Digitizing healthcare—opportunities for Germany

Society is aging and healthcare costs keep rising. By digitizing the system, health services can be provided at lower cost and higher quality. A study ran by McKinsey & Company Healthcare Systems & Services in Q4 2018 revealed the areas for and extent of potential improvements in Germany.

The study prepared in partnership with the German Managed Care Association (BMC) suggests that up to EUR 34.0 billion in potential value could have been realized in 2018 if the German healthcare system had been fully digitized. This is equivalent to around 12 percent of its actual total projected costs of around EUR 290 billion this year, which is a record high. Trends continue unabated: on top of a nominal annual increase of 4.5 percent, Germany’s aging population and expensive treatment methods are driving the rise in health spending. So the German healthcare market is at a crossroads. Digitization should pave the way for new approaches to medicine and creating opportunities to address several of the country’s most pressing healthcare issues. Although there are still some concerns about privacy, patients are already taking advantage of digital healthcare solutions and healthcare regulators, patients, payors, and providers are hoping that digitization will enable faster access to data and generate more savings.

For this study the authors analyzed the potential value, i.e. the potential saving that might be captured through 26 digital solutions and then quantified these for healthcare in Germany. Analysis of more than 500 research papers, observations and learning from previous projects, and interviews with leaders in healthcare were used to assess the impact of each digital solution. Specifically, the study discovered that 70 percent of the value could be captured by healthcare providers, primarily doctors and hospitals, with the remaining 30 percent captured largely by health insurers.

This study demonstrates the scope of the potential economic benefits to the German healthcare system through digitization. Furthermore, all of its stakeholders should learn from other industries’ experiences with digitization, which has delivered significant improvements each time its efforts were focused on the customer. Healthcare is all about the patient, and progress in the sector is characterized by faster and more affordable treatment and improvements in health outcomes.

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