Globalization and Future Trends in Healthcare Marketplace

1. University of MinnesotaThe Healthcare MarketplaceMedical Industry Leadership InstituteCourse: MILI 6990/5990Spring Semester A, 2017 Stephen T. Parente, Ph.D. Carlson School of Management Department of Finance sparente@umn.edu

2. Lecture Overview • International Health Markets: Globalization of the Medical Industry • Future trends in the healthcare marketplace • US Health reform (Episode VI)

3. I. Globalization of the Medical Industry Key Premises • Human disease and health care needs are not restricted within national boundaries – access to delivery of health care is a fundamental necessity for all human beings. • Human creativity is not restricted within national boundaries – development of health care can occur anywhere around the globe.

4. I. Globalization of the Medical Industry Conventional Wisdom: “The Best Money Can Buy” • Wealthy foreign patients (from Middle East, Europe, Latin America and the Caribbean) are traveling to the U.S. for the best care the money can buy – paying cash upfront for stateside surgery and routine checkups. • U.S. hospitals are catering to – and profiting from – the wealthy foreign patients. • Large medical centers offer concierge services that cater to traveling families’ banking, dining and shopping desires. • John Hopkins Medicine International – 40 full-time and 45 on-call interpreters • Mayo Clinic – 38 full-time interpreters and 25 on-call employees • Cleveland Clinic – 35 staff interpreters • Texas Medical Center – 10 full-time interpreters and 25 bilingual staffers

5. II. Medical Tourism: Evolution and Growth

6. II. Medical Tourism: Evolution and Growth Key Drivers of Medical Tourism: Cost of Service (All costs in US$)

7. II. Medical Tourism: Evolution and Growth Supply Chain of an International Patient: The Process

8. STP Disruptive Innovation Tourism Idea: Integrate These

9. Population and Demographics Key Issues for the 21st Century Health and Lifestyle Technology

10. Production of Health Demographics Genetics HEALTH Lifestyle/ Health Behaviors Medical Care

11. Demographics

14. Health Bads and their Consequences • Smoking • Cigarette smoking is the leading cause of lung cancer (90% of deaths); chronic bronchitis; emphysema (COPD), and a major cause of heart disease and stroke • Associated with additional cancers (e.g., bladder, pancreatic, and cervical) • Vision and hearing problems and slowed healing from injuries • Responsible for 443,000 deaths per year in 2010 • Obesity • Linked to hypertension, high cholesterol, coronary heart disease, type 2 diabetes, depression, and various types of cancer • Responsible for 400,000 deaths in 2010 • $75 billion in medical care expenditures in 2003 • $190 billion in 2012 • Excessive Alcohol Consumption • Associated with lost productivity, disability, early death, crime, neglect of family responsibilities • Motor vehicle accidents while driving under the influence • 80,000 deaths from alcohol abuse in 2010

15. Smoking Prevalence Over Time www.cdc.gov, 2004

16. Smoking Prevalence Over Time

17. Smoking Prevalence Over Time

18. CDC, 2004

20. Obesity Trends* Among U.S. AdultsBRFSS, 1985 (*BMI ≥30, or ~ 30 lbs overweight for 5’ 4” person) No Data <10% 10%–14%

21. Obesity Trends* Among U.S. AdultsBRFSS, 1986 (*BMI ≥30, or ~ 30 lbs overweight for 5’ 4” person) No Data <10% 10%–14%

22. Obesity Trends* Among U.S. AdultsBRFSS, 1987 (*BMI ≥30, or ~ 30 lbs overweight for 5’ 4” person) No Data <10% 10%–14%

23. Obesity Trends* Among U.S. AdultsBRFSS, 1988 (*BMI ≥30, or ~ 30 lbs overweight for 5’ 4” person) No Data <10% 10%–14%

24. Obesity Trends* Among U.S. AdultsBRFSS, 1989 (*BMI ≥30, or ~ 30 lbs overweight for 5’ 4” person) No Data <10% 10%–14%

25. Obesity Trends* Among U.S. AdultsBRFSS, 1990 (*BMI ≥30, or ~ 30 lbs overweight for 5’ 4” person) No Data <10% 10%–14%

26. Obesity Trends* Among U.S. AdultsBRFSS, 1991 (*BMI ≥30, or ~ 30 lbs overweight for 5’ 4” person) No Data <10% 10%–14% 15%–19%

27. Obesity Trends* Among U.S. AdultsBRFSS, 1992 (*BMI ≥30, or ~ 30 lbs overweight for 5’ 4” person) No Data <10% 10%–14% 15%–19%

28. Obesity Trends* Among U.S. AdultsBRFSS, 1993 (*BMI ≥30, or ~ 30 lbs overweight for 5’ 4” person) No Data <10% 10%–14% 15%–19%

29. Obesity Trends* Among U.S. AdultsBRFSS, 1994 (*BMI ≥30, or ~ 30 lbs overweight for 5’ 4” person) No Data <10% 10%–14% 15%–19%

