Lessons learned: finance and resilience in post-COVID health systems
Updated: Jul 25
“If you staff at maximum capacity, well, then you have to price and cost for maximum capacity at all times. But then do you just accept that for big chunks of the year you have overcapacity?”
- Manny Maceda, CEO, Bain & Co.
“In the longer term, the focus should be on capital and capacity – beds, diagnostic equipment and IT. This is the biggest yet often least-discussed bottleneck hampering a patient’s flow through the system.”
- John Burn-Murdoch, “How to fix Britain’s chronically ill healthcare system”, Financial Times, 3 June 2022
"The economic system we construct after this pandemic will have to be less short sighted, more resilient, and more sensitive to the fact that economic globalisation has far outpaced political globalisation.”
- Joseph E. Stiglitz, Nobel Prize-winning economist, 2020
As the dust starts to settle and at least some countries start to look beyond the COVID-19 pandemic, how are countries and their health systems looking to learn from the lessons of the pandemic? Indeed, will they learn the lessons from the pandemic?
The hammer blow from COVID-19
Health systems in countries around the world have suffered a huge shock, a hammer blow, as COVID-19 and its impact pushed health systems to their limits and beyond.
We all saw the images on television and social media. Whether it was Italian doctors having to play God choosing which patients got a ventilator, national governments fighting over limited vaccine supplies in bouts of vaccine nationalism, or the deaths of numerous health care workers through the pandemic, there were many examples of health systems being stress-tested on a daily basis.
Modern health systems were put under enormous strain. At the time, this triggered wide-ranging debates about the resourcing and financing of health systems worldwide. Words like ‘resilience’ and ‘just in case’ economics routinely came into our parlance when discussing reform.
Now, as people start looking beyond the pandemic, a key issue is going to be if and how these countries embed the lessons learned from the pandemic.
Opportunities for health system reform
Typically, health systems have not coped well with disruptive innovation.
In a post-pandemic environment, there are opportunities to rebuild, strengthen and grow our health systems in a way that encourages innovation and positive disruption.
If we take the opportunity, in years to come we may come to look back on the COVID-19 pandemic as the trigger for a new platform for growth and innovation in health care. This could set us up for the challenges humanity faces in the 21st century such as ageing populations, the growing burden of non-communicable diseases and emerging pandemic threats.
Rather than being seen as a threat, the reform, growth and development of health systems triggered by the pandemic could be the catalyst to drag health systems into the 21st century and drive a new wave of social and economic growth.
We have already seen examples of how health systems have evolved as a result of the pandemic, such as the early adoption of new vaccine technologies and the rapid take up of tele-medicine.
The challenge, however, is going to be to get people in the health sector to see these opportunities and embrace the reforms that need to be made. We also need to convince those outside the health system that this is worth doing from a social, economic and political perspective.
So, what sorts of issues needs to be confronted when thinking about post-pandemic health reform?
Societies need to invest more in health, and they need to get better at allocating that investment.
Firstly, the level of investment in healthcare needs to be seriously looked at.
The traditional economic thinking is that more spending on health care is bad. You see this all the time in government policy documents lamenting the long-term trend in growing spending on health care.
Source: Ortiz-Ospina, E. & Roser, M. "Financing Healthcare", Our World in Data, Oxford Martin School, University of Oxford, https://ourworldindata.org/financing-healthcare, accessed 24/7/2022.
However, the argument that ‘We’ll be ruined’ if spending on health care grows is open to debate. People like William Baumol have argued that if societies value their health care and want to spend more on them, this might be a valid consideration.
The concept of 'efficiency in healthcare' is not a simple one.
Societies spending more on their health as they get wealthier is not something that should necessarily be criticised or rejected.
Even before the pandemic, organisations like the World Health Organization and the World Bank were arguing that to reach the 2030 UN Sustainable Development goals on health the world was going to have to invest more in health systems.
The pandemic has just graphically demonstrated the importance of this.
A key issue here is the concept of resilience and built-in redundancy in health systems.
As the airline industry is learning, letting large parts of your workforce go during a pandemic only to flounder when peak demand returns due to staff shortages is not necessarily a good long-term business model for providing services to those in the community who need them.
Staff shortages are also affecting health systems. A question to consider here is the appropriate level of investment in health care and society’s appetite for built-in redundancy and excess capacity in health systems. Traditionally, this hasn’t been very high – but the pandemic has shown we may need to rethink this.
Productivity and the balance of labour and capital/technology
Another issue is the allocation of investment in health systems – the allocation between different inputs such as labour, capital and technology and the resultant productivity and efficiency of health systems.
For example, recent data suggests that the UK’s investment in the National Health Service (NHS) has been overly weighted towards labour – doctors, nurses, staff – and not enough on capital equipment and technology.
There’s a broader question here about whether health systems have the balance right between investing in the different inputs – labour vs capital vs technology – and whether a re-alignment of these relative investments could improve the efficiency, effectiveness and productivity of health systems worldwide.
Investing more in capital equipment, new technologies, IT systems, and productivity-enhancing reforms could be just as important as expanding investment in doctors, nurses, paramedics and other healthcare professionals.
As in many other industry sectors in society, investments in technology can potential trigger major productivity improvements and new growth opportunities for individuals, societies and economies.
Recent analysis in the Lancet has shown that even before the pandemic, health workforces were substantially below what was estimated as necessary to meet future needs.
This study found that in 2019 global health workforces fell short of minimum thresholds by 6·4 million physicians, 30·6 million nurses and midwives, 3·3 million dentistry personnel, and 2·9 million pharmaceutical personnel.
Shawview Consulting chart. Data source: GBD 2019 Human Resources for Health Collaborators. 2022. "Measuring the availability of human resources for health and its relationship to universal health coverage for 204 countries and territories from 1990 to 2019: a systematic analysis for the Global Burden of Disease Study 2019", The Lancet, 399, 10341, June, https://www.thelancet.com/journals/lancet/article/PIIS0140-6736(22)00532-3/fulltext, accessed 24/7/2022.
Remember, this is before the COVID-19 pandemic.
Of course, since the pandemic, health workforces around the world have been smashed.
Through a combination of health workers dying from COVID, suffering burnout and mental illness and others just retiring and quitting in droves, the global health workforce has been dealt a substantial blow.
Health workforces around the world are exhausted.
After two years of a gruelling pandemic, there is concern worldwide about the exhaustion of health care workers. The World Health Organization has warned countries to do more to protect health workers who are near breaking point.
In Australia, nurses are leaving the hospital system to enter the injectable cosmetics industry where the pay, hours and work-life balance are much better.
The worldwide shortage of health workers and the aftereffects of the COVID pandemic may linger for many years.
Global health governance and pandemic preparedness
How the world governs its health policy and manages pandemics also needs to be reformed.
Thankfully, there is work afoot on this.
The most recent World Health Assembly in May agreed to increase the share of the WHO’s funding that is untied, meaning it will have more power to intervene in public health emergencies, and the operation of the International Health Regulations were revamped to secure greater international cooperation.
But COVID-19 taught us, again, that when push comes to shove countries do not work together to combat pandemics as they should.
As The Lancet has pointed out, during the pandemic the existing International Health Regulations failed to “compel a robust, coordinated response” against public health emergencies and few countries showed adequate preparedness.
Fixing how countries will work together to respond to future pandemics, including through a new global pandemic agreement, will be a critical issue in the future.
While the challenges are many, if we get this right we will have the opportunity to position health systems to not only cope with future challenges facing society but also to provide a platform for future social and economic development going forward.