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Healthcare 'Gold Rush' Spurs Jobs, Fortune 50

 |  By John Commins  
   June 09, 2011

The healthcare sector is in the midst of a "new gold rush," spurring innovation, creating jobs and providing investment opportunities in an otherwise sputtering economy, according to a report from PwC's Health Research Institute.

Three out of four Fortune 50 companies are either in the health industry or have health divisions, and healthcare is expected to account for one-fifth of the U.S. gross domestic product by 2019, according to the PwC report The New Gold Rush.

That growth – helped by a graying demographic -- is seen in new technologies, new companies, new jobs, and new markets for both traditional health organizations and new entrants from such industries as technology, telecommunications and retail.

"It's one of the only major industries in the US that is growing right now, so everyone is looking for a piece of that growth," Tom Weakland, a principal at Diamond Advisors Services, and an author of the PwC study, told HealthLeaders Media.

"Many of the Fortune 50 are traditional healthcare companies already, whether they are medical device/products companies or pharmaceutical companies or health insurance companies," Weakland says. "Many of the others are, we now find, in four other areas that we have identified as fixers, implementers, retailers, connectors. They are looking at healthcare through those lenses to try to understand where they can better define product and services to meet the needs of the healthcare industry."

Even with the boom, Weakland says companies new to healthcare could fail in they rush into the sector without understanding the market, consumer expectations, and even how they will get paid. "One of the pitfalls is the idea of the one-size-fits-all solution that is going to fit everybody. That is just not possible," he says. "You have to do rigorous analytics. You have to do a lot of customer segmentation. You have to understand your consumer base, and a lot of organizations will miss the boat on that. They'll get to the market quickly with a one-size-fits-all offering that will flounder."

Weakland says new players should also avoid the "me-too strategy. You see something that is working and you just try to mimic it without adding value or differentiating," he says.

Most importantly, he says, is understanding that the healthcare sector is incredibly large and complex and highly regulated. "You have to think about health reform and HIPAA and EMRs with meaningful use and how you adhere to that," he says. "There is so much regulation involved in healthcare that people who traditionally don't develop products and services in that market have a lot of learning to do."

The study found that:
  • Nearly one in three American adults have worked, now work or would like to work in healthcare. Jobs in healthcare increased 65% between 1990 and 2009, while the rest of the workforce increased only 16% over the same time period.
  • Of the Fortune 50 companies that have a stake in the healthcare industry, 24% would be considered traditional healthcare companies, but 52% are entering the healthcare market in non-traditional ways.
  • A new generation of tech-savvy consumers is creating a new market for digital and interactive health. Consumers between the ages of 18 to 24 are two times more interested in mobile health applications or programs and three times more interested in health-related video games than those over the age of 65.
  • Consumer demand for convenience and transparency in services and pricing is opening up channels for alternative sources of healthcare services. For example, the use of retail health clinics almost doubled in the past three years, from 10% of consumers who sought treatment at a retail health clinic in 2007 to 17% in 2010.
  • Consumers' willingness to pay out-of-pocket for non-traditional healthcare products and services represents as much as $13.6 billion of new revenue annually, including $4 billion on health-related video games, $8.9 billion on resources that rate physicians and hospitals and $700 million on mobile health applications.

The report identifies four main roles that Weakland says companies might find the best opportunities to flourish:

  1. Fixers. Companies that seek to help traditional health companies become stronger by attacking the parts of the health system that are dysfunctional, redundant, bifurcated or unsustainable.
  2. Implementers. These companies see the silos in healthcare breaking down as organizations work across traditional boundaries, collaborating on innovation with a unified purpose toward government's aim of achieving a more integrated, efficient health model.
  3. Retailers. These companies bring practices for prospering in high-volume, standardized markets with low margins. They use customer relationships and ubiquitous access to serve price-sensitive consumer markets and the demand for choice and convenience.
  4. Connectors. These companies link information and technology across the health system. They look for ways to provide meaningful analysis and context of health data and information so that clinicians and consumers can make better decisions about health behavior.

While the growth of the healthcare industry is good for the people in healthcare industry, is it good for the rest of the economy?

"That is a good and interesting question," Weakland says. "What is good for the healthcare industry is good for the rest of the economy as long as it contributing to higher quality of care, better access to care, and bending the cost curves in the right direction. Ultimately all of that is good for the economy."

To see the report click here.

 

John Commins is a content specialist and online news editor for HealthLeaders, a Simplify Compliance brand.

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