Next week I shall be speaking at the Future of the Pharmaceutical Benefits Scheme Summit in Sydney. I was invited to speak at this conference because of my background having been in clinical medicine as well as being involved in the pharmaceutical industry for many years.
I’ll be speaking alongside leaders of government, pharmacy, CEO’s of pharmaceutical companies, as well as some of the leading academics in this space and I am pretty excited about this. Having worked mostly within the Small-to-Medium Enterprise arena for the last 4 years, this seems a little like going back to ‘play with the big boys’.
It is an honor to be asked for an opinionon the future shape of the industry. You may be aware that in Australia the government funds pharmaceuticals via the Pharmaceuticals Benefits Scheme (PBS). This is a payment scheme that’s seen significant price erosions particularly in the last few years where spending on medicines has declined significantly in order to save the federal government’s tight budget.
The January 2014 Productivity Commission report shows that government expenditure on the PBS in 2012 and 2013 was actually lower than the preceding four years. In fact, the Department of Health’s estimates for 2013-2014 show that PBS spending for the years 2016-2017 will almost be $4B lower than forecast in last May’s budget which shows that there’s incredible savings being made in the pharmaceutical sector.
So what does this mean for the Australian people?
Firstly, we therefore have less spending on bringing in new medicines into the country but not only that, the prices of medicines whether they are the innovator pharmaceuticals or generic medicines are also decreasing. This has an impact on the profits of pharmaceutical companies and pharmacies who now have to look at other ways of developing revenue and continuing to be sustainable.
I only recently interviewed Prof. Ian Frazer, “Australian of the Year” and CEO of the Translational Research Institute, a cutting edge research institute located in Brisbane. Whilst we discussed many issues in our meeting, Prof. Frazer pointed out that having a good healthcare system involves utilizing resources efficiently.
He even went on to say that managing government healthcare is like managing a business and we do need better business models in order to deal with our healthcare more efficiently.
Ian reinforced that “we can’t just manage healthcare and decide on treatments based on costs as some treatments are more expensive but they deliver better patient outcomes. At the same time we need to be equitable to everyone in the community such that everyone has access to these treatments which means we need to allocate resources effectively. We can’t just put away treatments but we do have to make decisions on what we should and shouldn’t treat based on dialogues and discussions with the public.”
Prof. Frazer even went on to say that a good healthcare system is ultimately about changing people’s behavior and getting people to be more responsible for their own health.
The same is also true if you are managing your own healthcare business or an organization with a social cause. I recently coached a CEO of a pioneering new organization called Humanity in Business which has an intention to educate other CEOs and senior leaders on business leadership based on values.
Humanity in Business is an organization that is keen to develop better leaders in business by creating a value-added program with a strong business model for this social purpose such that it can be sustainable over the long term. Its CEO, Muneesh Wadhwa was challenged with trying to figure out this business model and approached me for advice.
Here’s what he had to say after I spent some time coaching him and his organization through these challenges:
“I found Avi’s insights into business strategy extremely relevant and practical. He has a great understanding of the services industry and challenged me to create an offering which will add value to my clients and to my business.”
So there you have it, within the context of a conference, an interview with Australian of the Year or speaking to a CEO of a pioneering organization with a social purpose there is a great need to be able to better manage resources more effectively and create business models that are sustainable in order to benefit the broader population.
If you would like to have a complimentary consultation with me and help you figure your business model out with your organization, I’d be more than happy to hear from you. Simply send an email to firstname.lastname@example.org.
Love your success, health and happiness,
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Dr Avi specialises in insights and strategies to improve patient and customer experience.
Contact: +61 2 8091 0918