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New report shows budgetary constraints starting to affect healthcare providers globally

As healthcare systems around the world deal with budgetary constraints, new analysis from Siemens Financial Services (SFS) shows healthcare delivery costs continue to rise faster than Gross Domestic Product (GDP).

A new report: ‘Healthcare spending: addressing the big issue?’ assesses the widening gap between healthcare resources and healthcare costs.

SFS’ analysis of the gap between costs and capabilities illustrates that throughout the world, healthcare delivery costs have grown over the last eight years and remain in excess of the development of Gross Domestic Product (a key indicator of a country’s resources to pay for healthcare). This is the continuation of a long-term trend. In addition, the pace of this cost growth has accelerated considerably beyond inflation.

Accelerants of healthcare spending felt in common by all healthcare systems include an aging population, rising rates of chronic conditions, advancements in medicine and new technologies, staff shortages, regulatory and sustainability requirements, inflated energy costs, generally higher prices, and expansions of health insurance coverage. The cumulative legacy of those factors has to be managed – to secure the long-term financial sustainability of healthcare systems.

Changing patterns of demand require a pivoting of services and resources. Everywhere, health professionals are seeking to harness new ways of working and modern technologies to deliver better patient outcomes at lower cost. However, reforming healthcare provision around the world comes at a price. If the capital burden of new technology acquisition could be softened, and precious funds not tied up in depreciating equipment, then healthcare systems reform, improvement and efficiency could be achieved more quickly. This is where the power of specialist financial services comes into play.

Penny Pinnock, Business Development Manager, Siemens Financial Services notes: “Financial efficiency is as important as technological efficiency. If capital costs can be converted into operating costs (by harnessing third party capital), then healthcare organisations can transform without tying up their financial resources. For instance, energy-efficiency initiatives can be financed by harnessing future savings in a flexible financing structure. Existing equipment can be upgraded to superior performance standards. This is how flexible, private sector finance can enable transformation and new ways of working.”

To illustrate the continued widening of the gap between healthcare costs and healthcare resources, Siemens Financial Services (SFS) created an index of healthcare spending to compare with indices of inflation and Gross Domestic Product (GDP). GDP is an indicator of resources available for healthcare spending, whether for state/taxation-derived healthcare systems or those structured on health insurance policies. Index comparisons cover the eight-year period 2016-2024.

Click here to download the full insight study ‘Healthcare spending: addressing the big issue?’ 

SFS has also produced a Healthcare Leaders Briefing Series that explores the priority investment areas for transformative healthcare: https://www.siemens.com/global/en/products/financing/whitepapers/whitepaper-healthcare-transformation-finance-solutions.html

 

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