Healthcare’s future winners and losers
June 26, 2018
June 26, 2018
The distribution of market share and profitability across 13 healthcare sectors will change dramatically over the next decade, reveals Accenture analysis of healthcare profit pools—the relationship between a sector’s market share and its profitability.
Some traditional sectors will see market share fall by 60 percent, and new profit opportunities will emerge in others for companies that can quickly capitalize on them. Companies will need to make targeted investments to navigate this massive change, making tough judgements about which areas of the healthcare value chain will succeed, and which will suffer.
All healthcare sectors are not created equal in future opportunities. Sector margins will fluctuate significantly over the next 10 years. Some sectors will grow even while profits erode. A select few will improve both market share and profitability.
By far, the biggest future winners in tomorrow’s healthcare landscape will be software and IT companies and outpatient providers. Pharmacy benefits managers (PBMs), distributors and wholesalers, and payers will lose big in a landscape that will be unrecognizable. See Figure 1.
As profit pools increasingly shift from traditional parts of the value chain toward sectors oriented around technology, incumbents need new ways to defend against disruption and maximize business value. The old rules simply no longer apply.
Three pervasive market trends will set the new rules in healthcare:
As profitability centers more on the application of technology and less on traditional parts of the value chain, winners will leverage technology to reinvent the value they provide. There will also be huge rewards for rapid growth and consolidation due to the economies of scale integral to technology solutions.
In tomorrow’s healthcare landscape, current businesses will disappear, commoditization will reduce margins, and new sectors will offer new profit opportunities.
Staying ahead of this change means starting today with investments in areas with both long-term revenue opportunities and durable profit pools.