My work focuses on numbers—accounts, assets, debt and equity. I live and breathe this stuff, so it was a welcome change to write a blog post—with very few numbers—about financial trends we at Johns Hopkins Medicine International are predicting for international collaborative health.
Let’s start with the convergence among payors—particularly insurers—and what that might mean for international health and health care.
Over the past few years, tight regulations and crowded markets have forced U.S. and U.K. insurers to look for growth in international markets. For instance, U.S. investors expect about a 15 percent return on investment, so public insurance companies here are tapping into rapidly expanding overseas health care markets to meet growth forecasts.
Unlike the United States—where the payors and providers are well established, but largely separate organizations—emerging markets either have an underdeveloped payor landscape or integrated systems where providers own payors. This offers more opportunities for U.S. and U.K. payors to enter these markets. Starting these operations from scratch can be very difficult, so insurers often prefer to acquire them.
There are pros and cons when insurers enter emerging overseas markets, whether as new entities or through acquisition.
U.S. insurers together cover more than two-thirds of the country’s population. Over the years, they have influenced changes in the delivery, quality, availability and cost of health care, as well as in how providers are reimbursed for the care they deliver.
Because these insurers are well established, they will bring more standardization and advanced technology to emerging markets. They can also introduce new methods of reimbursement, which will help make quality care much more accessible.
These improvements could also spur more consumers toward private insurance. Even in developed countries such as the U.K., where the government sponsors health care, private insurance has grown in recent years.
While the insurers will bring choice, convenience and accessibility to emerging markets, there are potential drawbacks.
The governments in emerging markets often work with key providers to establish programs to improve health and health care for their citizens. However, insurers often offer programs that focus on cost rather than health outcomes, which directly conflicts with the goals of population health management programs.
Advances in health care technology and pharmaceuticals have significantly improved patients’ health and quality of life. However, if insurers in these emerging markets delay or decline adopting new technologies—for reimbursement reasons, for example—it compromises patients’ well-being.
The U.S. health care market has seen both the advantages and disadvantages of having insurance companies as payors. Insurers and providers are at odds due to lack of trust and conflicting agendas. However, the recent emergence of value-based reimbursement provides a path forward for both stakeholders.
The failure of a reimbursement model that pays providers per service or per patient has forced the industry to look at alternate payment forms to improve health outcomes and costs. Value-based reimbursements—where providers and pharmaceutical firms are paid for achieving certain cost and quality goals—have grown in the past five years. Several insurers, including the government agency that sponsors Medicare, have pledged to switch at least half of all reimbursements to a value-based model by year’s end.
While there’s good and bad when big health insurers enter emerging markets, this trend is already happening. Providers would be wise to learn from the failures of U.S. reimbursement methodologies and proactively prepare for a value-based reimbursement model that can benefit payors and providers—and, most importantly, patients.