The Healthcare industry is focused on leadership and new growth drivers | Global transformation is raging in the healthcare industry. Politicians, media leaders, and business leaders all over the globe are focused on healthcare reform and fiscal restraint. The global healthcare industry is struggling with unsustainable costs and increasing demand. This is due to an increase in consumer patients as well as increased chronic disease management costs. The global healthcare cost, currently at $6 trillion- $7 trillion, will rise to more than $12 trillion in the next seven years. This outlook suggests that drastic measures will be taken to stem the spiraling cost.
The United States healthcare spending now accounts for 17 percent of its gross domestic product (GDP). Despite a modest economic recovery, healthcare costs are increasing at twice the country’s economic growth rate. Europe is also facing its financial problems, and single-payer systems are becoming more common. Healthcare costs are rising beyond the national and regional growth rate. The Organisation for Economic Cooperation and Development (OECD) estimates that healthcare spending accounts for 9.5 percent of the average GDP of the 34 OECD countries located in North and South America and Europe. This includes Europe, Asia/Pacific, and North and South America. The average annual growth rate in healthcare costs within the group is 4.9 percent (higher than the U.S. rate). Healthcare spending in China is increasing at 16 percent, even though most people are insured. No matter what payer system you use, the global trend is that healthcare costs are growing, and the available capital for healthcare payments is decreasing. This new reality is evident in the pharmaceutical Industria médica, where total revenue is expected to decline or remain flat over the next ten years.
Despite these economic indicators, innovation and digital transformation may offer solid solutions for increasing the quality of care while containing costs–but only if executed properly. Other competitors, such as those from the technology sector, are also looking to enter the healthcare market. They are eager to grab some of the revenue from healthcare, and they are also familiar with the endless cycle of product development, aggressive competition, and innovation. They are also used to working in an environment in which companies can be disintermediated from their consumers within weeks. Healthcare is in a constant state of transformation and reinvention. However, it’s not new.
Senior-level executives of pharmaceutical and healthcare product companies are reacting by focusing their strategies to find new drivers that will reposition their businesses for growth. Recently, we surveyed chief executives and board members of European healthcare organizations. These included product-side organizations in pharmaceuticals and biotech as well as some healthcare services. We wanted to know how they were positioning their organizations for transformation and what the future holds. These leaders were asked a series of questions about their visions of growth, what business functions would be most affected by the changes in the coming period, and the role technology will play in the future.