Due to changing needs and demands for public health, healthcare providers have encountered a myriad of challenges in the last few years. Nigeria, for one, had to contend with workforce shortages amid the brain drain phenomenon, wherein Nigerian medical doctors have left en masse to seek work opportunities abroad. As a result of this human capital loss to migration, the Nigerian Medical Association reports that the official doctor-to-patient ratio in the country is at one to 49,000, below the WHO-recommended ratio of 1:1,000 and among the lowest worldwide.
This trend can also be observed in other low-to-middle-income countries, on top of other sectoral barriers like inadequate public health infrastructure and a lack of health system integration. Meanwhile, high-income countries have struggled with disparities rooted in the lack of equitable and affordable care across socioeconomic classes.
Despite these challenges, healthcare providers — supported by governments and the private sector — have been continuously improving service delivery and health outcomes around the world. As providers overcome critical barriers and drive social and economic growth across nations, there needs to be a closer look at how the global healthcare sector is currently performing and how it is projected to progress in light of key strengths and drivers in the value chain.
An overview of healthcare providers
Before delving into the state of global healthcare providers, we must first identify which parties work together and help buoy the sector as a whole. While the goal of the healthcare market is to deliver essential care and services to populations, it is comprised of diverse industries whose activities range from research and development to manufacturing and facilities management.
To start, the supply side consists of healthcare practitioners who provide medical services in facilities like community and private hospitals, clinics, laboratories, and nursing homes. Pharmaceutical companies and medical device manufacturers are also considered part of the healthcare market, as they produce drugs and equipment for integrated health systems.
Lastly, health insurance providers, whether private or public like the US Medicare and Medicaid, help influence public health outcomes by managing financial costs and enhancing overall access to health services. In Nigeria, the healthcare insurance industry was worth $1.8 billion (~₦1.72 trillion) in 2022, with the government-funded National Health Insurance System being a key contributor to growth.
How the healthcare sector is performing
Multinational investments
As previously mentioned, the global healthcare market has remained buoyant amidst workforce and logistical challenges. In fact, a significant rise in government spending has enabled the sector to reach a new high of $9 trillion (~₦8622 trillion) in 2020, equal to nearly 11% of the global gross domestic product. This upward investment trend is also reflected in Nigeria’s own health market, as the 2023 Medic West Africa Conference and Exhibition presented a demand scale worth $18 billion (~₦17.2 trillion) from multinational companies in industries like diagnostic solutions, life sciences, and medical manufacturing. These signify that beyond government expenditure, investments from the private sector help foster the economic growth of global healthcare.
Healthcare stocks and indices
Beyond investments from the public and private sectors, the market performance of global healthcare can also be gleaned from the growing interest in healthcare stocks and equities. Now that there’s a rise in online investment platforms, more and more individuals are starting to invest in and trade indices that list and track healthcare stocks. Not only are these online investors provided with profitable trading features like stable spreads and swap-free trades, but they also gain access to global financial markets that help monitor top-performing, high-market capitalization indices like the US Tech 100 (NASDAQ) and the US S&P 500 (SPX 500). NASDAQ reported overwhelmingly positive performance at the end of 2023, with its average return of 7.1% across indices mainly driven by the Dorsey Wright Healthcare Technical Leaders (DWHC) index, which gained 17.8%.
What drives market value and demand for healthcare
Government agenda
The increased healthcare spending by governments is primarily influenced by how their public policy recognizes the importance of the sector’s value chain. Notably, Nigeria’s Ministry of Health and Social Welfare has been proactive in driving investments toward the healthcare sector through its four-point agenda. This agenda prioritizes additional health funding, with the new 2024 budget allocating ₦1.23 trillion to health projects that lay the foundation for universal health coverage. On a global scale, the World Health Organization calls on governments to sustain public financing of at least 5% per GDP and increase the per capita spending on health to reach the target of $86 (~₦82400).
Technology and innovation
Technological applications in healthcare have also been a key driver of market growth, as more and more health systems are adopting digital tools that promote early detection, disease monitoring and management, and overall health equity. For instance, US healthcare providers and facilities were reported to have spent $17.9 billion (~₦17.14 trillion) on cloud-based technologies in 2022 to improve remote patient monitoring. Meanwhile, Nigeria has seen a boom in telemedicine startups like Mobihealth and iWello, meeting the demand for convenient, distanced, and high-quality healthcare while also contributing to market revenue.
How healthcare providers are expected to perform in 2024
Considering healthcare providers were able to overcome barriers to service delivery with the help of increased spending and technology, these factors remain crucial to sustaining market performance in 2024. Should governments, including Nigeria, continue to augment health funding and unlock the health value chain through private-sector partnerships, the sector will be closer to attaining UHC and improving the economic outlook.
Additionally, the increasing relevance of emerging technologies like artificial intelligence in healthcare can help physicians and other healthcare providers improve productivity and efficiency. For example, by adopting generative AI in information gathering, diagnosis, treatment, and monitoring, optimal efficiency across the healthcare pipeline can equate to better patient outcomes and increased value. However, like any other technology, generative AI comes with key considerations in transparency and data privacy if healthcare providers want to maximize its value for service quality and market growth.
