Healthcast 2020: Creating A Sustainable Future

PwC's survey focuses on examining the globalisation of healthcare and efforts to create a sustainable health system, informs Rajashri Sengupta

Given the growing evidence of unsustainability of global health systems, the fact that the productivity of nations is increasingly dependent on the health of its citizens and that the sustainability of the world's health systems is both a national competitive issue as well as a global economic imperative.

PricewaterhouseCoopers(PwC) recently undertook the third of its HealthCast surveys, which focussed on examining the globalisation of healthcare and efforts to create a sustainable health system. The research included a survey of more than 580 executives of hospitals and hospital systems, physician groups, payers, governments, medical supply companies and employers from around the world in 27 countries.

The report had four main goals: to provide a context for understanding global healthcare trends; to compile a rich variety of 'transferable lessons' from around the world on what's working in a converging global health market; to identify 'solution drivers' within the control of executives and administrators where health leaders can take action and effect change; and last, to serve as a call to action for healthcare organisations to look beyond their own boundaries to tackle the complex challenges of sustainability.

Global Convergence In Health

Globalisation of health has evovled in stages, creating both opportunities and challenges. These stages can be divided into 'fundamental' from 1950-1970, 'discovery' from 1970-1990, 'reactive' beginning in 1990 and estimated to transition in 2010 to the 'sustaining' stage that will define the next decade.

During the fundamental stage, attempts to find common ground began. The World Health Organisation was established along with the acknowledgement that fundamental health improvement begins with public health initiatives such as clean water and immunisation. The discovery stage saw healthcare costs spiral upwards due to a huge demand in new pharmaceuticals. In the reactive stage, health systems began considering a variety of global solutions to local problems. For example, to combat lack of money, health systems in more than 50 countries are creating public/private partnerships to build new hospitals and clinics.

Merely reacting to existing problems is not enough, however. Health systems in the next stage will seek sustainability, as cost acceleration is forcing stakeholders to assess their future viability. During this time, the barriers among pharmaceuticals, providers, clinicians, biotech companies and payers will continue to melt away.

The Unsustainability Of Global Health Systems

The globalisation of health brings enormous opportunities, but is overshadowed by common threats. Spiralling costs, uneven quality, and inequitable or mismanaged access threaten the sustainability of health organisations, systems and populations. More importantly, rising healthcare costs and related increase in corporate spending threaten to weaken the ability of developed economies to compete globally, threatening to destabilise those economies.

Rising costs is one of the key threats to sustainability. For instance, the Medicare Trust Fund in the US is projected to go bankrupt by 2019. Yet, in 2006, the US began an expensive new drug benefit scheme for the elderly, expected to cost USD 1.2 trillion in the coming decade. As Alan Greenspan, the Former Chairman of the US Federal Reserve, has stated: "As a nation, we may have already made promises to coming generations of retirees that we will be unable to fulfil."

Our analysis of data from OECD countries showed that the biggest increases in health spending began in 2000. By 2002, 24 OECD countries were spending USD 2.7 trillion on healthcare. According to our estimates, health spending for OECD countries will more than triple to USD 10 billion by 2020. Like the tide pounding the shore, healthcare spending ebbs and flows on the banks of each nation's economy. As more of the shore erodes, some nations worry that growing health spending will eat away at wages and purchasing power.

By 2020, health spending is projected to account for 21 per cent of gross domestic product (GDP) in the US and a median of 16 per cent of GDP in other OECD countries. In the future, the health spending growth rates of OECD countries are expected to narrow, although the US spending will remain significantly higher than the rest. By 2020, the US, which accounted for 55 per cent of OECD health spending in 2003, will account for 50 per cent - still a significant sum.

Features Of Sustainability

Sustainable health systems demonstrate some or all of the following seven features:

Quest for common ground: A vision and strategy is needed to balance public versus private interests in building an infrastructure and in providing basic health benefits within the context of societal priorities.

A digital backbone: Better use of technology and interoperable electronic networks accelerate integration, standardisation, and knowledge transfer of administrative and clinical information.

Incentive realignment: Incentive systems ensure and manage access to care while supporting accountability and responsibility for healthcare decisions.

Quality and safety standardisation: Defined and enforced clinical standards establish mechanisms for accountability and enhanced transparency, thereby building consumer trust.

Strategic resource deployment: Resource allocation appropriately satisfies competing demands on systems to control costs while providing sufficient access to care for the most people.

Climate of innovation: Innovation, technology and process changes are a means to continuously improve treatment, efficiency and outcomes.

