Investors, consumers are pushing the health care industry to tackle health inequity: Deloitte – Yahoo Finance

Health inequity is costing the U.S. health system billions of dollars annually, and could reach $1 trillion by 2040, according to a new report from Deloitte.

But, according to the report's authors, there is one bright spot on the horizon. Boards of health companies are increasingly focused on addressing inequity.

Health equity became a popular phrase during the pandemic and following the murder of George Floyd as calls grew to address systemic inequities in the U.S.

For years, studies have underlined the need to address health inequities, and numerous pilot programs have been tested to provide more efficient health care, but no scalable solutions have ever been realized.

Deloitte estimates that health inequities account for $320 billion in annual health care spending today, or cost about $1,000 per American annually. Its analysis projected the trajectory of unnecessary healthcare spend that is higher among poorer populations and minorities. Researchers analyzed five diseases that predominantly affect these populations, including heart disease, diabetes, breast cancer, colorectal cancer and asthma.

The researchers analyzed five high-cost diseases diabetes, heart disease, asthma, breast cancer, and colorectal cancer and determined common health disparities among the patient populations. They then used this data to establish the proportion of spending that could be attributed to health inequities.

Neal Batra, a principal in Deloittes Life Sciences and Health Care practice, said the key to tackle the issue is pressure from consumers and investors.

"You have more energy and attention around it than ever before. What we also know is that this topic is a genuine topic of discussion at the board and C-suite level in a way it's never been before," Batra said.

"I think boards care about this because investors care about this. I think investors care about this because they genuinely believe consumers care about this. And they believe consumers care about this, in large part, because of...George Floyd," he added.

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A demonstrator holds a sign during a protest against police brutality and racial inequality in the aftermath of the death in Minneapolis police custody of George Floyd during the outbreak of the coronavirus disease (COVID-19) in Manhattan, New York, U.S., June 13, 2020. REUTERS/Caitlin Ochs

And the business case has now become intimately tied to the ethical case.

"I think investors care about this because they recognize that if they are on the wrong side of this narrative...your business can get punished very quickly and very severely," Batra said.

But there are multiple ways the industry has to respond, the report said.

"Health care incumbents, industry disruptors, community organizations, and government agencies each have a role to play in removing the barriers that lead to health inequities and turning unaffordable costs into opportunities," the authors wrote.

There has been lots of M&A activity in recent years, and concerns remain about whether or not regional monopolies and scale translate to savings. But Batra said the country is seeing a surge in small players that could be true disruptors, as more virtual options appear and technology gains footing in the health space.

"I'm actually calling this the age of fragmentation. Where you have enormous explosion of smaller enterprises that are showing up in these spaces to do it differently," he said.

Which is what the latest report aims to highlight, especially for larger entities.

"I think this guidance is meant to help the large enterprises move, but ... change never comes from the incumbents. It comes from pressure from the outside, and the incumbents reacting. And I think we are in that moment right now," Batra said.

Andy Davis, a principal for Deloitte Consulting LLPs Health Care practice, said among the incumbents, insurers in particular are still getting a grip on their role.

"I think they're just starting to see some of the impacts they can have around what they offer around products, what they offer on solutions, how they actually reach out to individuals," he said.

"That all, at some point, comes back to premium and what you end up having to pass on to the consumer, which is pretty unsustainable," he said.

The federal government has taken a lead in trying to find a model, with society inequity adjustments, rather than just risk adjustment, in Medicare and Medicaid.

But all of this, despite years of focus on population health and social determinants of health, is still in the beginning stages, Davis said.

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Investors, consumers are pushing the health care industry to tackle health inequity: Deloitte - Yahoo Finance