Healthcare Faces Pivotal Year, Says PricewaterhouseCoopers’ Health Research Institute in its Annual Review of the Top Health Issues of 2008

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The health industries face a pivotal year ahead according to PricewaterhouseCoopers’ Health Research Institute in its new report, the Top Eight Health Industry Issues in 2008 (http://www.pwc.com/hri) released today.

The health industries face a pivotal year ahead according to PricewaterhouseCoopers’ Health Research Institute in its new report, the Top Eight Health Industry Issues in 2008 (http://www.pwc.com/hri) released today.

PricewaterhouseCoopers’ Health Research Institute identifies the following eight issues that will dominate health industry discussions in 2008:

  •     Retirees Will Play a Greater Role in Funding Their Healthcare Coverage

Three quarters of executives at multi-national companies surveyed by PricewaterhouseCoopers said that while employers should help provide access to affordable retiree health benefits, they no longer should be expected to pay for it. Is this the bell tolling for retiree health coverage? PwC's report suggests that employers may reexamine their approach to retiree healthcare by capping or eliminating traditional retiree benefits from their balance sheets and shifting toward “defined contribution” or “no contribution” approaches.

Driven by consumer demand for convenient and lower-cost medical care, the number of retail clinics in discount chain stores, grocery stores and drugstores is expected to quadruple, from 700 today to more than 3,000 in five years. In the year ahead, states, payers and policymakers will be crafting legislation and policies applicable to this new breed of healthcare provider, which lacks uniform regulation and quality controls.

The Centers for Medicare & Medicaid Services (CMS) has changed the way it pays hospitals to recognize the severity of illness among patients. Hospitals that treat sicker patients will be reimbursed more for doing so, potentially leveling the playing field among hospitals. That, combined with CMS’s new stance to not pay for certain conditions resulting from medical errors mean some hospitals may see a decline in revenue. In 2008, watch for private payers to follow in CMS’s footsteps and an increased demand for medical coding staff.

Typically more expensive than group health insurance, individual health insurance could see market growth as more states mandate health insurance and if an individual mandate or additional tax incentives come to fruition from proposals by Republican and Democratic presidential candidates. Hospitals and other providers may suffer if plans offer limited benefits, but in the long run would benefit from fewer uninsured Americans.
    

  •     Increased M&A Between Pharmaceutical and Life Sciences Companies

Revenue growth is down for Big Pharma: The pipeline of new drugs coming to market is thinning, brand drugs are coming off patent, and the cost of bringing new drugs to market is increasing. To address these woes, Big Pharma is joining forces with life sciences companies. With these collaborations, life sciences companies are now driving the industry where big pharmaceutical companies once had a significant advantage. Look for greater collaboration through mergers, collaborative risk-sharing, joint ventures and other co-development and co-promotion arrangements.

  •     Asia Plays Bigger Role in the Pharmaceutical Industry, but Safety Concerns Loom

Asia is poised to become one of the world’s largest pharmaceutical consumers and producers. The rising cost of drug discovery has led pharmaceutical companies to look outside the U.S. for a less expensive workforce and to outsource both clinical development and manufacturing operations overseas. Yet there are significant concerns regarding Asia's uneven protection of intellectual property rights and Asian drug safety.

  •     FDA Tightens Medical Device and Drug Safety Standards

Congress granted the U.S. Food and Drug Administration increased authority over post-market drug safety and the ability to require increased safety standards from drug companies. Under new FDA guidance, the pharmaceutical industry will face even more regulatory burdens. Look for payers to report to the FDA insurance claims data that identify patterns of adverse reactions to certain medications, such as with off-label drugs prescribed for use in ways not approved by the FDA.

The Internal Revenue Service wants hospitals to provide a full accounting of the benefits they provide to the community, reported in a uniform manner, as part of their annual tax return to the IRS, submitted on the proposed 2008 Form 990 and available for public inspection. In 2008, tax-exempt hospitals will need to start tracking community benefit efforts so that when and if required, they can accurately report their activities for the year.

“The future strategies of hospitals, insurers, pharmaceutical and life sciences companies will be influenced by government policies, market pressures and global trends," said R. Carter Pate, Global and U.S. health industries and government services leader, PricewaterhouseCoopers. “With healthcare costs taking a bigger bite out of the assets of individuals, businesses and the U.S. economy, there is a demand for greater accountability from the health industries and demonstration of the value for the money.”    
A full copy of PricewaterhouseCoopers’ Health Research Institute's Top Eight Health Industry issues in 2008 is available online at http://www.pwc.com/hri.

About the PricewaterhouseCoopers Health Research Institute:
PricewaterhouseCoopers Health Research Institute (http://www.pwc.com/hri) provides new intelligence, perspective and analysis on trends affecting all health-related industries, including health care providers, pharmaceuticals, health and life sciences and payers. The Institute is part of PricewaterhouseCoopers’ larger initiative for the health-related industries that brings together expertise and allows collaboration across all sectors in the health continuum.

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 146,000 people in 150 countries across our network share their thinking, experience and solutions to develop fresh perspectives and practical advice.

"PricewaterhouseCoopers" refers to the network of member firms of PricewaterhouseCoopers International Limited, each of which is a separate and independent legal entity.

Contacts:                
Lisa Stearns
The Hubbell Group, Inc
(781) 878-8882

Todd Hall    
PricewaterhouseCoopers        
(617) 530-4185

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