Question

Singh & Shi outline in Chapter #14 eight main forces that will determine the future change in healthcare in the U.S. Which do you consider the most important or fundamental in impacting future change? Why?

Answer 1

Answers :

In Singh and Shi chapter 14 of book , Social and demographics is the most important and fundamental in impacting healthcare future change.

The future of demographics and social change

Changes in global demographics (world population, density, ethnicity, education level and other aspects of the human population) will bring about significant social change, and therefore challenges and opportunities, for both government and business. This megatrend underpins other structural shifts, such as technological development and shifting economic power. While the changes will vary by region, they will have a profound effect on local and global markets and societies.

The impact

There will be many more people in the world

According to the UN, the global population is forecast to increase by over 1 billion by 2030, with most of this growth coming from the emerging markets. By 2050, the UN estimates that 80% of the global population over the age of 60 will be in countries that are currently deemed to be ‘less developed’[i].

An ageing population

Japan is the only country in the world where 30% of the population is over the age of 60. The UN’s latest demographics report forecasts that, by 2050, this will be the case in 55 countries. People will be living longer in retirement, which will result in the need for large-scale changes in government policy. This will also create a strain on healthcare services and providers, with many nations enforcing laws to ensure the elderly are properly cared for.

A global retirement savings gap

According to analysis by the World Economic Forum (WEF) the retirement savings gap across eight major economies is growing by USD$28 billion every 24 hours and could reach USD$400 trillion by 2050 – around five times the size of the global economy today.

Producing fewer children

As the graph above shows, we’re having fewer children – particularly in wealthier and educated sections of society. This potentially has far-reaching consequences for business, including lower productivity, less labour-force participation, and less investment growth. Younger generations will be increasingly burdened with the expectation of looking after the elderly, which in turn could further reduce productivity.

Here are some of the key changes that may impact investors in the medium to long term:

Healthcare spending

In the U.S. alone, healthcare spending is set to rise by 8% of GDP each year between now and 2040. That’s around USD$3,400 billion every year.

Pension income solutions will increase in importance

There will be a renewed focus on saving for retirement and finding effective ways of drawing an income when people retire. As a result, there could be a greater need for financial help, and the rise of robo-advice solutions.

Replace people with robots

As populations age, it becomes increasingly likely that businesses will use technology to plug the shortfall in labour supply. Robots are more productive (they don’t sleep, get sick or need performance reviews, although they may have technical problems). As a result, there will be a greater need for skilled jobs such as data scientists.

Consumer preferences are changing the food industry

Consumers are increasingly focussed on what they eat, how they are eating it and how it is produced; creating significant changes in the food supply chain. For instance, organic foods sales in the U.S. has risen 224% from 2005 to 2016. Fresh food is being preferred over processed foods and products with specific health related benefits, such as avocados and berries, have seen outsized growth. Consumers want their food to be more convenient, resulting in more online delivery, meal-kit solutions and convenient snacking options at supermarkets.