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Driving value through diagnostics

Driving value through diagnostics

Diagnostic services are a fundamental part of the healthcare ecosystem. Despite this, the value of diagnostics tends to be underestimated. This has resulted in providers competing on cost and arguably focusing effort and investments into operational efficiency rather than investing in innovation, technology and service quality.

Demand for services has been steadily growing. Ageing populations have meant that healthcare systems are dealing with an increasing prevalence of chronic conditions. Advances in science are providing new solutions in the form of personalised medicine and genomics. At the same time, increasing strains on national healthcare budgets mean that diagnostics are too often viewed as a relatively easy source of savings.

Driving value through diagnostics is a key challenge in the coming years but it should be facilitated by the increasing capacity to leverage data for improving care and clinical outcomes and through evolving business models. We highlight five core value drivers below.

Five reasons why diagnostics is much more than a support function

It is important not to overlook the value of diagnostic services, recognising how these services can help healthcare systems drive efficiencies while improving patient outcomes.

  1. It is an essential service in the delivery of healthcare. In the NHS in England, around 95% of clinical pathways rely on patients having access to efficient, timely and cost effective pathology services, and pathology is involved in 70% of all diagnoses made.1When it comes to imaging services, evidence suggests that countries with lower rates of scanning are associated with lower cancer survival rates.2This role extends across the entirety of a patient pathway: from screening for diseases and other conditions to diagnosing our illnesses and then monitoring and managing their progress.
  2. It directly improves healthcare outcomes. Early diagnosis, both as a result of screening programmes or from testing in response to health concerns, helps prevent premature mortality and increases the number of healthy years of life. High quality diagnostics aid more accurate disease identification, leading to more appropriate treatments. In the case of personalised medicine, diagnostics can inform the best treatment plan specific to each patient and then monitor the resulting health outcomes. The challenge for the industry is how to better demonstrate this through data, which has been rather limited and not well championed to date.
  3. It is already a source of valuable data for clinicians and health policy makers and this will increase exponentially going forward. The data collected and processed through diagnostics can be leveraged to improve clinical outcomes on both a national and local level. At a national level, the data can be used to identify population health trends and links between tests, treatments and outcomes. At a local level, information on patients and disease patterns can be used to provide decision support on which tests to order. Relevant and easily interpretable reports, as well as insights into treatment plans, help teams design and optimise patient pathways. The challenge for the industry here is how to play a more active role in using data and upgrading IT capabilities and internal competencies to drive value from the masses of data that already exists but is not yet being exploited as effectively as possible.
  4. It is a key enabler of patient activation. Diagnostic services can drive patient engagement and ownership of their own healthcare. This applies to laboratory services as well as for imaging services, which have typically had more direct contact with patients. Increasingly, there have been shifts to the `direct-to-consumer' market for lab testing in geographies that have been typically run through more traditional, national systems. An example of this is Medicheck, a company in the UK that provides tests on blood, saliva and hair samples as well as screening packages in response to difficulties of getting GP appointments on the NHS and the lack of transparency of results for the patient. More generally, involving patients in their care encourages them to take a more proactive approach to managing their health, increasing patient satisfaction and improving outcomes. There is much more that can be done in this area but, again, it typically requires skill sets which have not traditionally been focused on by diagnostics players.
  5. It indirectly reduces the costs to the healthcare system. Preventing people from getting sick saves downstream costs by reducing the need for beds, costly treatments and lost economic activity. Appropriate testing and targeted treatments mean greater value for every dollar spent. 

Diagnostic services can also facilitate the move of healthcare activity from the hospital to the community. By providing services in local clinics or even in the home, patients can get a faster, more convenient service while saving the health system time and money by avoiding costly hospital visits.

In addition, private diagnostics players can provide valuable solutions in partnerships with the wider care system and public providers. Examples include the increasing role of private radiology providers and teleradiology specialists in UK imaging. These evolving care models provide solutions to problems such as clearing waiting lists, adding capacity or specialist skills and, if used appropriately can help reduce the overall cost of care.

The takeaway

Early diagnosis can catch problems early, improving patient outcomes and saving downstream healthcare costs. Diagnostics can also accelerate the move by health systems away from treatment and focus on volume to prevention and a focus on value.

At the same time, healthcare systems around the world are facing the compounding challenges of an ageing population and squeezed healthcare budgets. To manage these challenges, they must not forget about the benefits a strategic and value-based approach to diagnostic services can bring. Payers and commissioners have an important role to play by shifting the focus away from price and towards value. Regulators can support this move by relaxing sometimes burdensome regulatory requirements.

However, it is also down to diagnostic service providers to practically demonstrate the value they can bring. This can be achieved through making best use of the data already available, working more closely with physicians, being an active party in initiatives to shift care to the community and providing new solutions through ongoing research and development efforts.

Private providers are relied upon in many markets to provide new and innovative solutions, know-how and capacity to national healthcare systems. In KPMG's latest report, “The healthcare diagnostics value game,” we explore the challenges and the solutions of delivering and demonstrating value in under-pressure markets based on research and interviews with leaders in the market.

For further information, download the full report (PDF 593 KB).

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