In healthcare, econometrics can be used to describe anything from healthcare infrastructure to return on investment, but in this brief, econometrics will be in reference to healthcare infrastructure. In regards to medical devices, econometrics provides a parameter, or structure, within which the purchasing of medical devices occurs; however, penetration of markets and external factors such as political, economic, regulatory shifts have a subsequent effect on the dynamics and volume of purchasing. IHS Markit estimates the total number of hospitals globally in 2016 was 130,866, compared with a total of 1.5 billion units of medical devices in 2016. IHS Markit predicts the number of hospitals to continue to grow through at least 2021, when the number will reach 134,881; similarly, IHS Markit predicts the number of medical devices to also grow through 2021, reaching 1.8 billion units in the year. As seen, growing healthcare infrastructure has a positive correlation with a growing medical device and healthcare industry.
This increase in both infrastructure and medical devices reflects a few things. First, it reflects the growing need for healthcare globally as the world’s population increases. (In 2016, global population numbered 7.4 billion people, and IHS Markit forecasts this number to grow to 7.8 billion by 2021.) It also reflects the increasing capacity of healthcare systems as infrastructure expands to accommodate a growing number of health issues; however, where the growth for medical devices occurs, how, and its constraints, is dependent on the physical constraints of the national health environment, as well as the overall efficiency of healthcare delivery within a given country.
In the United States, for example, there were 5,578 hospitals as of 2016, but the number of hospitals in the United States is declining due to managed care practices that reduce the patient length of stay and increased financial constraints on hospitals as a result of the Affordable Care Act (ACA). Hospital consolidations and closings are expected to continue through 2021, albeit at a slower rate. In terms of number of hospitals, the US is not the largest market; in fact, Brazil, Russia, China and India have much larger number of hospitals. Yet, the US is typically one of the top markets for volume of medical devices purchased, for example, for MRI, CT equipment, mammography and many other X-ray products it is the top market, due largely to high maturity of the market, a highly market-based economy, and fairly stable economic and political environment. The US market also has a high penetration rate for established products such as MRI, CT and X-ray imaging products.
Healthcare econometrics, then, provides an outline and structure through which medical devices are purchased, but it is not the only influential factor in determining purchasing volume within a country’s medical device market. Additional factors and purchasing nuances for each product are explored through IHS-Markit’s Healthcare Technology suite of research products, which includes up-to-date and in-depth research on medical markets spanning Digital, Imaging and Healthcare IT.