I3: The Emergence of Healthcare as a Global Issue

Transcription

1 I3: The Emergence of Healthcare as a Global Issue Chris Burns Agenda Key Global Trends Centralization of Purchasing War For Talent Trends In Global Healthcare Financing, Data and Analytics 2 1

2 Key Global Trends New World Order Economic activity and wealth patterns are shifting dramatically. The World s Ten Largest Economies (Gross Domestic Product, GDP) recent past and looking forward: Rank 2010 Rank 2030 (Forecast) 1. United States 1. China 2. China 2. United States 3. Japan 3. India 4. India 4. Japan 5. Germany 5. Russia 6. Russia 6. Brazil 7. United Kingdom 7. Germany 8. France 8. Mexico 9. Brazil 9. United Kingdom 10. Italy 10. France Source: 2010 Euromonitor International 3 Key Global Trends Significant global trends affecting employee benefits Economic and demographic Role of Government Aging populations in mature economies Effect compounded by inadequate financial planning for retirement Population growth in emerging markets Continued growth of skills based economy Reduction in social security provision in mature economies Lack or failure of public healthcare and wider welfare provision in emerging economies Pensions legislation encouraging shift from DB to DC Globalization Business environment People Rise of BRIC countries Rising middle class Increasing numbers of mobile employees Growth of large and mid sized business at the expense of smaller Growing number of MNCs, based in a variety of geographies Spiralling costs of healthcare, and rising cost of EB programs Increased war for talent Increasing attention to employee engagement and retention Productivity and performance focus Consumer trends towards Health and wellness Source:BCG 4 2

3 Key Global Trends China 200M rural residents will move to cities by 2020, increasing chronic disease and demand for access to quality care India People aged 60+ will reach 133M by 2020, coupled with dramatic shift in family structure as children/caregivers move out of households Private sector growth will continue to expand, resulting in a sizeable expatriate population Western Europe Aging populations with rising incidence of lifestyle diseases will place additional health cost pressure on governments; lower birth rates reduce old age dependents/working age tax paying population ratio Healthcare access will remain an issue as many countries will reduce publicly funded health services due to rising costs and budget issues Middle East Source: Aetna Long term expatriate population to remain significant (42% of GCC is expat); governments will shift responsibly for their healthcare needs to the private sector Governments face rapidly increasing chronic disease related health cost burdens (diabetes incidence among the highest in the world) 5 Key Global Trends Multinationals on the move One in four companies plan to enter new markets in the next five years Foreign markets are outpacing home markets as a source of future revenue for many multinationals. Nearly one in three multinationals expects more than 70% of its revenues to be generated from non home markets in five years. Brazil, China, India and the U.S. are top choices for companies looking to sell products. A majority of companies believe that employee benefits boost worker loyalty and productivity. Source: Economist Intelligence Unit (EIU) survey, MAXIS GBN,

4 Centralization of Purchasing The Challenges for Multinationals Gaining understanding of the plans globally Understanding and managing risk Making decisions effectively Avoiding surprises Achieving more centralized control Implementing successfully Finding the right resources Accessing the right information Satisfying stakeholder needs Source: Insurope 7 Centralization of Purchasing A Model for Good Benefits Governance Benefits Governance Pillars Effective committees/ decision making body Written guidelines or policies Appropriate accountability Rigorous supervision/ monitoring Effective information flow Set Direction Implement Monitor Source: Insurope Risk Management 8 4

5 Centralization of Purchasing New Global Benefits Management Model Traditional Approaches Current Approaches Highly decentralised, country by country benefits structures Local view to purchasing insurance Ad hoc planning and execution Limited central information/data access Traditional country benefits Acquisitions not integrated from an HR perspective Developed global benefit strategy and global governance framework Coordinated purchasing and active pooling strategies Benefit plan harmonisation where possible Consolidated data housed in web enabled technology Focused cost management initiatives; global retirement and healthcare programs Planned expansion and cross border integration Source: Willis Short term, Reactive Long term, Sustainable 9 War for Talent Biggest Challenge for Multinational Corporations Far and away, the biggest challenge for multinational corporations is finding the talent in local markets to expand their business. A majority of executives of multinational corporations cite a growing global shortage of talent as a factor that could limit their entry into both developed and emerging markets more so than economic weakness or even political instability. Source: Economist Intelligence Unit (EIU) survey, MAXIS GBN,

