Globalization of HealthcareFrom Crisis to Opportunity

Chicago June 1, 2010

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Globalization of Healthcare

• Global Marketplace for Healthcare

• Major Trends that Affect the Market

• Way Forward

Outline

33

Global Marketplace for Healthcare

• From Local to Global

• Size of Global Market

• Sub-markets

• Economic Zones

• Aggressive Posturing by Emerging Markets

• Cross-border Demand

• Firms Strike Back (Porter’s Five Forces)

Outline

44

How Big is the Global Marketplace for Healthcare (IMF)

Rounding Up • Global GDP US$55 trillion

• Global Health Spending US$5.5 trillion

• Spending on Health in all Low Income US$550 billion

• Spending on Health in Africa US$25 - 30 billion

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The Devil is in the Detail (IMF)

Rounding Up • US GDP US$16 trillion

• Global Health Spending US$5.5 trillion

• Financial Bailout US$3.0 trillion

• US Health Spending US$2.7 trillion

• New Health plan US$800 billion

• US derivatives markets US$666 trillion

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Binding Constraints

Fiscal Space • Overall level of GDP

• Share of GDP channeled through the public sector Share of public sector resources allocated to health care

• Share of health expenditure in public sector used to pay for health workers and health education

• Share of GDP channeled directly through households Household spending of health care

• Share of private expenditure on health care devoted to health workers and health education

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Sub Markets

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The Case for Investing Across Subsectors

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The Case for Investing Health Services Subsector

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Economic Zones

HiA Facility

US$1 Billion Total

•500 million loans

• 300 million equity

• 200 million for TA

Other Zones

• EU

• Eastern Europe

• North America

• South America

• Middle East

• South Asia

• East Asia

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Expanding Beyond Borders

• Old World

• Major US and European Companies

• Brave New World

• South Africa (Netcare)

• India (Apollo)

Multi-nationals

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Cross Border Demand

• Medical Tourism

• US (Mao Clinic, Leahy Clinic, Cleveland Cl)

• Thailand (Bumrungrad)

• Jordan (King Hussein)

• Beyond Tourism

• Hong Kong

• Singapore

What/Where

How Firms React to Competitive Threats Michael Porter’s Five Forces

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Major Trends that Affect The Market

• Opportunities

• Expansion in Health Insurance

• Global Financing Mechanisms

• Epidemiological shits

• Threats

• Financial Crisis

• Technological Arms Race

• Human Resources Crisis

Outline

Scaling up From 40 Million to 4 Billion: Who is Doing it?

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100 Years of Reform in the US – New York Times

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It is Popular Everywhere

The New and the Old Players in Health Financing

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7 years of 5% ave. growth … … with reducing inflation …

Annual GDP Growth (%), Sub-Saharan Africa, 2000-06Annual CPI (%), Sub-Saharan Africa, 2000-06

So Four Years Ago Things Looked Rosy

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The Sky Was the Limit

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Then Suddenly Everything Changed

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The World Economy went into a Tail Spin

Normal Market Response

But This Time that Didn’t Work

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Consumer Confidence Rapidly Collapsed

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New and Realistic Approaches were Needed in Health Care

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As in the Past Donor Funding is Already Affected

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Need for Renewed Political Commitment to Public Spending

1. Ghana 2. Chad 3. Cote d'Ivoire4. Kenya 5. Namibia6. Swaziland7. Senegal8. Comoros9. Mauritania10. Mozambique11. Sudan12. Cameroon13. Congo, Rep.14. Equatorial

Guinea 15. Nigeria 16. Gambia, The17. Togo 18. Gabon 19. Sierra Leone20. Burundi 21. Eritrea 22. Guinea 23. Central Afr. Rep.24. Zambia

25. Lesotho26. Zimbabwe 27. Seychelles 28. Ethiopia 29. Madagascar 30. Benin 31. Angola 32. Guinea-Bissau 33. Tanzania 34. South Africa 35. Mauritius 36. Mali 37. Uganda 38. Cape Verde 39. Sao Tome & Pri 40. Congo, DR 41. Burkina Faso 42. Botswana 43. Malawi 44. Liberia 45. Rwanda

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Instead Ministers of Finance Recently Rescinded

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Figure A2.1.3.1Health spending by Source as % of GDP

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Public spending on health as % of GDP Private spending on health as % of GDP

Need to Capture the Very Valuable Private sector Resources

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This is Not the First Financial Crisis

• Great Depression 1930s

• Oil Crisis of the 1970s

• Inflation 1980s

• East European Crisis (1990-1997)

• East Asian Crisis (1997-1998)

• Argentinean Crisis (2001)

• Russian Crisis (1997-1998)

• Peruvian Crisis (1988-92)

• Mexican Crises (1980s and 1990s)

In Healthcare What Goes Down always Comes Back Up

World Bank Lending

• From US$ 20 billion

• To US$100 billion

US Health Spending

• Up 100 Billion /year

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Medical Technology Arms Race

Hi Tech

3535

Human Resources Crisis

Outline

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The Way Forward

• Strength in Numbers

• Role of the World Bank Group

• Role of the IHF

• Role of Others

Discussion