Consumer, Non-Cyclical Future Reimagined: Consumerization of Healthcare - What's in Store?

Consumerization of healthcare is the trend of people influencing and controlling their medical & wellness care. Non-traditional sectors such as retail, technology & consumer packaged goods are looking to address these needs.

23 Jun 2020

Source: UBS

The diagram shows how the consumerization of healthcare is impacting the healthcare landscape.

A disruptive force: the consumerization of healthcare

Broadly defined, the consumerization of healthcare (CoH) is the trend of individuals asserting more influence and control over their medical & wellness care. To address this, non-traditional companies such as those in the retail, technology and consumer packaged good sectors are looking to address consumer & patient needs. This is likely to accelerate post COVID as consumers increasingly focus on health. In this report, which is part of a series that started with Future Reimagined: Propelled to The Thinking Economy, we explore the opportunities & obstacles of the consumerization of healthcare and which companies stand to gain across various sectors.

Why is this shift happening now? What are the obstacles?

We see several factors. Patients are burdened with higher healthcare costs like rising out-of-pocket requirements & high deductibles. Plus, an aging population means healthcare needs are increasing. Simultaneously, technology & scale are allowing new entrants to serve this market. There are several outstanding questions including: how will pace of consumer awareness & adoption unfold, and how will payer mechanisms develop. Additionally, risks of data privacy are prevalent & will need to be managed.

The addressable market for the CoH is $600 bn+ and growing

We est. the addressable market for the CoH was ~$600 bn in 2019 and will increase at a 5.5% CAGR through 2025. Further, we believe that CoH already represents "at least" $50 bn (this number is likely conservative). In our base case, we assume that this amount grows 10% per year, increasing to $90 bn by 2025. Still, at that point, CoH would represent just over 10% of the total projected addressable market, suggesting room for upside.

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