Strategic outlook–Global health and healthcare

Shaping the future of health and healthcare

Late 2019, the Wuhan Municipal Health Commission reported an increase in incidences of pneumonia-like cases with unknown cause. By the end of January 2020, the virus had spread to multiple countries around the world, totaling just under 10,000 cases. A year later, following the fastest vaccine development in history, the first vaccine against coronavirus disease (Covid-19) received emergency authorization. While Covid-19 triggered growth and innovation in health and healthcare, it also brought about significant health, economic, political, and environmental challenges. Within this timeframe, the global healthcare sector experienced unprecedented growth; overall healthcare spend is expected to reach USD 12 trillion in 2022, up from USD 8.5 trillion in 2018. Healthcare investments reached record highs in total funding in 2021 with a surge in venture investment and fundraising. A record USD 23.1 billion was raised by 128 therapeutic-focused biopharma companies that went public globally in the areas of innovative therapies, namely, gene, cell/immunotherapy, and tissue engineering.

Following the launch of mRNA-based vaccines, applications in Zika, malaria, and seasonal diseases, such as influenza are growing, as well as beyond infectious diseases, with a number of cancer vaccines in clinical stages of development. Precision medicine continues to grow with biomarker strategies for screening, diagnosis, and treatment selection and response monitoring becoming increasingly critical components of drug launches. This is supported by advancements in liquid biopsies, with the first tests approved by the United States Food and Drug Administration (US FDA) in 2020 for early pan-cancer detection (Guardant360 CDx and FoundationOne Liquid CDx). Biomarkers are poised to expand into applications beyond oncology, particularly neurologic, immunologic, and cardiovascular diseases.

Digital investments nearly doubled to USD 57 billion in 2021, particularly in telehealth and mental health. The number of digital health start-ups is increasing, with expansion from tech companies into healthcare (e.g., Amazon), putting pressure on the market. With a significant pace of change and digital leaders outperforming laggards in revenue, continued digital innovation is expected. Data aggregation technologies in clinical and commercial settings are maturing with a growing collection of companies providing solutions and enabling pharma to gain better insights.

There is an increasing recognition that treating patients in lower-acuity settings, such as the home, is less costly. Total home health expenditure growth is expected to outpace total healthcare expenditure growth in nearly all other healthcare segments, with increasing focus on home diagnostics, home administered drug delivery systems, and patient-monitoring devices. Increasing decentralization of healthcare is also aligned with increasing patient centricity, as patients demand greater convenience and medical privacy as well as value-based care. Artificial intelligence (AI) applications are now targeting many aspects of healthcare, including diagnosis, clinical decision support, disease prevention, monitoring and treatment, patient adherence and self-management, and workflow solutions. There is increasing focus on developing regulatory frameworks and guidelines for the clinical application of AI and its usability.

The first FDA approval for AI-assisted medical imaging was in 2017, but several other approaches in different areas have been approved since. In AI-assisted drug development and design, all of the largest ten pharmaceutical companies (by revenue) have either partnered with or acquired AI companies to make use of this capability, or are listing a significant number of AI jobs to build this capability internally. In addition, advances in AI, augmented reality, virtual reality, and improved connectivity allow the emergence of the metaverse. The metaverse can be a platform for several potential applications in healthcare, such as the delivery of telemedicine in a more immersive and interactive environment that can track the patient’s response to treatment or the formation of digital twins that can create a simulation using real-world data that can virtually model how the patient responds to a given procedure.

There are already metaverses that exist, such as the virtual real estate platform Decentraland and digital gaming platforms like The Sandbox. Companies are investing more in this space; Microsoft is developing Mesh.

The Covid-19 pandemic exposed disparities in global essential healthcare coverage, impacting women, children, and adolescents the hardest with a 25-percent drop in the coverage of essential health interventions. A pulse survey by the World Health Organization (WHO) in August 2020 showed that nearly 90 percent of the countries surveyed reported some form of disruption to health services. and the greatest disruptions were being reported in low- and middle-income countries (LMICs). Supply chain delays and high customer demand during the pandemic resulted in significant disruptions.

