Physicians, providers, and others must follow patients’ shifting preferences toward various care settings that are closer to home and community, the next frontier in care delivery. More than 40% of executives expect to see an increase in procedures performed in outpatient ambulatory settings, and more than 60% expect to see more care delivered in nonclinical settings (such as the home). We project that as much as of one-third of all hospital volume could move into ambulatory, home, and virtual-visit settings over the next ten years. Solutions are already expanding to cover more mobile patients and more points of care—including diagnostics, urgent care, primary care, specialty care, and post-acute care.

Further impetus for these shifts will come from policy momentum to maintain telehealth access and promote reimbursement parity. During the pandemic, the US Center of Medicare Services (CMS) increased the number of diagnosis codes eligible for telehealth reimbursement by 80%, and US private insurers eliminated co-pays for virtual care during the crisis. CMS recently added remote therapeutic monitoring codes to the 2022 Physician Fee Schedule, suggesting that the changes in reimbursement policy for digital health are likely to become permanent. Almost 30 states and the District of Columbia have passed parity laws for telemedicine.

That said, national and regional differences persist as legal, regulatory, and reimbursement frameworks have reached different stages of evolution around the world. The pace of telehealth adoption will probably be fastest in geographies such as the US, the UK, Australia, Denmark, Switzerland, and Spain, where digital consultations are an established part of the health systems. In contrast, data and privacy restrictions in markets such as Germany, Austria, France, and the Netherlands could hamper uptake in those countries.

As the delivery of care shifts, providers must create delivery ecosystems that integrate both digital and in-person modalities. Providing a cohesive care experience across the patient journey will require providers to partner more seamlessly with other stakeholders. One big must-do for providers is to determine the right number and level of partnerships to establish with pharma, medtech, and insurance players to provide a cohesive patient experience and deliver the best outcomes while maintaining competitive advantage.

As patient care takes place in more diverse venues and becomes increasingly virtual, biopharma and medtech companies need to understand implications of these changes for diagnosis, medication adherence, product design, R&D, and commercialization. In our most recent provider survey, three-quarters of physicians said that they would prefer to maintain or further increase the amount of virtual (versus face-to-face) engagements with pharma reps that they became accustomed to during the pandemic. They see virtual engagement with pharma companies as efficient and effective. Doctors are also looking for new models of cooperation with the pharma industry. Two of the four most effective communication channels for physicians are now virtual: training webinars and virtual speaker programs. Physicians continue to have high levels of interest in medical information and scientific data, and more are interested in learning how biopharma companies can support patient care with digital tools and engagement.

Medtech companies have an opportunity to define their strategies and their role in the patient journey more clearly, and then optimize their production and distribution accordingly. Like biopharma firms, medtech companies will need to invest in culture, training, and technology to support new multichannel sales and marketing models, since they will have fewer opportunities for in-person sales. Early adopters of omnichannel sales approaches in medtech have enjoyed strong results. The main focus in medtech continues to be on developing innovative and differentiated products, services, and solutions for a wider variety of care settings. Many subsectors are experiencing a continuing shift from hardware innovation to digital and software features and ecosystems (such as remote access), as well as to service offerings. Some companies are actively positioning themselves as partners of choice for other players in a multisite, omnichannel care delivery model.

Payers have a critical role to play as enablers and facilitators of the shift in care settings. They can also play a role in facilitating more home and community care settings. Many companies are accelerating their adoption of digital technologies and altering benefit designs in ways that offer preferential cost sharing for—or even mandate the use of—telehealth as a first step. Two-thirds of insurance executives believe that COVID-19 has had a positive effect on virtual and telephonic engagements, and nine of ten expect members’ digital engagement to increase over the next one to three years. More payers are partnering with other organizations to share data and enable improved mobile and cloud experiences. As many payers integrate themselves with the delivery system, they increasingly become direct facilitators of in-home, remote, and ambulatory services, often via the creation of virtual platforms and ecosystems to link patient journeys.

Science and Technology Accelerate

As the available therapeutic arsenal rapidly expands, players throughout the sector must adjust their practices to keep pace with the advances. New and advanced treatment technologies, such as RNA, CAR-T, and cell and gene therapy are gaining widespread traction. The successful development and delivery of two mRNA COVID-19 vaccines in less than a year will accelerate a wave of RNA innovation. We expect to see significant use of mRNA technology against other viruses, now that mRNA technology has been validated through the administration of hundreds of millions of doses. We also expect researchers to significantly accelerate the use of mRNA as a therapeutic modality in oncology and rare diseases and in other acute and chronic diseases.

In recent years we have seen strong growth in the funding of digital ventures, and the emergence of COVID-19 led to a marked acceleration in such funding. Venture funding in health care surpassed $20 billion in September 2021, with three more months left in the year, and the average size of funding deals increased as well—to $39 million in 2021, a 147% jump from $15.9 million in 2017. (See Exhibit 4.)