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There is no doubt that the future of healthcare lies in digital technologies. The next two decades will be the age of the bioeconomy, which will have a significant impact on the economy, society and human lives. The convergence of AI, analytics and computations will allow healthcare to become a more measurement-driven business and fuel innovations that will have a far-reaching impact on how businesses will run in the long term.
Realizing a digital future in healthcare after COVID-19 pandemic
As the healthcare industry strengthens its scientific arsenal, it also needs to recognize the new normal and implement emerging, sustainable business models. Frost & Sullivan published its predictions for 2020 in December 2019, and while some still hold, we must acknowledge the significant impact and changes driven by the COVID-19 pandemic. This new vision for a digital future in healthcare for 2020 and beyond will not just focus on measuring segment resilience, identifying business continuity plans and highlighting the promise of digital tech -- it will also explore the implementation framework and immediate opportunities for a smoother transition.
A lost year for healthcare
Before the true magnitude of the pandemic came to fore, 2020 was expected to be the year when the total healthcare market would cross the $2 trillion mark and witness comfortable growth of 5.3%. However, as the situation unfolded, it became clear that growth would not cross 3.1% even in the most optimistic scenarios. While some segments like pharma and diagnostics will remain more resilient and continue to grow at 4% to 5%, medical imaging and medical devices will take the hardest hit and will experience best-case revenue declines of 31% and 2%, respectively.
The healthcare IT segment is expected to grow at almost 8%, due to the steadfast growth in the telehealth market. But despite some technical gains, there's still expected to be a loss of $45 billion in revenue and as much as $92 billion if things do not start recovering by the end of the second quarter in 2021.
By the middle of 2021, the healthcare industry will get back on its original growth trajectory; however, this will depend on new opportunities, which we explore below.
Prediction 1: Virtual clinical trials will make up 40% to 45% of all trials
By the end of 2020, 33% of global clinical trials will be disrupted, putting $3 billion in new product revenues at risk. Contract research organizations and pharma sponsors will increasingly lean on clinical trial IT offerings aiming for hybridization of patient recruitment, retention and monitoring to circumnavigate the most immediate challenges associated with social distancing. Consequently, we anticipate the mHealth and wearables-driven IT market will reach $560 million without the cost of the devices. Although virtual trials reduced the total trial costs by 15% to 20%, real-world applications were limited to observational trials. However, the initiation of Janssen's first-ever fully virtual interventional trial (NCT04252287) has set the right tone in 2020. The adoption momentum will vary based on product groups, particularly complex products like biologics.
Organic factors such as concerted efforts from logistic companies like Marken, clinical research providers like Science 37, contract research organizations like PRA Health and inorganic factors like the COVID-19 pandemic will also accelerate the transition from traditional to hybrid to fully virtual designs across product groups and geographies in the next five years.
Prediction 2: Alternate testing sites to change point-of-care (POC) testing service paradigm
If there is one way to contain the spread of any infectious disease, it is testing. Bold measures have been taken during the pandemic including free, drive-through and walk-through testing and a large enabler has been (POC) testing. According to our research, countries around the globe are expected to maintain COVID-19 test volumes exceeding 500,000 subjects per day throughout the year for population surveillance and will generate $1.98 billion in revenue.
While the rise in testing is inevitable, the looming change is the emergence of alternate testing sites such as pharmacies or ports of entry. Although flu testing at pharmacies has been commonplace, 2020 is ushering in an era where pharmacies offer an unprecedented level of convenience to patients. They will move from screening to clinical lab-grade diagnostic and on-the-spot teleconsultation, followed by medication dispensation and reimbursement processing, all in a single patient visit, which can span just a couple of hours. This model will scale new heights in the coming years with test developers like Sherlock and Mammoth Biosciences close to the goal of achieving around $15 per test with a turnaround time of five to 15 minutes and sensitivity of 90% to 99%; SAP and Oracle offering high-grade data integration and connectivity; and pharmacies like CVS with 20,000 locations across the U.S.
The new model is sure to find traction with immediate advantages like triaging high-risk patients and reducing the lab burden, mid-term advantages like patient convenience and long-term advantages like rapid clinical trial recruitment.
Prediction 3: Ventilator surplus and remote monitoring to redefine non-hospital and home critical care model
Several healthcare and non-healthcare companies like Philips, Medtronic, Getinge, General Motors, Ford, Dyson and even Fitbit have responded commendably to the COVID-19-induced ventilator shortage. While this quick response and supply are critical, this will leave an uneven surplus once the pandemic is behind us. Frost & Sullivan's current estimates for 2020 indicate that the U.S. will end up with a surplus of approximately 100,000 ventilators. Germany and the UK might just meet their demand, but France, Italy and Spain collectively will face a deficit of almost 30,000 to 50,000 ventilators, which might be purchased through the rest of 2020.
