A vision of the future: Many nations fear health systems unsustainable

Faced with rising costs, diminished resources, and growing demands, health systems around the world are under siege and many will be unsustainable within 15 years unless fundamental changes occur. That's the sobering conclusion drawn by PricewaterhouseCoopers Health Research Institute in a groundbreaking report identifying best practices and reporting results of surveys and interviews with 700 health leaders in 27 countries.

"Everyone we spoke with, in every country, told us they are afraid their current health care system was not built to last," says PricewaterhouseCoopers' global leader for health care, Jim Henry. "Most countries have some aspects of their health system that are working, but no one country has the magic bullet. We need to rise above nationalism and turf protectionism, learn the lessons of other countries and sectors, and build on those best ideas. What's clear is that no one government can solve the health care problem. It will be up to governments, working together with private industry and consumers, who not only have a bigger financial stake but also a greater responsibility for their health care."

The report — Healthcast 2020: Creating a Sustainable Future — finds a convergence of trends and solutions in the global health care market. Countries are moving toward greater shared financial responsibility among the government, private industry, and consumers, even in historically taxpayer- and employer-funded systems. The report also indicates that consumerism, use of information technology, incentive realignment, and new reimbursement models such as pay-for-performance are soaring globally as nations seek to reduce health care costs and improve access, safety, and quality for their citizens.

More than half of those surveyed expect health spending to accelerate at a greater rate in the future than in the past. Health spending patterns also are becoming more similar among countries in the Organization for Economic Cooperation and Development (OCED), although U.S. spending remains the highest in the world, with Americans spending 53% more per capita on health care than the next-highest country, Switzerland, and 140% above the median for OECD (industrialized) countries. PricewaterhouseCoopers projects that global health care spending will triple over the next 15 years to $10 trillion, consuming 21% of U.S. gross domestic product and 16% of gross domestic product in other OECD countries. The aging of the population, rising standard of living throughout the world, the effect of consumerism in health care, and growing demand from China are driving the increase globally.

U.S. aging population woes

Rising U.S. health care costs are largely attributed to the growing uninsured population and advances in medical technology and new pharmaceutical therapies. Contrary to popular belief, the aging of the population is responsible for only a small percentage of the increase in U.S. health care spending.

Health care spending in the U.S. is the highest in the world, accounting for 55% of all OECD health spending, vs. 47% for 23 other OECD countries combined. But despite having by far the highest per capita spending, the U.S. ranks 22nd in the world out of 30 OECD countries in terms of life expectancy, suggesting, according to the firm, that higher spending per capita may not lead to better health, and raising questions about the overall value of health care.

Of all health care stakeholders, U.S. respondents said that doctors have the greatest potential to eliminate waste in health care spending, while in all other parts of the world government is seen as having the greatest influence, followed by hospitals, physicians, patients, drug companies, employers, and patient advocacy groups, in that order.

When asked how health care financing should be structured in a sustainable health care system, there was widespread support for shared financial responsibility among private and public payers. In government-run systems of England, Germany, and France, market-based reforms are liberalizing provider markets. In the U.S., traditionally viewed as a privately financed system, it is anticipated that expansions of government programs mean that half of all care will be tax-funded before 2020.

Nearly 84% of U.S. respondents said the best financing structure for the future is a combination of private and public funding, compared to 72% of all other respondents around the world. Only 6% of U.S. respondents, compared with 32% in the UK and 18% of all respondents outside the United States thought that health care should be largely taxpayer-funded.

What we need

More than 50% of respondents globally said that competition, taxpayer funding of some or all of health care, regulated cost controls, and cost-sharing by patients are important to sustaining their health system.

When U.S. respondents were asked what features are most important to a sustainable health system for the future:

  • 83% said equal access to care is the most important feature of a sustainable health system, noting the U.S. is the only developed country other than South Africa that does not provide health care for all its citizens and there are 45.8 million people in this country without health insurance.
  • 73% said transparency of pricing, quality, and safety will be an important or very important factor to sustain the nation's health system.
  • 66% (vs. slightly more than 50% of European respondents) said that market competition is important or very important to sustainability.
  • 64% of U.S. respondents said patient cost-sharing was the fourth most important feature of sustaining the nation's health system.
  • 46% (vs. 62% of respondents outside the United States) think that regulated cost controls are an important or very important feature of a sustainable health system.
  • 44% said greater controls on patient demand by insurers, the government, and/or employers are important or very important.
  • 39% of U.S. respondents (and 36% of UK respondents) think rationing medical technology will be an important or very important feature.

