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Speech to Healthcare Congress in Auckland

Hon Tony Ryall
Minister of Health


Speech to Healthcare Congress in Auckland

As an American entrepreneur wrote recently... "The opportunities at the intersection of health and technology will enable humanity to create health and wealth on a global scale ... seizing huge business opportunities while generating tremendous positive social impact for everyone, everywhere".

That is the amazing opportunity before you and your ideas and your businesses. And that’s why this healthcare congress is so valuable.

Many people underestimate the importance of the health sector here in New Zealand. It amounts to one-tenth of the economy.

In other words, one in every ten dollars of economic activity in our country relates to the health sector. That’s more than dairy, more than meat.

There are at least 75,000 people employed directly in our $15 billion public health service. And we have a very vibrant private sector too… which is so visibly represented here today.

A recent NZTE survey of 84 local medical device and health IT companies suggests they earned revenue of close to $1 billion last year, with 6,000 staff.

We can be proud of the achievements of New Zealand health ventures such as Fisher & Paykel Healthcare who sell their products in more than 120 countries and employ almost 3,000 people, including 360 R&D staff, around the world.

Beyond this, a wide group of local health IT and medical device producers, have increasingly used home grown innovation and management expertise to develop technologies, products and services which benefit New Zealanders. These companies create employment, export markets and economic wellbeing.

Companies like Orion Healthcare based here in Auckland with over 1,100 employees in 17 countries. Their products and solutions are implemented in more than 30 countries, used by hundreds of thousands of clinicians, and help to facilitate care for tens of millions of patients.

And that business success goes beyond devices and IT. Twenty years ago hardly anyone had heard the names Ryman, Metlifecare or Summerset. Yet today these retirement village operators and aged care providers are worth a collective $6 billion on the NZ share market, and are caring for thousands of New Zealanders.

When you consider the global medical devices market is estimated at $300 billion, the opportunities to create wealth from health are huge. Health technology can be one of New Zealand’s export success stories of the next decade.

That's one of the reasons I've set up the Health Innovation Hub as a partnership between four of New Zealand's biggest DHBs: Auckland, Canterbury, Counties Manukau and Waitemata.

Established last year, it works to help grow New Zealand's health technology industry and to support the adoption of innovations developed within the public and private health sector.

The New Zealand Health Innovation Hub is unique because for the first time, it brings together the public health system and the entrepreneurial spirit of innovators and industry.

This is part of the government’s wider Business Growth Agenda.

Earlier this week Bill English and Steven Joyce launched the “Business Growth Agenda – Future Direction 2014 report” which outlines the significant progress the Government has made in creating the conditions for businesses to invest for jobs and growth.

It also outlines the Government’s future priorities in its work programme focusing on the six inputs businesses need to succeed and grow: exports markets, capital markets, innovation, skilled and safe workplaces, natural resources and infrastructure.

Interestingly a lot of the key areas identified in the recent NZTE report on the health technology sector.

Our results so far are reflected in strong growth, increasing employment, an improved trade balance, stronger productivity growth, and real wages rising faster than the cost of living.

The BGA Future Directions 2014 report outlines the Government’s next steps to encourage a diverse range of businesses to succeed and hire more people.

The plan is to help more Kiwi firms internationalise and sell their products in overseas markets; encourage innovation particularly in the hi-tech sector, make it easier to raise capital; lift young people’s skills and achievement; make workplaces safer; and continue to invest in quality public infrastructure.

The New Zealand economy is expected to grow strongly over the next year and perform better than many other major advanced economies. What the Government is very focused on through the Business Growth Agenda is how we convert a couple of years of good growth into a sustained economic lift in our economic performance that benefits the country in the long-term.

Opening up new market opportunities is fundamental to that. The benefits of a Trans Pacific Partnership will be substantial for our country. As is the enormous work our government and kiwi business are doing in China.

China is only 3% of the global healthcare market. China expects to treble its healthcare spending over the next six years to $1 trillion. At an estimated per capita healthcare spend of less than US$400, there’s plenty of opportunity (NZ estimate US$3,500!).

China’s urbanisation continues apace. As does it ageing and increasing prevalence of chronic disease. As it gets richer, the people are demanding better access to healthcare. With better and earlier diagnosis, then the numbers of patients requiring treatment and medicines will only increase exponentially.

The Chinese government is turning its mind to healthcare reform in order to mitigate this massive growth in spending. Pharmaceutical spending is one target area.

Considerable investment is going into developing primary care infrastructure, integration with hospitals, and training of the workforce. And there’s a desire for low-cost interventions that can do the most good as quickly as possible.

It is not surprising that many of the global health players are embracing China as not only a source of revenue, but as a base for manufacturing and research.

