Health systems worldwide unsustainable, says PricewaterhouseCoopers
14 November 2005
Washington, USA. Faced with rapidly rising costs, diminished resources
and growing demands, health systems around the world are under siege and
many will be unsustainable within 15 years unless fundamental change occurs.
The crisis is prompting healthcare organizations and policymakers to seek
urgent solutions in unlikely places -- outside their own borders. In a
groundbreaking report released today, PricewaterhouseCoopers Health Research
Institute identifies best practices and unveils the result of surveys and
interviews with 700 health leaders in 27 countries.
"Everyone we spoke with, in every country, told us they are afraid their
current health system was not built to last," said Jim Henry, global leader
for Healthcare, PricewaterhouseCoopers. "Most countries have some aspects of
their health system that are working, but no one country has the magic
bullet. We need to rise above nationalism and turf protectionism, learn the
lessons of other countries and sectors, and build on the best ideas. What's
clear is that no one government can solve the healthcare problem. It will be
up to governments, working together with private industry and consumers who
not only have a bigger financial stake but also a greater responsibility in
their healthcare."
The report, called HealthCast 2020: Creating a Sustainable Future,
finds a convergence of trends and solutions in the global healthcare market,
including the way healthcare is funded. Countries are moving toward greater
shared financial responsibility among the government, the private industry
and consumers, even in historically taxpayer- and employer-funded systems.
The report also found that consumerism, the use of information technology,
incentive realignment and new reimbursement models such as
pay-for-performance are soaring globally as nations seek to reduce
healthcare costs and improve access, safety and quality for their citizens.
More than half of those surveyed by PricewaterhouseCoopers expect health
spending to accelerate at a greater rate in the future than in the past.
Health spending patterns also are becoming more similar among countries in
the Organization for Economic Cooperation and Development (OECD), although
US spending remains the highest in the world. Americans spend 53 percent
more per capita on healthcare than the next highest country, Switzerland,
and 140 percent above the median for OECD countries. PricewaterhouseCoopers
projects that global healthcare spending will triple over the next 15 years
to $10 trillion, consuming 21 percent of gross domestic product (GDP) in the
U.S. and 16 percent of GDP in other OECD countries.
The report highlights best practices and common trends in health systems
around the world, including:
There is wide support for shared financial responsibility among private and
public payers. More than 75 percent of health leaders and policy makers
believe that financial responsibility for healthcare should be shared. Only
a minority of industry leaders in the US, Canada and Europe think that a
mostly tax-funded system is a sustainable system. Even in systems where
healthcare is primarily tax-funded, such as in Europe and Canada, only 20
percent of respondents favour that approach. Despite calls for universal
healthcare in the US, only 6 percent of US respondents favour a mostly
tax-funded system.
- Examples in Practice: US health spending already is 46 percent
tax-funded and growing as Medicare/Medicaid programs expand. Market
reforms in government-run systems such as England, the Netherlands and
Germany are increasing use of co-pays or providing compulsory insurance
coverage with the option to add services through supplemental private
insurance.
Consumerism is changing the way healthcare will be delivered. As patients
pay more for their own healthcare, they are demanding accountability and
information about pricing, safety and quality to make better decisions about
what they are "buying." Healthcare organizations will have to publish or
perish, and, like the automobile and airline industries, are beginning to
report their prices, error rates and safety standards. Eight in 10
executives surveyed said that transparency will be one of the most important
features of a sustainable health system. Two-thirds believe hospitals are
currently unprepared to meet the challenges of empowered consumers.
- Examples in Practice: To promise world-class care to its citizens,
Hamad Medical Corp. in Qatar is working to be a Joint Commission
International-accredited hospital. As part of a safety assurance
initiative, the United Kingdom has adopted a non-punitive medical
error-reporting system based on a model used by the US Federal Aviation
Administration.
Focus is shifting to wellness and prevention. Preventive care and disease
management were cited by two-thirds of respondents as the most important
ways to reduce healthcare costs and manage demand on health systems. Health
promotion and wellness initiatives are being sought voluntarily by employers
and mandated by governments.
- Examples in Practice: Ireland was first to place a country-wide ban
on smoking indoors, and this has since spread to other countries. The
Swiss are considering a tax on food with high glycaemic content. The UK
is considering a "traffic light" nutritional labeling system on foods to
make it easier for consumers to make healthy choices.
Pay-for-Performance is soaring. Misaligned incentives are identified as a
root cause of gaps in the quality in healthcare and inequitable sharing of
risk and rewards. Eighty-five percent of organizations surveyed say they
have begun moving toward pay-for-performance initiatives, a significant
increase in the past two years.
- Examples in Practice: Physicians in California receive bonuses for
screening patients for conditions that are expensive to treat, such as
cervical cancer and coronary heart problems. The Dutch will introduce a
new health insurance system in 2006 that realigns their incentive
structure. Spain is using patient choice as a lever for changing
physician behavior.
Information technology is the backbone of care. Lack of care integration
was cited as the biggest problem facing health delivery systems, according
to more than 80 percent of respondents. Three-quarters of respondents viewed
information technology as most important to integrating care (74 percent)
and information sharing (78 percent).
- Examples in Practice: The National Health Service (NHS) in the
United Kingdom is committing $12 billion over 10 years to build a
national healthcare information network, and requires some physicians to
use computers to get paid. The Canadian government is building the
Canadian Health Infoway. The US has a goal to build a national medical
record system. Australia is considering making electronic reimbursement
mandatory.
Innovative, flexible care models are emerging. Many countries are
exploring more innovative, adaptable care models to increase access and
productivity and to circumvent workforce shortages. This includes hospital
redesign, use of technology, outsourcing of elective procedures and
importing of nurses and other clinical staff.
- Examples in Practice: Norway is using telemedicine to provide
healthcare in remote areas. A German company is buying smaller
hospitals and connecting them to specialized, centralized high-tech
medical units. More than 100 smaller, specialty hospitals have been
built in the US in the past five years. In Australia, 45 hospitals now
offer "Hospital in the Home."
"Innovative solutions to common healthcare problems are emerging in the
global healthcare market," said Sandy Lutz, director of research for
PricewaterhouseCoopers Health Research Institute. "Governments and
healthcare organizations across industries and sectors must find a way to
share ideas and work together in ways that they have not in the past."
HealthCast 2020 identifies seven common features for sustainability that
include: the need for common ground among stakeholders; a digital backbone;
incentive realignment; quality and safety standardization; strategic
resource deployment; innovation and process change; and adaptable models of
care delivery centered on the needs of patients.
The report includes survey responses from 578 healthcare executives,
policymakers and employers from 27 countries to assess their opinions about
health systems sustainability. PricewaterhouseCoopers also conducted
in-depth interviews with more than 120 healthcare thought leaders in 16
countries, including Australia, Canada, Europe, India, Japan, Singapore,
South Africa, the United Kingdom, the United States, as well as in the
Middle East.
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