AS health has moved to the front page, the discussion is no longer just about the cost of care. It is about health as an investment. Healthy life years are the new currency of growth and prosperity. What’s the evidence? Countries with the most healthy life years are also the most competitive, as demonstrated by the World Economic Forum’s (WEF) Global Competitiveness Index.
The fact is, we are living longer but we are not living healthier. For every year increase in life expectancy, we live only 0.8 year in a healthy state. And when individuals live longer in a state of disability, it adds up to big costs for companies and economies.
Globally, if no action is taken, we will lose US$47 trillion (RM179 trillion) of cumulative economic output between 2012 and 2030 because of the impact of non-communicable diseases (NCDs) and mental disorders.
Where to start? Some of the necessary actions are well within reach of an individual company; others will require governments and companies to work together. In order to encourage new investments in health, the WEF, in collaboration with Bain & Co, has identified some practical actions that governments and businesses can take.
Tackling vaccination rates, balanced nutrition and healthy pregnancies could all make a difference, yet most stakeholders believe such interventions are too costly to implement. In our research, we found the opposite. Even modest amounts of investment can generate returns that convert unhealthy life years into healthy ones.
To prove we can generate returns, we need a new way to think about the return on investment of healthy populations. We can measure return on investment (ROI) from an individual perspective (iROI) as well as from a population/societal perspective (pROI), but it is critical to bring all the key stakeholders together to create a common understanding of what it will take to measure change.
Some companies are already taking action. Centene Corp’s Start Smart for Your Baby is a programme in the US that helps women have a healthier pregnancy and has already led to a 4.5% reduction in extremely low birth-weight deliveries. The average cost of US$75 per participating mother has produced an iROI in the range of 300% to 500%.
Among NCDs, cardiovascular disease is a leading cause of death worldwide. American healthcare provider Kaiser Permanente has demonstrated the potential for economic return on relatively modest actions. It set up a programme to treat 350,000 high-risk heart patients at a direct cost of US$205 per year for each participating patient. The programme aims to prevent 19 heart attacks or strokes per 1,000 participating patients per year, resulting in fewer unhealthy years for high-risk patients. The additional healthy life years have an estimated socioeconomic value of US$7.8 million, leading to a potential iROI of 3,700%.
Sometimes, a government agency can take the lead, as in the proposed population-based intervention of subsidies developed by Singapore’s Health Promotion Board. The project aims to provide government micro-subsidies for the use of healthier cooking oil in meals outside the home, thus reducing the incidence of cardiovascular disease. The board estimates a potential economic return for Singapore of S$102 million (RM285 million) by 2020 and a population-based ROI of 1,100%.
When private companies and governments work together, the payoff can be substantial. Nestlé’s investment in a better understanding of the causes and effects of malnutrition in the Philippines, together with proposed subsidies from the Philippine government for the consumption of fortified cereal and milk, is a good example of how a collaborative effort can benefit both the public and private investors and ultimately, improve overall population health. The expected benefit in terms of reduced medical costs, increased productivity and fewer unhealthy life years could lead to a pROI of >110%.
Working across sectors is complicated and messy, but each sector has a role to play. The role of the public sector is to set the right framework and incentives for sectors to work together. The private sector must then identify opportunities that can make a measurable impact and generate real returns.
Projects that are already working at Centene and Kaiser, along with those proposed by governments like Singapore, demonstrate how even modest investments and collaboration can make a difference. When healthy life years become part of the currency of growth, the future of healthy is within our grasp.
Norbert Hueltenschmidt is a Zurich-based partner who is also head of Bain & Co’s healthcare practice in Europe, the Middle East and Africa. Pankaj Saluja is a Singapore-based partner who is head of the SEA healthcare practice. Francesco Cigala is managing partner of Bain’s office in Kuala Lumpur.
This article first appeared in Forum, The Edge Malaysia Weekly, on July 20 - 26, 2015.