The impact of this went beyond the healthcare industry and was exacerbated by the global semiconductor chip shortage and blockage of the Suez Canal by a cargo ship in March 2021 for six days resulting in shipment delays of around USD 60-billion worth of products. Misinformation, mistrust, and political divide continued to be present, with the US Capitol riots in early 2021, the release of the Facebook Files and Partygate in the United Kingdom. Misinformation and mistrust impaired vaccine efforts and resulted in multiple protests against vaccines, restrictions, and lockdowns. Mental health issues were prevalent throughout the pandemic due to isolation, redundancies, job losses, and uncertainty across the population. Pressures on healthcare systems affected the mental health of healthcare workers across the globe, leading to significant burnout.

Beyond the pandemic, major conflicts, such as the Taliban takeover of Afghanistan and Russia’s invasion of Ukraine, resulted in significant loss of life, impact on health and well-being, human rights violations, and broader economic and supply disruptions across the world. The risk of geopolitical divide (e.g., between the US/West and China) may restrict access to medicines, disrupt supply chains, and limit the ability of national health systems to respond to global health problems requiring cooperation and collaboration, for example, anti-microbial resistance (AMR) and the threat of future pandemics. Macroeconomic issues, such as the energy crisis and rising inflation, continue to affect individuals’ standard of living, thereby impacting their physical and mental health. In addition, government regulations to reduce inflation are expected to affect the pharmaceutical industry. For example, the Inflation Reduction Act, which empowers the federal government to negotiate prices for some drugs purchased by the Center of Medicare and Medicaid Services, can impact how pharmaceuticals are researched, developed, and commercialized. The climate crisis has continued to have an increasing global impact. In July 2021, the Dixie fire became California’s largest single wildfire in recorded history, and was only extinguished in October of the same year. The effects of the climate crisis continued in 2022 with heat waves across the globe, including the US, Europe, China, and India, wildfires, and floods in South Africa and Asia, particularly in Pakistan, where over a third of the country was submerged. These events highlight the global inequities that exist in health and healthcare and the fragility of healthcare systems under the pressure of pandemics, conflicts, economic uncertainty, and the climate crisis. In order to benefit equitably from technology and innovation in the healthcare industry, these issues need to be proactively addressed.

What is the vision for health and healthcare in 2035?
The strategic outlook sets out a vision for health and healthcare in 2035. A 2035 outlook allows for sufficient time to respond in the context of other key global targets, such as the 2030 Agenda for Sustainable Development and 2030 nationally determined contributions (NDCs) as part of the Paris Agreement, and provides opportunity to implement change to health and healthcare at the system level.

Equitable access and outcomes in health and healthcare. Health is a product of social determinants, including where one lives and works, and health and healthcare inequity continues to be a pressing issue. While decentralization is relieving pressure off hospitals and allowing increased access to care, there are still geographic and demographic disparities in access to not only healthcare but also high-quality healthcare. The WHO has reported that over half of the world’s population lacks access to the basic health services they need. Customer empowerment and ownership of health through digitization and healthcare at home are not yet universally accessible and may exacerbate existing disparities. The pandemic had disproportionate impact on certain populations, highlighting inequities. For example, the reduction of essential maternal and child health interventions may have caused more than a million additional child deaths. One in seven people in LMICs is fully vaccinated for Covid-19. By comparison, nearly three in four people in high-income countries (HICs) have been vaccinated for around a year. Beyond the pandemic, only 4 percent of research and development (R&D) budgets are focused on women’s health, and there are limitations in the availability of clinical data on women, as those of reproductive age were historically excluded from clinical trials. In addition, multiple studies found that in many areas of healthcare, women experience poorer outcomes than men, such as in dementia care and management of acute pain. The goal is to have equitable access to determinants of health, ensuring health data is representative of the population and ensuring people with equal needs achieve equal health outcomes. Among European Union (EU) countries, deaths and losses due to ill health account for 20 percent of the total costs of healthcare and 15 percent of total costs of social security benefits. Losses due to reduced labor productivity costs are around 1.4 percent of annual gross domestic product (GDP). Eliminating health inequity is estimated to equal a projected USD 350 billion return to society.

