The Future Of Healthcare: Payment Or Prevention?

Paul Clark

Traditional healthcare models are under pressure on a global scale. In the industrialized world, aging populations and chronic diseases have caused soaring treatment costs, triggering governments to introduce new policies to stem the rise in health spending and improve healthcare outcomes.

According to the SAP eBook, Connected Care: The Digital Pulse of Global Healthcare, this has a ripple effect on other players in the healthcare industry, including insurers, healthcare providers, and pharmaceutical companies, who are under pressure to rethink their business models.

The healthcare industry has long been characterized by a 3-pronged approach:

  1. Healthcare providers: hospitals, clinics, and doctors delivering treatment and services.
  2. Healthcare manufacturers: pharmaceutical and other medical companies manufacturing medication and devices.
  3. Healthcare payers: typically governments and insurers who pay for medical services.

All of these healthcare organizations are working to adapt to the new pressures, and they are increasingly incorporating digital technology into prevention-based models of healthcare.

Healthcare providers are actively implementing technologies that can help them provide accountable care, which is the best treatment delivered in the most efficient way. As a result, connected wearable devices are increasingly being used to monitor diseases, activity levels, or vital signs remotely, which can reduce costly visits to hospitals and even prevent some medical crises altogether.

Healthcare manufacturers are moving beyond medicine and supplying personalized treatment solutions that include monitoring as well as lifestyle advice. Pharmaceutical companies are also seizing the opportunity presented by the Big Data collected from hundreds of consumer health apps for chronic conditions. Big Data analytics can be used to reveal connections and patterns that enable the development of personalized precision medication.

Healthcare payers such as insurers and government agencies are looking at multiple ways to reduce costs using technology and prevention-based incentives, according to the SAP Connected Care eBook and the Hitachi article, A Spoonful of Sugar or an IoT of Prevention.

Insurance companies have started using IoT data to develop tailored insurance policies and pricing, with some insurers providing discounts to people who share their personal and fitness data, and offering reduced premiums for people perceived to have healthier lifestyles. They are also encouraging health providers to use remote monitoring to reduce premiums.

Governments and government agencies around the world are attempting to reduce payments by focusing on prevention and quality treatment.

  • In the United States, the Affordable Care Act rewards outcomes and the value of treatment over volume, which is restructuring the American healthcare industry.
  • In Japan, the relatively long life expectancy and low healthcare expenditures in proportion to GDP are often attributed to various preventive healthcare practices.
  • In the United Kingdom, a government agency is currently working with Hitachi and the University of Manchester on a survey targeted at developing a type 2 diabetes prevention program that aims to be clinically effective, easily accessible, and proven to reduce costs.

The Hitachi article suggests that IoT technology can help prevent disease. The article states that the U.K. spends about $13 billion annually on type 2 diabetes, but it suggests that instead of continuing to treat patients with more and more drugs, that IoT-based apps and other products and services should be used to encourage healthy lifestyle changes that can help prevent the disease.

The traditional lines of distinction in healthcare will continue to blur and change as healthcare providers, manufacturers, and payers adapt to meet today’s new focus on preventive care and patient outcomes.

For an in-depth look at how digital technology is changing the healthcare industry, download the SAP eBook, Connected Care: The Digital Pulse of Global Healthcare.

For more information on how the digital age is affecting business, download the SAP eBook, The Digital Economy: Reinventing the Business World.

Discover the driving forces behind digital disruption in the SAP eBook, Digital Disruption: How Digital Technology Is Transforming Our World.


About Paul Clark

Paul Clark is the Senior Director of Technology Partner Marketing at SAP. He is responsible for developing and executing partner marketing strategies, activities, and programs in joint go-to-market plans with global technology partners. The goal is to increase opportunities, pipeline, and revenue through demand generation via SAP's global and local partner ecosystems.