market demands. Because doctors are facing pay cuts through reimbursement reductions, independent physicians must balance their need to cut costs while investing in their businesses to stay relevant. Many employed doctors gain exposure through hospital branded materials. Independent physicians are advised to drive awareness in their local area to maintain steady business. Implementing strategic marketing techniques can break private practices out of the shadows and provide the security necessary to maintain the practice’s financial success. Many private practices have found it necessary to invest in technologies that improve their level of care, but without communicating those capabilities with the community, patients lack the knowledge to take advantage of specialized care. As many hospitals and health plans successfully integrate patient records, private practices are not immune to the same expectation from patients. As wearable technology and information sharing becomes safer and easier, the expectation for providers to utilize that data will only grow.

Image Source: Healthcare Business Today Image Source: Healthcare Business Today

Medical Devices & Wearable Tech

Following the dawn of the FitBit, the Apple Watch, and many others, doctors now have potential to access behavior patterns like never before. These gadgets go beyond a trendy new fad by connecting trackable data with patient records to allow doctors to gain a better understanding of the lifestyle of their patients. However, with knowledge comes power, and unauthorized access to the HIPPA protected data can become a costly catastrophe. The massive amount of data is not the only vulnerability; the security of medical devices is as well. This was made clear in 2015 through the remote hacking of a patient’s insulin pump that allowed for the adjustment of a potentially lethal insulin dosage. While major security breaches took place in 2015 capturing millions of personal information, the security risk in medical devices can mean life or death.

“No medical device hack is known to have hurt a patient, yet,” said Benjamin Isgur of PwC Health Research Institute in the Fortune article, Here’s How Your Health Care Is Going to Change in 2016. “The fear of such a hack will likely prompt providers to create firewalls and separate networks away from other medical data. Such moves will be costly and time consuming for many hospitals, but will be a necessary move to protect patients.”


Innovation seems to be introducing risk to the health science industry, and the trend of personalized care has placed pressure on the heavily controlled pharmaceutical industry. Though not yet FDA approved, compounding is a growing trend to give patients access to personalized medications to avoid allergens or unnecessary chemicals in their prescriptions. Though pharmacy compounding is not new, the demand is growing from patients wanting to gain back control of their prescriptions as well as the associated expenses. However, pharmaceutical companies justify their increasing prices to compensate for the costs of innovation, federal investigations, and inflation.

Because of this, many health plans are exploring alternative payment structures such as financing options for more expensive drugs and outcomes-based reimbursement between the health insurers and the pharmaceutical companies. Since it’s difficult to follow the dollar through our current healthcare system, many industry leaders are calling for transparency from the pharmaceutical companies. Prescription medicine is a hefty chunk of health care costs, so it can be difficult for insurers and patients to allocate money to their life saving drugs when prices are hidden and difficult to manage.

Image Source: Secure Health LLC Image Source: Secure Health LLC

Health Plans

The middlemen, insurance providers, are feeling the strain from both the patients and the healthcare specialists. While negotiating with hospitals regarding network access and rates, they’re scrutinized for increasing premiums and deductibles each year. In 2015, USA Today reported the cost of an average health plan increased 7.5%. Health Insurance companies use previous years’ data to make predictions to anticipate the expenses accrued under each covered individual. Collaboration and efficiency will be needed among the various negotiating parties to improve the status quo.

As we can see from the above points, predicting the costs involved in healthcare is a gamble thanks to advances in technology, growing demands for personalized care, and the need to incorporate useful data into care provided. Because of mergers and acquisitions within hospital networks as well as major health plans, the need to have data accurately transferred is a daunting and crucial task in itself.

Topics covered in this insight: 2016, healthcare, life sciences

How can we help you bloom?
Get In Touch