Addressing health inequity is not just a societal goal but there is business incentive for employers to play a more proactive role in investing in their employees’ health. Employers share the burden of chronic diseases and health inequities that drive many chronic conditions, such as obesity and diabetes. This generates costs for employers, such as greater healthcare expenses, absences, medical appointments, and reduction in productivity. Companies that provide wellness programs and benefits packages have been shown to help narrow the health disparities gap, particularly those focused on vulnerable populations. Contributing to creating a more equitable society is beneficial for company exposure and culture. Businesses have a powerful voice and can advocate for policies that can meaningfully improve the health of communities, employees, and families. The long-term goal is to provide access to universal health coverage (UHC) globally. WHO defines UHC as all people receiving the health services they need, including health initiatives designed to promote better health, prevent illness and provide treatment, rehabilitation, and palliative care of sufficient quality to be effective while at the same time ensuring that the use of these services does not expose the user to financial hardship. Research indicates that while private financing can play a role in UHC, the onus is on public funding and allocation of general government revenues to ensure coverage of the population not in salaried employment and drive improvements in health system performance. Value-based agreements can be incorporated into this model to share accountability across more stakeholders and incentivize providers, insurers, pharmaceutical companies, and physicians to focus on outcomes.

Technology and innovation. Health technology and innovation have significant future growth potential in new treatments and modalities improving patient outcomes, better and earlier diagnostics for prevention as well as earlier treatment, and technology that improves the quality and efficiency of healthcare provision. Healthcare spending continues to outpace GDP growth on a global scale – a development that is not sustainable. Consequently, drug prices and reimbursements are put under pressure to contain costs. The goal is to cultivate an environment that supports funding, use and implementation of innovative approaches in science and medicine, including wellness, therapeutics and healthcare delivery. Innovation has the potential to reduce overall healthcare spending by improving efficiency and outcomes. Beyond healthcare savings, healthcare innovation supports overall economic output. A model built to project ageing populations demonstrates future reductions in output of 17 percent by 2056 and 39 percent by 2096, relative to an economy with constant population distribution. The model demonstrates that curing diseases like Alzheimer’s and dementia can lead to a compounded output increase of 5.4 percent. However, incorporation and use of technology takes time due to the receptiveness of the end-user, availability of the required infrastructure – particularly in LMICs – and cost to the healthcare system. Therefore, innovators need to focus not only on their projected revenues but also on the extent to which their products and services will ultimately lead to cost-savings, improved efficiencies, and true value add to existing treatment paradigms.

Environmental sustainability. The healthcare industry has a large climate footprint, accounting for an estimated 4.4 percent of global net carbon dioxide emissions. In England, the NHS accounts for around 4 percent of greenhouse gas emissions. Of this, 62 percent of emissions are from medicines, equipment, and other supply chain sources (e.g., freight). Pharmaceuticals contribute around 20 percent of the emissions, compounded by over £300 million in medicines going unused each year in England, resulting in sub-optimal usage of therapeutics and over-prescribing and waste, causing soil and water contamination. Along with the impact of the healthcare industry on the environment, there is the impact of the climate crisis on health and healthcare. This can be through extreme weather events, heat stress, poor air quality, water quality and quantity, food security, and vector distribution. As a result, mortality, heat-related illness, respiratory illness, water and vector-borne diseases, malnutrition, and mental health of individuals are likely to suffer through the climate crisis. The goal is to reduce the impact of the healthcare industry on the environment, and prepare for and address climate change for better health and wellness of the global population. Net-zero commitments include more than 70 countries, including China, the US, and the EU, who are collectively responsible for 76 percent of global emissions, and 1200 companies. The pharmaceutical and medical technology sector as a whole achieved a major breakthrough in Race to Zero, whereby 20 percent of the major companies (by revenue) have committed to halving emissions by 2030 at the latest. Healthcare policy makers are adopting environmental objectives – for instance, the NHS is aiming to reduce its carbon footprint by 80 percent by 2040, there is growing interest in incorporating environmental sustainability into health technology assessments and increasing focus on how prevention and better management of chronic conditions can improve carbon emissions. While the increasing list of countries and companies with net-zero targets is encouraging, the commitments made to date fall short of what is required to meet the Paris Agreement of limiting global warming to 1.5 degrees Celsius compared to pre-industrial levels. The richest 1 percent of the world’s population is estimated to produce double the emissions of the poorest 50 percent of the world’s population, while 94 percent of pollution-related deaths occurred in LMICs in 2016. In addition, between 2030 and 2050, around 250,000 additional deaths associated with climate change are expected due to malnutrition, malaria, diarrhea, and heat stress. The cost of direct damage to health is estimated to be around USD 2–4 billion per year by 2030.

