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World Healthcare Analysis

06 Mar 2017Economics Essays

There has been an increasing change in the healthcare industry trends and strategic management over the last couple of decades. Some of these include healthcare spending as well as production of biologic and generic drugs. Among some contributing factors to these changes include but are not limited to the following. Population ageing has and will continually act as a key factor in determining healthcare spending. Developed-world countries are experiencing a rapid population ageing as compared to developing countries. A study of 60 developed countries indicates that life expectancy is projected to rise from seventy two years in 2008 to approximately seventy three years by 2013. This implies that the average world population will age. New medical technologies emergence and adoption will also be a significant costs driver. It will further be influenced by extent of the benefits that payers will be willing to provide. These rising benefits levels will lead to excess cost growth-the fact that health spending growth per person exceeds the GDP growth rate per person (Economist Intelligence, 2008, p.2)

These two factors will be an added burden to the already bloated public health systems, although the real benefit levels that governments provide will more vigorously challenge the health systems financial stability than any other factor. On the same note, severe governmental fiscal problems are expected in the forthcoming decades in almost all developed countries. This is constantly making government healthcare benefits less affordable in these countries, especially putting into consideration the high rates with which populations are ageing at. One basic reason for this is that there is decreasing output in terms of labor force and as thus the number of tax payers is shrinking. With diminished taxes, governments are becoming less and less capable to provide healthcare. Many governments and private payers will inevitably respond to these issues in a myriad of ways. One such approach will be to reduce the benefit levels in an effort to curb such benefit growth so that it is brought to reasonable proportions with the GDP growth rate per individual (Walshe, 2003, p. 76).

Others will attempt equilibrium by maintaining the benefits but at the same time aggressively attacking the prices paid to providers and suppliers in the system. Furthermore, others will encourage the populations to reduce lifestyle diseases burden by reappraisal of health attitudes at the societal level. In general, there will be an increased offload of the cost burden onto the patients and healthcare consumers.

Similarly, other markets will use the expanded elderly population’s political influence to pressure governments into increased retirement health benefits. A good example of this trend is what happened in the United States recently when Part D of the Medicare drugs benefit was introduced. This is because more employers will probably attempt to refrain from paying health benefits to former employees after retirement, a factor that would eventually overburden the concerned governments (Walshe, 2003, p. 74).

On the other hand, private payers will more or less adopt a more preventive care from the conventional curative care in concerted efforts to reduce on the costs. Insurance providers are expected to lower premiums if evidence for choices of healthy lifestyles such as gymnastic exercises is provided. In addition, there will be an increase in incentives to make people more health conscious. The bottom of the line in this approach will ascertain that the beneficiary’s health status and level of offered benefits will not be the only determinants of the medical costs premiums.

Legislative changes will be part of the many policy changes that will be effected to push for reforms in many countries concerning the healthcare of the citizenry in the world healthcare market. In many countries, including the United States, quite a large proportion of the citizens remain deficient of even the most basic healthcare especially health insurance. The fiscal feasibility of a universal comprehensive healthcare Programme is in doubt for now but this remains a heated debate and political priority. One method to include all into this progamme is by subsidizing health insurance for those persons in the low income bracket (Economist Intelligence, 2008, p.5).

A more significant system will be one that compares the efficacy and safety of the treatment procedures for both acute and chronic diseases as well as on prescription drugs. This will be aimed at arriving at greater cost efficiency in health systems. It is thought that the best way to adopt this is on a bottom up initiative.

In conclusion, considering the increased burdens that come as a result of persistent chronic diseases brought about by sedentary lifestyles, there will be a significant trend that will lead to introduction, in developed markets, of value-based pricing. Based on pharmaco-economic reviews, governments will tend to combine reimbursement and pricing functions for higher contentious process and results there from. On the same note, it is expected that generic drug industries may take the order of the day if they are able to produce cheaper drugs whose efficacy can be ascertained beyond any reasonable doubts (Dabbah, 1999, p. 85).

On their part, patented drug manufacturers are expected to be dramatically hit by such generic drugs growth. For the last few years, the greatest impact has been in the cardiovascular drug market. One country that has been known for its doctors to be reluctant in allowing branded drugs is Japan but researchers believe that Japanese doctors will soon or later follow suit along countries who accept generic drug prescriptions.

References:

  • Dabbah Roger (1999). Total R&D Management: Strategies and Tactics for 21st Century Healthcare Manufacturers. Buffalo Grove, IL: Interpharm Press, pp. 85
  • Economist Intelligence Unit (2008). World healthcare outlook: of mixed benefit. Industry Briefing, November 30th 2008; 1-8
  • Walshe Kieran (2003). Regulating Healthcare: A Prescription for Improvement? Philadelphia, Open University Press, pp. 74, 76

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