Future Trends in the Delivery of Medical and Healthcare Services

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Future Trends in the Delivery of Medical and
Healthcare Services
Richard C. OSullivanChief EconomistThe Forbes
Groupwww.forbesgroup.com
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Critical Issues

• Consumerization
• The Growing Skills Shortage
• Globalization

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Consumerization of Healthcare
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The Drive TowardConsumer-Driven Healthcare

• Decline in Employer-Sponsored Benefits
• 63 in 1993 to 45 in 2003 (BLS)
• Erosion of Health Benefits
• De-institutionalization of care delivery
• Policy Shifts to Consumer-Driven Payments

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Structural Drivers Reducing Employer-Sponsored
Benefits

• Lower union participation
• Small and Mid-sized employers (SMEs) less likely
  to offer health benefit
• 63 in 2003, Down from 68 in 2001 (KFF)
• Only 50 of small firm workers eligible vs. 68
  for large firm workers (KFF)
• Fewer full-time workers
• Fewer blue-collar manufacturing workers
• More service jobs
• 9 of P-T workers vs. 56 of F-T workers (BLS)

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Market Drivers Eroding Health Benefits

• Decline in eligibility among smaller firms
• Small firms 58 in 2001 vs. 50 in 2004 (KFF)
• All firms 65in 2001 vs. 61 in 2004 (KFF)
• More restricted physician and facility access
• Average Deductible Up 65 (KFF)
• Hospital Deductibles double for SME workers
• Plans with Co-pays doubled from 2002 (KFF)
• Tiered Drug plans up from 76 to 90 in 4 years
• Employer-Financed Retiree Benefits down
• 2 in every 3 in 1988 to 1 in 3 in 2004 (KFF)

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Restricted Access Plans Dominate
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De-institutionalization of care delivery

• More outpatient care
• Inpatient 33 (1992) 27 (2000)
• Home care 6 (1992) 11 (2000)
• What kind of garments and textiles needed?
• Assisted living growing at 15-20 per year,
  fastest growing housing market (NCOA)
• Managing the environment as well as the patient
• University of VA experimental home
• Community-based care

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Homecare Rises with Age
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De-institutionalization of care delivery

• Retail care delivery emerging
• Target and QuickMedx
• Europe out in front Boots Dentalcare
• Self-care
• Home defibulators approved
• Home healthcare reported to be the fastest
  growing occupation (35) to 2012 (BLS)
• Growth of Caregiver Burnout

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Policy Shifts to Consumer-Driven Payments

• Health Savings Accounts (HSAs)
• Shift treatment decisions and costs to consumer
  to reduce discretionary spending
• Intended to increase demand for generics and low
  cost substitutes
• Requires high deductible policy (1,000 or more)
• Cannot be used in conjunction with spousal
  coverage
• May or may not exclude dental or vision coverage

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Will HSAs Work?

• The jury is still out
• Top 1 account for 20 of healthcare spending
• Top 15 account for 68 (EBRI)
• Will lead to adverse selection
• Placing greater pressure on Medicare and Medicaid
• Benefits to employer but not necessarily to
  employee
• Early studies suggest it could reduce needed as
  well as discretionary treatments especially
• in lower-income patients

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What is Driving Health Spending?

• Aging is not the villain everyone suspects
• Rising incomes INCREASE spending
• Medical product inflation is a problem
• Technology is the principal driver

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HSAs and Technology

• New technologies and practices are SUPPOSED to
  cost more
• Attract resources from established methods
• Cover costs for infrastructural development
• The nail that sticks out
• Home care and prescription drugs became subject
  to Congressional price controls
• Will new technologies avoid their fate?

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The Growing Skills Shortage
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Educated Professions Lead Job Growth Out to 2012

• Total labor force growth 14.8
• Three fastest growing
• Professional Occupations 23.3
• One in every four new jobs
• Service Occupations 20.1
• Healthcare support 34.3 - one in five service
  jobs
• Management/Finance 15.4
• Professional and Management Occupations combined
  will account for 40
• of all new jobs!

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Educated Professions Lead Job Growth Out to 2012

• Six of 10 fastest growing occupations require
  college degrees
• 20 of the 30 fastest growing occupations require
  college degrees
• 35 of jobs in fastest growing occupations
  require college degrees
• The unemployment rate for college educated
  workers is already 3.4
• 1.4 for hospital workers!
• Where will the workers come from?

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Immigrants Play a Growing Role

• Immigrants accounted for half of 1996 2000
  labor force growth
• 90 percent in New England, Mid-Atlantic, and
  South Atlantic
• Will account for one in every four new households
  through 2010
• 13.5 percent are in professional occupations
  compared to 15.9 percent of native born
• Immigrants accounted for one in four new
  professionals from 1996 to 2000
• 19 percent are in low-skilled jobs compared to
  13 percent for native born
• Unemployment rates very close 4.2 percent vs.
  4.0
• percent for native born

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Who Are the New Immigrants?
Not so poor or huddled
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Who Are the New Immigrants?
More diverse Origin of Foreign Born Population
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Who Are the New Immigrants?

• NAFTA slowing immigration from Mexico
• Mexico accounted for 25 of immigrants from
  1991-2000
• 20 in 2000 and 19 in 2001
• Collapse of Communism drives up Eastern European
  immigration
• 1981-1990 30 of European immigrants from
  Eastern Bloc
• 1991-2000 55 of European immigrants from
  Eastern Bloc
• Highly educated work force
• Asian population shifting from Pacific to Central
  Asia

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Medical Professions Affected More than Most

• Foreign born share of total workforce 13.6
  (BLS)
• Foreign trained as share of all medical
  practitioners 18 (AMA)
• Past 30 years
• Total domestic med school grads up 88
• Total international medical grads (IMGs) up 161
  (AMA)

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Healthcare Cost Controls Drive Shift to Lower
Skilled Providers
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Older Workers Staying Active

• Fewer Able to Retire
• Only one in three retirees today receives
  employer- sponsored health coverage
• Fewer have savings to cover decades of retirement
• More Postponing Retirement Voluntarily
• Especially in more educated, higher-income
  populations
• Retirement has become a process, not an event.
• 8 of 10 expect to work part-time
• (AARP)

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Consequences of Skill Shortage

• More likely to be foreign born or trained
• Less homogenous skill base
• More culturally diverse Enter the Care-bots
• Conflict between homeland security and healthcare
  cost control
• Medical products used by lower skilled workers
• Where does monitoring stop and diagnosing begin?
• Older workers are more resistant to new
  technology adoption

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Globalization
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Globalization of U.S. Healthcare

• Rising foreign healthcare workers
• Pandemic fears growing
• APHL sharing best practices
• Product standards evolving
• EU leading the way
• Prescription drugs
• Standardization of Professions

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Consequences of Globalization

• More heterogeneous workforce
• Product standards move to international stage
• EU as dress rehearsal?

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Conclusions

• Assume greater consumer choice and direct patient
  participation in care
• Design for new unmonitored environments
• Proactively prevent technology from becoming the
  next whipping boy
• Design for lower skilled delivery and/or
  follow-up
• Actively support homecare infrastructure
• Foreign workers
• Short-run Assume less homogeneous skills
  standards
• Long Run Look toward globalized
• standard setting

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