Over the next 10 years, we will see more profound transformations in healthcare than the last 30 years. As we will discuss in our new series of blogs, the transformations will be driven by consumer demands and changes in the use of technology, as well as the pressure by the government to drive changes to payments to providers over the next five years.
This process will require changes in all providers and hospitals, it will force modernization of payers systems (CMS, HMOs and other private insurance), and lastly the intensive use of pharmaceuticals. All these changes are leading to a reallocation of resources, dislocation of current ivory tower institutions, as we see disruptive technologies now entering healthcare and increasing consumer expectations.
Our expectations do not include any material changes in the repeal or replacement of the Affordable Care Act 2010 (ACA), also known as ObamaCare. We still think today that the ACA will be materially modified, however it not see a wholesale replacement.
Changing Medicare Consumer Demands…
Healthcare is at the beginning of a historic convergence never seen in American history. That convergence is summarized by the 77 million Baby-Boomers on one side, and the edge of a similar large Millennial generation entering their mid-30s. Sadly, this Millennial generation could be in worse medical shape and more poorly equipped to handle a stagnant healthcare marketplace.
Deloitte Consulting defines Baby-Boomers in two parts, the “leading edge” and a “trailing edge.” Most of our readers know we refer to Baby-Boomers generally as those born between 1946 and 1964. However, our generation is in fact two generations.
What we have noticed as differentiation on those two parts of the Baby-Boomers generations is dealing mostly with those that were subject to the draft, and/or served in the Vietnam War versus those that did not. That war changed Americans, and gave the largest generation in America two distinct parts.
The “leading edge” just turned 70 this year, and the youngest of the “trailing edge” are around 52. From today forward, 10,000 Baby-Boomers are reaching Medicare, or age 65 daily. Approximately 26 million Boomers will enter into Medicare over the next 13 years.
Why is that important?
If we accept the notion that everything in American society has been fundamentally changed by the Baby-Boomer generation, we must realize that the trailing edge of the Baby-Boomers are more likely to be disruptive to the healthcare system than their older brothers and sisters.
The generation in their 60s and 70s differs from those in their 50s and that difference is the use of technology. We grew up with computers in our schools. We bridged two technologies; typewriters which many of us had in the classrooms of our middle schools, and from what we recall, computers showed up later in our high school years. I recall having computer classes using a RadioShack Tandy TRS-80 in 1977 and 1978 while at the same time building my own computer, a HealthKit H-8 personal computer, assembled in 1977 at home. I was ahead of what they we teaching in my high school. For those even a couple of years ahead of me, they missed the entry of the computer into the classroom. I recall buying my first IBM 8088 computer in the fall on 1981. It was so expensive that we had to finance it, it took 3 years to pay it off along with a dot-matrix printer, 1200 baud dial-up modem, and a case full of software boxes that were using floppy-drives, not hard-drives.
The “trailing edge” of boomers are all comfortable with technology, plus we question everything in life. This generation grew up with computers, faxes, pagers, cell phone PDAs, and yes even smart phones and the Internet.
The trailing edge of boomers will demand better care, better technology, and to be a more active contributor to their health care. We will demand shared decision-making with our providers and in the information used to make such decisions.
A recent patient survey over 1,000 mature adults found that 85% said that they were “not satisfied with at least one aspect of their provider’s care.”
We believe that “trailing edge baby-boomers” will demand data, information, and most assuredly access to their live information. What this implies is more patient-centric care. As this trend continues, providers and healthcare systems will need to adjust immediately.
The positive news here is that we have all the technology needed to transform healthcare, and the ability as an industry to comply with these demanding Baby-Boomers.
This is also good for the payors and governments. Various studies have shown that patients involved in decision-making are less likely to choose the most expensive or invasive procedure at least 20% of the time. This is not a generation that merely accepts a finding without being shown the backup information and the process of making the decision.
The Center for Medicare and Medicaid sees this trend is advancing, as a shared decision-making model of care. This new model is taking center stage. It is very likely that the better use of technology, and transparency will be just what the transformative and demanding second half of the generation will demand over the next 10 years, therefore we predict a transformation driven by these “trailing edge Baby-Boomers.”
– Noel J. Guillama, President