Despite the undercurrent of change in their industry, healthcare CEOs are optimistic about the future. Growth prospects—for the global economy and for their businesses—are bright. And yet, health leaders are facing technological disruption, new kinds of competition, shifting regulation, and political pressure. These are some of the findings we see in PwC’s 21st Global CEO Survey, in which 63 healthcare CEOs from 25 territories participated.
The answers from the healthcare CEOs in our sample echo a scene playing out in many healthcare markets around the world: the status quo of rising demand for health services and escalating costs of care may be profitable for some now, but it is unsustainable. And the maelstrom is finally triggering a consolidation and transformation of the industry.
Over two-thirds of healthcare CEOs (67%) expect global economic growth to increase—above the global average of 57%. This is a large jump from last year’s survey, when only 23% of healthcare respondents were bullish on the global economy. What has stayed the same is the overwhelmingly positive expectations for growth in their sector. Like last year, 91% of Healthcare CEOs reported they expect to see revenue growth for their organisation in the next 12 months and the next three years.
Healthcare leaders point to a number of expected profitability drivers for 2018, most notably organic growth (75%) and cost reductions (68%), both similar to the global sample. They exceed the global sample in relying on alliance or joint ventures (62% versus 49%). That’s not surprising, as healthcare companies are facing pressure to connect digitally with their customers and make full use of big data, they will increasingly look to partner with technology firms, or face building those complex capabilities themselves.
Given the nature of the healthcare market, it is not surprising that the biggest concern for healthcare CEOs is over-regulation. Fully 88% of the healthcare respondents in our sample are extremely or somewhat concerned about over-regulation threatening their organisations’ growth prospects (see exhibit 2).
Another worry keeping the healthcare CEO up at night: cyber threats. With security breaches and malware attacks making headlines and bearing serious consequences to healthcare payers and providers (for example, the WannaCry ransomware attack which affected the UK’s National Health System (NHS) in 2017), two-fifths of healthcare CEOs reported being ‘extremely’ concerned about cyber threats, with 76% overall citing it as a threat to their organisations’ growth prospects.
But a potentially bigger challenge to their business operations is a shortage in talent: 83% of healthcare CEOs told us they are somewhat or extremely concerned about the availability of key skills. As healthcare needs rise with ageing populations worldwide, many markets are facing a shortage of healthcare workers.
When we asked healthcare CEOs to look at the disruptive trends accelerating toward them over the next five years, changes in customer behaviours and core technologies rank at the top, with 68% of healthcare CEOs believing these two trends will be somewhat or very disruptive. And 65% feel the increase in direct and indirect competitors is also a disruptive trend.
On top of managing current threats and future disruption, the survey revealed there are some pressures that healthcare CEOs are feeling more acutely than their peers from other industries. For example, a majority of healthcare CEOs agree that they are facing increased pressure to show business results under shorter timelines, higher than the global average. And 56% also say they feel pressure from employees and customers to take political or social stances, much higher than the global average of 38%.
It is clear that healthcare CEOs see the hurdles ahead, yet their confidence remains high. Leaders must work to address regulatory pressures, competition from both within and outside of the industry, and stakeholder demands to address social issues. Further, these CEOs must implement strategies to attract the skilled employees necessary to carry out day-to-day business, as well as address challenges such as cyber threats.