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Friends,
In this episode we’re going to discuss the opportunity we have, collectively, to live longer and healthier lives – and the underlying transition that’s required in the healthcare industry to make that a reality over the next few years.
The specific topics at hand include: (1) The economic imperative for why the American healthcare industry must move toward wellness; (2) the profound life-saving and cost-saving benefits of such an industry shift; (3) the central role that employers can play in wellness and longevity; and (4) some of the challenges and headwinds in this shift.
Our expert guest today is Neal Batra, who is a principal in Deloitte’s Life Sciences and HealthCare practice which is focused on the redesign of business models and commercial operations. He also heads Deloitte’s Life Sciences Strategy & Analytics practice, leading the way on next-gen enterprise strategy, analytics and technology. Neal has more than 15 years of experience advising health care organizations and businesses in biotech, medtech, health insurance, and retail health care. He is the coauthor of Deloitte’s provocative ‘Future of health point-of-view’ – forecasting on the healthcare ecosystem in 2040, and the business models and capabilities that will matter most. He holds an MBA from London Business School and a BBA from the College of William and Mary.
In this interview, we’ll discover:
- The difference between ‘life-span’ and ‘health-span’, and why ‘healthy longevity’ may be more important to us than longevity.
- How many additional years of life-span and health-span Neal and his colleagues believe Americans can experience by 2040.
- Why and how employers could be a major channel for enhancing healthy longevity.
- The amount of annual national healthcare spend we could save if we added well-care to our sick-care system.
- How this transition must include all Americans – an imperative from the disparities & inequities perspective, as well as the economic perspective.
The foundational issue that Neal and his colleagues start off with is that our healthcare system, as amazing as it is – is focused on the ‘break it and fix it’ model. It is a system that largely waits for disease and illness, and then dedicates tremendous resources and expertise toward dealing with that disease and illness burden. This is what he and many others refer to as a ‘sick-care’ system. This is in stark contrast to a system that is focused on proactive prevention of disease and illness. And Neals points out that this is not an either-or decision. What he recommends is a widening of the aperture – a diversion of some of the current healthcare spend to proactive and preventive well-care.
Neal opens up our discussion with a sobering revelation. For most Americans, the time of life when their health begins to erode corresponds to the time that they’re getting ready to retire. As he puts it, “Your healthiest years went to your employer, and in a time that was meant to be the ‘golden years’, or the years in which you had a financial foundation that allowed you to do different things with your life, your healthspan declines to a point where your quality of life declines.”
A second revelation – that Neal and his colleagues have published on – is that if we transitioned to a wellness industry, Americans could add an additional 12 years to their lifespan and nearly 20 years to their healthspan, by 2040. His team has also projected that the American healthcare system could save $3.5 Trillion per year – what he refers to as a whopping ‘well-being dividend’. Neal’s point, not to be missed, is that the cost dilemma in American healthcare will not be solved through cost reduction in a sick-care system, but rather through cost prevention through a well-care system. In his own words, “I’d like to shift to a ‘cost-of-avoidance’ narrative versus a ‘cost-of-care’ narrative. The cost-of-care narrative is a trailing economic measure, and there is no amount of innovation that will ever make it cost-effective to address the population in this break-fix modality. The only way out of the economic death spiral we are in when it comes to healthcare is to jump in front of illness, and invest ferociously on disease avoidance, and early as well as real-time diagnosis.”
A critical finding – that Neal and his colleagues have also published – is that approximately $1Trillion of the $3.5 Trillion in savings will come from the elimination of the disparities and inequities in healthcare. One statistic he mentioned is that white Americans live on average, 78 years, while for black and native Americans, the ages are respectively, 72 years and 68 years. And while these and other disparities are unconscionable in and of themselves, the calculations add an economic imperative to the ethical arguments for eliminating the structural racism in our healthcare system.
A third revelation and shocking forecast that Neal shared – which again, his analytics & actuarial team have published – is that, by 2040, 60% of healthcare spend in the US will go to well-care, not the treatment of disease and illness. He and his colleague predict that, by 2040, we are going to witness a “new health economy” with “new business models” which will drive 85% of all healthcare revenue. This new health economy will also be driven by a shift from a ‘rule-of-thumb’ to a ‘rule-of-one’ medicine – that is, the hyper-personalization of care – enabled by the digital and AI revolution in healthcare.
To balance out the dialogue, we did discuss the very real obstacles and headwinds to this sort of healthcare transformation. For starters, wellness care does not align with the current, predominant, industry business models. Neal’s counter-argument is that no industry has ever been transformed by incumbent stakeholders. It’s only through external pressure that the incumbents either respond and change, or they go by the wayside. His point of view is that hospital systems have two options: (1) continue to solely pursue the acute care/sick-care business model, and contract into an acute care focused factory; or (2) engage and expand into wellness care and the corresponding business models.
I don’t want to lose sight of Neal’s ‘both-and’ perspective, which is that it’s not that we have to choose between sick-care and well-care. Instead, we need to create a more balanced healthcare system that includes a significant well-care component. But, as Neal points out, we’ve got a long way to go to reach that balance. “If you held our sick care capabilities constant over the next decade and flowed everything into wellness and wellbeing, I think the yield on the American health system would be enormous economically, as well as from a health outcomes perspective”.
I’ll end with this personal observation. In my career, I’ve seen us accomplish miraculous things – creating space-age interventional cardiac labs, life-saving hemodialysis centers, and tele-stroke units. But here’s the rub. Wouldn’t you rather have the healthcare system focus a significant amount of resources and expertise on you NOT having that heart attack, kidney failure, or stroke in the first place? I know I would.
Wishing you all the best of health and wellness!
Zeev Neuwirth, MD