PricewaterhouseCoopers says it is interesting that 69% of respondents in Asia/Middle East/Australia thought this would be an important feature.

Interest in consumer-directed care is intensifying around the world, the report says, and as patients assume a greater share of health care costs, they will demand greater accountability and seek transparency of pricing, safety, and quality. But current reimbursement systems don't pay for these measures.

Some 85% of all organizations surveyed have already initiated pay-for-performance initiatives focusing on performance, quality, and safety. The report says 60% of U.S. respondents say reimbursement to providers is an effective lever to promote quality and patient safety measures.

When asked who has made the most progress in efforts to improve health care quality, U.S. respondents gave their highest marks to patient advocacy groups, ahead of physicians, hospitals, and health plans. In all other areas of the world, government was credited with leading this effort.

Fewer than half the U.S. respondents (38%) believe hospitals are well prepared to meet the challenges of empowered consumers.

Lack of integration hurts

All respondents identified the lack of integration among providers and clinicians globally as the biggest problem facing the health delivery system. Two key areas cited as having the biggest positive influence on care integration were patient education and technology.

Some 75% of U.S. respondents and nearly 66% of global respondents overall said that patient education, including wellness and immunization programs, will be the most effective way of managing demand on resource-strained health systems.

Approximately 75% of respondents globally viewed information technology as most important to integrating care (74%) and information sharing (78%).

PricewaterhouseCoopers Health Research Institute director Sandy Lutz tells State Health Watch that while many people think the problems with health care systems in the U.S. and worldwide are too big and nothing can be done about them, there are advances being made on each of the features of a sustainable model.

"We're trying to break something that can be seen as overwhelming down into digestible bites," she says. "It helps if people look at it holistically."

Many Americans think there is no need to look at what is happening in other countries, Ms. Lutz says, but many issues in other countries are the same as those facing the United States and people in those countries are taking actions we can learn from. It is shortsighted not to look outside our borders, she says.

Asked what surprises the PricewaterhouseCoopers analysts found in the data, Ms. Lutz refers to the overwhelming support for a combination of funding sources.

"In the U.S., very few people want a tax-funded system," she tells SHW. "That's counterintuitive to what most people think the response would be. There also are several findings that point to increased consumer responsibility and accountability."

Ms. Lutz says she hopes the report will encourage people to think about the issue of sustainability in an actionable way. "The industry has been siloed," she says. "They need to think more about working together and taking a long-term view of building a system that will last."

Key sustainable features

There is much that health care leaders around the country and the world need to think about. The report identifies seven key features of sustainable systems, whether they are governments, networks of affiliated health-related organizations, or individual organizations:

  • Quest for common ground — a vision and strategy to balance public versus private interests in building an infrastructure and providing basic health benefits within the context of social priorities.
  • Digital backbone — better use of technology and interoperable networks to accelerate integration, standardization, and knowledge transfer of administrative and clinical information.
  • Incentive realignment — incentive systems to ensure and manage access to care while supporting accountability and responsibility for health care decisions.
  • Quality and safety standardization — defined and enforced clinical standards establishing mechanisms for accountability and enhanced transparency, building consumer trust.
  • Strategic resource deployment — resource allocation appropriately satisfying competing demands on systems to control costs while providing sufficient access to care for the most people.
  • Climate of innovation — innovation, technology, and process changes as a means to continuously improve treatment, efficiency, and outcomes.
  • Adaptable delivery roles and structures — flexible care settings and expanded clinical roles providing avenues for care that are centered on patient needs.

"How, specifically, are various health systems addressing the need for sustainability," the report asks. "Some solutions will require far-reaching changes in national policy. Policy solutions can be influenced — but are not made — by the managers of health care organizations. Other areas over which management has some ability to effect change are plentiful and are driving solutions. By looking at these solution drivers, health leaders can begin to formulate responses to the major challenges facing their health systems.

"Transferable lessons are emerging….They include changes to systems, policies, and structures. New financing incentives and models. Modifications to people's roles, skills, and attitudes. Altered processes and workflows. Discoveries of new technologies and new uses of old devices. Across boundaries, languages, and cultures, these are the strategies being employed by health systems across the world. The solutions are out there in the global market of health."

For more information, go on-line to www.pwc.com/healthcare or www.pwc.com/hri. Contact Ms. Lutz at (214) 754-5434 or e-mail sandy.lutz@us.pwc.com.