What are the solutions to address the issues?
While these barriers prohibit the achievement of equity, resilience, innovation, and environmental sustainability in health and healthcare, addressing these barriers provide opportunities to create value for businesses, governments, and society. There are several levers to resolve these issues driven by public, private, or both stakeholders, and solutions can make use of multiple levers as subsequently demonstrated by the selection of case studies.

Cross-industry collaborations can occur between healthcare providers and a range of other industries, such as consumer/retail or digital solutions companies to address a number of barriers. In one such example, a technology platform, Honor Technology, and an at-home health service company, Home Instead, have combined their capabilities to offer Home Instead’s high-touch care model supported by Honor’s technological and digital solutions. This collaboration allows Honor to scale its technology geographically and better empower Home Instead’s workforce. In such cross-industry collaborations, the key to success is mission alignment across the two organizations joining forces. In the case of digital solutions, it is particularly important to ensure that the technology is designed in collaboration with the customer to account for their specific needs and tech readiness, while engagement is guided by on-the-ground support through a trusted member of the community or carer. In addition, alignment on data collection and ensuring data integration from the beginning across the organizations is key to continuing to improve services and demonstrate value proposition, along with transparency in data collection to the consumer. As a result, agencies using the Honor care platform have a workforce turnover rate that is half the industry average, and 94 percent of them feel they have the tools and resources they need to be empowered in their jobs. In addition, 94 percent of the older adults they care for have a positive experience with their professional caregivers.

Patient empowerment is a key lever to encourage patients to have ownership of their health and wellness. To support this, South Africa-based health insurance company, Discovery Vitality, developed a behavioral change platform that incentivizes customers to adopt a range of health behaviors, including increased physical activity, healthy eating, and regular screening. The key to success in supporting behavior change is incentives. Simply providing guidance on good health choices is insufficient in changing behavior, but personalized interventions and incentives lead to better engagement, trust, and outcomes. The private sector is particularly well positioned to offer these types of incentive structures. Data gathered over decades show that increasing engagement with the platform reduces mortality risk and life expectancy. For those with the highest engagement, life expectancy reaches 83–89 years, compared to South Africa’s average life expectancy of 64 years.

Digitization, AI, and big data to better connect healthcare stakeholders and provide access to a wider set of healthcare information to improve decision making is an important underlying theme in several case studies (e.g., ABDM, Home Instead, and Honor). In Bayer Consumer Health’s work in Guatemala, digitization via QR codes on individual product sachets aims to improve affordable access to over-the-counter (OTC) medicines by reducing packaging costs, improving healthcare literacy, and empowering patients while reducing carbon footprint. The role of OTC products in middle-income countries of Latin America (like Guatemala) helps individuals save on average four productive days, worth USD 123 revenue per person per year – a significant income for low-income consumers who can earn between USD 2 and USD 15 per day. While digitization’s role in addressing health and healthcare issues will likely increase in the future, challenges around accessibility (e.g., ensuring access to mobile telephones with camera functionality) and regulatory approval must be considered. As demonstrated by the case study in Guatemala, when discussing data interoperability in the context of health and healthcare, the digital solutions being deployed do not need to be advanced or overly ambitious. The emphasis should be on building the right data infrastructure for the future while understanding how best to apply the minimum data set now to inform decision making and improve outcomes for patients.

