Healthcare Globalization

As the healthcare industry scales up to meet emerging financial pressures, big healthcare brands from the US are partnering with international healthcare markets. The industry must stay on top of this trend in order to support new challenges that are not well understood today.

The healthcare industry is facing economic challenges. As the population ages, healthcare spending increases and the supply is outweighing the demand. This is leading to economic challenges that are difficult to solve in the current environment.

Merger and Acquisition (M&A) activity has been a trend in healthcare for the past decade. Now, however, we are starting to see this industry consolidating at an international level. Well-known North American healthcare systems such as Partners Continuing Care, Cleveland Clinic, Johns Hopkins and more are purchasing or partnering with health systems in other countries. We are seeing this at a much larger scale than we’ve seen in the past.

Moreover, if we look at the combined company RL Datix, they will now have a foothold in over 19 countries around the world. Interestingly, this international growth was not attributed to new sales regions, but rather to the global expansion of their existing clients.

Despite the increased spending, profit margins are not growing proportionally. As such, health system CEOs need to look for other sources of revenue to offset the rising costs:

International health systems are not as well-versed in healthcare quality and access as their North American counterparts are. In order to learn from methods that have been proven successful, other countries encourage north american brands to take on the healthcare challenges in their regions. For instance, the quote below was taken from an annual UAE Healthcare Sector Report calling out some of their successful new partners:

This is a concern that will be compounded as health systems scale into emerging markets that dont offer the same protections to patients that we see in North America. We can expect that some of these systems will be acquiring liability beyond their control.

Moreover, in many developing countries healthcare is completely unregulated and decentralized. Brazil, for instance is recovering from historically low access to healthcare with a completely decentralized model of universal healthcare access. Municipalities provide free health care that is funded by the states and federal government. However, this model is difficult to control and to predict future expenditures. As such, it is a risky market to break into and may be why we are not seeing major healthcare systems in that market yet.

The healthcare industry already deals with complex challenges of fragmented leadership, siloed delivery, and poor adoption of technology. Now, the industry must shift its business focus to maintain positive profit margins in an economy that cannot support itself. In order to stay in the black, healthcare organizations are expanding to global markets, introducing challenges that may bring more harm than good.

As an optimist, I want to say that access to affordable and quality healthcare will become a global human right in the next decade. As a realist, however, I doubt that we will ever get there.

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