Featured Story May 2018 - June 2018
The Health Sector Transformation: New Entrepreneurial, Financial and Societal Opportunities

By Dr. Emmanuel Alexandrakis, Senior Research Fellow.

The adoption of a policy philosophy that integrates society's dual needs for simultaneously addressing health needs of the population and economic growth requires a transformation process for being able to achieve more with less resources. Furthermore, the collaboration among all parties involved in the healthcare 'ecosystem', focusing on adequately financing patients' needs and supporting value-based therapeutical outcomes, is the prerequisite for success.

Such an approach is also a top EU priority (see Note 1) and Greece has all the necessary conditions to apply it. There is no other way out of the social and economic crisis Greece is going through than that of implementing win-win solutions that could optimize the capacity of the economy to exploit innovation and global trends and in parallel to serve social needs. And the health sector is the way to go!

A critical factor that is globally triggering the need for transformation is that healthcare expenditures are growing faster than GDP. According to estimated figures, global expenditures on health could rise from US $ 8 trillion in 2018 to over $18 trillion in 2040 (Global Burden of Disease Health Financing Collaborator Network, 2017). This increase in spending is forcing governments to use available financial resources in different, more efficient but also effective ways. But also, to find new models for collaborations (see fig.1.).

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Figure 1

Health systems financing transformation, however, requires many complex and politically sensitive decisions. Defining the right model that will address sustainable growth needs shall also be built on the grounds of innovation and political consensus. A health sector policy focus could offer both. 

Therefore, applied inter-disciplinary research shall address questions such as what is the appropriate split between the public and private sectors in providing healthcare and health insurance, how much choice should patients have, which health services should citizens be entitled to, at what cost, and at whose expense, and finally how can health system financing be sustainable.

A "health economy" focus could offer a solution because health innovation translates to growth (see fig.2). And, in turn, growth could support a healthier society.

Figure 2

Unlocking the potential for a strong healthcare sector in Greece is not only a driver for entrepreneurial growth, but could also serve as a stabilizing factor during recessions, while at the same time supporting people's prosperity and wellness. Therefore, adopting an approach that gives rise to what is defined as a "Health Economy" approach is in effect transforming a societal need into a development opportunity, constituting a win-win arrangement for both governments and citizens. What this requires is to strategically manage to functionally integrate medical and technological developments to address the challenges and compromise counter-forces in democracies. Increasing health awareness imposes pressure on political stakeholders, who are becoming more and more sensitive to these issues. Therefore, instead of viewing healthcare as a cost factor, we must view it as an investment. And there are measurable impacts of the Health Economy on economic growth, employment, and the health indices of the population.

The findings of the research conducted by Dr. Dennis A. Ostwald and Dr. Klaus-Dirk Henke at the Wirtschaftsforschung Institut - WifOR (see Note 2) on the German economy for the period 2005 - 2008, provide the theoretical background for adopting the new understanding of the health economy, as an integrated part of the healthcare system. In 2008, 1 out of 7 people were employed in the health sector, a total workforce of 5,6 million people. During that same period, exports of the sector represented 7% of total exports of Germany, a total value of 73 billion and the added value created was estimated at 224 billion, that is equivalent to 1/10th of the economy! In fact, the results demonstrated strong links of the health sector within the extended supply chain and this resulted in a strong indirect effect in production, earnings and employment of the related sectors, as well as a strong induced impact on consumption. Hence, in 2007, the total GVA (Gross Value Added) created by the health sector was 386 billion (214 billion due to its direct impact and 172 billion due to the indirect and induced impact by the related increased consumption). And, most impressively, for every two jobs in the health sector, an additional job was created in other sectors.

In a nutshell, innovation in the health sector has an overall (quantitative and qualitative) contribution to growth, employment and stability. And this is because the impact of innovation in the health sector is expressed throughout all the supply process. Therefore, investments in medical equipment, hospital and outpatient infrastructure, integrated care service provision, as well as soft parameters such as therapeutic and diagnostic protocols, Big Data and Real-World Evidence insights and the like are elements that generate multiplied contributions in the economy. All these elements of the healthcare value chain are where changes are taking place and these same elements are creating the entrepreneurial, financial and societal opportunities.


1.Global Burden of Disease Health Financing Collaborator Network (2017) "Future and potential spending on health 2015-40: development assistance for health, and government, prepaid private, and out-of-pocket health spending in 184 countries", The Lancet, 389: 2005-30, Published Online

2.IOBE - The Foundation of Industrial & Economic Research - (2014) "Strategy Report for the Pharmaceutical Sector in Greece", Aggelos Tsakanikas, Thanos Athanasiades, Yannis Giotopoulos, Efi Korra

3.Ostwald D, Legler B, Schw?rzler MC, Tetzner S. (2015) "Der ?konomische Fu?abdruck der Gesundheitswirtschaft in Mecklenburg-Vorpommern. Analyse der lkswirtschaftlichen Bedeutung f?r Wirtschaftswachstum, Arbeitsmarkt und Au?enhandel unter besonderer Ber?cksichtigung des Mittelstandes [The economic footprint of the health economy in Mecklenburg-Vorpommern. Analysis of the economic importance for economic growth, the labour market and foreign trade with a special focus on medium-sized enterprises]. Darmstadt: BioCon Valley GmbH;

4.http://www.bioconvalley.org/fileadmin/user_upload/Downloads/bcv/Veranstaltungsinfos/2015_GWiZ/ BCV_151204_GWiZ_Studie.pdf  (accessed 12 September 2017).

5.Ostwald, D. A. / Henke, K.-D. / Hesse, S. (2013), "Das Gesundheitssatellitenkonto: Der zweite Schritt: Wertsch?pfungs- und Besch?ftigungseffekte der regionalen  Gesundheitswirtschaft". In: Luthe (Hrsg.), Kommunale Gesundheitslandschaften, Band: Gesundheit / Politik / Gesellschaft / Wirtschaft.

1.At the EU level, the issue of healthcare and its sustainability are in the top of the Agenda. In October 2016, the Commission - European Policy Center issued a joint Report on 'Health Care and Long-term Care systems & Fiscal Sustainability, Good practices on improving the cost effectiveness of health systems'. Also, in the November 2016 there is reference in the Council Conclusions: "The Council CONSIDERS that achieving the twin aim of ensuring fiscal sustainability and access to good quality health care services for all, by improving the efficiency and effectiveness of health and long-term care systems, is therefore particularly important."

2.Research on the Health Economy and the contribution of the health sector in economies has been undertaken by Professor Klaus-Dirk Henke from Technical University of Berlin, who is also a long-standing member of the Scientific Advisory Board at the Germany Federal Ministry of Finance, and the Advisory Council for Concerted Action in Health Care, as well as by Dennis A. Ostwald, Chairman of the WifOR independent economic research institute in Darmstadt. Further insights in the research and published papers could be found on the site of Wirtschaftsforschung Institut (WifOR), an independent economic research institute. http://www.wifor.de/

Dr.Emmanuel Alexandrakis  is a Senior Fellow at MSL and an Adjunct Professor at the MBA International of AUEB, and Head of International Market Development at WifOR.