It won’t be long before China becomes our largest trading partner. This is why the National government puts such a huge effort into opening up markets and trading opportunities for New Zealand business.

Because the benefit is jobs and prosperity for all New Zealanders. And health technology has every opportunity to secure its share of that prosperity.

The other land of opportunity is the United States. The Affordable Care Act is driving a much greater focus on value and performance. It’s a massive opportunity for New Zealand. Payment systems are incentivising integration, the avoidance of waste, and innovation.

The United States medical technology spend is ten times that of China. And the Americans spend more than anyone else on healthcare. While it is highly regulated and quite expensive to do business in, no one can ignore the significant change in focus in the American health technology market.

Like the United States, and virtually all other health systems around the globe, we are facing three major challenges – the first financial, the second demographic, and the third patient expectations.

You’ll all be familiar with those major challenges.

Our plan to meet these challenges is built around better, sooner, more convenient care with all the elements that suggests of quality, timeliness and patients at the centre of care. And this makes sense.

We are living longer, more sedentary lives. This means more of us have chronic disease like diabetes, asthma, dementia and cancer. The sooner clinicians can detect, treat or prevent these conditions, the better they can reduce the significant burden these conditions put on patients and the health system.

Our strategy to do this is clinical integration – providing joined-up care across primary and secondary services. With resources and interventions flowing to where they are most effective, so patients get their care sooner and closer to home.

A huge amount of work is happening around the country as community and hospital clinicians work together to redesign how and where care is provided. Clearly if more care can be provided upstream -in the community rather than hospitals - then that contributes to better health for the patient and the overall financial health of the system.

So our public health service is changing the way it delivers care. Step by step. Year by year. And it will look very different in the next ten years.

The change is a result of three mega-trends in healthcare across the globe as suggested by health futurist Lord Darzi: the shift of healthcare upstream closer to where patients live; the increase in self-care; and the rise of personalised medicine.

The increasing prevalence of chronic conditions I spoke about earlier means healthcare is moving upstream closer to where patients live, and built on a stronger primary care system.

He says patient care will be less about hospital specialists and more about nurses and allied health professionals delivering and supporting care in patients’ homes and communities.

Shortages of skilled staff in some countries are seeing their health systems move much more rapidly to this new environment. Examples include the expanding role of community pharmacists to nutrition and exercise advisors.

We are already seeing a smarter use of allied health professionals in supported post-hospital discharge particularly in Canterbury and here in the Waikato.

And many of you will know about the interesting work underway with the Steady As You Go programme involving phys ed students, physios and OTs in the lower South Island.

We are also seeing a move to what’s called self-care - patients taking responsibility for more and more of their own health care and management. You’re seeing this happen in banking and airlines - the customers using technology to do more the work that the banks and airlines used to have staff to provide.

Already patients are using technology here in New Zealand which allows them to monitor their own vital signs and stream this data on their mobile phones to their health professionals.

We’ve got some fantastic IT and medical device manufacturers here who are making this happen.

All the evidence shows that improved patient self-care, or expert patients as some call it, does lead to better outcome for patients with chronic disease - and the patients are happier too.

Internationally it’s clear that people are prepared to pay for technologies – be they online services, apps or nutritious foods - that support healthy living and allow them to take responsibility for their own health.

Finally, there is the trend towards personalised medicine. As Darzi points out, knowledge of the human genome and other bio-markers will transform healthcare as diagnosis, treatment and prevention will all be shaped around an individual patient’s specific genetic make-up.

In many ways this will be empowering for patients as they will have a better understanding of their risk profile and what they can do to prevent illness. It also raises a whole lot of ethical issues.

One of the constraints on this trend will be the ability of health systems to afford what are likely to be very expensive personalised medicines. This in turn may limit pharmaceutical companies’ ability to advance this frontier further.

New Zealanders have every reason to be optimistic about our country’s prospects.

Under John Key’s leadership, this Government, alongside households and businesses, has managed New Zealand through some of the most significant challenges we’ve seen in generations.

As Bill English has said providing we stay the course, we will have a faster-growing, more sustainable economy. Wages will continue to increase faster than the cost of living and tens of thousands more jobs will be created every year.

We will provide more elective operations, we will help more New Zealanders off welfare and into work, and the crime rate will continue to fall.

We’re on track for a surplus next year and even better times in subsequent years. And we’ll soon be able to start rebuilding our net financial assets.

The alternative is to put all of this at risk at the election and radically change direction.

We know what a change of direction looks like. We’ve been there before: higher taxes, more bureaucracy and a focus on what doesn’t matter.

We now have the opportunity to significantly improve New Zealand’s economic fortunes and provide a better future for New Zealand families.

Provided we stick to our plan, I’m confident that the future of our health service and our country will be incredibly bright indeed.


ends

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