With many firms in the midst of or preparing for annual strategic planning sessions, it feels appropriate to take a step back from our day jobs and recognize a long-term trend Eurasia Group sees developing—the sustained politicization of healthcare, but against a backdrop where government seems poised to be less involved over time. Next month, we'll take a closer look at the opportunities and risks for industry generated by that dichotomy.
Policymakers and patients have squabbled over the ideal model for a healthcare system for more than a century. But there has always been a sense that the heavily regulated, western European single-payer model strikes the right balance between patients' and business interests, and that governments could and should be on the hook to manage that system (the US continuing as a notable exception).
That has changed. It is becoming clear that models such as the UK's National Health Service have crippling sustainability challenges—events like Brexit notwithstanding.
This has two very real implications. First, it makes western Europe a new source of instability for healthcare businesses. When I started with Eurasia Group seven years ago, it was rare that a healthcare firm wanted to discuss Europe with any urgency; it seemed most were relying on the region for relative policy stability (as well as predictable growth) as they focused on the experimental promise of emerging markets. Second, a flickering Western lodestar has emerging markets searching for an appropriate, imitable healthcare architecture. Chinese officials, who sometimes referenced UK strategies for implementing universal health coverage, are now considering alternatives that include the Canadian model. But Canada's “Pharmacare” program is still very much a work in progress and one that could upend Canada's reputation as a viable single-payer system.
So, what does the future have in store? I'd wager that conventional wisdom no longer holds—that government's relative participation in healthcare will actually decline over time, even as incomes rise.
The fiscal burden of European healthcare is hardly unique—throw a pin at a map and you will likely hit a country that is attempting to carve out a larger role for private healthcare players—from R&D, to provision, to finance. Brazil, once a poster child for statism and national champions, has flirted with rolling back government-mediated universal care and now leans on developing partnerships with the private sector.
Similarly, Saudi Arabia's leadership is approaching multinational corporations for healthcare partnerships as it recognizes that it can no longer afford to fund and deliver care to historical standards by itself.
Even Turkey, the golden child of emerging market healthcare (with high patient satisfaction, low out-of-pocket costs, and robust support from President Recep Tayyip Erdogan), is banking on public-private partnerships to stay afloat.
Unwittingly, the US might be a leading indicator for how healthcare systems evolve, with a government that seeks to have industry play a larger role in early-stage R&D and a strong disposition toward care that is privately financed and funded, sometimes in creative ways. Beyond some key personnel announcements, we don't yet know enough about the newly minted Amazon-Berkshire Hathaway-JP Morgan healthcare venture to gauge its chances for success, but it will not be the last of its kind. Watch this space.
This article was originally published on Pharmaboardroom.com
