| Blog Post

Covid-19 tested national health systems—and they responded largely as designed

The Covid-19 pandemic has dealt a seismic blow to health systems around the world. But while it may seem as though most countries have come up short in one way or another, the way their health systems have reacted is largely a function of how they were designed—particularly, how much a country's health system is exposed to private market forces.

Health system stewards—policymakers, executives, and private individuals—should study how the pandemic offers insight into the benefits and disadvantages of each nation's health care system. And that examination can offer ideas for their system's future design.

Here are the three most salient observations from my research across the past 18 months, focusing on three countries—the United States, England (separate from the rest of the United Kingdom), and Australia—that are culturally linked but have different levels of private market participation in their health care systems. 

Download the slide decks: 2021 global market trends

1. Health systems that respond to market forces found themselves with more bed capacity and flexibility.

The United States and Australia both operate health systems that include a significant role for private enterprise. Provider organizations are rewarded for building bed capacity to attract patients, serving them efficiently, and reinvesting profit to grow.

Market incentives allow the U.S. and Australian systems to efficiently treat and discharge patients from a hospital. The average hospital length of stay in the United States is 5.5 days, and it's 4.6 days in Australia. Compare those numbers to England's 6.2 days. In a pandemic, quickly treating non-infectious disease cases is critical, as it eases the strain on hospital capacity. The U.S. hospital bed occupancy rate hovers around 65% despite having a low number of beds per capita.

Similarly, years of conversations with Australian hospital CEOs pins their hospital bed occupancy rate at around 75%. But in England, hospital occupancy is normally over 90%. It's no surprise that Australia and the U.S. have generally worked through their surgical backlogs quickly, while England anticipates years before it can claim the same.

But system slack may not go to those in most need.

The current focus on health equity and the unequal impacts of Covid-19 across socioeconomic strata and racial minorities in all three countries reveals a significant cost of exposing health care to market forces: patients who have more resources are better able to access quality care.

In the U.S., where payer mix can weigh significantly on a hospital's financial viability, facility closures have plagued communities with lower levels of income, particularly those in rural environments. Australia struggles with a similar dynamic where less capacity and clinical expertise in rural communities leads to a rural patient having 1.5 times greater chance of dying from chronic heart disease and double the chances of dying from diabetes compared to patients in urban areas. Meta-analysis of health services in rural Australia show about 1% of the available services of an Australian city.  

Government-stewarded systems have a leg up (albeit an imperfect one) based on a different social contract: the axiom that everyone should get a minimum amount of care regardless of their ability to pay. England boasts the lowest level of "unmet need" compared to OECD peers even with lower per capita staffing and comparable health care use. 

2. Centrally managed health systems found it easier to make big moves at scale.

One of the most elusive goals of any health system is the ability to take advantage of its scale. That could mean setting and disseminating standards across the continuum, or it could involve shared investments that benefit multiple organizations, teams, and patients.

Here is where systems like England's have a built-in advantage.

The National Health Service of England (NHS) has one of the most extensive national genomic testing networks in the world. It is composed of a consortium of NHS laboratories that harness national genetic information for future application. And it's all run through a central network of testing sites that guarantees standards, provides clinician with detailed referral information, and secures patient data and sensitive information.

The NHS was able to quickly reposition all these assets to gene sequence the SARS-CoV-2 virus, affording it a world-leading ability to trace the spread of Covid-19 variants. In June, England sequenced its 600,000th positive test sample, contributing more than 20% of the world's total databank on Covid-19 gene sequences.

While the United States has also sequenced 600,000 positive tests at the time of writing, it has done so with a much larger testing network and five times the volume of Covid-19 cases compared to England. Audits of the U.S. diagnostic landscape points to the need for greater coordination and surge capacity.

But big bets are harder and riskier than lots of smaller ones

For every example of an effective top-down, sector-wide move by the NHS, there's another in which a narrower, bottom-up solution may have been better. Here's where the market-based health systems of the United States and Australia can shine.

The pandemic proved that we could use remote and virtual technologies to provide safe care. And the race is on to harness this window of opportunity to permanently embed these technologies into health care.

In England, a relatively new government organization called NHSX leads the digital transformation for the health service. Among many technology priorities, they're driving AI development and adoption.  As part of that effort, they've put up over $190 million over four years to pick winning AI applications.

Investment amount notwithstanding, the track record of the NHS in picking winning technologies is punctuated by splashy failures. The U.S., on the other hand, while not completely absent of government participation in markets, relies on private investors and stakeholders to maximize the chances of a winner being selected, but also minimize the exposure when the losers lose.

3. The more that government pays for health care, the less providers had to worry about the immediate "Covid-19 bill."

In publicly funded systems like England's, the immediate financial consequences of the pandemic did not weigh heavily on those charged with delivering care. As clinicians and health care leaders were making significant decisions on little information, it was helpful to remove the financial component when calculating risk. Avoiding the financial consequences in the immediate term also made provider-to-provider cooperation more likely because no one felt they were losing money or footing bills for others.

But that bill is simply deferred and will have to be addressed sometime.

In contrast with England, health organizations in Australia and the United States have already begun cost restructuring and strategic planning for a post-Covid environment. In my conversations with health care executives, I've found uncertainty everywhere. But market-exposed health care organizations that have already started planning for the future are more likely to avoid the wide-ranging cuts we've seen government-backed health systems like England's make when in austerity. They're also more likely to take advantage of the window of disruption created by the pandemic.

The pandemic continues to deliver a stress test for health systems around the world. Even though the results to date are mixed, many health systems did what their societal compacts had instructed them to do. Moving forward, when leaders and private individuals advocate for changes, they'll find that Covid-19 effectively highlighted the costs and benefits of those changes. If one of the guiding principles of health care is to do no harm, then advocates for health system reforms must ensure they balance the goals of maintaining existing strengths against their proposals to shore up weaknesses.

Catch up on the slide decks from our global market trends series

webinarCheck out the upcoming and past webinars in our series to learn:

  • The most important trends affecting cardiovascular, oncology, and women’s service lines;
  • How to respond to changing market conditions; and
  • Innovations and case studies from a global perspective.






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