Outlook
In the last three years, the world experienced a major pandemic, multiple geopolitical conflicts, and climate and energy crisis effects, which all have a detrimental impact on health and healthcare globally, with the most vulnerable populations being the most impacted. While triggering growth and innovation in the form of a surge in healthcare spend and investments, scientific advancements, improved digital innovation and connectivity, and alternative care models, the pandemic also exposed global health disparities, had a detrimental impact on mental health and well-being, and exacerbated macro-economic issues and the climate crisis. In a time where barriers are complex, involving multiple stakeholders with competing priorities, it is increasingly important to work together and define clearly what the vision for health and healthcare looks like in 2035. Equitable access and outcomes for all is a key pillar and will require significant and disproportionate investment in the countries or regions lagging behind. Healthcare systems need to be reorientated to think about success in the context of broader outcomes across health and wellness for individuals, communities, populations, and systems over multiple years in the face of expected and unexpected circumstances. An environment that supports funding, use, and implementation of innovative approaches in science and medicine needs to be cultivated, in particular in countries or regions where infrastructure and opportunities may not be as advanced. For environmental sustainability, reducing the healthcare industry’s impact on the environment is key while also preparing for and addressing climate change for better health and wellness across all countries, including those that suffer a disproportionate impact. Each strategic pillar is important, but collectively striving for them all will help ensure that sustainability, equality, resilience, and innovation are embedded into future health and healthcare systems. The vision for health and healthcare in 2035 is ambitious yet achievable. To get there, stakeholders across sectors, industries, and geographies need to build on the existing traction and collectively lead across their organizations to catalyze long-term change at the system level. The biggest barriers in health and healthcare in 2023 are predicted to include worsening mental health, healthcare workforce shortages, supply chain issues, and climate and macroeconomic instability (e.g., energy supply and inflation). While it is important to keep these barriers in mind, they should be addressed in the context of the outlook for 2035 to ensure activities are complementary to striving toward systemic, long-term change.

Action is needed now; nearer-term initiatives and targets that balance the needs of different stakeholders should be enacted to build upon successes to date.

In 2023, private stakeholders should:

• Implement the WHO guidelines on mental health at work and other evidence-based research to preserve, monitor, and remediate employee welfare, as well as define and track metrics over time to demonstrate impact and advance understanding of key determinants of well-being in health and healthcare workplaces.
• Incentivize private industry investment to drive innovation in medicine development and commercialization, supply chain optimization, and healthcare delivery. Outline how innovative products and services can lead to contained costs, improved efficiencies, and better outcomes at the individual and system level, which could be scaled globally considering the different tech capabilities across markets. Also, work with policy-makers to outline ways to cultivate regulatory environments that support rather than restrict the adoption of technology and innovation.
• Mandate that environmental, social, and governance pillars are embedded equally into the health and healthcare industry by defining and tracking a clear set of metrics centrally to encourage widespread adoption and standardize expectations across the industry in collaboration with public bodies.
  Public stakeholders should:
• Internationally cooperate (e.g., via the World Trade Organization and other trade and investment fora) to create an environment that facilitates and promotes distributed supply chains via a global network with a focus on building capacities and investing in under-represented geographies with vulnerable populations.
• Redesign systems to focus on the value of outcomes achieved over the volume of services delivered, and embed the financing of value through linking resource allocation, resource use, and outcomes achieved across communities. Implement policies that ensure the changes are at the system level but allow for local autonomy and flexibility in funding models. Define a clear set of short-, medium-, and long-term impact measures to allow for national data aggregation and evidencing of system-level impact. Educate all stakeholders, including patients, physicians, payers and policy-makers to ensure alignment and embed value as the norm.
•  Mitigate national divergences in data regulations by converging an international body that sets out rules and guidelines to harmonize data use and its applications within health and healthcare. Alongside this, track, monitor, and publish data-related trends to update policy makers on key changes required to support the widespread use and adoption of data applications in the industry while balancing the needs of privacy, personal data protection, and security.

This article is based on a report by World Economic Forum in collaboration with LEK Consulting.