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COVID-19: a shot in the arm for healthcare?
By: Benjamin Hunter
Last updated: Wednesday, 10 November 2021
The COVID-19 pandemic has catapulted healthcare to the forefront of public interest. Yet healthcare institutions are under immense financial strain and in this blogpost Ben Hunter draws attention to the loss of income from international patients. He argues this has laid bare the weaknesses of a global market model in healthcare and encourages us to press for decommodified and locally driven alternatives.
The global healthcare economy
Contemporary healthcare institutions are increasingly immersed in multiple, overlapping global markets for products and services. There are intricate international systems for attracting investment, recruiting workers, and procuring pharmaceuticals and other health products. COVID-19, and associated policy responses, have placed strain on many of these systems, driving desperate struggles to obtain reagents, ventilators and personal protective equipment, and incentivising questionable strategies for the wealthiest agencies to ensure they come out on top.
One area attracting relatively little attention is the revenue pressure being felt by healthcare providers as a result of disruption to global markets for patients. Cross-border travel for accessing healthcare (often referred to loosely as ‘medical tourism’) is a major feature of healthcare in many countries, and (pre-COVID-19) was estimated to be a global market worth USD 50 billion. Much of this commercial activity is concentrated in particular countries, cities and hospitals, in middle-income countries like Malaysia, Thailand, Mexico, India and Turkey, and in some high-income countries such as South Korea, Singapore and the USA. It offers a revenue stream that can boost profits and excite investors; and has been seen as a way for public hospitals in the UK to ameliorate the effects of recent government funding squeezes.
A business model in crisis
Recent travel restrictions have, however, plunged the medical tourism industry into crisis. Hospitals reliant on income from international users are confronted with the failure of their business model, as are the brokerage agencies and accommodation providers that emerged to serve them. The CEO of Bangkok’s renowned Bumrungrad Hospital recently described how the 50% of its users who come from overseas have ‘disappeared’. Meanwhile reports from India suggest some hospitals are experiencing revenue losses of up to 90% as the effects of international travel restrictions are exacerbated by reduced domestic demand for certain services; the cost of a six-month interruption to India’s medical tourism industry has been estimated at USD 2.5 billion.
Faced with considerable financial losses, healthcare industries are seeking government subsidies to ensure viability in the short-term. In India there have been requests from industry representatives for public subsidies, while the UK government’s purchasing of private sector capacity has been described as a bailout for the country’s ailing private sector. Governments in countries with fewer COVID-19 cases are now looking to stimulate medical tourism as part of a wider economic push to revive inward tourism, even proposing to convert under-used pandemic facilities into hospitals for medical tourists. Industry analysts are advocating revised business strategies such as focusing attention on people in neighbouring countries, and using transnational telemedicine to tap into newfound familiarity and comfort with virtual interactions.
In the meantime, the failure of the global market model in healthcare is having profound human costs. People who would have travelled for healthcare unavailable in their home country – in many cases for life-threatening diseases – are facing significant delays to treatment with grave consequences. Wealthier sections of society are being confronted with under-resourced hospitals in their home countries – going abroad to circumvent inadequate domestic healthcare facilities is no longer the option it was three months ago.
Healthcare at a crossroads
The COVID-19 pandemic is forcing us to re-assess what we value in society. In settings where healthcare is chronically under-funded, and where opportunities to travel abroad for care are now diminished, there may be real impetus for governments to improve the state of domestic healthcare. Countries with advanced healthcare systems face several pertinent questions for the future: What is the purpose of their healthcare institutions? Whose interests should they serve and to whom should they be accountable? How should they finance their activities?
It is becoming more and more apparent that healthcare institutions must be extricated from the economic strategies and global market models within which they have become entangled. Yet in a guidance note published last week, two World Bank economists proposed greater roles for foreign investors in healthcare institutions, on the basis that ‘supporting greater foreign entry in all health-related services would help countries build resilience to future health crises by releasing pressure on domestic health systems and service providers’. COVID-19 has laid bare the flaws in these kinds of claims, as hospitals serving international capital markets side-step social responsibilities and demand public subsidies. There is instead a need for government leadership, increased domestic funding and a decommodification of healthcare, through pooled financing mechanisms such as taxation. It may seem a tall order given the looming global recession, but it is a decision that has strategic political benefits for those who take it. A new era for healthcare beckons: one of deepened marketisation, financialisation and inequalities; or one of equitable universalisation for a vital public resource.
Written by Dr Benjamin Hunter, Lecturer In International Development in the School of Global Studies. Ben works at the intersection of health and development, with a particular interest in how new areas of commercial exchange emerge in the health sector.
This blog has been jointly published by the Sussex Sustainability Research Programme (SSRP) and Unsettling Healthcare.
This blog is part of the
SSRP Forum: the Pandemic and Sustainability
This forum aims to contribute to the analysis of the impact of the pandemic on sustainability and the Sustainable Development Goals (SDGs), and to offer policy recommendations on how to respond to this unprecedented challenge.
The spread of coronavirus (COVID-19) presents us with an unprecedented challenge. We see losses of human life around the world, while one can hardly think what will happen if and when the pandemic reaches poorer countries with weaker economic and health structures. We see countries shutting down their economies to avoid the spread of the virus, as well as employing unprecedented measures of social distancing and population lockdown. We see whole economic sectors and households entering the intensive care of public financial support. In less than a month, the pandemic has redefined the priorities, parameters and boundaries of ‘what is possible’ in much of the world that we constructed since the Second World War.
The most urgent question is how to deal with the humanitarian crisis currently evolving and prevent it from getting out of control at a global scale. But a question we must also face is how the currently unprecedented mobilisation of public resources will be used to support our transition to a sustainable future, rather than a return to a socio-environmentally unsustainable past. One can hardly overstate the urgency of both these tasks. We in the Sussex Sustainability Research Programme (SSRP) community aim to contribute to this ‘mobilisation’ effort by setting up this Forum which aims to bring together experience, knowledge, ideas and recommendations to inform public responses to the pandemic and the implementation of Sustainable Development Goals (SDGs) at both local and global levels.
Forum Academic Lead
Dr Andreas Antoniades, Senior Lecturer in International Relations in the School of Global Studies at the University of Sussex.
Find out more about his Sussex Sustainability Research Programme (SSRP) project on 'Financial Crises and Environmental Sustainability'.