Global health CEOs are an optimistic bunch at the moment. Almost half (46%) are very confident about their company’s growth prospects for the next 12 months, compared to 38% of all CEOs globally.
But despite being more upbeat, they’re also acutely aware of the challenges facing their sector.
People are living longer, chronic diseases are on the rise and medical advances come with a price tag - so governments are struggling to contain ballooning spending on health.
Health CEOs see multiple opportunities and challenges, including changing consumer behaviour, leadership and skills, the speed of technological change and cyber risks.
We look at how global health leaders are tackling these issues and setting up their organisations to thrive in a dynamic and rapidly evolving world.
One of the biggest challenges for CEOs – in health and elsewhere – is bringing the focus of the organisation back to the consumer. Or in our world, the patient.
In the health sector, in particular, the experience from the patient’s perspective is often less than ideal.
But when we asked about their priorities for capitalising on new opportunities, the most common response from health CEOs was ‘human capital’.
‘Consumer experience’ ranked a distant fourth.
Clearly, there’s opportunity for leaders in health organisations to sharpen their focus on the consumer and take the necessary steps to improve outcomes. We need to shift from a focus on “treating illness” to “improving health” with an integrated approach through prevention, treatment and care in the community.
This shift is also the only way to bend the curve and continue to deliver better health outcomes with more sustainable, affordable costs.
Why is this so important? Because, every health consumer has an expectation based on their best experience in any industry, anywhere in the world. The benchmark is no longer the best experience in health; it’s the best experience from financial services, from transport, from retail, from hospitality.
And new consumer-focused companies like Apple, Uber and Amazon are setting a new standard of consumer experience that’s forcing everyone else to lift their game. The bar is rising, and no industry is immune - this is termed ‘The Experience Economy”.
Having the right people and culture is critical in health. 77% of global health CEOs highlighted availability of key skills as their top issue. As health organisations become more digitally enabled and customer centric, this will require new workforce capabilities and an aligned culture. Culture is also critical to quality and safety outcomes.
Digitally enabled technologies such as artificial intelligence, robotics and analytics - as well as core platforms like electronic health records - can deliver significant improvements in clinical, patient experience and operational outcomes.
However, to capture the value, CEOs need to work closely with senior clinicians. In fact, it is important to see these projects as clinical – as opposed to digital – transformations, with technology as the enabler.
The recent transformation at St Stephen’s Hospital in Hervey Bay can be considered a success largely because all the stakeholders – clinical, executive, operational – were an integral part of the process. This was positioned as a clinical transformation enabled by digital technology with a guiding principle of "what's right for the patient" - and has delivered clear benefits to health outcomes, efficiency and service.
For a start, health CEOs need to work with the health education sector and colleges to build new capabilities in the health workforce (e.g. change leadership, CMIO) and be open to talent outside the health sector. Imagine the fresh perspectives that people from finance, retail or technology could bring to the health sector.
This is a mindset shift that must come from the top. Health CEOs need to set the tone that says: let’s stop tinkering around edges; how do we really make this a better experience?
Part of the challenge for CEOs is finding the right talent to help to turn consumer-centricity into a reality.
Health leaders say they have great difficulty recruiting for the people with the skills to guide organisations through change; skills like creativity and innovation, leadership and emotional intelligence. Leading change with multi-disciplinary teams to unlock the potential from digital and analytics requires new skills - and leaders also need to do this in parallel with managing the complexities of day-to-day operations.
So how can organisations secure the talent they need?
For a start, they need to look for talent outside the health sector. Imagine the fresh perspectives that people from finance, retail or technology could bring to the health sector.
Second, CEOs need to need to rethink their entire HR function. One third of Health CEOs say they are, as do 70% of CEOS globally.
There’s no point tinkering around the edges; health CEOs need to figure out very clearly how and where value gets created in their organisation’s human system, and then focus on that.
Twenty years ago, there were fewer than 700,000 industrial robots worldwide; today, there are 1.8 million, and the number could soar to 2.6 million by 2019.
More than half of CEOs globally say they’re exploring the benefits of humans and machines working together, which is similar to health CEOs (59%).
But although Australia’s healthcare system ranks among the best in the world in almost every quality indicator, we’ve fallen behind in our adoption of new technologies and processes that promise both improvements in patient outcomes and significant gains in efficiency.
For example, in 2015, there were 1,414 digital hospitals in the United States; in Australia and New Zealand, just one.
Health CEOs need to ask themselves whether they’re serious enough about technology. And not just technology for technology’s sake, but rethinking their entire operation to take advantage of advances in digital, analytics, personalised medicine and robotics.
The key to doing this successfully lies in looking at transformation through a holistic lens. While it’s tempting to focus primarily on the technology, complex problems demand to be tackled from multiple perspectives.
