The latest NAB Health Insights Special Report takes an in-depth look at health consumer attitudes and satisfaction levels. It’s a revealing investigation available for download now.
2015 could stand out as a year of change for the health sector – so where do the best opportunities lie? Dean Pearson, NAB’s Head of Industry Analysis, and Melissa Timbs, Senior Policy Advisor - NAB Health, look at how the changes could work in your favour.
Australia has one of the world’s best health systems and offers a wide range of opportunities for businesses and service providers.
“Healthcare overtook retail as the biggest employer in Australia in 2009-10 and, since the global financial crisis (GFC) about 35 percent of jobs that have been created are in healthcare and social systems,” says Dean Pearson, NAB’s Head of Industry Analysis.
“However, the core issue going into 2015 is a budget deficit for health of at least $5 billion which is driving the government to seek further private investment into the health sector.”
The health sector is looking at financial sustainability and the spectrum of capital solutions available including public private partnerships and social impact investment. “We’ve also seen a very active investment market for health in 2014 with a number of health specific public offerings (IPOs) and it’s expected that more will follow in 2015,” says Melissa Timbs, Senior Policy Advisor – NAB Health.
As the aged care sector matures there’ll be a continuing trend towards consolidation. “While bigger players get bigger and better able to leverage economies of scale, some of the most attractive opportunities for smaller business will lie in niche markets where they can charge a premium for services based upon a growing need to cater for complex needs and changing disease patterns,” says Timbs.
The introduction of Living Longer Living Better on 1 July, 2014 also brought a growing focus on a user pays model. About 40 percent of the nation’s wealth is held by 50 to 69 year olds – a group that typically has very strong views about how they want to be looked after as well as the money to shape that. The internet has made them more informed and they have no qualms about seeking a second opinion or requesting a particular service.
Only about 7 percent of Australians move into residential aged care, which means that private operators will see a growing number of opportunities in community, support, respite and home care services. There’s also a growing market for technology services that enable people to stay at home for longer. “We’ll see more competition in the home care sector over the coming year,” notes Timbs. “The aged care industry has favourable demographics, a rising ageing population and increased health advancements are increasing longevity.”
Pearson believes the recent trade agreements with countries in Asia will increase potential for export, particularly in areas such as biotechnology, pharmaceuticals and aged care. “China alone has more than 1.3 billion people, a rising middle class and an ageing population.”
The General Practitioner (GP) co-payment was the headline story for 2014 and, late in the year, there was an announcement that a redesigned co-payment was to be introduced on 1 July, 2015. The government still needs to seek the co-operation of the Senate to ensure the changes take effect (via regulation) but, if approved, these changes will have some impact on how health practitioners run their business.
The GP is the consumer’s central point of contact, directing them towards acute care, allied health or the pharmacy. The government’s plan to replace Medicare Locals with Primary Health Networks (PHN) has the aim of reducing fragmentation and creating more alignment between primary healthcare and local hospital networks.
“GPs, pharmacists and allied health providers play an important role in preventative care and private health funds are also focused on this area,” says Timbs. “As chronic illness continues to put pressure on acute care there’ll be growing demand for private practitioners in the preventative space.”
Another area of opportunity is regional and remote health. The government is providing increased support with the expansion of facilities, consultation rooms and space to support more medical students and supervising GP registrars.
A large number of reforms and government policies will have an impact on pharmacy throughout 2015 including the proposed increases to the Pharmaceutical Benefits Scheme Co-payment, Price Disclosure reforms, the 6th Community Pharmacy Agreement and Competition Policy Review outcome.
“With a number of these reforms impacting margins, pharmacists are required to be very good business operators,” says Timbs. “They need to have a good understanding of their customer and the cash flow drivers of their business and the ability to manage expenses and staff rosters, as well as looking at opportunities for other revenue streams.”
With change also comes opportunity. “Government is focused on rebuilding primary care and we’re seeing this with the formation of primary health networks and the opportunity for pharmacy to participate, given the vital role they play in our primary healthcare system,” says Timbs.
The AHPRA Pharmacy Board will look at progressing opportunities for the development of training programs that will enable pharmacists to administer vaccinations. The Board is also looking at prescribing by approved pharmacists and has agreed to establish a Pharmacy Prescribing Committee to investigate this opportunity.
The ageing population provides significant opportunities with some of the larger aged care facilities opening pharmacies on their premises. There are also opportunities for innovation via technology, for example, dispensary robots are giving pharmacists more time to spend talking to their customers.
Pearson believes that, across the spectrum of healthcare, private operators with a deep understanding of consumers and their behaviour will be best placed to take advantage of opportunities as they arise.
“I’m a big advocate of sentiment surveys,” he says. “Social media has also made it much easier to get feedback from consumers. Most people are happy to tell you what they think and don’t mind if you ask them.”
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