How will the road to sustainable health run through disruption? May 2017
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1 How will the road to sustainable health run through disruption? May 2017
2 The need to deliver improved productivity and efficiency has never been greater. We are very proud to have sponsored the International Longevity Centre-UK (ILC-UK) research entitled Towards affordable healthcare: Why effective innovation is key. While there are clearly significant, deep-rooted challenges facing the National Health Service (NHS), we have been heartened by the amount of technological innovation that has delivered outstanding results across the UK via partnerships between health authorities and local technology entrepreneurs. In 2016, sponsored by the UK Treasury, EY published a report entitled UK FinTech on the cutting edge, which confirmed the UK s position as the leading global FinTech hub. In undertaking the research, it became very apparent that the UK has a wealth of entrepreneurial expertise in digital innovation that encompasses HealthTech and InsurTech. It would seem highly desirable for the UK Government to fully leverage existing UK innovation both to solve many of the NHS s challenges and promote UK expertise in a post-brexit international market. This current report recognizes that the NHS faces unprecedented uncertainty, as it seeks to reconcile longer life expectancies with significant health challenges in obesity, diabetes and dementia and rising consumer expectations and demands. The need to deliver improved productivity and efficiency has never been greater. It has been well documented that the UK health system is buckling under huge financial and operational pressure. In fact, at the end of the financial year , NHS Trusts (predominantly hospitals) were 2.45 billion in the red, with 65% of providers in deficit. The NHS has become a highly political topic, with many views on how best to fill the funding gap. This is a subject that undoubtedly will be hotly debated over the next couple of months and we hope acts will not be buried in the inevitable rhetoric. So far the UK national strategy has focused on a combination of policy levers to reduce cost and encourage transformational change via various productivity and cost-saving initiatives. However, this strategy comes with the recognition that the quality of services needs to be improved a topic highlighted by many recent headlines. The road to sustainable health runs through disruption 1
3 Global implications As the ILC-UK s report points out, the issues we face as a society are far wider than the NHS itself; they are relevant across the globe. We have a rapidly aging population that is living longer thanks to advances in medicine. We must never forget that the very existence of the NHS is making it possible to cure people earlier in their lifetime who would have not survived in a pre-nhs world. But the NHS in only one of many organizations throughout the world contributing to this initiative. With an aging population, we face greater demand for personal care due to the subsequent increase in chronic illnesses. Far more is being spent on older individuals than those who are working age. Chronic illnesses are changing the cost curve and shifting the increase in costs to earlier in life. Combined with the medical successes that result in a longer life, we are spending more on care than ever before. The NHS, and other similar organizations around the world, has become the backstop for our aging society. There is clearly a need to balance the investment these organizations are making with the quality of social care provided. The sustaining benefits of innovation EY previously sponsored Creating a Sustainable 21st Century Healthcare System, in which the ILC-UK explored innovations around the world and the UK. From India to New Zealand, and the US to Finland, they identified 19 of the most original innovations and a diverse array of age-related health challenges. Towards affordable healthcare: Why effective innovation is key is a sequel that explores how specific innovations could be applied to the UK and their potential cost savings. Such analysis leads to recommendations for how to foster budgetfriendly public policies that simultaneously promote innovation and meet the needs of an older society. EY endorses the excellent work that has been undertaken by the ILC-UK and adds its own recommendations in this summary. These are based on the current global political climate and megatrends that we believe create even more disruption in an already fractured health system. The road to sustainable health runs through disruption 2
4 Call out or quote? Health care megatrends Technologies applied to health are moving us rapidly to what we call Health 2.0. Biopharmaceutical companies, working closely with academics and pre-competitive consortia, have made great strides in identifying novel, disease-modifying agents in diverse arenas, from immune-oncology to gene editing. In addition, precision medicine continues to evolve, expanding beyond single action tests to diagnose cancer to combine data from the genome, the proteome, the microbiome and the epigenome to yield a more nuanced picture of disease risk. While today s genetic tests are primarily used to diagnose and manage disease, the density of tomorrow s evaluations will help mitigate future disease, providing actionable lower-cost interventions at an earlier time. Enabling advances such as cloud computing, increased computational power, natural language processing and machine learning are also having a major impact. Artificial intelligence can now be leveraged in areas as diverse as diagnostic support and the reading of medical images. These AI-based algorithms are not only as accurate (if not more so) as human-based endeavors, they are faster too. As such, they are transforming medicine from data-informed to data driven with less unwarranted variation and more accuracy. Finally, wearable sensors, today embedded into watches and bulky straps, will disappear into our clothes, bandages and the gadgets that surround us. The quantified self will become a reality, providing grist for the algorithms that identify the drivers of health and disease. Focus will shift from illness and care delivery to 24/7 wellness. These innovations will allow health to be reimagined. Against this backdrop, there is a significant wave of political change emerging across the world, including Brexit, the US election of Donald Trump and a series of upcoming European elections in Within the UK, we have greater clarity around what Brexit means, although it is likely to take many years until we understand the true impact. At the heart of a successful Brexit for the UK will be greater international trade and prosperity, underpinned by investment in new technologies, skills, disruptive innovations and enhanced productivity. In the United States, the new administration has the opportunity to provide the kind of policies that promote enough stability to permit investment while encouraging innovation with smart, adaptable, light-touch regulation. In each economy, creating sustainable health care while supporting our aging societies is of paramount importance. To meet both political and societal objectives, we must leverage our innovation experience. The road to sustainable health runs through disruption 3
