Since the beginning of 2020, the global economy has been faced a litany of overlapping and increasing pressures.
From the continued COVID-19 recovery, to the ongoing war in Eastern Europe, geopolitical spot fires elsewhere, to the increasing inflationary pressures worldwide, it is impossible to pretend that the healthcare space is immune from these pressures.
With increasing calls on the public purse, the dreaded term ‘cost efficiencies’ is beginning to return.
Colman Taylor, Owner and Chief Vision Officer for HTANALYSTS, said the world had seen firsthand how an unwell and vulnerable population can intrinsically affect an overall economy.
“We have this lesson from COVID that the health of the nation and the economic performance of the nation are intrinsically linked,” Mr Taylor said.
In Australia alone, spending on health goods and services grew by $14.6 billion to $220.9 billion during 2020–21 – the second year (first full financial year) of the COVID-19 pandemic, according to reports released by the Australian Institute of Health and Welfare (AIHW).
This investment brought total health spending to the equivalent of 10.7% of Australian Gross Domestic Product (GDP), the highest ratio since consistent data became available in 1985–86.
Colman, who has provided key strategic oversight for over 500 market access and health economics projects across the Asia-Pacific region, said the societal benefits of healthcare expenditure, whilst under the microscope, was more prevalent in the mindset of decision makers.
“If we are wanting to cut back on healthcare spending, I think there’s more of a recognition that this has productivity and broader impacts that are not directly obvious on the balance sheets.”
“Whilst the pressure will continue to ramp up, I don’t think it necessarily means that we need to cut back on healthcare spending. For me, what it means is that healthcare payors will be seeking to understand the impact for every dollar they spend.”
Taylor draws on his experience working with a diverse variety of companies from local start-ups to international pharmaceutical, digital health and medical device companies, to explain that medtech must demonstrate their achievements in improving social outcomes to ensure the best chances of success during times of global economic upheaval.
“Companies are realising that the things they do, have these social consequences, and that they need to be more closely connected and aware of what they’re doing and what those outcomes are,” Mr Taylor said.
“You’ve got a real mismatch between the companies that actually deliver social impact, like the med tech sector, and the companies that can effectively communicate their impact.”
“However I think there is a rising awareness that all companies need to think about their ESG responsibilities which are beyond the bottom line, and they are starting to cotton on to the environmental part of it, because they are being forced to, however the social component is really lacking.”
“The natural conservativeness of being on the medical side, and not overclaiming, prevents some companies from doing anything sometimes. But the world is changing and everyone is realising that business needs to be part of the conversation regarding social outcomes.”
“In fact, we’re seeing companies on the periphery of healthcare that might deliver consumer products, nutrition and things like that, which are starting to really cotton on to this and say that we want to connect what we’re doing to impact and make sure that the activities that they’re doing have a credible and sustainable impact.”
2023 will pose new challenges for all areas of the healthcare space, but if managed correctly, it also possesses new opportunities for companies that have a clear ability to measure and communicate their social impact.