6 War for Talent Talent and Skills Scarcities The Numbers The talent gap is a challenge for employers everywhere. To sustain economic growth, by 2030 the United States will need to add more than 25 million workers and Western Europe will need to add more than 45 million employees. Employability will continue to be a huge problem worldwide. Because of the uneven quality of education systems, only 25% of Indian and 20% of Russian professionals are currently considered employable by multinationals. There are an estimated 214 million international migrants worldwide. Collectively, they would make up the world s fifthlargest nation. Compared to today, in 2050, most G7 and all BRIC countries will have more than doubled age 65 and older dependency ratios, and all except India will have more aged socieities than today s most aged society (Japan). With 45 million new entrants in the global job market annually most of them young 300 mill. new jobs will be needed between now and 2015 to keep pace with the growth in the labor force. Even China faces long term talent shortages. The number of those aged 60 and older is expanding rapidly, already forming 12.5% of the nation s population. The country s one child policy and its drop in birth rates means that by 2050 the 10 workers now supporting each senior citizen will fall to 2.5. Source: 2011 World Economic Forum 11 Trends In Global Healthcare Innovation and demand soar in emerging economies Spending on health care in countries such as China and India will continue to rise in line with their economic growth, and they will become big markets for health care companies. Aging populations overwhelm the system Aging populations will lead to increases in the number of people suffering from chronic, expensive totreat diseases and disabilities, straining health care systems. Rising costs Aging populations and technological advances will cause health care costs throughout the world to continue to rise and will have a widespread impact on health care spending, design of national systems, and delivery. Prevention care on the rise Wellness programs, and other means of preventing or reducing the incidence and severity of serious diseases (e.g. cancers) and chronic conditions (e.g. obesity related illnesses such as diabetes). Source: Harvard Business Review,

7 Asia Pacific Trends In Global Healthcare Global Medical Trends Survey-2012 Key Findings: % 9.6% 10.1% 10.2% Europe 9.4% 9.0% 8.5% 8.1% Latin America Middle East/Afric a 11.6% 10.0% 10.4% 10.5% 10.9% 9.8% 10.7% 10.0% The average medical trend is 9.6% for 2012 and projected to be at a similar level for Aside from Europe, all regions are continuing to experience global medical trend rates rising at double-digit levels. While some countries are seeing rates stabilize, a number of growth markets in the Asia Pacific region and Latin America continue to face increases above 10%. While traditional cost management approaches still dominate, wellness interventions are growing with insurers increasing their wellness capabilities through in-house or partner resources. The prevalence of employer-sponsored health benefits continues to grow rapidly across more countries and more health insurers. North America 10.8% 12.1% 11.4% 11.0% Global 10.2% 9.6% 9.8% 9.6% Source: Towers Watson 13 Trends In Global Healthcare Global economic burden of five chronic diseases (direct and indirect) in US$: Disease Cancer $290 billion Cardiovascular disease $863 billion COPD $2.1 trillion Diabetes $500 billion Mental Illness $2.5 trillion $458 billion $1.04 trillion $4.8 trillion $745 billion $6.0 trillion Source: United Nations Population Division; 2011 The Global Economic Burden of Non communicable Diseases; World Economic Forum and the Harvard School of Public Health, Sept

8 Trends In Global Healthcare Life expectancy and health spend by country Source: OECD Health Data 2012; Last updated: 29 October 2012; Data shown represents 2010 or nearest year available by country 15 Trends In Global Healthcare Companies offering health promotion to employees Source: Buck Consultants 16 8

9 Trends In Global Healthcare Employer objectives driving wellness strategy Source: Buck Consultants 17 Trends In Global Healthcare Health issues driving wellness strategy Source: Buck Consultants 18 9

10 Trends In Global Healthcare Consumers will increasingly be in charge of their own health care Access to, and affordability of, high quality health care is a universal issue Health care purchasers will continue to demand more cost-effective solutions Providers will be held more accountable for care outcomes Health IT will be a key enabler in helping people live healthier 19 Financing, Data and Analytics The Savings Continuum Approx. 4,000 companies utilize pooling No Pooling Small Groups Pool Natural Pools with Excess Protection Dedicated Pools with Loss Carry Forward Captive Reinsurance of Pooling Networks Global pooling of premiums achieves economics of scale in reducing administrative costs and returning dividends from good underwriting results Captive reinsurance of the pooled premiums gives control of information and assets and creates opportunities for underwriting and investment income 75 global companies use their captives to finance benefits 20 10