Global Health Care Industry – Objectives, Need, Trend, Improvement Opportunities & Infrastructure Required

Health is wealth is a simple sentence but its sense and meaning is tremendous and deep.

It is said that without physical and mental fitness, people won’t be able to work productively. While looking at the current scenario, where Globalization is the buzzword and people strive for excellence and head-to-head competition, we find everyone neglecting his health like anything. This negligence leads to improper life conditions.

Health care industry is one such industry where tremendous development has occurred but not to the extent of its requirements. The importance given to manufacturing industry, services sector was far more than that of healthcare industry, as a result of which we can see that the average life expectancy of people in many countries is below the world average.

Due to improper health facilities many lives are lost during the natural calamities like the tsunami, bird flu, hurricane, earthquakes etc. In such a case effective supply chain management needs to be implemented so that disasters, natural calamities, etc can be taken care and proper medical facilities reach the individuals easily at the right time, right place, right manner and at right price.

Thus to sum up, we can say that the healthcare Industry is one such industry where the problem is of global importance and it requires immediate action so as to make this ever expanding and developing world a better place to live in.

Objective of Health Care Industry

The main objective of Health care industry is:

“To transform sick patient to healthy person at a reasonable cost, in the shortest possible time with utmost satisfaction of the patient”

In the industry it is strongly believed that:

Healthcare is an industry where supplies have not been seen as assets, and if you don’t see something as an asset, you probably don’t manage it.

This belief is the root cause of less development in the industry. With the lack in the importance given to health and healthcare industry, today we can see the problems faced by the common man across the world.

Need for Health care Industry

The world is now no more than a global village. It is changing dynamically at a rapid rate and is shrinking every other day. World’s economies are now moving on the path of 3I’s i.e., they are getting Integrated, Interrelated and are becoming Interdependent. Globalization has a taken a toll in the development of the individual, industry, and the nation as a whole. With the motive to achieve success and get the tag of so called “Super Power” or the “Developed Nation”, it is necessary to compete globally. Competition is seen everywhere and it’s not merely a rat race.

Analyzing the Trend

United Nations has developed a benchmark clearly defining about the need of the health care industry in the development of the people and the nation. The Human Development Index is the key to measure the overall development in the individual and it was found that around 45% of the countries are having HDI less than the world’s average. Also there is a lot of deviation seen in HDI, because handful of the countries are overdeveloped and some are underdeveloped. It is very important that the countries invest considerable amount of capital in the development of the people, who are the biggest assets to any nation/economy.

Supply chain improvement opportunities

Following are the key areas where process improvement opportunities can be seen:

1. Disaster Recovery
2. Supply chain integrity
3. Network complexity
4. Disintermediation and
5. Value visibility

1. Disaster recovery

Disaster recovery planning has lagged behind in supply chain which is a big problem in healthcare because in healthcare industry lives are at stake. Simply carrying large amounts of product inventory does not solve the issue. Effective action is to develop systematic contingency plans, which includes factors like alternative production sites, manufacturing flexibility, factory-direct shipping capabilities, offsite backup and critical safety stocks.

2. Supply chain integrity

Quality assurance is a crucial healthcare supply chain function as it ensures that the patients receive safe therapies. Technologies such as radio frequency identification, offer the prospect of ensuring supply chain integrity.

3. Network complexity

Healthcare supply chains are very complex. Hospitals are combining with clinics and other providers under common management. Manufacturers, distributors, and providers largely operate independently from one another. Thus it’s high time when Healthcare supply chains need to move towards an integrated “demand-pull” model instead of demand push, so that manufacturers have much earlier and clear visibility into actual consumption.

4. Disintermediation

The prospect of disintermediation, moving product directly from manufacturers to providers, is growing stronger in healthcare supply chains. The explosion of network complexity is creating important opportunities for distributors to develop value-added partnerships with manufacturers and providers thus making the chain efficient. This repositioning will accelerate over time and will help them gain the market share who can facilitate the change on the other hand for those who try to stem the tide will lose both share and profitability.

5. Value visibility

The current pricing structures reinforce the inefficiency of the fragmented healthcare supply chains. Distributors negotiate volume discounts from manufacturers, and offer discounts to providers. Some distributors have driven up channel inventory by chronic forward buying against expected price increases. Clear visibility into value creation is lost in this chaos which is the precondition for major improvements in supply chain efficiency.

Analyzing the Trend

UNHDI is an index which describes a country’s performance globally. The HDI index or the human development index is again calculated based on three important factors as elucidated below:

• Longevity
• Per Capita Income
• Education

Figure I: HDI Components

Thus we can see that longevity or the life expectancy at birth is a very important criterion for a country to develop and prosper.

According to the recent survey conducted by United Nations data for HDI has been obtained for 187 countries. After proper analysis of the data the following inferences can be made. We can see that almost 50% (to be precise 44.39%) of the Countries are having life expectancy below average. This indicates that healthcare is a major problem across the world and not in any particular country or handful of countries.

Comparison of Countries’ HDI with World’s Average HDI
Particulars	# Countries	Percentage
HDI Above Average	101	54.01
At Par	3	1.60
HDI Below Average	83	44.39
Total	187	100.00

Table 1: Countries’ HDI Vs World’s Average

Figure II: Countries’ HDI Vs World’s Average

Also talking of the life expectancy, after the thorough analysis of the data collected from World Bank as shown below in the form of a graph, it is found that 77 countries out of 194 countries are lagging behind the world average for the life expectancy which is at 69.7 years. (Data as of 2011, Source UN)

Countries Average Life Expectancy Vs. World’s Average Life Expectancy
Particulars	Number of Countries	Percentage
Below Average	77	39.69
Above Average	117	60.31
Total	194	100

Table 2:  Countries’ Life Expectancy Vs World’s Average

Figure III: Countries’ Life Expectancy Vs World’s Average

Now let us take a look at the cause of deaths. According to the data released by WHO it is computed that 63% of the death is caused due to Non communicable disease i.e., the disease which is not transferred to people by infection. Thus it proves that the healthcare facilities are underdeveloped to a great extent and it does not reach the needy.

Cause of Death across World
Particulars	Number of deaths	Percentage Contribution
Communicable Disease	15637399	27.49
Non Communicable Disease	36121871	63.50
Injuries	5129018	9.02
Total	56888289	100.00

 

 

 

 

 

 

Table 3: Causes Of Death

Moving on to the Infrastructure available in the industry, we can see that the data given below clearly indicates that out of 73 countries whose data were available 55 are having index below the worlds average which is a whopping 75%. This indicates that three-fourth of the countries are still lacking in basic infrastructure required for the industry to grow. Thus due to unavailability of infrastructure, medical facilities people are suffering from various kind of health related problems in life and they are insecure.

Healthcare Infrastructure – Total density per 100 000 population- District/rural hospitals
Particulars	Number of Countries	Percentage
Index <0 (Below Average)	55	75.34
Index >0 (Above Average)	18	24.66
Total	73

Table 4: Infrastructure Comparison

Figure IV: Infrastructure Comparison

Thus last but not the least, it can be concluded that the health care sector represents one of the most important and growing industry. In several countries, including the US, health care spending is less than the optimum required amount. Thus this lack of investment and improper integration of IT and technology in the industry is leading the health care industry nowhere.

In a nutshell to ensure proper health and life balance it is important that the proper investment and development is provided to the industry so that the common man is benefited and the fear of unhealthy and insecure life is abolished which is the global challenge in today’s ever expanding and growing environment.

Author: Niraj Satnalika

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