Book Chapter from: The INSEAD-Wharton Alliance on Globalizing: Strategies for Building Successful Global Businesses (Cambridge: 2004)
Is the global healthcare industry drawing together, or coming apart? For many players, more integrated markets could provide opportunities for more efficient global operations. But if companies are increasingly forced to adapt their business strategies to particular conditions in most or all of their markets, costs tend to mount and lower returns on investment may make globalisation far less desirable.
The Novartis Chaired Professor of Healthcare Management Thomas D'Aunno and Professors Lawton Burns and John Kimberly of the Wharton School offer a broad examination of the issues that are encouraging or inhibiting globalisation of various types of healthcare services. It has often been argued that providing care is essentially a local activity. The authors cite some of the many US-based hospital systems that have unsuccessfully tried to export their business models. But pharmaceutical and medical device companies have generally managed to globalise various key operational components far more readily.
The chapter considers the major factors promoting globalisation in the health sector. These include the rapid spread of diseases and rise in numbers of elderly in many countries; rising costs of care and pressures for cost containment; increasing consumer activism globally; and the spread of management and regulatory practices.
On the inhibiting side of the equation, certain peculiarities of individual nations are impossible to overcome by attempting to apply models developed in other markets. National attitudes towards access to services, the developmental histories of healthcare systems, differences in spending levels, and other variables tend to inhibit the globalisation of both players and practices. Even pharmaceutical companies, which generally may have relatively far more opportunities for globalisation, cannot escape addressing varying and complex regulations and cultural norms in each of their markets.
The authors also consider the "dark side" of globalisation, from "tourist healthcare" in Thailand, to the harvesting of human organs from prisoners and the spread of HIV-infected blood from peasants in China. They also critique the inertia inherent in healthcare systems in various countries. Both physicians and the various professional groups that tend to dominate healthcare systems' value chains are often very unlikely to want greatly to disturb the status quo.
D'Aunno, Burns and Kimberly conclude with a discussion of the variety of implications that the forces affecting global divergence and convergence may often have for managers leading multinationals involved in healthcare. These include taking a more complex view of global markets; examining opportunities for market entry; carefully considering the costs of adaptation, and trying better to understand some of the contradictions involved -- especially the universal contradiction of consumers increasingly demanding higher quality and safer care at lower costs.
Cambridge University Press, 2004