Healthcare cost per capita is rising fast and not matching the improvements in healthcare outcomes. Due to economic pressure and growing populations, government-backed integration and collaboration throughout the sector are fundamental to improving patients’ value and minimizing inefficiencies in the system, says new BCG report
Dubai, July 5, 2020 — Current healthcare systems around the globe are struggling to be sustainable, and solutions must be considered and applied by governments to optimize healthcare spending and improve services for citizens – including in the GCC, according to a new report by Boston Consulting Group (BCG). The report, titled ‘Curbing the Cost Curve in Health Care: Plugging the Leakage,’ insists that, although there will be challenges along the way, the transition to a value-based healthcare system is a necessity for every system in the region.
Like many other areas worldwide, aging populations and the rising costs of medical services place tremendous strain on the GCC healthcare industry. A large portion of health care costs is driven by a small portion of the population, such as people with chronic conditions and the elderly. These factors, combined with rapid population growth in several countries, are causing an unprecedented rise in healthcare costs.
“The challenge is choosing the right payment model for specific activities or patient groups and then integrating it with a value-based payment system that incentivizes different industry players to display the behaviors fundamental to sustainability,” said Jad Bitar, managing director and partner at Boston Consulting Group. “The transition to a value-based system begins with pay-for-performance (PfP) models.
At the same time, integrating healthcare systems is vital to establishing value-based healthcare systems. Information sharing across facilities ensures oversight and coordination, and access to all data is essential to transparency and not hindering value through unnecessary or duplicate treatments. Governments can help resolve such issues by assuming a prominent role in managing providers, funding efficiency programs, and offering financial incentives to encourage providers to report outcomes or mandate reporting results as part of national policy. Transparency is crucial, and open dialogue will drive substantial improvements in healthcare value.
Low cost, world-class car
Healthcare providers’ survival in the value-based era is dependent on the provision of high quality, low-cost care. Two measures can easily contribute to this – group purchasing organizations (GPOs) and capacity-productivity systems. GPOs optimize the procurement of medical supplies and are often used by providers to negotiate with vendors, unify acquisition, and cut costs through aggregate purchasing – with reduced costs, improved capital management, and standardized purchasing all advantages. With regards to capacity-productivity systems, these assist providers in assessing resource allocation efficiencies through the evaluation of core tasks, quality improvements, and supply and demand imbalances.
“A common mismatch in the GCC is supply and demand, especially in lower tiers of insurance beneficiaries,” said Dr. Nikhil Idnani, managing director and partner at Boston Consulting Group. “The high margins in VIP categories suggests that the majority of providers concentrate on these categories at the expense of others, with many patients way below VIP insurance coverage. At present, there is a clear imbalance concerning provider networks, while provision gaps in areas such as pediatrics and primary care will continue to expand should value-based healthcare approaches not be implemented and inefficiencies ignored. Capacity planning is most effective when performed centrally as it ensures collaboration between the public and private sectors, minimizes duplication and redundancies and clarifies the role of every healthcare provider.”
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