Why World Needs More Markets in Healthcare

Edvard Munch: Hospital Ward (1897-1899) // Public domain

Recently, a Slovakian newspaper published a commentary about tighter regulation in the healthcare sector. The question remains what exactly does he mean by the word “tighter regulation”?

The Slovak healthcare sector has its ministry, oversight authority, public health offices, its chambers, National Health Information Center (NCZI), Institute of Health Analysis (IZA) and Institute of Health Technology Assessment (NIHO). It has a dominant state insurance company and dominant state hospitals. The state owns and controls the education chain. It generates a plethora of laws and by-laws.

The 11 most important laws alone have been amended 603 times in the last 20 years. The Health Insurance Act was roughly 23,000 words when it was written; today it is about 55,000 words. We have tabular salaries. We have profit regulation. We have a new program decree that tells insurance companies exactly how to use the money.

But, well, surely some regulation can still be devised. Although looking at current political developments, I would like to have the authors’ optimism that that tighter regulation will not be mandatory treatment with a disinfectant and cosmic crystals. The problem I have with the comment is different; the author sees the “competition versus a directive plan” debate as a discussion about pouring water in a closed container: “The better hospitals and ambulance services do, the worse the insurance companies will do.”

Consumer Revolution

In many ways, the current healthcare system resembles a pay-as-you-go pension system. Today’s young healthy workers financially (dues) and physically (healthcare workers) provide healthcare for today’s old sick non-workers. As with pensions, such a system is doomed to deep erosion due to demographics.

Today, there are roughly 20 people over the age of 70 for every nurse. In 2030 it will be around 30. That’s already in six years! In the case of doctors, the situation will be just a little worse. Based on the European Commission’s projections, the Slovak health sector will need EUR 5-11 billion extra by 2030 compared to the current trajectory.

Of course, this is not just a Slovak problem. No country in the world would claim to have enough health professionals today, let alone in the future. Not long ago, I believed that I would be nursed in my old age by young Indians and Filipinas. But global demographics have stepped on the brakes so much in recent years that I no longer think so.

This change will not be handled by any kind of regulation. We need to scale up production in healthcare. We need a consumer revolution. Just as it has happened in industry, food production, telecommunications, transport, retail and finance. Healthcare needs an influx of capital, entrepreneurial discovery, an emancipated consumer, and a results orientation. The world is not being moved forward by the equivalent of Social Security companies but by companies like Narayana Health.

It is no coincidence that along with pharma, some of the biggest global investors in healthcare are retail and technology firms like Amazon, Walmart, Google and others. The consumer revolution is already happening. Even in Slovakia. From prepaid cards at clinics and commercial lab screening programs, to the use of second opinion portals, health data analytics from Oura and other wearables and cancer insurance and global health insurance.

Not ‘If’, But ‘How’

Yes, at most tens of thousands of educated, mostly young and relatively wealthy people are currently taking advantage of it. However, their numbers will grow, just as the number of people using computers or trading on the stock market has grown. Positive feedback means that each additional customer cultivates the market and a more cultivated market attracts more customers.

Our research has shown that the “most marketable” force in healthcare is people just after 40. Thus, people who need healthcare services more intensely for the first time and they are discovering with horror what the reality is. When today’s young tech generation moves into this phase of life in a few years, they will create a huge demand for other solutions. They won’t wait for the state, they’ll buy them.

We are now faced with the question. Are we going to have a two-track healthcare system? Part of the population will operate in a parallel modern efficient commercial healthcare system as customers. The rest will be stuck in an eroding public health system not as customers but as patients, or rather ‘pages’.

Or will we look for synergy? A way to open up the public system to the “other” world? The latter will require a radical philosophical change. The example is not so much the Dutch healthcare system, which is just a better functioning iteration of the Slovak healthcare system, but rather the Singaporean system. In Singapore, the state provides basic financial and physical access to healthcare, but each individual, family, or community must consistently “manage” their interactions with the healthcare system throughout their lives. Just as we manage our careers or personal finances. The health system itself is made up of a checkered and intertwined mix of commercial, non-profit, and public services.

I am not so naive as to prescribe such radical change in Slovakia in one reform. The current form of healthcare is deeply culturally burned into people and will take at least a generation to begin to fade. It is not enough to change the laws; the patients themselves must change too. We can step in the face of such changes, or we can run away from them.

The article was originally published in Slovak in Denník N

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