Healthcare as an investment

Improving US health and economic vitality through effective spending

In order to shift momentum towards more strategic and effective investment in health, leaders need to engage in more dynamic and innovative thinking about how to generate better outcomes from healthcare at lower cost.

Economist Enterprise embarked on an ambitious research program to examine the complex relationship between health and wealth. We employed a mixed methods approach to investigate how leaders can strategically invest in healthcare systems to optimize health and economic outcomes.

49

Health system variables

Measuring health system attributes and current approaches to resource allocation

Demographics

Expenditure & payment

Organization

Regulation & accountability

Behavior

10

Health outcome variables

Measuring different aspects of morbidity and mortality among the population

Health status

Mortality

5

Economic outcome variables

Measuring the contribution of health and health outcomes to socioeconomic progress

Analysing the Model

The macroeconomics of health will continue to be debated; this model is an important step forward in informing that debate and demonstrating that leaders have no choice but to prioritize health as a critical component of socioeconomic development and growth.

Going beyond traditional associations between life expectancy and GDP, this research seeks to generate a more nuanced understanding of linkages between health investments, health outcomes and economic growth, using US data over a 15-year time horizon (2004-2019). The findings offer a platform to engage in new ways of thinking about how we fund, structure, and shape health systems as a critical strategy for economic growth and resilience. The scenarios below explore specific dynamics and applications of the model.

Scenario 1

Moving the needle

Reducing waste and system vulnerabilities

Different types of health system waste (e.g., administrative, operational, clinical) persist, in part because the parts of the health system that perpetuate them have little incentive to change. While waste can be difficult to measure, indicators such as preventable hospitalizations and unnecessary visits can be useful signals that a health system is working inefficiently. This scenario explores the impact of reducing these two measures by up to 10%.

A 2.5% reduction in preventable hospitalizations (as measured among Medicare enrollees) may result in…

Increase

Increase of $26.06 in tax revenue per capita

Reduction

257,000 fewer people reporting low health status
6,500 fewer US children living in poverty
12 fewer amenable deaths per 100k nationally
1 fewer infant death per 1,000 live births

Examples of areas leaders can focus on to achieve these results:

Proper tracking and reporting of preventable readmissions, which will help inform future strategies aimed at improving quality and decreasing readmission numbers
Prioritizing health equity, care integration and continuity, standardizing care, and improving patient education
Greater investments or prioritization of research funds towards effective health technology and innovation
Funding risk stratification programs to identify target areas of intervention, strengthen safety nets, support comprehensive care teams
Develop and utilize digital health technology for non-emergent use (e.g., mobile integrated care)

Scenario 2

Zooming out

Managing risk factors for poor health

The WHO highlights that the majority of NCDs, which are increasingly responsible for the majority of deaths and disability in the US, are due to a combination of four key risk factors: tobacco use, physical inactivity, harmful use of alcohol and unhealthy diets. This scenario explores the differences in impact between a 10% and 20% reduction in both obesity and smoking rates at the population level.

A 10% reduction in smoking may result in…

Increase

$172 more in tax revenue per capita on average

Reduction

4.5m fewer disability-adjusted life years
0.08 day reduction in average poor physical health days per month
71.8 fewer amenable deaths per 100k nationally
0.06 day reduction in average poor mental health days per month

Examples of areas leaders can focus on to achieve these results:

Taking a more nuanced view of tax revenue in relation to tobacco use reduction - tax revenue increases as a result of health and economic benefits of reductions in smoking may offset tobacco tax revenues lost
Setting ambitious goals and adopting holistic evidence-based strategies to prevent and manage obesity and smoking

Scenario 3

The long game

Mitigating demographic shifts

Leaders are increasingly needing to contend with longer-term trends such as aging populations and lower fertility rates that impact health and the economy. High resilience in aging populations has been linked with lower levels of depression, greater longevity and generally more successful aging at the individual level, as well as providing macro-level benefits. This scenario explores the downstream impacts of demographic shifts related to aging.

A 0.25% increase in the population 65 years or older may result in…

Increase

96,000 more disability adjusted life years nationally
40,000 more people reporting low health status anually
1,270 more children living in poverty
0.002 day increase in average poor physical health days per month

Reduction

2.6 fewer amenable deaths per 100k nationally

Examples of areas leaders can focus on to mitigate these potential impacts:

Ensure that health systems support healthy aging to mitigate risks to poor mental and physical health days
Consider investments in areas that support the resilience of older people, particularly in health, finance and social structures and institutions