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RELIEVING THE PRESSURE

26/02/2019

The pressure to transform healthcare delivery so that it delivers improved patient experience and outcomes is well recognised across the world. In this article Chris Wilkinson, Head of Sales for Healthcare and Public Sector for Siemens Financial Services explores the ‘healthcare value indicator’ of healthcare systems worldwide and reviews research which estimates the ‘frozen capital’ from equipment and technology investments that could be released to fund operating requirements.

 

Healthcare systems around the world are under pressure. People are living longer and healthcare systems are expected to deliver higher quality healthcare to more people. As a result, there is pressure to transform healthcare delivery so that it delivers improved patient experience and outcomes. In response, policymakers and healthcare institutions are reviewing the efficiency and effectiveness of their healthcare resources, the pressure of demand on those resources, and the quality of the outcomes that those resources deliver.

 

SFS Chris Wilkinson

In Europe, healthcare systems, which are publicly funded, are under pressure to contain spending while improving patient outcomes – increasing both their efficiency and their effectiveness in creating healthier societies.

 

Healthcare funding is critical to alleviating the pressures of reform and development, yet there are limits on what the state can afford, or which taxpayers will agree to pay. The proportion of Gross Domestic Product (GDP) spent on healthcare is a critical factor – as is the efficiency and effectiveness with which it is deployed. As a result, healthcare finance managers are now looking to measure not only the efficiency of treatment procedures, but also the quality of patient outcomes resulting from that treatment.[1]

 

A new whitepaper from Siemens Financial Services, entitled Relieving the Pressure, looked at the net pressure on healthcare systems in fourteen countries around the world and considered the relationship between healthcare demand and healthcare resources available. This was then related to the patient outcomes produced and the resulting ‘healthcare value indicator’ (the value that a health system is delivering) achieved.

 

The results show that France is currently delivering the best ‘healthcare value indicator’, closely followed by Scandinavia. Other European countries – UK, Germany, Spain, are delivering above-average indicator values.

 

 

It is widely acknowledged that access to the latest technology and equipment – increasingly digitalised equipment – helps to improve patient outcomes.[2] Up-to-date technology is one critical element that relieves pressure on healthcare systems by optimising clinical and care skills. Examples include super-precise surgical robotics,[3] highly detailed medical imaging for earlier diagnosis,[4] point-of-care diagnostics for more rapid triage,[5] laboratory automation to improve test turnaround times, automated dispensary to avoid medication errors[6] and telemedicine to improve access to healthcare.[7]

 

Access to new generation technology is however often a real challenge for healthcare systems that are battling to contain and optimise operating costs and patient outcomes. As a result, healthcare systems around the world are increasingly looking to harness private sector capital to fund at least a proportion of their capital requirements.[8]

 

Using private finance can unlock ‘frozen’ capital – which would otherwise be tied up in capital equipment purchases, allowing it to be deployed on urgent operating requirements aimed at improving patient outcomes in the short- to medium-term.

 

SFS has estimated the volume of capital finance that could be ‘unlocked’ from key equipment and technology capital investment and applied to urgent operating finance requirements as follows:

 

Frozen Capital 2017 Estimate ($ billion)
China 16.53
India 1.3
France 3.68
Germany 6.47
Poland 0.61
Russia 1.2
Scandinavia 1.56
Spain 1.39
Turkey 0.77
UK 1.89
USA 34.78

 

As a result, specialist technology finance solutions such as pay-for-outcomes technology upgrade and transition finance options are gaining increasing acceptance amongst healthcare institutions as a means of enabling cost-effective investments in new technologies. Such financing solutions spread the cost of the technology over an agreed financing period, with finance payments arranged to align with the expected benefits of the use of the technology over time, such as improved operational efficiency.

 

Such tailored financing packages tend to be offered by specialist healthcare financiers that have an in-depth understanding of medical technology and its applications. They understand the profound impact up-to-date technology can bring to the daily operation and can expertly evaluate any associated risks. They are therefore more inclined and more able to create customised financing packages that fit the specific requirements of each individual organisation – for instance, by flexing the financing period to suit the customer’s cash flow needs. This contrasts with the standard financing terms usually available from generalist financiers who often lack technical expertise or a thorough understanding of the healthcare sector.

 

Healthcare institutions worldwide now have the opportunity to examine their own levels of frozen capital and explore how much might be unlocked to enable the quest for improved patient outcomes and healthcare value.

 

 

 

[1] Deloitte, 2018 Global health care outlook: The evolution of smart health care, 12 Jan 2018

[2] HealIT.gov, Improved diagnostics and patient outcomes, 12 Oct 2017; Physiotherapy Journal, The clinical use of assisted technology to maximise patient outcomes, Nov 2016; International Journal of Nursing Sciences, Mobile technology for health care in rural China, Sept 2014; Moscow Times, Digital Technology will Move Russia Forward, 5 Feb 2018; et al

[3] Lakeview Regional Medical Center, Lakeview Regional Improving Patient Outcomes With Investment in New Robotic Surgery Technology, 8 Aug 2017

[4] For instance: Zhu H, Zhang L, Wang Y, Hamal P, You X, Mao H, et al, Improved image quality and diagnostic potential using ultra-high-resolution computed tomography of the lung with small scan FOV: A prospective study, 2017, PLoS ONE 12(2): e0172688. doi:10.1371/journal.pone.0172688; Scottish Funding Council, New medical imaging technology has potential for earlier diagnosis, 27 May 2017

[5] S.K.Vashist, Pont-of-care Diagnostics – Recent Advances and Trends, Biosensors (Basel)v.7(4) 2017 Dec

[6] Z.Ahmed, S.Garfield, Y Jani, S.Jheeta, B.Dean Franklin, Impact of electronic prescribing on patient safety in hospitals: implications for the UK, Clinical Pharmacist 5 May 2016

[7] Government of India – Ministry of Health and Family Welfare, e-Health and Telemedicine, (various announcement dates)

[8] PwC, Depleting resources adding pressure to healthcare, 2018; World Bank – Multilateral Development Bank Group, Mobilization of Private Finance 2017; European Scientific Journal, Public Private Partnership in the Provision of Health Services for the Millennium Development Goals, Oct 2016; The Economist, How and when to use private money in infrastructure projects, 22 Apr 2017; BSR, Innovative Finance to Expand Access to Healthcare, 7 Sep 2017; Institute for Global Health Sciences/PwC, PPPs in healthcare – models, lessons and trends for the future, 2018; NHS Providers, The state of the NHS provider sector, Nov 2016; Polish Ministry of Economic Development, The government policy for the development of PPPs (Poland), July 2017; International Finance Corporation, Strategy and Business Outlook Update FY19-FY21, April 12 2018

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Finance Derivative is a global financial and business analysis magazine, published by FM.Publishing. It is a yearly print and online magazine providing broad coverage and analysis of the financial industry, international business and the global economy.