30. Obesity Trends* Among U.S. AdultsBRFSS, 1995 (*BMI ≥30, or ~ 30 lbs overweight for 5’ 4” person) No Data <10% 10%–14% 15%–19%

31. Obesity Trends* Among U.S. AdultsBRFSS, 1996 (*BMI ≥30, or ~ 30 lbs overweight for 5’ 4” person) No Data <10% 10%–14% 15%–19%

32. Obesity Trends* Among U.S. AdultsBRFSS, 1997 (*BMI ≥30, or ~ 30 lbs overweight for 5’ 4” person) No Data <10% 10%–14% 15%–19% ≥20%

33. Obesity Trends* Among U.S. AdultsBRFSS, 1998 (*BMI ≥30, or ~ 30 lbs overweight for 5’ 4” person) No Data <10% 10%–14% 15%–19% ≥20%

34. Obesity Trends* Among U.S. AdultsBRFSS, 1999 (*BMI ≥30, or ~ 30 lbs overweight for 5’ 4” person) No Data <10% 10%–14% 15%–19% ≥20%

35. Obesity Trends* Among U.S. AdultsBRFSS, 2000 (*BMI ≥30, or ~ 30 lbs overweight for 5’ 4” person) No Data <10% 10%–14% 15%–19% ≥20%

36. Obesity Trends* Among U.S. AdultsBRFSS, 2001 (*BMI ≥30, or ~ 30 lbs overweight for 5’ 4” person) No Data <10% 10%–14% 15%–19% 20%–24% ≥25%

37. Obesity Trends* Among U.S. AdultsBRFSS, 2002 (*BMI ≥30, or ~ 30 lbs overweight for 5’ 4” person) No Data <10% 10%–14% 15%–19% 20%–24% ≥25%

38. Obesity Trends* Among U.S. AdultsBRFSS, 2003 (*BMI ≥30, or ~ 30 lbs overweight for 5’ 4” person) No Data <10% 10%–14% 15%–19% 20%–24% ≥25%

39. Obesity Trends* Among U.S. AdultsBRFSS, 2004 (*BMI ≥30, or ~ 30 lbs overweight for 5’ 4” person) No Data <10% 10%–14% 15%–19% 20%–24% ≥25%

40. Obesity Trends* Among U.S. AdultsBRFSS, 2005 (*BMI ≥30, or ~ 30 lbs overweight for 5’ 4” person) No Data <10% 10%–14% 15%–19% 20%–24% 25%–29% ≥30%

41. Obesity Trends* Among U.S. AdultsBRFSS, 2010

42. Thought questions: Health behaviors • If lifestyle behaviors are such large contributors to mortality and morbidity, why don’t we allocate more resources toward education? • What tools does/can the government use to modify behaviors of individuals? • In what ways might private insurers or providers try to modify behaviors of individuals?

43. Your Turn

44. Are You a Gradualist Towards Health Reform? • What are positives about being a gradualist? • What are negatives about being a gradualist? Gradualism: (n): The policy of approaching a desired end by gradual degrees.

45. U.S. Health Reform’s Gradualism Late 1940s: Massive $$$ into NIH as instead of NHI 1996-7: S-CHIP, MSAs, HIPAA 1974: Nixon HMO & Health, ESRD Planning 1965-66: Medicare & Medicaid compromise 1936: AMA Compromise Social Security 1919: AMA Uses ‘Red Scare’ Increasing Coverage 2006-10: PPACA 1993: Clinton Health Security Act 1970s: Kennedy NHI 1960s: Great Society NHI again 1948: Truman NHI for ex-New Dealers 1930s: New Deal 1910s: Progressive Movement for NHI Gradualism: (n): The policy of approaching a desired end by gradual degrees.

46. An Open Letter from the Gradualists to the Revolutionaries • What if you bankrupt the system? • If you dampen financial incentives for new provider and technology development, will society be worse off? • Will U.S. physician reject state/federal management of health benefits? • Name comparable cases when a total revolution of a social good and high technology market made the world better off. • Others….

47. An Open Letter from the Revolutionaries to the Gradualists • How many more uninsured will there need to before healthcare is in national crisis? • Why should an industry created by physicians, be governed by insurance oligopolies? • When have oligopolies been a good thing in any industry? • More questions …..

48. The Big Picture • Why are our costs twice as high as other western countries? • Technology easy to get • Providers make twice as much • Good marketing. • Consumers see health care as an economic good. • Why are our outcomes so bad? • Infant mortality is high because we don’t ‘say no’ to interventions for high risk pregnancy/birth. • Quality of life at end of life down because we don’t ‘say no’ for high cost interventions.

49. What Will Alter the Picture (IMO) • Anything that brings on a real ‘War Economy’” • Dow goes below 10,000 • Double dips (unemployment or housing) • Major firm or bank collapse • China collapse/pause brings up debt servicing cost to reconcile Medicare trust fund imbalances. • Any epidemic or national terror attack • VA and Military Treatment Facilities become staging areas. All providers ‘temped’ by fed until crisis abated