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How to Reduce the Cost of Healthcare? Market Trends and Strategies Explained

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Topics under Managed Care

Global Managed Care Industry Report

The managed healthcare services industry is recording a higher rate of growth throughout developed nations, reports Global Industry Analysts. Market growth is being driven by falling premiums, the significant size of Managed Care Organizations (MCOs), and agreements between managed care providers and employers making discounted rates available.

People are opting for managed care plans due to greater awareness regarding the benefits of a preventive approach to healthcare, pressure to cut costs and a trend toward evidence-based medicine.

MCOs began in the US and continue to spread to other areas. As the US managed healthcare market is near saturation, MCOs are concentrating their efforts on underdeveloped markets such as Latin America.


Because of the rising cost of healthcare, cost cutting initiatives are increasingly being introduced in the managed healthcare industry, along with generic use. Datamonitor underlines the difficulty that has thereby arisen for sales representatives trying to market more expensive branded drugs to medical professionals. It is necessary to implement more efficient use of marketing resources, recognize important stakeholders and optimize sales. Due to a trend toward new stakeholders such as state bodies, the market is witnessing a shift from a sales representative approach to a key account management approach. The pharmaceutical industry has been using eDetailing as a marketing tool, though the practice has not been adopted across the board mostly because it is difficult to gauge return on investment.

Technology is playing an increasingly central role in the healthcare industry. According to TechNavio, nations such as India and China are using IT to automate healthcare services, store medical records in digital format and connect medical devices. Varied software applications are facilitating the optimization of healthcare business processes, with shared services and mobile technology set to play an important role moving forward.

The highest rate of IT spending in the healthcare industry is being witnessed in China and Australia, with IT spending in many Asian countries unchanged by the economic recession, using state and public funds to fund the largest part of IT spending. Availing of IT in the healthcare sector boosts connectivity and data management, providing safe access to patient data. IT demand in healthcare will continue to be driven by a patient-centric approach to healthcare in hospitals, demand for patient safety and the need to manage resources more efficiently.

State funding toward the automation of the healthcare delivery services will continue to fuel the adoption of IT in healthcare. Some obstacles to IT use in the sector include integration policies, cost in terms of information systems, after sale support and maintenance, and regulatory compliance.

Regional Markets

India: Health insurance represents the second-largest segment in India’s non-life insurance industry, according to RNCOS. Having recorded strong growth over recent years, it is expected to continue growing over the coming years, partly due to public and private insurer deployment of schemes to avail of insurance market potential. India’s health insurance industry is fuelled by increasing healthcare costs and rising awareness. Much of the market’s growth has been facilitated by state-sponsored health insurance initiatives. Both private and public insurance providers are introducing individual and family coverage for chronic conditions such as stroke, kidney failure and heart failure. Insurers are also catering to the country’s HIV/AIDS sufferers.

Europe: The EU is witnessing a combination of new funding sources and cost reductions as ways to optimize the region’s healthcare budget. According to Business Insights, almost 85 million Europeans have private health insurance, with Germany leading with over 22 million insured, followed by the Dutch, exceeding 16 million private health insurance holders. Private insurance healthcare benefits represent less than 10% of overall EU healthcare expenditure. Close to 95% of France’s population holds complementary health insurance, and the nation has close to 900 private health insurers, the most of any one EU country. Other countries have far less private insurers, with just over 45 in Germany, followed by 30 in the Netherlands and under 30 in the UK.

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