Apr 16 2020
Amid the global health crisis, IBISWorld has tapped the expertise of our global research team to better understand how healthcare systems are faring amid COVID-19. Comparable statistics are used to gauge each individual country’s preparedness for the ongoing pandemic. Additionally, IBISWorld covers recent government responses to the crisis in the form of healthcare support programs and economic stimulus. Comparable demographic trends are also used to add further context to the potential impact of COVID-19 on a country’s healthcare system. Overall, healthcare systems are experiencing varying levels of strain amid rising infection rates. Nevertheless, government responses have been robust and are expected to bolster their respective healthcare systems in the coming months.
The COVID-19 pandemic has posed a significant challenge for the Australian economy, most notably its healthcare sector. Even with a robust healthcare system and strong social security net, how prepared is Australia for the ramifications of COVID-19?
Australia spends more than $180.0 billion on its healthcare system annually, equivalent to approximately 10.0% of GDP or $7,485 per capita. Prior to the coronavirus outbreak, respiratory diseases represented less than 5.0% of total health expenditure in Australia. However, this is expected to be significantly higher in 2019-20 and 2020-21, as resources across the country are being diverted to treat and contain the virus.
Australia’s first line of COVID-19 defense has been general practitioners, who are engaging with patients and conducting tests to detect COVID-19 infections. There services are largely funded by Australia’s Medicare system, which contributes more than $9.0 billion to the General Practice Medical Services industry in Australia (IBISWorld report Q8511). Including medical practitioners working in hospitals and outpatient services, there are 3.94 medical professionals for every 1,000 people in Australia.
Hospitals represent the bulk of government healthcare spending and will be a key element in treating and containing COVID-19 across the country. In 2019-20, Australia has an estimated 682 private hospitals with 1.4 beds per 1,000 people, and 675 public hospitals with 2.5 beds per 1,000 people – together, the country has 3.9 hospital beds per 1,000 people. However, less than 20.0% of public hospitals have a specialised ICU, which is required for caring for the most critically ill COVID-19 patients.
The private sector largely handles elective surgeries, but the unprecedented nature of the pandemic has resulted in a joint public-private partnership for the duration of the crisis, with the federal government committing to paying for half the costs for private hospitals to provide services.
Australia’s demographic has leaned toward an older population profile over the past decade, particularly as the baby-boomer generation ages. Those over the age of 60 currently represent 21.4% of the population, causing considerable concern for Australia’s healthcare system in relation to COVID-19 since these individuals have the highest risk of becoming critically ill from the virus.
The Australian government has responded to the pandemic by restricting both internal and external travel. The Australian border has been closed to noncitizens to slow the rate of infection from external entrants. Social distancing measures have been enforced to reduce spread within communities and isolation has been encouraged for the population except for necessary travel, such as grocery shopping or exercise. The exact level of restriction varies slightly between state and territory. To maintain operations in private hospitals amid growing preference for public hospitals during the pandemic, the federal government has committed to paying for half the costs for private hospitals to remain open and assist in the treatment and containment of COVID-19.
Is Australia Prepared?
The Australian healthcare system is relatively well prepared under current trajectories of infection, although measures to flatten the curve will need to be sustained to prevent the system from being overwhelmed.
COVID-19 poses a significant health and economic challenge for New Zealand, particularly for the most vulnerable members of the population. Families of lower socioeconomic status are particularly vulnerable due to the economic effects of the virus. How prepared is New Zealand for COVID-19?
New Zealand spends a much smaller amount on its healthcare system than Australia. Vote Health is the largest source of funding for New Zealand’s healthcare system, and 75.0% of this budget is allocated to funds for New Zealand’s District Health Boards, which are responsible for dividing up the funds to health services across the country. The New Zealand central government spent $19.3 billion on health-related items in 2019-20. New Zealand has approximately 2.6 beds per 1000 people.
NZ’s government has taken swift action against the virus, choosing to enact strict lockdowns to contain the spread of the virus. If the strategy proves successful, it could place New Zealand in a strong position both health-wise and economically in the coming months to contain the virus and return to business-as-usual faster than other nations.
Is New Zealand Prepared?
The New Zealand healthcare system is robust, and the relatively low rate of infection due to the stringent lockdown measures present a low risk of the system being overwhelmed. However, as COVID-19 has quickly developed in other nations, NZ’s healthcare system is able to handle a higher rate of cases if infection rates grow.
The first two COVID-19 cases in the UK were recorded on January 29; case numbers have since snowballed despite enforced social distancing and the closure of nonessential establishments. The NHS covers all UK citizens, with general taxation contributing the majority of its funding. However, growth in NHS has been slow in recent years, resulting in a growing private sector. As the UK faces an increasing rate of transmission and hospitalisation, with the Prime Minister himself having been treated in intensive care, how well prepared is the country’s health sector for handling the COVID-19 pandemic?
