Of all the challenges facing the G20 in London (90% Global GDP; 80% of World Trade & 64% of global population)  there is no bigger bad news / good news agenda item than healthcare.

As markets have tumbled capital projects in the developed and emerging world have been cancelled, remittances have dried up as migrant workers return home, income from commodities has fallen, levels of Aid are being pegged back, more people could fall below the poverty trap and reaching the Millenium Goals is looking tough. And yet, healthcare provision in developing and emerging markets could generate significant triple bottom line (economic, social and environmental) benefits and be part of building the upturn rather than be a casualty of constructing a better yesterday. 

Patently obvious

Patently obvious

This is no utopian pipe dream and the logistics of Healthcare can play a major role in the transformation of an economy; its stability and future prospects. After all, as we all obsess on banking we should remind ourselves that banking serves markets not the other way round and, healthcare is one of the biggest markets available to those seeking sustainable growth. Let’s explore the context and then, focus opportunities and innovative solutions. 

According to the Russian Military Directorate one third of would be conscripts into military service are disqualified from active service due to some physical or psychological infirmity because national healthcare services are so bad. In India, a shortfall of truck drivers is exacerbated by insanitary conditions along the highways and, truckdrivers account for 7% of HIV/Aids carriers. Despite massive oil revenues Nigeria has 70% of global polio cases and huge disparities in regional healthcare service levels will dislocate any efforts to diversify the economy. In Iraq, high incidence of diarrheal disease due to lack of potable water and poor sanitary conditions are slowing down efforts to establish stable markets. Now, consider the impact of the shortfalls noted above. 

There is considerable evidence demonstrating the links between health and economic welfare and, an inequitable distribution of healthcare services exacerbates regional, ethnic and religious tensions and can dislocate sustainable growth. For example, poor nutrition is having a serious impact on productivity and, several studies highlight the impact upon cognitive ability and, functional literacy – not to mention child mortality and the pipeline of future workers. The challenge is affordability and accessibility of products, services and specialist advice. And it is innovation in physical, information and cash flows that can generate significant impacts.  

There are many healthcare contexts and yet the potential positive impacts are clear. For example, Singapore’s dramatically improved healthcare service since the 1960’s – especially the provision of modern sanitation and the logistics of disease management such as malaria correlates strongly with the leap from GDP per capita of $512, in 1960, to $26,836 by 2005. Many studies question the sustainability of China’s recent growth due to heavy smoking and industrial pollution placing an increasingly costly burden on the state and, further constraints on the workforce at a time when the dependency ratio switches to more people in retirement than at work.

What type of healthcare are we talking about? The US spends about $2 trillion per year on healthcare services with an estimated 25% on inefficiencies and though an estimated 20% of GDP will be spent on healthcare by 2015 46% remain uninsured. Other developed countries such as France provide a comprehensive service but emerging and developing economies can only shape hybrid systems within tight fiscal constraints.

Here’s the key point. We need to look at Healthcare from a Logistics perspective and work backwards from needs and demand to affordable treatments and ways in which they can be produced and delivered better, cheaper and faster. We need to break up the neat sequential supply chain models that are based on branded treatments at premium prices delivered to those that have the money or, can be reached cost effectively. This means a ruthless revision of the operating assumptions that were developed by the old order of the pale, the male and the stale.

Here’s the opportunity:

