Covid-19 to transform healthcare investment

14 May 2020
The global fight against a pandemic the likes of which has not been seen in more than 100 years is expected to rapidly accelerate innovation in the healthcare sector

While the fight against Covid-19 is ongoing and will require a great deal more effort and coordination by national governments, it is clear that the outbreak will have a lasting impact on healthcare investments and delivery models for many years to come.

In times like these, innovation and transformation accelerate in industries that serve the war or war-like effort, and like in a war, the Covid-19 pandemic has globally exposed the vulnerability of the healthcare system to this type of event.

To mitigate the impact of the pandemic and meet the future challenges of healthcare delivery in the 21st century, the industry must transform itself along a number of parallel and complementary tracks, including by building additional capacity, repurposing existing capacity and healthcare innovation.

The Covid-19 pandemic has shown us that the medical supply chain is only as strong as its weakest link

Building capacity

Not least, governments will need to increase their healthcare systems’ capacities, which will require investing in additional hospital beds as well as in the medical workers who will service them.

However, this need not be done in the traditional manner of constructing physical hospitals because the Covid-19 pandemic has shown that, although having the necessary capacity is important, the flexibility to deploy it is equally as important.

Modular and mobile hospital units are examples of creating this flexible deployment and ensuring the necessary capacity and the ability to scale-up, if needed, at short notice.      

The Covid-19 pandemic has shown us that the medical supply chain is only as strong as its weakest link.

In many countries, that link is not the availability of high-tech medical equipment, but instead the low-tech testing kits and protective gear, such as masks and gloves, in addition to their inability to source it due to border closures and bans on exporting these materials from the countries producing them.

This will spur increased investment in both hi-tech and low-tech manufacturing facilities in many countries seeking, as a national security priority, to bring both low and high-tech medical equipment manufacturing on-shore in order to reduce the reliance on a more globally centralised or integrated medical supply chain.

Severe disruption to the global supply of personal protective equipment  – caused by rising demand, panic buying, hoarding and misuse – has put lives at risk from the new coronavirus

Repurposing capacity

In addition to increasing capacity, national healthcare sectors must be able to utilise capacity more efficiently by prioritising critical medical cases and reserving more of this capacity for national medical emergencies. To ensure this, additional investments will be needed in:

> Preventive care and medical awareness to reduce the long-term burden of preventable conditions such as heart disease, type-2 diabetes and smoking-induced illnesses. This will require rolling out campaigns aimed at screening, testing and the early diagnosis of preventable conditions, with more regular check-ups covered by medical insurance plans and public health campaigns centred around healthy living and the risks of unhealthy habits and behaviours.   

> Technology-enabled telemedicine, allowing doctors to service more patients with less serious cases remotely. Such technology can also be used to track patients’ conditions remotely through electronic diagnostic sensors on or in the human body. Both governments and the private sector will need to invest in the platforms and technologies that will enable the shift towards telemedicine. These technologies are not new, but are now gaining wider acceptance as they demonstrate more efficacy.  

> Artificial Intelligence (AI) as the first stage in diagnosing less severe or less complex cases, thereby releasing physicians’ capacity to deal with more severe and more complex medical cases and conditions. AI and machine learning algorithms have had good predictive power (in some cases greater than that of human physicians) in correctly diagnosing patients based on an analysis of their symptoms. Expanding the accuracy of this technology and its scale of deployment is a significant area for future investment.

Middle East governments have the opportunity to utilise their sovereign wealth funds to gain increased access to life sciences investments

Medical innovation

Governments and the private sector will need to work together to dedicate more resources into key areas of healthcare research such as genetics, immunology, vaccines and therapeutics.

This pandemic has highlighted just how much there is left to learn about the human immune system and how it responds to pathogens.

Healthcare security will forever be shaped by this experience, requiring more investments into scientific research and new therapeutic drugs that treat a variety of symptoms arising from infectious diseases.

A decoding of the human immune system will lead to the development of better and more targeted treatments to deal with current threats, and the ability to respond more quickly to future threats from novel pathogens.

Countries that do not have the required expertise in these fields, or the domestic research and development infrastructure, can allocate more investments into life sciences and advanced medical research through venture capital funds, or through partnering with industry leaders.

Investing in healthcare will be viewed by governments less through a financial lens and more as a matter of national and global security

Governments in the Middle East have the opportunity to utilise their sovereign wealth funds to gain increased access to life sciences investments in order to advance medical knowledge in these areas, transfer some of that knowledge back to the local economies through the establishment of specialised healthcare facilities, and generally reap both financial and non-financial benefits from healthcare innovation. 

Moving forward, investing in healthcare will be viewed by national governments less through a financial lens and more as a matter of national and global security.

As such, governments are expected to draw-up comprehensive multi-year healthcare plans and incentivise both public and private investments into the sector. 

About the author

Yaser AbuShaban is principal investment consultant and research lead at Mercer

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