Is Curing Patients a Sustainable Business Model?
What It Means for the Hospitality and Medicine Industries
The question "Is curing patients a sustainable business model?" has sparked debate in the healthcare and financial sectors. While curing diseases is a clear win for patients and society, it presents unique financial challenges for the business models of pharmaceutical companies, hospitals, and the broader healthcare industry.
The Business of Chronic Disease vs. Curing
Traditionally, much of healthcare revenue comes from managing chronic diseases—conditions like diabetes, heart disease, and arthritis that require ongoing treatment, regular doctor visits, and long-term medication. This model creates a steady, recurring revenue stream for hospitals, pharmaceutical companies, and associated service providers.
When a true cure is developed—especially a "one-shot" cure—the financial dynamics shift dramatically. For example, Gilead Sciences' hepatitis C cure, Sovaldi, generated $12.5 billion in revenue in its first year but saw sales drop by nearly 80% within three years as the pool of treatable patients shrank. Once patients are cured, they no longer need ongoing treatment, medication, or hospital stays, leading to a sharp decline in future revenues for the companies involved.
Financial Impact: Chronic Disease Revenue vs. Curing
Comparing Financial Implications: Diabetes, Sickle Cell Disease, and Hepatitis C
Diabetes: Diabetes is a chronic condition with no definitive cure, resulting in patients generating revenue for healthcare providers and pharmaceutical companies over decades. In the United States, the lifetime direct medical cost for a patient diagnosed with type 2 diabetes ranges from $85,200 to over $130,000, with more than half of this amount spent on managing complications. In India, the annual cost per patient varies from ₹24,000 to ₹120,000, depending on the type of medication, frequency of tests, and severity of complications. These ongoing expenses mean a steady, long-term income stream for the healthcare sector.
Sickle Cell Disease: Managing sickle cell disease over a patient’s lifetime can cost around $1 million. However, the recent advent of one-time gene therapy cures offers a different financial model: the cure itself costs about the same as lifetime management, but the revenue is realized upfront rather than spread over many years. Once the patient is cured, there is no need for ongoing treatments, eliminating future recurring revenue from that individual.
Hepatitis C: The introduction of curative drugs for hepatitis C, priced at about $84,000 per patient, initially generated significant revenue for pharmaceutical companies. However, once the majority of patients were treated and cured, the demand for the drug sharply declined, leading to a rapid drop in future revenue.
Financial Implications for Healthcare and Hospitality
The transition from chronic disease management to curative treatments is reshaping the financial dynamics of healthcare and related sectors:
Healthcare Providers
Chronic care services—hospital stays, routine tests, and frequent follow-ups—have historically provided hospitals and clinics with stable, predictable revenue. This model depends on patients returning regularly for ongoing management of long-term conditions.
Effective cures reduce the need for repeat visits and long-term management, directly shrinking future business opportunities. As more patients are cured, the volume of chronic care services declines, challenging the sustainability of traditional revenue models.
Pharmaceutical Companies
Chronic medications, such as insulin for diabetes or statins for cholesterol, act as "annuity" products, generating steady income over many years or decades due to ongoing patient demand.
Curative drugs, on the other hand, produce an initial surge in revenue as the patient pool seeks treatment. However, this is typically followed by a sharp decline as the number of untreated patients diminishes.
The high cost of research and development (R&D) further complicates the picture. Only about 20% of drugs recoup their R&D investments, making companies more likely to favor products that provide lasting, recurring income over "one-and-done" cures.
Hospitality in Medicine
Hospitals and clinics often supplement their income by offering extended care, meals, and lodging for patients with chronic illnesses. This creates a secondary revenue stream tied to long-term stays and services.
As curative therapies become more widespread, the demand for prolonged hospital stays and associated hospitality services is likely to decrease, potentially reducing this important revenue source for healthcare facilities.
The Broader Economic Picture
While curing diseases may challenge the traditional business models of some healthcare companies, the overall economic and societal benefits are immense:
The total economic burden of chronic diseases in the US exceeds $3.8 trillion annually, including both direct medical costs and indirect costs like lost productivity.
Curing major diseases like cancer or cardiovascular disease could boost national economic welfare by 9–10% of GDP, thanks to reduced healthcare spending and increased productivity.
Disruption and Opportunity: What’s Next for Healthcare and Hospitality?
For the Healthcare Industry:
The rise of curative treatments is forcing a shift from volume-based (fee-for-service) models to value-based care, where providers are rewarded for improving patient outcomes, not just for delivering more services.
Pharmaceutical companies may need to adopt new pricing models, such as long-term licensing agreements or outcome-based payments, to capture the value of cures while ensuring affordability and access.
Hospitals may see reduced demand for chronic care beds and services, but can focus more on acute care, prevention, and innovative therapies.
For the Hospitality Industry in Healthcare:
As hospitals adopt more hospitality practices—like personalized food, comfortable accommodations, and concierge services—the focus may shift toward short-term, high-quality experiences rather than long-term stays.
Medical tourism may benefit from curative treatments, as patients seek one-time solutions abroad, but the need for extended stays will decrease.
Conclusion: Sustainable, But Different
Curing patients is a sustainable business model for society, as it lowers long-term healthcare costs and improves quality of life for individuals and communities. However, for healthcare providers, pharmaceutical companies, and the hospitality sector within medicine—industries historically dependent on the steady, predictable revenue from chronic disease management—this shift presents significant financial and strategic challenges.
Curative treatments can generate substantial short-term profits, especially when first introduced, but do not provide the same long-term revenue stability as chronic care under current business structures. As cures reduce the need for ongoing treatments, hospital stays, and long-term patient services, companies must rethink their strategies to remain financially viable.
The future of healthcare will require a balanced approach that integrates both curative and chronic care, supported by innovative financial models. Aligning business incentives with patient outcomes and societal benefit is essential. This transition demands new strategies that prioritize patient well-being and public health while ensuring the financial sustainability of healthcare and hospitality businesses in a rapidly evolving landscape
In simple terms: Curing diseases is great for people and economies, but it disrupts the old way that hospitals and pharma companies make money. The industry must adapt, focusing on new ways to deliver—and get paid for—life-changing treatments, while still providing high-quality care and hospitality for all patients.
Disclaimer
The information provided in this blog is for discussion purposes only and does not constitute medical, financial, or professional advice. While every effort has been made to ensure the accuracy of the content, healthcare and financial data may vary by region, institution, and over time. Readers should consult with qualified healthcare professionals and financial advisors for advice specific to their individual circumstances. The views expressed in this blog are those of the author and do not necessarily reflect the policies or positions of any organization or institution. The author and publisher expressly waive any liability for any loss, damage, or consequences arising from decisions made or actions taken based on the information contained in this blog. No responsibility is assumed for any harm or damages resulting from the use or misuse of the information provided herein.