Although UK healthcare expenditure has increased over the past five years, it has fallen as a share of GDP. ONS figures show that there was a 3.3% increase in spending over 2017, equating to £2,989 per person, but healthcare spending has fallen from 9.8% of GDP in 2013, to 9.6% in 2017. Per capita healthcare spending in the UK was marginally below the median spend of OECD countries, but the country has the highest rate of health expenditure paid for through public revenues, at 79.0%.
Opportunities for private practitioners have arisen in the face of long NHS waiting times, which have significantly exceeded targets. However, private healthcare provision may marginally offset pressure on NHS services during the pandemic, as the government has struck a deal with private healthcare providers to assist in providing care for COVID-19 patients. However, as the functionality of the NHS dominates the public eye in the final quarter of 2019-20 and into 2020-21, healthcare expenditure is expected to increase as the NHS scrambles to cope with rising demand. The government initially made a £5.0 billion fund available to the NHS and public services to support efforts to fight COVID-19, and has promised to provide however much is needed.
General medical practitioners (Q86.210) have felt the pressure as government funding has slowly tapered off. Approximately £9.3 billion was paid across 7,279 general practices in 2018-19, equating to £154.81 per registered patient. These amounts have increased 13.4% and 8.5%, respectively, since 2015-16. The UK has 2.8 doctors and 7.8 nurses per each 1,000 inhabitants in 2019. The OECD has recognised that the UK has comparatively high spending on healthcare but fewer nurses than other OECD countries. The government has also relied on student doctors and nurses that have been placed in hospitals; there are 12.9 doctors and 31 nurses per 100,000 people in the UK.
General practitioners are resorting to virtual appointments with patients to reduce the risk of further transmission. Although such consultations are not as effective as those carried out in person, the rate of virtual patients is expected to increase. In 2019, the OECD recognised the effectiveness of primary care within member countries by listing avoidable asthma or chronic obstructive pulmonary disease (COPD) admissions per 100,000. The UK reached 281 in 2019, whereas OECD countries averaged 225.
The UK has 1,257 hospitals (Q86.101), including both NHS Trust-managed and private hospitals. While England comprises 84.0% of total UK population, it possesses only 68.0% of hospitals. The share of hospitals in Scotland, Wales and Northern Ireland either far outweigh their population or match it. To improve the distribution of NHS hospitals within England, Boris Johnson gave the green light to start 20 NHS building projects in August 2019; £850.0 million was made available to pay for the construction of new wards, intensive care units and diagnostic centres.
Up until 2019, the number of hospital beds had been consistently falling, with available bed space more than halving between 1987-88 and 2018-19, from 299,000 to 141,000. NHS figures have reported the number of overnight beds has stabilised in 2019. The UK has fewer acute beds relative to the population than many other comparable health systems, at 2.5 hospital beds per 1,000 people in 2017. However, an aging and increasingly vulnerable population has raised demand for NHS services. Over 2018-19, general acute bed occupancy averaged 90.2% and exceeded 95.0% in winter as the system displayed symptoms of demand overload.
The UK population is expanding and is forecast to reach 67.0 million in 2020. Additionally, people are living longer, with UK life expectancy reaching 81.3 years in 2019. The percentage of people aged 60 and over increased to 23.8% in 2018. With 92.0% of the recorded deaths due to COVID-19 in England occurring with people in this age group, the UK is in a more vulnerable position than it might have been a decade ago.
NHS England states that roughly one-quarter of the population, and two-thirds of people aged 65 or over, have two or more long-term medical conditions. Depending on the nature of these conditions, a person may be more exposed to COVID-19. Air pollution and smoking both represent an increased risk due to the respiratory nature of COVID-19. The OECD has reported that 17.2% of the UK population aged 15 and over are daily smokers, whilst air pollution results in the death of 32.1 people out of 100,000 – both of which are considered below the OECD average.
Although the UK government was initially slow to react to COVID-19, the interventionist steps taken have been drastic. Widespread closures of businesses have been enforced to prevent social gatherings, and people have been instructed to isolate within their homes except for leaving to shop and exercise.
The NHS has enlisted all English private hospitals to help treat coronavirus, taking on work which the public organisation cannot carry out. Under the terms agreed by the government, no profit will be derived from any services, with operators receiving at-cost payment. The deal is expected to provide 8,000 more hospital beds, an additional 1,200 ventilators, more than 10,000 nurses and 700 doctors.
The sector is at severe risk of staff shortages, as medical staff that catch the virus will have to self-isolate for 14 days. In response, more than 65,000 retired doctors and nurses in England and Wales have been asked to return to the NHS, and anyone in Scotland who has left the medical profession within the last three years is being asked to return. Additionally, Allied Health Professionals (AHP) have been encouraged to return to work, and unqualified AHP students have been asked if they would like to undertake paid employment with the NHS to further relieve the strain.
