Health System Costs – An Evidence-based Approach

22nd Healthcare Industry Meeting


Value-based Healthcare: Innovations for a New Era

"Instead of a conversation about price we now can have a conversation about value." Sir Andrew Dillon, Chief Executive for United Kingdom's National Institute for Health and Care Excellence (NICE) outlines the mechanics of Evidence-based Healthcare, one of the models designed to crack the sustainability issue of both public and private systems. Outcome-based Healthcare and Cognitive Computing were also discussed at IESE's 22nd Healthcare Industry Meeting." Get inspired! Subscribe to IESE's YouTube Channel:

Belén Garijo, CEO of Merck's Healthcare Division, and Víctor Grífols, President and CEO of Grífols, S.A. / Photo: Jordi Estruch

Achieving greater economic sustainability for health systems at a time when life expectancy continues to increase, being present in the global market and taking advantage of the possibilities offered by big data. These are some of the major challenges posed by the transformation of the healthcare industry, according to the experts at the 22nd Healthcare Industry Meeting recently hosted by IESE in Barcelona.

The debate focused on the major trends currently identified in this area: financing of health systems in countries where resources are limited, formulas for improving efficiency and the potential benefits of big data analytics for the development of new products and services.

A Demanding Environment

Belén Garijo, CEO of Merck's Healthcare Division, pointed to the evolution toward a "multi-client" business model—an increasingly demanding one—as the first topic for reflection: “Regulatory agencies, public and private financiers, healthcare professionals and increasingly informed patients require business to be conducted differently,” she said.

For his part, Víctor Grífols, President and CEO of Grífols, S.A., said that globalization brings certain advantages, such as the possible "alignment of criteria at the pharmaceutical level." Grífols underlined the significant progress made with the centralized registry of the 28 European Union countries and the plans to align criteria between Europe and the United States.

The Importance of Emerging Markets

The risk diversification allowed by the global stage forces companies to "learn how to manage emerging markets," said Garijo, taking into account the differences between countries. This is vital in order to "compete and diversify more strategy and anticipate your future business risk profile," she added.

Grífols said that the differences between Western countries and the rest of the world are so vast that "we must give more time" to those that have not reached an advanced level of development: “It will be quite a while before we can implement our healthcare policy and health criteria in countries that don't even have enough to eat.” Furthermore, he said, "there are many ways to improve the health of a population and a country without incurring too many pharmaceutical costs.”

More Research for More Cures

It will remain essential to stimulate progress in R&D, although this area also poses questions.

“We have improved the survival prospects for patients who previously could not be healed, because this is not just a financial issue: we're talking about healing more—that's our mission," explained Garijo. In this field, "precision medicine is a huge opportunity for the future to adapt and better identify the areas in which we are going to produce greater value for the same money," she said.

Grífols noted that the healthcare industries are increasingly more efficient and "able to solve problems that used to be extremely costly." Nevertheless, he said the debate on the cost of healthcare is not going to change: “No matter what you do, the state will never be satisfied.”

The issue of whether welfare is sustainable emerges amid an environment of continuous progress. In Grífols' opinion, in the future someone will have to determine if progress toward increased life expectancy is good or bad and how far it can be taken. Because, as he sees it: "What's the point of living longer if countries cannot ensure people's well-being?"

According to Garijo, "we have to move away from the political and populist environment and start talking less about generalizations and more about business plans.”

The Case of the United Kingdom

Andrew Dillon, Chief Executive of the National Institute for Health and Care Excellence (NICE) in the United Kingdom, discussed the issue of healthcare spending in the British health system.

Dillon addressed the dual challenge facing the health system to improve results by offering guidelines based on the science of evidence: first, in making decisions about resource allocation and, second, on the new strategies in healthcare, which are revolutionary and provide incredible improvements but, at the same time, present new challenges.

According to Dillon, the health systems in many countries face a period of significant financial constraints, while the ambitions of the population are growing in this field and we continue to see the development of technologies that are increasingly innovative and expensive.

Opportunities for Big Data

According to Luis Campos, Managing Director of GE Healthcare for Spain and Portugal, no one denies that there is a challenge as far as the sustainability of the health system. “But the good news is that this sector still has major opportunities for improvement when it comes to management,” he said. In this respect, big data and "the processing of information will be the fundamental catalyst for improving and trimming the extra fat that we are still carrying.”

Campos stressed that currently only 3% of the available information is used in a meaningful way. He wondered aloud about the possible improvements that could be made if 10% or 25% were used, as opposed to 3%.

In the same vein, Jordi Martí, Vice President and Director General of Celgene Spain and Portugal, said that "science is not enough to succeed in the market" so it is imperative to strive for "mainstreaming.” “The only way to gain value is to measure things by taking advantage of data.”

Haig A. Peter, Executive Consultant and Cognitive Computing Ambassador at IBM Research in Zurich, offered some statistics about the data revolution. According to Peter, we are no longer dealing with big data, but rather "a real tsunami" of information whose potential has yet to be tapped into.

He said that each person during their lifetime will generate 1M gigabytes of data on their health history, the equivalent content of 300 million textbooks.

Despite the magnitude of the challenges posed by this massive amount of information, Peter concluded: “Welcome to the cognitive age. This is just the beginning of something exciting, so here we go.”