Adaptable delivery roles and structures: Flexible care settings and expanded clinical roles provide avenues for care that are centered on the needs of the patient.

The Quest For Common Ground

Sustainability starts with finding common ground on the goals of a sustainable system. Getting to a common ground requires a pragmatic assessment of what each party can contribute to a sustainable future. As health systems seek common ground — whether on a global, national or local level — they must be introspective about their own weaknesses, strengths and resources.

The HealthCast 2020 survey provides a viewpoint on where to look for common ground. When defining a sustainable health system, HealthCast 2020 respondents saw the ingredients in two tiers. More than 80 per cent of the respondents agreed that transparency and access were the two most important requirements of sustainable systems. The US rated access highest; the rest of the world rated transparency highest. These topics, particularly how to define access and transparency, are issues for common ground discussions on a national scale.

Financing care emerged in the next tier of important ingredients. More than 50 per cent of HealthCast 2020 respondents said competition, taxpayer funding of some or all of healthcare, regulated cost controls, and cost sharing by patients were important. Clearly, competition and regulated cost controls are opposite ends of the spectrum, but the health industry might need some of both as long as there's agreement on goals. Balancing these divergent needs will require regulation, co-operation and planning.

These differing views exemplify the results of the HealthCast 2020 survey, which found that the importance, and thus the role, of competition has a societal context: it is rated higher in the US than in the government-run systems offering universal coverage, as in Europe and Canada.

Another component of creating a common ground is balancing the public and private financing of the healthcare systems. A convergence of financing systems is evolving globally. In the US (traditionally viewed as a privately-financed system), expansions of government programmes mean that half of all care will be tax-funded before 2020. Meanwhile, market-based reforms are changing the government-run systems of Germany, the Netherlands, England and France, liberalising provider markets. A new focus on user fees and health insurance is beginning to erode the universal 'free' systems of the past.

Coming to common ground won't be easy. It means confronting the following challenges:

• Agreeing on the long-term vision of success.
• Aligning incentives to bring about uniformity in quality of treatment and access to care.
• Reaching an agreement on funding and governance.

Transferable Lessons

Collaborate across traditional sectors and territory boundaries:

Delivering the best healthcare is no longer confounded by national boundaries. For example, the European Court of Justice has determined that any citizen of the European Union has the right to cross borders within the EU for non-hospital-based care, and be reimbursed up to the benefit and reimbursement level in the patient's home state. Access to care is eased by a new EU health insurance card, which serves as a medical passport for Europeans needing care in other EU countries. In certain circumstances, the patient may also be entitled to cross-border hospital care, though non-emergency care must be pre-authorised by the patient's own system.

Basic Benefits: Determine what care or benefits are basic to public health and structure an insurance system for the rest. More than 75 per cent of HealthCast 2020 respondents said financial responsibility should be shared. Despite repeated calls for a universal health system in the US, the survey showed that only six per cent of respondents favoured a system that was mostly tax-funded. (Currently, 46 per cent of US health spending is tax-funded.) Even in systems where healthcare is primarily tax-funded, such as in Europe and Canada, only 20 per cent of respondents favoured that approach.

Amid an ongoing debate about solidarity, some European countries are moving towards basic health coverage augmented by a private health insurance market. For example, under the new Dutch system, insurance will cover hospital costs and medical specialist costs under a new risk-adjusted payment classification system of Prescription Cost Groups and Diagnostic Treatment Combinations (DTCs). The DTC payment is estimated to cover about 70 per cent of needed care. Under the new law, all Netherlands citizens will receive a basic level of health insurance coverage, regardless of income, but they must purchase supplementary insurance packages for additional care. Opting out of the basic assured system is prohibited by law.

Many point to the Swiss compulsory basic health insurance scheme, which covers illness, accidents, certain preventative measures, and maternity for all inhabitants, as a model for determining the basic level of care for individuals and designing the system around such care. The insured persons must pay both, the premiums and a part of the costs.

Use regulation to encourage and strengthen competition: Regulation typically determines the playing field and rules, and increasingly, governments are encouraging more competition in healthcare.

Competition is expanding as governments seek more efficient ways to provide care than non-competitive markets can deliver. Despite the resistance to increased competition and privatisation, more governments realise that in order to meet consumer needs and to reduce costs, privatisation and/or competition may need to occur. For instance, in England, the NHS has recently contracted out some 2,50,000 elective procedures to the private sector in order to increase capacity, reduce elective waiting lists, and encourage innovation in delivery. This strategy has a medium-term goal of increasing outsourced clinical delivery to some 15 per cent of national health spending. Similarly, the Irish Government has recently purchased specific healthcare procedures from private providers to reduce waiting lists.

