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Squeezing Costs out of Healthcare Tops PricewaterhouseCoopers' List of Health Industry Issues in 2010

NEW YORK, Dec. 17 /PRNewswire/ -- PricewaterhouseCoopers' Health Research Institute's Top 10 Health Industry Issues in 2010, puts healthcare cost control at the head of the list as the overarching theme for the year ahead.

"Healthcare typically lags trends in the business cycle by a year or more. While flat may be the new growth for other sectors of the U.S. economy, the recession could hit healthcare in 2010," said David Chin, M.D., partner and leader of PricewaterhouseCoopers' Health Research Institute. "The primary emphasis for all healthcare organizations in the year ahead will be on reducing costs and creating greater value in the health system, a focus that will have a domino effect from one sector to another and redefine roles, responsibilities and relationships."

Each year, PricewaterhouseCoopers' Health Research Institute publishes its top issues across all health industry sectors. The report includes trends affecting insurers, hospitals, physicians and other providers, pharmaceutical and life sciences companies, as well as the growing number of non-traditional market participants converging into the healthcare space. This year's top 10 issues are:

  1. Intense effort to reduce healthcare costs -- No stone will be left unturned. Hospitals, physicians, and other providers will look to squeeze every penny out of their operations and supply chains, renegotiating purchasing agreements and contracts with suppliers on everything from food services to medical devices and pharmaceuticals. Payers will look to reduce benefit-related administrative costs. Expect employers to increase audits of employee dependents to weed out those who are no longer eligible for coverage.
  2. Aftermath of health reform -- While 2009 was a year of watch and wait on health reform, healthcare organizations will be busy in 2010 absorbing the potential first waves of regulatory changes. These include major insurance market and payment reforms, dozens of new agencies and grant programs, reimbursement and pricing pressures, increased oversight, tax changes and the overall implications of increased coverage and consumer demand. PricewaterhouseCoopers expects the trend in the United States to mirror that of European countries in which major reform initiatives and their concomitant regulations will be a recurring process.
  3. Government accelerates change through rewards and penalties -- 2010 will be a double-bonus year for physicians who act quickly to take advantage of government incentives to adopt electronic medical records and e-prescribing. Those who do not will face potential penalties later. This new carrot and stick model of accelerating change represents a shift in the government's role as a "passive payer" to an "active buyer" of healthcare and its move from volume-based payments to value-based purchasing.
  4. Focus on fraud and mistakes -- Healthcare organizations will need to tighten internal controls and raise the bar on compliance as the government goes after fraud and mistakes in 2010. Health reform is banking on as much as $1.6 billion in savings from healthcare fraud prevention and recovery to bend the curve on cost growth. The Obama administration has boosted its fraud and abuse budget for 2010 by 50 percent, and a significant portion is dedicated to prosecution and enforcement. Pharmaceutical executives now face jail time for off-label marketing violations. CMS' Recovery Audit Contractor (RAC) program is analyzing patient and financial records seeking evidence of Medicare overpayments, and demanding restitution.
  5. Technology and telecommunications sectors become leading players in healthcare -- With a huge boost from the 2009 stimulus package for broadband funding and healthcare IT expansion, technology and telecommunications companies are aggressively capturing a growing share of the healthcare business. Beginning in 2010, the convergence of healthcare with technology and telecommunications companies, as well as other new market participants, will change the regulatory rules, the basis for competition and the way health services are delivered.
  6. Big pharma joins the healthcare delivery team -- The role of pharmaceutical and life sciences companies will evolve from manufacturer/supplier to full partner on the healthcare delivery team as its focus shifts from lab-based outcomes to promoting prevention and patient outcomes. In 2010, expect to see greater alignment of incentives between pharmaceutical companies, payers and providers. There will be an increase in collaborations among pharmaceutical and life sciences companies with one another as well as retailers and other organizations to address education, clinical effectiveness, product safety, wellness and compliance.
  7. Physician groups to rejoin health systems -- The percent of hospitals employing physicians has nearly doubled since 1994, and PricewaterhouseCoopers expects the trend will continue in 2010 as physicians seek greater stability and electronic connectivity. The realignment of physician groups with hospitals, including new models such as accountable care organizations (ACO), will require all providers to re-evaluate their relationships, operational infrastructure, payer contracting and overall funding models.
  8. Alternative care delivery models to emerge -- As the health system continues to struggle with costs and capacity, traditional care delivery models will give way to alternative models of care outside of physicians' offices and hospitals. Expect to see an increase in the number and scope of services offered by work-site and retail health clinics and home health services as well as other technology-enabled delivery such as e-mail, telehealth and remote patient monitoring.
  9. H1N1 elevates emphasis on readiness for public health outbreak -- Another wave of H1N1 flu in 2010 will put pressure on healthcare organizations, public health officials and employers to re-evaluate readiness for a major public health outbreak. They will need to reassess vaccine supplies and distribution, communication channels, bed capacity, sick leave policies and the role of funding mechanisms and contingency plans.
  10. Community health becomes new social responsibility -- In 2010, a new social responsibility for community health will emerge among employers, healthcare leaders and community leaders, with a major boost in funding from the government. Stimulus funding is providing grant money and other incentives for the development of evidence-based clinical and community-based prevention and wellness strategies to address chronic disease rates. A growing number of states and municipalities are creating policies and forming alliances to promote sustainable healthy lifestyles in entire communities.

A full copy of PricewaterhouseCoopers' Health Research Institute's Top 10 Health Industry Issues in 2010, including implications for healthcare organizations is available online at

About PricewaterhouseCoopers' Health Research Institute

PricewaterhouseCoopers' Health Research Institute ( is an unparalleled resource for health industry expertise. By providing cutting-edge intelligence, perspective and analysis on issues impacting the health industry, HRI assists executive decision-makers and stakeholders worldwide in navigating their most pressing business challenges. PricewaterhouseCoopers is one of the only firms with a dedicated global healthcare research unit, capitalizing on fact-based research and collaborative exchange among our network of professionals with day-to-day experience in the health industries.

About PricewaterhouseCoopers' Health Industries Group

PricewaterhouseCoopers' Health Industries Group ( is a leading advisor to public and private organizations across the health industry, including payers, providers, academic institutions, health sciences, biotech/medical devices, pharmaceutical companies, employers and new non-traditional market participants in the dynamic healthcare space. PricewaterhouseCoopers has a network of more than 4,000 professionals worldwide and 1,200 professionals in the U.S. dedicated to the health industries. PricewaterhouseCoopers' Health Industries' clients include 40 of the top 100 hospitals in the U.S. and 16 of the 18 best hospitals as ranked by US News & World Report; all 20 of the world's major pharmaceutical companies; all of the top 20 commercial payers in the U.S.; municipal, state and federal government agencies and many of the world's preeminent medical foundations and associations.

About PricewaterhouseCoopers

PricewaterhouseCoopers ( provides industry-focused assurance, tax and advisory services to build public trust and enhance value for its clients and their stakeholders. More than 163,000 people in 151 countries across our network share their thinking, experience and solutions to develop fresh perspectives and practical advice.

"PricewaterhouseCoopers" refers to PricewaterhouseCoopers LLP or, as the context requires, the PricewaterhouseCoopers global network or other member firms of the network, each of which is a separate and independent legal entity.

© 2009 PricewaterhouseCoopers LLP. All rights reserved

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