Is it possible to deliver high quality, low cost care at scale?
As countries grow wealthier, models of healthcare provision and financing need to adapt to increasing expectations and new demands for healthcare. In many countries, there is growing interest in developing affordable universal health coverage. While this will bring important benefits it also creates challenges.
Over the past ten years, there has been an unprecedented growth globally in the number of people rising out of poverty to achieve middle-class status. This population, often referred to as the middle-of-the pyramid, has a significant disposable income meaning an increasing demand for healthcare. There are over one billion people in the world in the middle-of-the-wealth pyramid (MOP), with an average total wealth per person of between USD 10,000 and USD 100,000, and a combined wealth of USD 33 trillion, one sixth of global wealth (Credit Suisse Research Institute 2010). In Africa alone, the population in the middle of the pyramid increased from 100,000 in 2000 to over 325,000 in 2010. While in sheer numbers the shift has been most measurable in China and India, where the growing spending power of the MOP population has sustained growth throughout the financial crisis, the change is equally important from Latin America to Africa and Asia.
The MOP population often relies on private providers and has limited financial protection, in terms of pooled insurance mechanisms to protect against catastrophic illness. In India surveys show that more than 70 percent of all healthcare to the MOP population is provided by private providers (NRHM, 2005-12) and in China nearly 50 percent of all expenditure is directly from out-of-pocket payments (MOH of China 2008).
In India, at least fifty percent of this is provided by unregistered informal providers and do not adhere to any standards of good medical practice. For many countries, the growth in this segment of the population has not translated into a significant increase in the market for health insurance, or pre-paid medical care. Private insurers (payers) have been reluctant to enter this market, and slow to develop plans with cost-effective benefit packages that match people’s ability to pay and that are attractive enough for MOP families to shift from out-of-pocket payment to a pre-paid option. In many countries, a significant proportion of the MOP population are independent traders for whom employment-based models of collection are not possible meaning alternative models will be required.
The question of how to meet the increasing demands and expectations of a growing MOP population is a huge challenge for both the financing and provision side of health care. Particularly because often increasing levels of technology, irrationally high pharmaceutical use and unnecessary, expensive procedures are interpreted by consumers to mean higher quality.
How can countries with less well-developed healthcare systems meet the growing demand for high quality healthcare without replicating the high-cost models that are now causing such problems in many Western economies? How can adverse impacts on services for the poorer segments of society be avoided? Do any of the models emerging in the countries facing these challenges offer learning for more established health systems? Is it possible to adopt leading edge approaches to develop new services rather than struggling to get existing providers to change their practice and leapfrog countries with more developed healthcare systems?
This report explores these questions and to answer them we have searched the literature, collected case studies and commissioned research. We brought together experts, hospital managers, payers and policy makers at a KPMG client conference in Johannesburg. Over 70 KPMG Clients and healthcare leaders met for two days where we tested our ideas, challenged assumptions and learned from each other. There is no single solution and a number of different components need to be in place.
Ensuring that individual providers are low cost is only the first step. Payers and policy makers also need to create systems and incentives to ensure patients are treated at the most cost effective level of care. Defining appropriate coverage packages, and working with patients to encourage cost conscious behaviour and to support them in looking after their own health are also important strategies. Beyond this is a need for improvements in regulation and public information to ensure consumers do not equate high cost with higher quality and are not induced to use services that do not offer value-for-money, or worse yet expose patients to unnecessary risks.
This report looks at these components, how they can come together into a complete, affordable health system and identifies what actions can be taken to ensure the aspirations of the emerging more affluent populations can be met without weakening the wider health system and adversely impacting the poor.
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