  • Medicines: Glaxo Smithkline and others are offering affordable medicines to the poor and, generic medicines are opening up accessibility to the poor. This is only part of the story.Go to any of the shanty towns in the developing and emerging world and you will see street vendors selling medicines that are not in their original boxes; way past their sell-by-date or, not longer in the refridgerated environment that they need to be effective. It is estimated that anything from 25% to 70% of marketed medicines in the developing world are counterfeit. Pharma counterfeiting is a major problem and is made easy by a dogged adherence to developed world distribution practices that open up opportunities for the unscrupulous with those that cannot afford the premium price.It is time to move from niche to mass markets and work on the logistics to make this happen. Revenues can increase and margins can grow if delivery systems can be set up for wider reach.Equally, a closer look at the WHO (World Health Orgiansiation)’s Essential Medicines List could benefit from a logistics perspective. Segment the list into those treatments not requiring refridgeration; those that carry no bad effects from over prescription and, those that are less than $10 per course and this could be the basis of focussing delivery and increasing the impact of care. Work done by Vinay Gupta sees the A list down to 12 drugs and this can be part of a wider strategy to deliver affordable healthcare for a wider constituency than now.  
  • Delivery systems. Prathap C Reddy of the Apollo Hospital Group’s mantra is “healthcare for anyone, anywhere, anytime.” Working with Airtel and Ericsson, the Apollo Group have launched a Telemedicine Networking Foundation that helps to bridge the digital divide in rural healthcare.  700 million people have no access to specialist healthcare and, with 80% of specialist medical practitioners living in the cities there is little prospect of the gap closing – until now. Technology is opening up so many options and the mobile is the catalyst. A mobile can do it all: train community health workers in situ; connect them to clinics; enable an emergency response; monitor conditions and adjust treatment remotely; cut through language barriers and, even facilitate payments and monitor results. As Mats Granryd of Ericsson India puts it – mobility has proven to be a major catalyst for social and economic empowerment and a key ingredient of bridging the healthcare divide.” Third generation mobile telephony, offering broadband wireless connectivity even to the remotest villages will develop these services even more.Note. We are at an early stage in these developments but the transformative impact is already being felt. Think of the opportunities for developed world know how, products and services in this once remote marketplace.
  • Facilities and services. Logistics plays a key role in the delivery of treatments to patients with acute needs and yet, storage and retailing conditions are woefully inadecuate in many developing countries – durgs are kept at high temperatures and humidity and are not protected from the sun.Then, there is the need to rethink diagnosis and treatment facilities. In the UK and elsewhere the traditional GP practice is giving way to specialist primary care clinics. Instead of the Doctors meeting all patients, treatments are being segmented and diagnosis is filtered so that qualified nurses deal with a wide range of ailments that they are more than capable of dealing with.Take this model a step further and in India the public health community has finally accepted the need to train villagers where they live and to do so in large numbers – over 600,000 such workers are being trained up as part of a rethinking of coverage strategies. After all, in any opera there is a chorus that far out numbers the lead performers and is no less critical to the outcome.
  • Education and awareness. In the UK a significant number of patients fail to comply fully with their treatments and this issue becomes more serious in cultures that have low literacy levels and a poor understanding of preventive possibilities. From Aids to malaria, improved understanding of preventive and curative therapies can only help to improve healthcare impacts and the mobile revolution can be the catalyst for achieving this.
  • Health and Safety at work. There are many people who think that this is a cost rather than an investment. Ask the insurance community about pay outs on ever more complex materials handling equipment all along our supply chains worldwide. An estimated 70% of all payouts are triggered by human error and much of that is down to poor training and inadequate safety equipment.Think of the Aids epidemic and truck drivers worldwide. Aman Sethi with his Last of the Ustaads piece on Truck drivers has painted a picture of life on the road – the lousy food, the dreadful stopovers and, the role of the truck driver as a bridge population serving as a conduit between high-risk groups like sex workers and the general population. Quoting a recent study that suggests 3-7% of truck drivers in India have HIV/AIDS as compared to the national average of 0.43% among adult males he emphasises that HIV prevalence was highest amongst women whose spouses were employed in the transport industry.Trucks are involved in half of the accidents in India and the figure is higher in Africa. However, it is the lifestyle hazards on the road that carry with them even greater risks for the wider community. It is time that a review of logistics imperatives embraced this public health dimension that lies beyond the statistical radar of economic models but plays such a major role in their conclusions.Health and safety at work is not part of a utopian fix that we can return to when the banking system is fixed – it needs to be part of a solution that champions inclusive ans sustainable growth. And it CAN be paid for by more imaginative insurance systems. 
  • Financial models. It is time to move away from high cost branded medicines that end up delivering to a niche with the cash and explore insurance models that can deliver on needs. The paybacks are enormous – not least in being able to control disease proliferation. After all, even gated communities and guard dogs can’t keep disease beyond the fences. Vinay Gupta , a leading thinker on inclusive and sustainable growth (see: Swadeshi) has written some challenging material on healthcare economics and a future posts will cover the logistics elements to the financial model.

The transformative impact of healthcare has huge potential as a trigger for the upturn. Above all, a willingness to open up markets as above could be a major gesture by the developed world and their corpororate giants to the wider community of the G-20. It could be the time when an obsession with shareholder value moves to a more responsible emphasis on stakeholder value as the driver of investment strategies and, logistics can be the catalyst to transform the healthcare landscape and, provide a viabble platform for sustainable and inclusive growth.