To meet the expected wave of patients needing to be hospitalised, field hospitals have begun to open in different locations, such as London’s Nightingale Hospital and Birmingham NEC Nightingale Hospital.
With only 8,000 ventilators on hand, several UK manufacturers have made ventilator production a priority. Additionally, the government has committed to increasing testing capacity to 100,000 per day by the end of April.
Is the UK Prepared?
With the sudden onset of COVID-19, healthcare must be provided to all who are in need at the lowest possible cost available as the UK economy strives to remain efficient. The pandemic has provided the greatest example of the importance of state-provided healthcare. The UK government has reversed previous intentions by opening the coffers to the NHS, commandeering private healthcare organisations to fight the oncoming tide and save lives. However, the question remains: have they reversed enough of their previous actions at a fast-enough pace?
The first confirmed case of COVID-19 occurred in Germany on the January 27. In mid-March of 2020, numerous measures were introduced to slow the spread. This pandemic poses a major challenge to both the German healthcare system and the German economy. Is the German healthcare system prepared for the outbreak of COVID-19?
The Federal Statistical Office collects data on health expenditure every two years, so the latest available data is from 2017. In 2017, Germany's healthcare expenditure amounted to €375.6 billion, an increase of 4.7% over the previous year, accounting for 11.5% of GDP. Per capita expenditure was therefore €4,544. About 4.9% of these costs were attributable to respiratory diseases, the share of which is expected to rise sharply in 2020 due to the outbreak of COVID-19 and is also likely to cause a significant increase in health expenditure.
If a COVID-19 infection is suspected, inhabitants are advised to firstly contact their general practitioner (GP; Q86.21DE) by telephone, who will then decide accordingly whether a test should be carried out. In Germany, only 16.7% of doctors work as GPs, which is 25.0% below the EU’s average, with an exceptional lack in rural areas. In total, Germany has 4.3 doctors and 12 nurses per 1,000 inhabitants. The number of nurses is significantly higher than the EU’s average.
More than one-quarter of healthcare expenditure is accounted for by 1,942 hospitals, the share of which is expected to increase in the current year. In recent years, there have been repeated calls to reduce overcapacity in hospitals to avoid misallocation of resources, but this debate has changed with the outbreak of COVID-19. Germany currently has 6 hospital beds per 1,000 inhabitants and 33.9 intensive care beds per 100,000 inhabitants (0.3 intensive care beds per 1,000 inhabitants).
A major challenge, however, is personnel capacity. Relatively few skilled workers are available despite an above-average number of doctors per 1,000 inhabitants. With the additional expansion of capacity due to COVID-19, the minimum nursing staff limits introduced last year have therefore been temporarily suspended and medical students in later semesters are currently being recruited for deployment in hospitals.
Demographic shifts are already well underway in Germany, with the proportion of older people in the population constantly growing. The proportion of people 60 and over is 28.2%, while 6.5% of the German population is already over 80. Older people and those with pre-existing conditions are particularly at risk and need special protection from COVID-19, as its course is often much more severe in older generations than in younger, generally healthier generations.
To contain the virus, the federal government has introduced a nationwide ban on gatherings and has closed numerous shops, leisure facilities and cultural institutions, as well as schools and day-care centres. The borders to many European neighbours have also been closed and the government has recently proposed stricter entry regulations. The concrete scope of the measures varies between German states and municipalities, as some of them have taken even stricter measures, depending on the extent of the COVID-19 outbreak in the respective region.
Hospitals have been urged by the government to postpone scheduled elective surgeries as much as possible to keep beds free for COVID-19 infected patients. To protect the hospitals from resulting financial issues, the government passed the Hospital Relief Act; therein, hospitals will receive a compensation payment of €560.00 for each patient.
Is Germany Prepared?
The German healthcare system seems to be relatively well prepared for COVID-19, with death rates relatively low at the moment. So far, however, there is relatively little knowledge regarding COVID-19 prevention or treatment, making healthcare work difficult and uncertain.
Per capita health expenditure in the United States is expected to amount to $10,612 in 2020, according to IBISWorld estimates, substantially higher than comparative per capita health expenditure of other developed countries. The exorbitant costs of healthcare in the United States stem from its complex, hybrid public-private payer system that largely depends on employer-provided health insurance.
The implications for the US healthcare system under the current COVID-19 outbreak are dire. Concerns regarding capacity and economic support have come to the forefront of national discussions. Through this overview, IBISWorld seeks to explore the preparedness of the US healthcare system to handle the outbreak.