Access new sources of capital to remain competitive: Sustainable health organisations cannot rely simply on government funding, especially while competitors tap a host of private capital sources. A blend of financing, philanthropy and government funding will be needed. However, health companies will need robust business models to attract investors.

A Digital Backbone

Seventy-three per cent of HealthCast 2020 survey respondents said that IT was important or very important to integrating care. Delivering seamless, integrated patient care can be difficult when medical records and other sources of patient information are stored at multiple locations and there are no means of pooling the information.

Healthcare is in data overload, and in need of a means for knowledge transfer. Case mix classification systems, initially developed in the US, have been modified and are well established or being further modified for use in countries in the EU as well as in Australia. When implemented, these systems create large databanks of financial, demographic and clinical data that can be used for ongoing decision support and performance management.

Harnessing the speed of technology and communication to improve care depends on building the shared infrastructure to use these data resources. For example, the US Department of Veterans Affairs has been tracking patient data with a computerised record system throughout its network of 157 hospitals and 869 outpatient clinics since 1994. Yet, outside the government system, such information handoffs do not occur as readily.

Building a digital backbone faces numerous challenges:

• Technology initially requires additional funding.
• Lack of standards makes interoperability and connectivity nearly impossible.
• Adoption of technology can take months, if not years.
• IT solutions are often dumped on clinicians without adequate training and process change.

Invest In Shared IT Infrastructure

In England, the NHS, which is the largest health organisation in the world with 1.3 million workers, is pursuing that goal. The NHS is investing £6.2 billion (USD 12 billion) over a 10-year period (beginning in 2002) to create a national network connecting 270 health trusts, 18,000 sites, and 28,000 physicians. The goal is better integration of electronic patient records, e-prescribing, and electronic appointment scheduling with an underlying principle of patient choice.

The NHS started requiring primary care physicians in England to use computers to get paid in 2004. As a result, with very few exceptions, physicians in England use computers to create electronic medical records (EMRs) for their patients. Soon, all clinicians in England will be required to track patient activity via a nationally integrated IT system. This system uses the EMRs for patients to create a warehouse of information available to analyse care. It is also intended to support integrated care pathways, make billing more efficient and improve quality outcomes by creating, for example, an easy way for physicians to report adverse drug events.

EU health ministers and the European Commission are moving toward a trans-European e-health system by 2010. The European Commission Communication on e-health emphasises co-operation between national health authorities and sets target dates for member states to identify a common approach to patient identifying data and standards for health data by the end of 2006 and support for network infrastructure by 2008.

In a global healthcare setting, there will be various strategic options for convergence and these will depend on factors such as how healthcare processes are converging globally. Convergence in clinical standards and political drivers in different countries will drive what happens to processes and, therefore, data. One example is the distinction between giving patients access to their own electronic record, as is planned in England, and the more common approach to an electronic medical record designed around the needs of clinicians and providers.

Leverage Technology

To eliminate duplication and administrative inefficiencies. In Australia, payers have been working with the Health Insurance Commission (HIC) on a new online system that is expected to reduce administrative costs for hospitals and payers. By swiping the patient's card, a provider has access to relevant cost and co-payment information.

About 40 per cent of general practices in Australia now use the system to process patient claims electronically, and Australian Health Minister Tony Abbott announced that participation in HIC Online and Healthconnect, two electronic reimbursement programmes, may become mandatory. The 2004 survey found that 95 per cent of HIC Online users received faster payments and 84 per cent achieved improved efficiencies.

Make technology a reason to collaborate: In the US, more than 200 regional health information organisations (RHIOs) have been established by consortiums of hospitals, physicians and payers to create local networks of electronic health records. Although in some cases insurers are funding these efforts, sustainable funding still remains a key issue.

Collaboration

Payers, hospitals, physicians, and community service organisations are working together to foster standardisation and adoption of technology and process changes. They are teaming to enhance access and portability of healthcare services. They are coming together to realign incentives to accomplish mutual goals.

Technology assessment and dissemination: Payers, providers, and community organisations are coming together on a regional and/or national basis to establish infrastructure and communications standards. They are developing incentives that will distribute the risks and rewards more evenly.

Conclusion

Transferable lessons are emerging. The variety is astounding, but so are the commonalities. Around the world and across all sectors of the industry, healthcare leaders are exploring many of the same solutions. The solutions are related to a common ground and digital backbone concern.

The writer is the Executive Director and Leader of PwC for Healthcare Practice in India