With proliferation of technology and ACA value-based pricing rules, healthcare will continue to decentralize with a focus on outcomes

Confidential – Do not copy or distribute (www.innoaction.co)

From: Traditional Model To: Connected Health Model

Provider perception of product value

Payers reimburse indiscernibly

Patients consumes passively

Cu

rre

nt

Fu

ture

Access based on evidence of safety & effectiveness

Provider has little influence

Value shift lowers margins

Unrestricted access

‘Simple’ provider influence model

Predictable profit margins Instrumentation and

measurement

Patient accountability

Tiered healthcare supply and demand model

Standards of care

Info

rmation a

nd o

utc

om

es

tra

nspare

ncy

• Information transparency from real world evidence will challenge access, safety, and reimbursement,

driving up the bar for safety and efficacy and driving down margins of current business models

• Value shift away from products to solutions, to identify the right solution for the right patient to deliver

the right outcome – e.g., diagnostics, monitoring, medicine, lifestyle, incentives, etc.

Source: InnoAction Advisory

Protocolization of care combined with higher patient engagement will further put the consumer in charge of their health

• Standards of care and protocolization of care through consumer/ home diagnostics and differential

diagnoses tools can enable more evidence-based, coordinated, and value-driven healthcare

Source: Bain

Confidential – Do not copy or distribute (www.innoaction.co)

The advent of mobile, sensor, and wearable tech has opened up a huge potential for consumer-driven healthcare

Source: IBM

Confidential – Do not copy or distribute (www.innoaction.co)

Virtual, digitized, and evidence-based care has the potential to drastically reduce healthcare costs, while improving quality

Source: InnoAction Advisory

Quality

Co

st

Ev

ide

nc

e

Low High

Low

Low

Hig

h

Physician Office

Hospital

Home Health

Telemedicine

Coordinated Care

EV

IDE

NC

EIN

FO

RM

AT

ION

HE

UR

IST

ICS

Digitized Health

Confidential – Do not copy or distribute (www.innoaction.co)

Virtual, digitized, and evidence-based care has the potential to drastically reduce healthcare costs, while improving quality

Source: Oliver Wyman

Confidential – Do not copy or distribute (www.innoaction.co)

Healthcare companies who can own and coordinate this emerging technology and evidence domain can shift the economics of care

Source: IBM

Confidential – Do not copy or distribute (www.innoaction.co)

Technology advancements combined with significant cost pressures and shifting consumer norms will drive business model shifts

Evolving Challenges for Incumbent Business Models

Enterprise

boundary

Customer

interaction

From:

Complete and proprietary in-house capabilities from research to post-marketing

Push marketing oriented to drive transactions

Through new product development by translating science into clinic

Portfolio diversification, scale and market share

Value creation

Risk

management

To:

Eco-system of collaborative networks to cost-effectively enable value chain

Co-value creation oriented to fulfill customer needs

Through solution development using a systems design approach

Risk-sharing by orchestrating solution partners and stakeholders

• Open platforms enabled by technology will shift the supply-side models for R&D, Manufacturing/

Supply Chain, Commercial and Medical – creating lower fixed infrastructure costs and displacing

existing barriers to entry i.e. enabling new-entrants to disrupt existing business models

Source: InnoAction Advisory

Confidential – Do not copy or distribute (www.innoaction.co)

Key trends in consumer-centered healthcare

Source: PSFK 2014

Confidential – Do not copy or distribute (www.innoaction.co)

Key trends in evidence-based medicine

Source: PSFK 2014

Confidential – Do not copy or distribute (www.innoaction.co)

Commodity diagnostics will shift from a centralized model to a patient-centered decentralized model (I)

Source: PSFK 2014

Confidential – Do not copy or distribute (www.innoaction.co)

Commodity diagnostics will shift from a centralized model to a patient-centered decentralized model (II)

Source: PSFK 2014

Confidential – Do not copy or distribute (www.innoaction.co)

Commodity diagnostics will shift from a centralized model to a patient-centered decentralized model (III)

Source: PSFK 2014

Confidential – Do not copy or distribute (www.innoaction.co)

Commodity diagnostics will shift from a centralized model to a patient-centered decentralized model (IV)

Source: PSFK 2014

Confidential – Do not copy or distribute (www.innoaction.co)

Commodity diagnostics will shift from a centralized model to a patient-centered decentralized model (V)

Source: PSFK 2014

Confidential – Do not copy or distribute (www.innoaction.co)

Commodity diagnostics will shift from a centralized model to a patient-centered decentralized model (VI)

Source: PSFK 2014

Confidential – Do not copy or distribute (www.innoaction.co)

Commodity diagnostics will shift from a centralized model to a patient-centered decentralized model (VII)

Source: PSFK 2014

Confidential – Do not copy or distribute (www.innoaction.co)

Commodity diagnostics will shift from a centralized model to a patient-centered decentralized model (VIII)

Source: PSFK 2014

Confidential – Do not copy or distribute (www.innoaction.co)