This is likely to reset the critical care medicine paradigms, especially as manufacturers stare at sale losses for subsequent years until demand picks up again. Though a fraction of the surplus will end up in federal stockpiles, a large portion will be absorbed by hospitals. Most notably, the portable designs will end up in homes, redefining non-hospital care models. Already, 95% of home medical equipment providers in the U.S. are reporting challenges in securing new equipment from manufacturers. The ongoing shift toward care delivery in homes, along with healthcare workforce shortages and associated fatigue of the existing personnel, will drive this trend further.
Another positive change expected from this surplus is the advancements in remote monitoring technologies including ResMed's cloud-based Airview platform. We expect the ventilator market to see a jump of 400% in 2020 and reach $4 billion in revenue in Europe and the U.S. combined. However, sustainability of this growth will call for a review of creative leasing models, embedding remote monitoring and control in newer designs and utilizing analytics to usher in a new era of growth in an otherwise mature and sluggish segment.
Prediction 4: Informatics and AI address workflow automation and operational analytics
Globally, the first and second quarter were quieter for the radiology department. According to Frost & Sullivan estimates, there has been a 50% to 70% reduction in footfall for elective procedures for oncology, cardiology, neurology and general radiology, creating a revenue deficit of $25 billion to $30 billion in imaging services alone. Nevertheless, with the early signs of a return to normalcy, the pent-up demand for elective procedures will grow in the remaining quarters.
At current trends, radiology, which is serving at 25% to 30% capacity, is expected to scale up to 65% to 75% by Q4 in 2020. This much needed upward swing would have ordinarily been challenged by current aging equipment fleet and technology obsolescence in the installed bases, but the new infrastructure investments made in teleradiology and AI as part of COVID-19 stimulus packages will bring the anticipated growth to fruition. This next-generation imaging equipment fleet will not only address historical concerns about the total cost of ownership and productivity gains, but it will also boost workflow efficiency by 40% to 50%.
As a result, it's predicted that teleradiology and AI will bring 2x growth in comparison to Q3 and Q4 of 2019 and drive $6 billion to $7 billion of imaging business in the second half of 2020.
Prediction 5: Virtual consultations by HCPs will witness greater than 100% growth in U.S.
As Europe and the U.S. crossed unfortunate milestones with the number of patients affected by COVID-19, the telehealth industry received a boost. Frost & Sullivan forecasts that revenue from virtual visits will display 124.3% growth in 2020 in the U.S. alone, which is the largest telehealth market and the biggest COVID-19 hotspot. However, this growth is pressure testing the existing network infrastructures and models -- the wait time for a virtual visit is already 22 hours, as reported by the Wall Street Journal. While the need to scale up is clear and pressing, several factors are creating an active transition into the impending age of teleconsultations.
There is a strong impetus from governments to standardize the use of telehealth tools, such as Centers for Medicare & Medicaid Services (CMS) adding 80 services to be fulfilled via telehealth and Swedish telehealth provider LIVI launching the first UK national guidelines for NHS general practitioners. Likewise, the private sector -- Teladoc for instance -- has moved to expand telehealth capabilities into robotics and virtual assistants that will support healthcare workers. Despite the catalyst being temporary, we are confident that telehealth will become the new normal. Aggressive onboarding of doctors, rapid scale up by vendors like Amwell and Zipnosis, and global evolution of reimbursement and regulatory models will ensure that telehealth becomes the new standard of care for mental health, chronic conditions and dermatology segments.
About the authors
Reenita Das is a healthcare futurist and strategist, passionate about changing the healthcare industry. She recently was voted one of the top 100 women in Femtech and Healthtech. She has lived and worked in over 10 countries in the world, focusing on healthcare issues and working with the public and private sector to implement growth change strategies. Das currently serves as transformational health partner and senior vice president and is the first woman partner at Frost & Sullivan.
Khushbu Jain, a biodesign and innovation fellow, has over nine years of experience in the healthcare industry in the areas of market research, commercial due diligence and asset scouting for portfolio optimization. Khushbu currently serves as an industry analyst with Frost & Sullivan's Transformational Health vertical. In her current role, her work spans cross-sections of pharmaceutical value chain including specific therapy areas, novel biological products, and pharmaceutical manufacturing.