Healthcare – counting the cost

Companies like GSK and GE are focusing on health outcomes as a key measure of business success. Other companies would be well advised to learn lessons from their approach.

Andy Wright from GSK reminds us in Briefing’s ‘speaking out’ commentary this month that the Ebola outbreak is symptomatic of a huge healthcare deficit globally. GSK’s new approach to doing business – with pricing caps and profit reinvestment in the 49 poorest nations – marks a radical departure to business-as-usual. It deserves careful scrutiny by other companies, well beyond the healthcare sector.

Another big-name business that has embraced a new measure of success is GE. Its Healthymagination programme is investing $6 billion in bringing to market product innovations that deliver high-quality and more affordable healthcare. Anybody can do high quality at a price; the big prize here is lowering the costs of healthcare. Already GE has 100 validated products on sale.

Why does this matter? Good health costs money. Not surprisingly rich countries spend more: according to World Bank data, nearly $9,000 is spent on public and private health per capita in the USA, but less than $90 in India and many African countries. Even measured on ability to pay (as % of GDP), the disparity is marked – 18% in the USA, 9% in the UK, and 4% in India.

Whatever the wealth level or population size, lower costs simply mean that more people can get help. Think of the rising cost of the (tax-payer funded) NHS in relatively affluent UK. Any business that sets its goal as reducing healthcare costs is making a social contribution to one of the world’s biggest challenges. Couple that with a business strategy that grows market share and increases sales, and you have a classic win-win solution, for investors and for society.

In fact the win-win can go further towards sustainability, as there’s often a green dimension too. The price of much environmental damage shows up in healthcare costs. Think of the poor air quality in our big cities. The OECD puts the economic cost of outdoor air pollution in member countries at $1.7 trillion, from higher healthcare costs and increased mortality – about half of that is from road transportation alone. A company increasing the efficiency of its vehicle fleet doesn’t just achieve a CO2 benefit (and probably reduced long term running costs), it saves lives and cuts healthcare costs too.

The lesson for sustainability professionals trying to construct KPIs to measure their triple bottom line impacts – and perhaps tempted into the complexity of an E P&L (environmental profit and loss account) – is this:  look at using health as a proxy indicator, counting both costs and crucially benefits too.

This article was first published in Corporate Citizenship Briefing

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