What Does The Future Hold For Healthcare?
Having met with a CEO of a leading hospital in the United Kingdom, we were encouraged by the attitude of officials towards reforming their health care system. But what about the condition of health care in Australia?
There is a view in the United Kingdom that more hospitals are not necessarily the answer to dealing with the ageing population. Rather than adding more beds, the focus is shifting to productivity improvements and integrated care. This has important implications for the Australian healthcare system, where companies like Healthscope (ASX: HSO) and Ramsay Healthcare (ASX: RHC) are spending hundreds of millions of dollars each year expanding capacity.
This theme of integrated care incorporates a number of initiatives, with perhaps the most pertinent being a restructure of the health care system so that patient treatment is coordinated across services, rather than in isolation. On the surface, this seems like an ambitious task for the United Kingdom given their healthcare system is similar to our own; comprising numerous parties that have a natural incentive to act in their own interests, with doctors in particular being fiercely independent.
Bold actions are required by the Government in order to drive coordinated change across industry participants. In Australia, the current political debate is centred on balancing the budget, but it won’t be long before healthcare becomes the critical issue.
The Government does not want to foot the bill for an ageing population, but current initiatives are doing little to reduce the cost of health care. The Government is encouraging greater adoption of private health insurance by increasing the penalties for those that aren’t covered, but since health care premiums are rising faster than wages eventually something will have to give.
Reforming the health system will be a very difficult task, but we are encouraged by the dialogue in the United Kingdom. We hope that a similar dialogue is being shared in Australia, before the pressures from an ageing population trigger an emergency.
Ben MacNevin is an Analyst with Montgomery Investment Management. To invest with Montgomery, find out more.
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