The healthcare capacity of the United States can be described as adequate on a per capita basis when taking into account the country’s geographic dispersion and percentage of population over 60 years of age. IBISWorld estimates there to be about three medical practitioners and three hospital beds per 1,000 individuals in the United States. While lower than other OECD countries, including those in this report, the physical capacity of the US healthcare network has expanded in recent years, according to Census data. This has been more prevalent in some areas of the healthcare sector than others. In particular, both the number of enterprises and establishments have increased in both 2018 and 2019 in the Hospitals industry (62211). Moreover, US capacity for specialty medical care involving chronic illnesses and severe diseases covered under the Specialty Hospitals industry (62231) has outpaced growth in the general Hospitals industry.
Healthcare capacity is abundant in areas of the country with high densities of individuals aged 60 and older. This helps to mitigate the potential strain on the US healthcare system as the virus has a disproportionately more severe effect on older individuals. However, immunocompromised individuals are more dispersed and are at equal or greater risk compared with the elderly. IBISWorld estimates individuals aged 60 and over to account for 17.0% of the total US population, placing it at a slightly lower risk than other countries with higher populations of elderly individuals.
Challenges and Government Response
COVID-19 has strained healthcare capacity in areas of the country considered hotspots for the virus. Nowhere in the country is this more prevalent than in New York. The state continues to contend with the rapid spread of the virus and surging hospitalization rates. However, New York’s healthcare capacity has remained resilient as local, state and federal aid has bolstered capacity by converting convention centers, hotels and even an area of Central Park into temporary hospitals. In other parts of the country, particularly Washington and California, states have allowed bankrupt hospitals to reopen to increase capacity. Overall, the numerous measures taken to increase healthcare capacity in New York, Washington and California serve as models for potential severe outbreaks in other parts of the country and emphasize the impact of rapid mobilization.
CARES Act & US Preparedness
Signed into law on March 27, the $2.1 trillion Coronavirus Aid, Relief and Economic Security (CARES) Act provides significant relief to the US Healthcare sector. The most significant provisions include:
- $100.0 billion in grants to hospitals to cover healthcare-related expenses and lost revenues.
- $27.0 billion to replenish the national stockpile of medical equipment and support research and development of COVID-19 vaccines, therapeutics and diagnostics. Included in this allocation is $3.5 billion of funding to the Biomedical Advanced Research and Development Authority to fund the development and manufacture of biomedical treatments (IBISWorld report NN001).
- $4.3 billion in grants to the Centers for Disease Control to facilitate testing and current federal, state, and local mitigation efforts.
The total number of hospital beds in the United States is about 924,107, according to the American Hospital Association. Therefore, the $100.0 billion in hospital relief will average $108,213 per hospital bed. Currently, the $100.0 billion is in the process of being distributed on the basis of a hospital’s share of Medicare fee-for-service payments. As of April 8, an initial $30.0 billion is expected to be released to the nation’s roughly 6,000 hospitals. Going forward, the gradual distribution of federal aid to hospitals will greatly increase the nation’s preparedness and support the continued fight against COVID-19.
Despite its lauded single-payer healthcare system, the COVID-19 outbreak is projected to pose a significant health and economic challenge to Canada. This is especially true when it comes to the most vulnerable segments of the Canadian population. Seniors in Canada are a rapidly growing portion of the population, with 24.2% of Canadians being over the age of 60. How prepared is Canada for COVID-19?
While Canada spends less on healthcare than the United States, every Canadian with legal status is eligible for healthcare coverage and is able to choose any physician or hospital without facing a complex bill. This enables Canadians to seek care imminently. Nearly all Canadians have a primary care doctor, yet Canada’s system is not without its faults, as Canada has 2.6 medical practitioners and 2.5 hospital beds per 1,000 people; this is lower than most other OECD countries, including the US, the UK and Germany. Hospitals (62211CA) are therefore overcrowded and emergency departments are overextended, resulting in longer wait times and more limited resources to treat COVID-19 patients.
The government has acted quickly to combat the spread of the virus, committing more than $1.0 billion to expand public health measures. Additionally, the government allocated $50.0 million to support initial actions against the virus, which included shoring up border and travel measures and granting support to the Health Portfolio Operations Centre and the National Microbiology Laboratory. Furthermore, the Government of Canada invested $7.1 million toward the repatriation of its citizens and donated $2.0 million to the World Health Organization to fund WHO’s COVID-19 efforts. The US-Canada border closed in late March, and multiple provincial governments including Ontario, Quebec and Alberta have mandated the closure of all nonessential businesses to contain community spread of COVID-19.
Is Canada Prepared?
The Canadian healthcare system’s relatively low rate of infection does not present a high risk of the system being overwhelmed presently. Nevertheless, the ongoing COVID-19 pandemic is evolving quickly. To this end, if infection rates grow, Canada’s system ultimately stands a high chance of experiencing significant strain.