Have been updating our views on what is going to make a difference in addressing the healthcare challenge ahead of a talk next Thursday for the Technology Strategy Board in Bristol. As well reviewing where the sector itself thinks things are heading, have included perspectives that link more to stronger political will to effect change and potential shifts in societal values. 
Internal Perspective
Reading though numerous views on the challenges, options and future scenarios for healthcare from consultants, medics and the likes if the EIU, there is evident agreement on the issues as well as many suggestions of how to improve the efficiency and effectiveness of healthcare delivery. The major impacts of drivers of change such as an ageing society, rising dependency ratios, more chronic disease, fatter less active populations who still drink and smoke too much are complemented by concerns around intellectual property, a slowdown of healthcare funding inflation, the balance between public and private healthcare, the cost and impact of clinical trials and the need to improve access to good healthcare at both local and global levels. These seem to be on everyone’s list.
As for addressing these challenges, much faith seems to be being placed on improved technology around diagnostics, bioinformatics, genomics and big data use to enable more personalized and predictive healthcare. At the same time reform of the system to better share knowledge, get a handle on pricing around value and prioritization of specific demographics and diseases also feature strongly. In addition, much is also being made of the potential for more participatory approaches to redefine responsibility for individual healthcare, the role of co-payment and enabling changes in patient, doctor and payer behaviors. There is certainly not lack of ideas as varied people call for precedence for preventive healthcare, increased focus on the vulnerable or the individual, greater remote support via telemedicine and means by which we can decouple healthcare spending from GDP growth.
External Perspectives
The problem seems to be that while there is much enthusiasm for new technologies, new business models and different payment systems, the political will to make significant shifts in the system and society’s ability to change core values seem to be being skirted over. However, looking outside the sector, there seems to be four shifts that may have more impact on change than the internal healthcare to-do lists seem to infer?
The End of Chimerica
With urbanization of most countries happening at an increasing rate, as we hit 75% of the population living in cities, as well as more poverty, we can also see another billion or so middle class – especially in China and India, but also significantly across Africa. As these new consumers become more attractive and we see the increase of made in China for China, some predict the end to the Chinese lending of money to the debt-fuelled US and a focus on other economies. As such as China and India’s economies both catch up and surpass that of the US quicker than many expected, and maybe the USD is replaced by an Asian currency unit as a preferred means of international trade, the money will less likely touch the US. Indeed as only 2.3% (or 30m) of the Chinese population currently have over $100k in wealth, and just under 40% (530m) have over £10k, healthcare for these markets will have to be priced significantly differently than in the West. Healthcare for the core of the China market will not be based on US principles but will have to be delivered at less than 10% of current costs. As such the status of US as the payer for R&D and the primary market for many new developments will be replaced by China and other countries taking the lead: Asia not America will set the standards.
Competing for Cash (in the West):
With a decline in subsidy from Asia, US and European budgets will come under even greater pressure. If you look at the 2011 US federal government budget, healthcare, defense and pensions are all costing round about $1 trillion each with transport and education not far behind. Add in state level spending and the figure for healthcare more than doubles. With increasing stress on the system, competition between government departments for a slice of the pie is getting intense. The military are trying to do more with less and so, as one example, we can see the rise of drones as the preferred method of achieving remote air superiority at less cost and less danger to US pilots. Equally in the energy sector, the desire to achieve energy security is driving investment in shale gas, wind and, most significantly solar. At the same time the obesity epidemic and the related costs of diabetes is putting ever-greater pressure on the healthcare budget and so accelerating the call for greater preventative healthcare focus rather than sick-care. In addition, the increasing popularity of international medical tourism as a means of reducing the costs of surgery is clearly showing a desire to optimize expenditure. What we can see from the US case but applicable across Europe as well is that, with less money in the system and limited growth in many nations, the days when public healthcare spending outstripped GDP growth by 1 to 2% are well and truly over. Total healthcare funding is now going to start to decline! Politicians may not want to be too public about this but, given the options, there is no real alternative.
Affordable Ageing
Thirdly, and back at a global level, we can see the impact of the demographic change towards a doubling of the over 65 population in the next few years. As such, while people are living longer and staying economically active for longer, with many will be working until they are 70, the dependency ratios are against us. Japan is already in a mire, but with still declining birth rates in the EU, there is simply not enough younger people entering the workplace to pay for healthcare for the elderly. Add in increasing youth employment as you find in much of the world and the challenge of gathering the taxes to pay for healthcare is getting greater. China is heading for a similar nexus as the one child policy has impact on the economic balance of Chinese society: Every child in China will, in the next couple of decades, probably be looking after not only his or her parents but also four long-lasting grandparents. We will clearly see more automated people care kick in for the elderly with robots replacing carers and telemedicine providing support for people at home so that they reduce the burden on the sick care hospitals. But the business models are yet to be proven, or more significantly, politicians are yet to show willingness to take sick-care funding away in order to support preventative healthcare at the levels needed. Even more difficult, we are also reaching a point where society’s attitudes to systemic euthanasia are shifting. Led by several countries, the perspective that ‘do not resuscitate’ should be the approach for all public systems and so cutting the massive costs of sick-care for the last two years of life is gaining ground. A wider acceptance of assisted suicide is also on the horizon in many regions. The implication of all of this is clear. Whether we like it or not, whether politicians are open about it or not, healthcare for the young will be prioritized over sick-care for the old.
Personalization Premium
Lastly, much of the confidence in technology providing the answer seems to be based on the premise that with advanced genomic profiling and improved diagnostics, we will be willing and able to pay for more personalized healthcare. Although the costs will be higher per patient upfront, the argument is that overall the system will be re-jigged and personalized healthcare will be affordable. A big assumption here is that, with an increase in patient co-payment, we as individuals will be picking up more of the tab. Many increasingly doubt this and support the case with examples from other sectors. For instance, with neutragenomics and targeted foods an achievable ambition, many on the food sector assumed that consumers would pay a premium. So far however, across food, trainers and cars, the reality has been that people will choose personalized products over the standard but the idea of paying a premium for it is not in the mix. Even in the relatively simple area of prebiotic and probiotic yoghurts, prices are on a parity with other alternatives and consumer facing adverts now advocate taste more than health benefits. In fact, if you look across the global food business, you only find one success for gaining a premium from personalization – mym&ms! Not even Mars has been able to repeat this one off success. Everywhere else personalization gains little or no margin premium no matter how beneficial it is.
Systemic Stress
At the start of the first Future Agenda programme, Jack Lord, CEO of Navigenics, shared his view that within the sector “the next decade is not likely to be the time for change, but instead a time that ‘stressors’ on the healthcare system become progressively evident.” As with other sectors however, one can argue that with the macro drivers of change now in play, systemic stress is already occurring to such an extent that more significant change will occur in the next decade than many believe. The issues are all known, if not openly shared and many agree that affordable healthcare not sick-care has to be the priority. Support for patients before they become patients is essential and that means support outside the hospital. However, as you can see with mhealth and vaccines, the business case for prevention is yet to be fully proven, or more accurately, accepted by those in charge of the world’s healthcare payment systems – many of which require a fundamental rethink.