Opportunities in the US health care shake-up

Regardless of who you talk to and whether they are talking about regulatory complexities, dollar-spend, opportunities or rising patient numbers, the emphasis is always on size.

With 16 percent of US GDP spent on health care, ($US2.4 trillion) – higher than anywhere else in the world – New Zealand Trade and Enterprise’s biotechnology business development manager, Dietrich Ruehlmann jokes that it makes New Zealand’s GDP ($US117 billion),  “look like a rounding error”. 

But all agree that it’s no laughing matter. There are nearly 46 million Americans without health insurance and 130 million suffering from chronic diseases – arthritis, asthma, heart disease, depression, diabetes, cancer and obesity – out of a population of 307 million.

Lost productivity is estimated at around $US1trillion a year, and people are going bankrupt or dying because they can’t afford healthcare.

Based in Washington, Ruehlmann is well placed to observe the two major factors heralding healthcare change - the US recession and the new Obama Administration.

“Everyone agrees the healthcare system needs to be fixed, but nobody knows how it could work.”

Unsustainable health care costs have come under the recessionary spotlight and while politicians, industry players, citizens and lobbyists grapple with the possible solutions, very real cash has already been invested. 

The recent Budget announced a reserve fund of $US630 billion over 10 years to finance health care reform with US$76 billion worth of health initiatives planned for 2010. Which is why, NZTE’s Vancouver-based business development health manager, Lisa Andres says New Zealand companies need to be positioning themselves now.

“If they wait until the RFPs are out it will be too late. You’ve got to be connecting with buyers and potential partners and that’s why the Health Innovation Challenge [see side story] is such a great opportunity.”

Simon Malpas, CEO of Telemetry Research and its subsidiary wireless power company Tetcor, agrees the time is ripe with opportunities, pointing at their 300 percent revenue increase last year.  As they take their first step into the US market, he says investment announcements had an immediate impact on them.

“We did twice the number of quotations in February and March than any other month as a result of the $US10 billion stimulus package for medical research – all of which has to be spent within two years.” 

And as the implantable medical device market is estimated at $US25billion, he says, “Things are looking very good.”

Tetcor’s product uses Inductive Power Technology (IPT) to provide power to implantable devices – wirelessly. Malpas says that while the potential applications for IPT are endless, the most pressing need is in the area of heart assist devices, which help pump blood around a patient’s heart. 

Two underpinning components have clearly emerged from bi-partisan healthcare debates on Capitol Hill: better patient outcomes for less spend.

If New Zealand companies can prove their innovation has these dual benefits, Ruehlmann says, they stand a “very, very good chance” in the US.

These dual drivers point to a change in focus from ‘sick care’ towards ‘health care’ and combined with the cash already committed, opportunities for Kiwi companies abound across a range of US industries that are giants in their own right –  training and research, pharmaceuticals, biotech, medical devices, food, vitamins and ICT. 

Growth at e-learning clinical training company Go Virtual Medical is making CEO Peter Vanderbeke, currently on a development trip overseas, scratch his head. 

“We’ve gone from six to 26 staff in three months,” he jokes, “and I’m wondering if my office will have been taken over when I get back.”