PricewaterhouseCoopers Forecasts Three-year Window of Opportunity for Healthcare Industry to Solve Key Problems.

Health/Medical Writers

DALLAS--(BW HealthWire)--May 24, 2002

Blueprint for Future Identifies Actions for

Global Providers and Payors

Healthcare leaders across North America, Western Europe, and Australia identified major industry gaps and levels of readiness to address them in a landmark research report released today by PricewaterhouseCoopers. HealthCastTactics: A Blueprint for the Future updates the firm's award-winning 1999 global research report, HealthCast 2010: Smaller World, Bigger Expectations, and suggests tactics for the healthcare industry to employ over the next three to five years.

According to the newly released report, HealthCast Tactics: A Blueprint for the Future, significant gaps exist between what healthcare executives, policy makers and employers rate as important and what is being implemented on several important topics. The largest gap identified was in implementing reimbursement systems that reward providers for quality and patient safety. Other critical gaps exist on issues such as administrative efficiency and hospitals providing patient satisfaction data. Leading healthcare payors and providers will move toward strategies implementing pay-for-performance reimbursement, clinical priorities, and patient privacy.

"The problems of today's healthcare system aren't insurmountable," said Woodrin Grossman, chairman of the global healthcare practice, "However, healthcare organizations must plot the right moves today. To get to the future first, hospital systems and payors must begin applying proven tactics that will take one to three years to implement fully."

The new report surveyed more than 650 top executives from hospital systems, health plans, physician groups, medical vendors, and employers, as well as policymakers and government health officials in the U.S., France, Germany, Great Britain, Italy, the Netherlands, Spain, Sweden, Denmark, Australia, and Canada. In addition, the firm interviewed 65 top executives in healthcare organizations in the U.S., Canada and the Pacific Rim for a closer look at current industry challenges and an assessment of readiness to implement solutions.

Significant Gaps

PricewaterhouseCoopers concluded that payors and providers alike are developing strategies that call for pay-for-performance reimbursement, set clinical priorities, and honor patient privacy. "What we discovered are significant gaps between what healthcare executives, policymakers and employers rate as important issues and what actions are being taken on these issues," reported Sandy Lutz, director of research for the PricewaterhouseCoopers healthcare practice. "We also discovered other critical gaps in administrative efficiencies and hospitals' provision of patient satisfaction data," she said.

According to HealthCast Tactics the biggest gap between the importance of issues and actions addressing them centers on the lack of pay-for-performance reimbursement systems. While this concern rated high (3.9 on a 5.0 scale), implementation of solutions was perceived as low (2.6). "Both providers and payors would prefer reimbursement methods that reward quality and safety," Lutz said. The survey details examples in which payors and government agencies are adopting such systems.

Ranking Privacy Risks

In terms of privacy protection, the PricewaterhouseCoopers survey asked respondents to rank seven different instances in which a patient's privacy could be at risk. The top-ranked instance was when physicians share patient information via e-mail. The lowest-ranked instance was in electronic patient records stored in proprietary data warehouses. Among physicians and hospital executives, the top-ranked risk was the discussion of patient records by hospital employees.

Solutions on Two Tracks

HealthCast Tactics: A Blueprint for the Future looks at building the future hospital system and the future payor system. According to Lutz, "Many hospitals will approach the mid point of this decade in a severe capital crunch. Their plants are aging and their staff turnover is high. They may not have the capital to repair and retain. If their patients and physicians can go elsewhere, they will. If they can't, the consequences will be lower quality of care."

Tactics targeted for hospital systems include:

-- Imbedding pay-for-performance in reimbursement strategies

-- Offering self-service tools to lower administrative costs and shift
responsibility

-- Targeting high-volume healthcare users through predictive modeling

-- Establishing single-platform information and data warehousing systems

-- Recognizing opportunities as public and private payor responsibilities blur

On the payor side, medical costs and increased demand are intensifying dissatisfaction that affects all participants in the healthcare system. David Chin, a PricewaterhouseCoopers principal who leads the payor practice, noted that payors must work with providers and consumers to develop more efficient and effective delivery of treatment and care. Payor tactics suggested in the new PricewaterhouseCoopers report include:

-- Imbedding pay-for-performance in reimbursement strategies

-- Offering self-service tools to lower administrative costs and shift
responsibility

-- Targeting high-volume healthcare users through predictive modeling

-- Establishing single-platform information and data warehousing systems

-- Recognizing opportunities as public and private payor responsibilities blur


     High-Interest Issues Identified by Healthcare Thought Leaders

                                                           Significant
                                      Importance Readiness     Gaps
                                      ---------- --------- -----------
Payors reimbursing providers in part
on safety and/or quality                  --                   --

Hospitals providing patient
satisfaction data                         --

Hospitals setting clinical priorities,
centers of excellence                     --        --

Payors directing patients to centers
of excellence                             --

Provider reporting safety and quality     --                   --

Payors reducing administrative costs      --                   --

Providers tracking payment denials by
type                                      --        --

Patients and healthcare organizations
understanding how their data is
shared                                    --                   --


Source: PricewaterhouseCoopers HealthCast Tactics survey, 2002

Importance rated more than 3.5 on 5-point scale
Readiness rated more than 2.75 on 5-point scale
Gap of 1.25 or more, representing a 25% Gap Between Importance and
Readiness

For more information about HealthCast Tactics and other reports in the HealthCast series, visit www.pwcglobal/healthcare. PricewaterhouseCoopers is the world's leading professional services organization. Drawing on the knowledge and skills of 150,000 people in 150 countries, PricewaterhouseCoopers helps clients solve complex business problems and measurably enhance their ability to build value, manage risk and improve performance in an Internet-enabled world. PricewaterhouseCoopers refers to the U.S. firm of PricewaterhouseCoopers LLP and other members of the worldwide PricewaterhouseCoopers organization.

EDITORIAL NOTE: To obtain a copy of the full 56 page report please contact [e-mail] with your name, publication and mailing address.