5 FinTech and HealthTech leadership FinTech is changing financial services, providing new opportunities for UK growth and consumer benefit. Hidden within the world of FinTech are many innovative technologies that serve the heath care sector. These technologies currently provide HealthTech solutions to the NHS and the private health care sector, and need to be given proper scrutiny and potential backing if they are to help solve the existing health care and aging crisis. The UK is a leading location for FinTech development: in 2015 the UK s FinTech sector generated over 6.6 billion in revenue and employed over 61,000 people. From alternative finance to payment services and data analytics to blockchain, FinTech is disrupting established processes to enhance the competitiveness of the UK s financial services and health care sectors, providing more choice for consumers and a far more cost-effective ecosystem. The UK has world-leading FinTech and HealthTech talent, which is supported by a progressive regulator in the Financial Conduct Authority and a Government committed to promoting competition and innovation. Hidden within the world of FinTech are many innovative technologies that serve the health care sector. The road to sustainable health runs through disruption 4
6 Outlook for health care The ILC-UK research highlights the role of technological innovation in a future NHS, leveraging existing successful pilots and case studies. We would encourage the UK Government to seize on the success of UK innovation to invest in solving the highlighted NHS issues and promoting UK innovation internationally in a post- Brexit world. A number of suggestions for disrupting aging before aging disrupts economic growth are applicable outside the UK as well. These include: Reframing health as a long-term societal asset, not just a near-term cost Using the power of engagement to change how stakeholders interact with disruptive technologies and each other Employing disruptive technologies to accelerate data-driven treatment selections that allow both aging in place as well as better prediction and intervention in the aging process; this will require engaging with the Government to manage societal priorities Collaboration is needed to address the chronic disease crisis. Insurance companies (payers), pharma companies, employers and the Government must join together to determine when behavioral nudges will have maximum impact. This includes: Supporting m-health technology research Developing distributed ledger technologies such as blockchain to provide security across the health delivery supply chain, while creating the backbone for a secure, portable health record and payment system Incentivizing technologies that advise patients, promote lasting behavior change, and inform better health outcomes There is a significant amount of political debate in the media right now around NHS service quality vs. third-world countries and, indeed, the link between the Overseas Aid budget and Brexit. There is a suggestion that perhaps funding could be diverted toward Eastern European countries in need of aid but also voted in any Brexit divorce settlement. Many governance issues challenge how this could work in practice. However, how about investing overseas aid in these new innovative technologies that can benefit health in third-world countries at the same time as giving much needed support for our NHS? We would strongly recommend undertaking a study based on the research produced here by the ILC-UK that could seek to support these urgent needs and we believe they are highly compatible. The road to sustainable health runs through disruption 5
7 The better the question, the better the answer Every new solution comes with a cost. With resources already at their breaking point, it is crucial that investments are made in solutions that address the right problem. And, that starts with asking a better question. EY is committed to supporting society by assisting our clients in building a better working world. Together we can ask, and answer, the following: How can creative financing models and public-private partnerships enable long-term investment in wellness instead of disease? How can organizations partner with seniors to reduce the costs of aging? What incentives accelerate the safe sharing of data and the ability to act on that information? How can sharing and collaborating change care delivery and build a better, healthier world? How can Governments promote innovation within their economies to deliver sustainable health services and care? Shaun Crawford Pamela Spence EY Global Insurance Industry EY Global Life Sciences Industry Leader Leader The road to sustainable health runs through disruption 6
8 EY Assurance Tax Transactions Advisory About EY EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities. EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit ey.com. How EY s Global Life Sciences Sector can help your business As populations age and chronic diseases become commonplace, health care will take an ever larger share of gross domestic product. Scientific progress, augmented intelligence and a more empowered patient are driving changes in the delivery of health care to a personalized experience that demands health outcomes as the core metric. This is causing a power shift among traditional stakeholder groups, with new entrants (often not driven by profit) disrupting incumbents. Innovation, productivity and access to patients remain the industry s biggest challenges. These trends challenge the capital strategy of every link in the life sciences value chain, from R&D and product supply to product launch and patient-centric operating models. Our Global Life Sciences Sector brings together a worldwide network of 11,000 sectorfocused professionals to anticipate trends, identify their implications and help our clients create competitive advantage. We can help you navigate your way forward and achieve sustainable success in the new health-outcomes-driven ecosystem EYGM Limited. All Rights Reserved. EYG no GBL BSC no ED None This material has been prepared for general informational purposes only and is not intended to be relied upon as accounting, tax or other professional advice. Please refer to your advisors for specific advice.
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