6ReasonsHSI

6 Reasons Why Health Systems Are Inefficient

And why HealthTech aka digital health is an unprecedented opportunity to solve them

With all the technological progress and innovation we have witnessed in the past fifty years, a model efficient healthcare system still evades developing and frontier nations. Is it just a question of more investment and resources? Or is it something more much more fundamental?

With a focus on solving the problem, Galen Growth Asia set itself the quest of understanding why.

We examined GDP spend on healthcare per capita across 22 Asia Pacific countries and their respective healthcare outcomes (we used cardiovascular mortality rate as a proxy as it is still the leading cause of deaths).

We segmented this data set by “developed” and “developing” economies and we observed that, while there is no strong correlation in the developing segment between spend and cardiac mortality, in the “developed” countries, despite the spend doubling per capita, the cardiovascular mortality essentially remains flat.

 

The Healthcare Spend Productivity Malaise / Leakage

What is at the root of this health system loss of productivity? Why are health systems not able to establish a direct correlation between patient outcome improvement for every dollar spent.

After numerous discussions and interviews with customers, payors, government officials, we concluded that healthcare systems are, at their core, plagued with critical system inefficiencies, driven by value leakage points which essentially dilute the impact of every invested dollar.

Based on these discussions, we have empirically observed that there are multiple healthcare pain points, which rob the system, and therefore the population, of achieving an optimal “ROI” from the invested resources through value leaks in each health care system.

 

The six reasons why health systems are inefficient

Based on our findings, we developed a framework that systematically regroups each health system’s pain points into six key categories of inefficiencies which impact all healthcare systems, but to a different degree in each system, thereby giving it a very local nuanced context in response to the vagaries of each healthcare system. We have further pressure tested this framework in various markets across the region with a multitude of stakeholders. While the extent to which an inefficiency contributes to each healthcare system is different, we have found positive resonance for this framework universally.

 

#1:      Patient Flow

Patient Flow is often cited as a key barrier within healthcare systems across APAC, particularly in emerging regions. The large gap between number of patients indicated for a particular disease and actual number of patients treated urgently needs to be addressed. Significant market inefficiencies and drop offs in the Patient Flow at every step of the care pathway are the result of low patient and physician awareness, access to diagnostics and affordability for these therapies.

 

#2:     Material Flow

The revolution we are witnessing in logistics driven by e-commerce will have dramatic consequences for healthcare and drive customer expectations. Amazon is expected to enter the pharmaceutical distribution in the near future and bring to bear the might of its highly efficient logistics infrastructure. Alibaba is doing similarly in China.

 

#3:     Capital Flow

There is an imbalance between healthcare demand and supply in Emerging Asia, including challenges in healthcare delivery, capital flows and healthcare financing protection. To address this imbalance, shared responsibility, transparency and collaboration is required by various stakeholders in the healthcare ecosystem, including those in digital technology, finance and insurance.

 

#4:     Human Capital Flow

Matching the supply and demand needs of patients and healthcare professionals in Asia-Pacific is a significant health system inefficiency, and one forecasted to worsen with time.

 

#5:     Operational Flow

How to best plan, prioritize and coordinate tasks across the continuum of care is a key challenge for healthcare professionals in Asia. Because of resource constraints, failure to address this challenge can lead to a vicious cycle of suboptimal quality of care, especially for chronic patients.

 

#6:     Information Flow

When industries undergo transformations through data, it’s been shown that data standards help to accelerate how different stakeholders communicate with each other more effectively. All parties in healthcare will benefit from data, technology, and insights to improve the care pathway.

Addressing each one of these Health System Inefficiencies in turn, we explore the causes for the value leakage in the healthcare system and how these represent a significant opportunity for healthcare innovators to use HealthTech to develop point solutions.

Our next chapter, soon to be published, will focus on Human Capital Flow Inefficiencies. To receive your free copy, please subscribe.

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KotaKubo
November 6, 2018

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