Globalization—whether you like it or not—has been the major force shaping markets for industrial goods for the past century. Until recently, services, including health services, were largely domestic businesses operating in national markets. Today, technology has given us the ability to tap knowledge workers regardless of geographic locations, creating a global market for services writes Ioan Cleaton-Jones, Principal Health Industry Specialist at IFC
In health, globalization is driving mobility of health professionals, mobility of health consumers and mobility of companies taking successful business models across borders. This last piece of the trend—the mobility of companies—is only just taking off. And it holds the greatest potential for a complete transformation of global health systems. IFC, a member of the World Bank Group, is supporting some of the most promising emerging global companies.
Why now? Gains in broadband capacity around the world are making it possible to deliver services in remote places, track patient records and help doctors and patients better manage chronic conditions. More importantly, rising incomes and growing middle classes in developing countries, along with aging populations around the world, are fueling demand for more and better quality health services, as well as the growth of private sector health providers. These private health providers—ranging from hospital systems and specialty clinics to diagnostic laboratories–are increasingly sophisticated, developing innovative new models for delivering quality care at lower cost.
In South Africa, Netcare has built a reputation for high quality, patient-centered care. The group’s founder, Dr. Jack Shevel realized early on that scale could help reduce operating costs, and the company has built the largest network of private hospitals in both South Africa and the U.K. Netcare also innovated, bringing integrated teams for eye and hip surgery that helped Britain’s National Health Service to reduce backlogs.
The South African hospital industry is very competitive. This has driven consolidation to benefit from economies of scale, with three companies now supplying most of the market. Survival depends on efficient operational management and delivering good quality, which gives South Africa’s hospital groups an edge as they seek new markets. Life Healthcare is also a private hospital operator in South Africa. Through its investment in Max Healthcare, it has embarked on international expansion in India. Life Healthcare has now expanded to Botswana, India and Poland, and its growth is expected to continue.
India’s private healthcare market less mature and faster growing than that of South Africa. Hospital and clinic operators are building their own new facilities, but are also selling their expertise to manage hospitals on behalf of others which enables them to expand with lower capital investment. Apollo Hospitals are present in Mauritius and Bangladesh, where they operate hospitals for others, as well as in their home market of India.
Globalization of health goes beyond hospitals and clinics. India-based Fortis Healthcare operates hospitals and diagnostic centers in India, Sri Lanka, UAE, Singapore and Mauritius.
International Healthcare Holdings has expanded from Malaysia, where it is headquartered, and Singapore, to Turkey, India, China, Hong Kong, Brunei, Vietnam, UAE, Macedonia and Iraq.
There are fewer examples of cross-border movement in Latin America but it is starting to happen. 21st Century Oncology operates 145 radiation oncology cancer treatment centers in the U.S. and 36 centers in 6 countries in Latin America. Training medical staff–doctors, nurses and medical physicists—is a key competitive strength supporting its success in expansion.
All of these successful examples share a fundamental characteristic. They offer patients world class standards of care. Growing recognition of this ability to deliver quality care in emerging markets has driven some amount of medical travel in which patients seeking care travel to another country than where they live. But the impact of that trend on the global health landscape will pale in comparison to the movement of healthcare companies across borders.
There remains much untapped potential for growth in health services in the developing world where non-communicable diseases like cancer and heart disease are now the leading causes of death, just as they are in developed countries, and too many people continue to lack sufficient access to basic care.
Dr. Ioan P. Cleaton-Jones is Principal Health Specialist at IFC, a member of the World Bank Group. He focuses on emerging market private healthcare. He has advised health projects in 31 countries in the Americas, Asia, Africa and Europe, with investments totaling more than $1.1 billion, including debt, equity (private and public) and mezzanine finance. Ioan has science and medical degrees from the University of the Witwatersrand, Johannesburg, South Africa and an MBA from the University of Southampton, UK.
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