UK: 2016 Global Health Care Outlook - Battling Costs While Improving Care

Last Updated: 26 January 2016
Article by Karen Taylor

Most Read Contributor in UK, August 2017

Deloitte's ' 2016 global health care sector outlook', launched 14 January, highlights the key global trends impacting the healthcare sector and the important considerations that healthcare stakeholders need to address as they tackle their local marketplace and organisational issues in 2016 and beyond. This week our Centre for Health Solutions blog summarises some of the key considerations covered in the global report which we consider should have implications for the UK.

Despite the many differences between healthcare systems across the world, all countries are striving for a more sustainable, affordable and equitable healthcare system, in the face of shifting business, clinical and operating models. Health care providers, payers and consumers everywhere are engaged in a persistent tug-of-war between competing priorities: meeting the increasing demand for health care services while reducing the rising cost of those services. The global report identifies cost considerations as pivotal across five challenges currently faced by all healthcare systems:

  1. Demographic: growing and aging populations, changing balance between chronic and communicable diseases, wide variation in access to staff, facilities and treatments and more engaged, informed consumers.
  2. Financial: financing of healthcare, which costs some 10 per cent of GDP, much of it funded by financially challenged governments, large scale health reforms, controls over drug costs and the adoption of alternative financial and business models, including value based payments and public/private partnerships.
  3. Operational: waste reduction, infrastructure challenges, new provider and operational models, talent and workforce shortages.
  4. Regulatory compliance: patient and product safety, cyber security, fraud and abuse.
  5. Innovation: Medical advances, connected health, data and analytics.

The report also highlights three macro issues which frame the cost discussion:

  • Sector defragmentation - The healthcare sector is moving from a traditional, fragmented approach to one focused on consolidation, convergence, and connectivity. In some countries, increasing competition and sharply climbing costs are fuelling the trend of "bigger is better" and risk sharing is becoming increasingly popular alongside increased transparency over care quality, outcomes, and pricing.
  • Population health – Healthcare providers and payers, both public and private, are seeking to tackle the cost curve using innovative approaches to managing the health of a population. Stakeholders across all health and social care systems will need to join forces and transition financial incentives from the "break-fix" model of care to prevention and outcome optimisation. While the philosophical shift has been made in some countries, balancing the potential benefits of population health management with the practicalities of implementing, funding, and delivering such models remains is still at an early stage.
  • Volume to value – Due to concerns about rising costs and wide variations in performance and quality indicators, stakeholders are pushing for a transition to outcome- or value-based care (VBC) payment models, which align clinician and hospital bonuses and penalties with cost, quality, and outcomes measures.

With rising costs and equitable outcomes a primary driver of the need for change, stakeholders in different countries are responding in different ways, with varying degrees of success. Governments are implementing measures such as new hospital contracting models which include readmission penalties and discharge planning targets, to bring down expenses. Providers are developing expertise in population health management, outsourcing non-core activities and forming partnerships/collaborations with payers, life sciences companies and other organisations to help fund infrastructure improvements and share information and expertise.

Managing the health care impacts of population aging will be a major imperative for 2016 and the foreseeable future. The World Health Organization's 2015 World report on ageing and health outlines an action framework based on the new concept of functional ability. Implementation will require health systems to shift from today's disease-based, acute-care, curative models towards integrated care that is centred on the needs of older people. It will also require global policies to:

  • align health systems to the needs of their older populations
  • introduce better ways to measure and monitor the health and functioning of older populations
  • develop systems for providing long-term care
  • create age-friendly environments.

There will also need to be more emphasis on community-enabled, self-directed elder care that encompasses seamless expansion of support through to the end of life. Enhanced skills training will be needed to expand the numbers and ability of carers dedicated to elderly care that enable people to live independently for longer.

Meeting the demand for more value for less costs will require historical payment schemes to be replaced by new, value-based models which incentivise providers to improve quality and transparency, while reducing waste and inefficiencies. Some of the resources, capabilities, and skills needed for the transition to value based care include expanding clinical support, digital technology, cost-effective health information technology, new staffing models and better co-ordination of patient care, all underpinned by effective managerial expertise and business knowledge.

No country can afford to stand still, indeed the pace of change needs to accelerate to meet demand pressures. One common solution for all countries is identifying ways of pulling through the value of innovation in an accelerated, scalable fashion. The global report considers that executing tailored and integrated "innovation plays" that capitalise on new technologies, delivery alternatives to existing care options, improve patient experiences and encourage partnering across the value chain should help reduce costs and enable providers become more competitive. This will also lead to new players entering the provider market increasing choice and competition and reducing costs.

Meanwhile, as costs and patient numbers continue to increase, stakeholders increasingly need to operate more efficiently, lower their unit costs, raise quality levels, and identify ways to optimise their limited resources. However, if providers, payers, and patients can find ways of working more collaboratively and control health care spending, reduce variations in care, deploy technology cost-effectively, and engage consumers in self-care, the result should be effective, efficient, and equitable health care for all.

The Deloitte global report acknowledges that the way forward will not be easy. However, those countries that can shift from episodic care to population health management and from volume- to value-based care, while adopting new ways of working supported by cost-effective technologies adopted at scale, will be the ones that deliver effective, efficient, and equitable care to their populations in a sustainable way.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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