AVA – The Impact of Covid-19 on Global Healthcare

The pandemic will have profound impact on the healthcare industry. While certain developments are obvious, others are not.

1. Healthcare is getting digitalized, finally

While the digital revolution has redefined most industries, the healthcare industry has resisted major change so far. Complex structures, misaligned incentive systems and a high degree of regulation have been key reasons for this.

What a change Covid-19 is making: Telemedicine is becoming standard of care, processes become digitalized – from education to diagnostics up to treatments. Even regulatory audits may get virtualized – something that would have been unthinkable as little as three months ago.

2. Infectious diseases get the needed attention, which is great news for developing countries

Infectious diseases have caused humanitarian crises as long as we have existed. However, over the last decades it has been developing countries which suffered most. Think about tuberculosis, malaria, Ebola, and HIV, which still kill millions of people every year. But very few of them in developed countries.

Scientific focus is back: Expect a massive inflow of funds and talent to improve diagnostics, therapies and vaccines to prevent future pandemics. Equally important are strengthened public health systems, a much better educated population and changed social norms. Developing countries will indirectly be the biggest winner of this.

3. Governments are forced to put a price tag on human lives

Politicians around the world have implemented tough restrictions and record-high financial support programs around them. While few people question the importance of “flattening the curve”, there are challenging decisions ahead. The lives of (mostly elderly) persons must be weighted against the impact of lockdown and recession for (mostly younger) persons. While mortality and recession seem to be much more correlated in poorer countries, even rich countries have a lot to be afraid of – think about the effect of a steep increase of Americans without health insurance.

4. Higher rate of unplanned pregnancies in H1 2021

As a co-founder of Ava I have obviously been involved in a lot of discussions about the effect of Covid-19 on reproduction. Intuitively most people assume a lot of babymaking going on at the moment … there is plenty of time for this during lockdown. However, as long as it remains uncertain in what state hospitals will be over the course of a potential pregnancy, many couples are deciding to postpone this decision. Reproductive therapies – contributing increasingly to birth rates – are currently suspended in many countries.

It will be highly interesting to see birth statistics being published over the coming year – with China’s statistic for Q4 2020 providing first in-depth insights. My take for the time being is that unplanned pregnancies (already now at almost 50% in the US!) will be up in the first half of 2021, while planned pregnancies will be down. Analyzing the effect of this will be a bonanza for future sociologists.

5. Hospitals are becoming much more flexible

While we currently talk a lot about the number of hospital beds and ventilators, the trend from stationary to ambulatory medicine is here to stay. Rather than investing into hardware, hospitals and health systems should invest into software and improved patient journeys, and make sure their infrastructure is adaptable to cope with extraordinary situations.

6. China is becoming a global leader in health innovation

Crisis accelerate prior trends, and the shift of power from West to East is happening at breathtaking speed also in healthcare. After some issues at the onset, China has handled Covid-19 much better than most other countries. Sure – a leadership with undisputed authority helps in such a situation. But many other countries have this and will not cope nearly as well.

In terms of digital health – with companies such as Ping An Good Doctor and WeDoctor both serving hundreds of millions of registered users – China has leapfrogged the rest of the world. While data protection poses a challenge (see point 8), the country is building the most innovative healthcare system in the world.

7. Nationalization of healthcare structures reduces efficiency

Covid-19 shows the fragility of global supply chains and lean production. As many governments prioritize populist initiatives over global collaboration, we must expect more regulations and protective measures. This will reduce efficiency: In approval processes, production and distribution.

8. Expect severe data breaches in the years to come

We currently have a data privacy crisis – governments, organizations and companies are accumulating highly personal data sets from citizens at unprecedented scale. It makes sense that preventing deaths is prioritized over data protection in the heat of crisis. However, as data sets composed of medical histories combined with rich behavioral data are hugely valuable, key players will have little incentive to change the status quo after the crisis is over. We need to expect massive data breaches and data-related scandals to bring this into equilibrium again over the years to come.

9.  Healthcare spending will keep increasing

A huge number of people have been employed to cope with the pandemic, and massive short-term investments are going into infrastructure. While the inflow of students, volunteers and retired healthcare workers will be temporary, the overall expenditure for healthcare will most certainly remain at a higher level after the crisis. Healthcare currently composes around 10% of global GDP (higher in developed nations, with 18% in the US at the top end): Expect this to keep growing at high speed.

But while many people suffer from high healthcare costs (and while spending does not fully correlate with outcome), this is after all a sign of the world’s growing life expectancy and quality of life.

10. Innovation down massively in the short-term, massively up in the mid-term

While innovative Covid-19 projects have spread up over the last weeks and months, healthcare companies around the world focus on keeping their P&Ls under control. As in other sectors, they are strongly challenged on the revenue, supply chain and productivity side. While R&D budgets of multinationals are under pressure in this environment, the situation for startups – which are the true innovators in healthcare – is even gloomier. Clinical studies are postponed, sales channels disrupted and financing disrupted. This will result in massive short-term destruction on the innovation side.

However, the digitalization and creative thinking that has been unleashed by Covid-19 will transform healthcare over the coming decade. There is no better time for entrepreneurs and creative minds