Bain: Investing in health creates competitive advantage

23 February 2015 4 min. read

Healthy populations can create competitive advantages for economies, a newly released report by Bain & Company and the World Economic Forum shows. While unhealthy people put a strain on economies, healthy people result in higher productivity and lower healthcare costs. According to the researchers, economies should increase the number of ‘Healthy Life Years’ of their population by investing wisely while taking into account the 9 key inflection points that can impact an individual’s health.

Non-communicable diseases
Non-communicable diseases (NCDs), also known as chronic diseases, are diseases that are not passed on from person to person. There are 4 main types of NCDs: cardiovascular diseases, cancers, chronic respiratory diseases and diabetes. Unhealthy lifestyles, including the use of tobacco, physical inactivity, the harmful use of alcohol and unhealthy diets, increase the risk of an NCD.

Every year, non-communicable diseases kill 38 million people and sicken many more, putting a strain on the global economy. According to the World Economic Forum (WEF) and Harvard School of Public Health, the cumulative output lost between 2012 and 2030 as a result of NCDs and mental disorders could be as high as $47 trillion.

Investing in health creates competitive advantage

Consulting firm Bain & Company, in cooperation with the WEF, recently released a new report titled ‘Maximising Healthy Life Years: Investments that pay off’. In this report, the researchers find that in this time of slow economic growth and increased competition, “healthy individuals and healthy populations can create a competitive advantage through increased productivity, reduced healthcare costs and overall higher levels of well-being.”

To create these healthy individuals and populations, economies can no longer see health as a ‘cost’, but rather as an ‘investment’. Countries should invest in maximising the number of ‘Healthy Life Years’, described as “a year of physical, mental and social well-being; not just the absence of disease or infirmity.” By living these healthy years, individuals nurture ‘virtuous cycles of health’ – recurring cycles of events increase the beneficial effect of the next – that fuel health and growth, the researchers state.

Healthy Life Years as a Source for Continuous Economic Growth

Investing in preventing rather than healing
In their report, the researchers indicate that economies that focus on the well-being and prevention of illnesses will realise a greater return on their investment than economies focussing on health care and treatment. Economies should therefore increase their investments in creating healthier populations. “The benefits of investing to create a healthy population vastly outweigh the investment made. Such investments need to be part of any population health strategy,” explains Arnaud Bernaert, Senior Director Global Health and Healthcare at the WEF.  

To identify areas for concrete investments to maximise healthy life years and to realise high returns on these investments requires, according to the researchers, the understanding of nine key inflection points when “health can change for better or worse.” These include health enabling environments, healthy pregnancies, balanced nutrition in childhood, adequate vaccinations, adequate social engagement, minimum level of education/health literacy, healthy body weight, sense of self-efficacy, and high compliance rate with treatment.

Focus on maximising healthy life years as a key goal

Although the economic returns that stem from investments in healthy populations are high, investing in health still lags behind investing in healthcare. According to the researchers this is the result from three key issues:

  • The potential disconnect between investors and beneficiaries: This can be problematic when investor and beneficiary are not the same.
  • The role of different stakeholders: Creating a healthy population is still seen as a public sector obligation.
  • Lack of understanding of various investment opportunities: Private investors may not immediately see the positive returns of a healthy population.

In conclusion, Norbert Hueltenschmidt, Partner at Bain & Company partner and co-author of the report, says: “The goal of this report is to encourage economies and companies to start to think differently about the return on investment in healthy populations. The overall social and economic benefits are undeniable. Getting more stakeholders involved in creating greater traction for health investments and demonstrating the various investment opportunities and related returns will help to fuel the virtuous cycle of health and maximise Healthy Life Years.”