For example, digital and analytics can be a powerful way of improving quality and safety (reducing errors, increasing consistency) and targeting interventions in the best way. It also frees up clinicians so they can spend more time with their patients and on complex decision making and activities – these are skills that can’t be replicated by machines. The benefits realisation case is clear and the patient of the future and the clinician of the future will expect to be in a digitally-enabled environment.
So by looking at technological transformation as a "must do" for all key stakeholders, digital can drive improvements across the full range of metrics that matter: clinical outcomes, consumer experience and business performance.
Digital transformations are not straightforward, and it’s important to start with a clear end point, a robust business case and a realistic timeframe. Many projects have a payback period of seven or more years so CEOs need to think through funding arrangements. They also need to manage expectations about when people can realistically to expect to see the benefits. Overall we see ten best practices in digital implementations:
1. Patient first, outcomes mindset
2. Executive, clinical and policy leadership - set priorities, take accountability
3. Clinical engagement - “clinical transformation, supported by technology”
4. Clear business case and phased benefits realisation plan (hard/soft, quality and safety) with capital injection
5. Strong governance (central coordination, local implementation) and project management, through transition to BAU
6. Risk mitigation (cyber, disaster recovery)
7. Informatics: harness the power of data
8. Infrastructure foundation and standards
9. Partnerships and collaboration, including with extended stakeholder communities
10. Measure results and continuous learning, including sharing insights across the sector
Health CEOs globally see China as an important growth market. But not as much as their counterparts in other sectors do, and not as important as the US.
This is surprising considering the tremendous opportunity for revenue growth that China offers, particularly for health organisations in Australia.
Not only is China our biggest trading partner, it’s also quickly becoming one of the world’s biggest healthcare markets.
This rise is fueled by a number of factors: China’s economic growth, a growing middle class, an ageing population and the rise of chronic disease.
China’s middle class are expected to account for more than a third of the population by 2030*, and with rising disposable incomes to spend, these consumers are demanding – and willing to pay for – access to better quality healthcare.
Like Australia, China also has a rapidly ageing population (330M people over 65 years by 2050) and faces a deepening problem with chronic diseases such as diabetes (100M+ with diabetes)
*Economist Intelligence Unit
Players from both countries are starting to capitalise on these emerging opportunities.
China Resources, aided by Macquarie Group, announced plans to acquire a majority share in cancer and cardiac services business GenesisCare for $1.7 billion. Australia’s third largest private hospital operator, Healthe Care, was sold to China’s Luye Medical Group for a reported $938 million.
And there’s plenty of Australian companies investing directly in China. Whilst Ramsay Health Care pulled out of its China JV, it continues to have investments in SE Asia. Despite competition from local firms, Cochlear has found China to be one of its fastest growing and largest markets.
It’s understandable that these businesses would look to our northern neighbours for growth opportunities. The scale of the market is huge, even if (as is wise) you just focus on a limited number of cities/provinces. The Chinese government is keen to provide better access to quality healthcare and has opened up the market for private and foreign investment. Whilst there are still risks, there are signs of improvement in key areas like IP protection.
In this sector, China is supportive of foreign investment in health care. While public funding is being used to raise the quality of care for the poorest citizens, private players are stepping in to fill the gap at the top end of the market. Tech players in particular have seized the opportunity for innovation, for example with digital health and wellness offerings. The large HNW and mass affluent segments have affordability to pay out of pocket (and increasingly have private health insurance),so ‘consumer-driven healthcare’ is already a reality.
With the emerging prospects for two-way trade, health CEOs need to consider what is the bigger risk: invest in China and find out the right way to play, or do nothing and realise five or ten years later that the opportunity has passed you by?
Of course, winning in new markets is never straightforward, and it’s important to be aware of the risks. But weigh this against the risk of missing out on the biggest growth story of the 21st century.
So if you’re thinking about investment in China, or have been approached by a Chinese firm, there are a few things you need to consider to give the deal the best chance of success.
First understand the China/Asia context. Build insider relationships. Look at the upside and potential to leverage your capabilities and assets to capture the market opportunity (and whether this will be complementary to or a distraction from your core business).
Second, find the right partner. Teaming up with Chinese companies is a great idea when tackling the China market - after all who better to help manage the risks of China than a Chinese company? Make sure your strategic objectives are aligned, ensure due diligence is robust, and you have the right deal structure - including being open to giving up control.
Finally, investment in Asia requires a sophisticated and long-term approach to risk management. Making sure you have the right team in place and the right governance structures before proceeding is essential. Assess risks holistically including financial, reputational and IP risks.
Find out more about how to succeed in Asia here.
Australia Health Consulting Industry Leader
Tel: +61 2 8266 5091
Marketing Leader, Government, Health & Priority Clients
Tel: +61 7 3257 5077