Read the Conversation
Meeting highlights:
- Italy's healthcare system is publicly funded but faces challenges such as a shortage of clinical staff, increasing demand for services due to an aging population, and insufficient funding growth.
- Italy is experiencing a demographic shift toward an older population, leading to higher demand for healthcare services, especially chronic disease management.
- Public healthcare funding in Italy has remained a priority, with inflation further reducing its real value. Italy spends less on healthcare as a percentage of GDP compared to the European average.
- There is a strong focus on digitalization as a critical component in transforming Italy's healthcare system. This includes improving care accessibility, data integration, and enabling innovation, such as AI-driven diagnostics.
- Retaining talent is crucial for companies like Philips, where a positive, inclusive culture and focus on professional development help to keep skilled professionals in a competitive market.
EF: What are the current priorities on your agenda, and how do you assess the challenges and opportunities in the country right now?
AC: In Italy, the healthcare system is primarily public, with the National Healthcare System being government-funded. In 2023, public financing for healthcare has remained quite stable, with a total budget of around €130 billion. Additionally, approximately €47 billion comes from out-of-pocket expenses by individuals, making it roughly €130 billion from public funds compared to €35 billion from private spending. Out of the €35 billion in out-of-pocket expenses, only €4 to €5 billion comes from insurance coverage.
This means Italy’s healthcare system largely depends on government and political decisions. The Italian NHS has faced significant challenges for many years, and I would like to highlight three critical issues.
First, there is a need for more clinical staff, both doctors and nurses. According to research from Agenzia Nazionale per i Servizi Sanitari Regionali (National Agency for Regional Health Services), a key institution in Italy, outpatient prescriptions have increased by 44% and MRI scans by 60% between 2019 and 2023, while the number of clinicians and nurses has remained flat. This indicates a rising demand for healthcare services without a corresponding increase in medical staff.
The second challenge is Italy’s aging population, a trend seen in Italy, across Europe, and in Japan. This demographic shift leads to a higher incidence of chronic diseases, further driving the demand for healthcare services. The combination of an aging population and the increasing burden of chronic conditions puts additional pressure on the system.
In 2023, those over 65 accounted for nearly 24% of Italy's population, with projections suggesting this figure will reach around 36% by 2050—an 11-point increase. This demographic shift, coupled with increased medical prescriptions, is driving higher demand for healthcare services. Meanwhile, staffing levels have remained stagnant, creating a strain on the system.
At the same time, funding for Italy’s National Healthcare System (NHS) has remained flat and has even decreased in real terms due to high inflation rates in 2021, 2022, and part of 2023. While overall healthcare spending has increased in absolute terms, it has effectively diminished when adjusted for inflation, widening the gap between Italy's healthcare spending and the European average. Currently, Italy's healthcare spending is about 6.4 of its GDP, compared to over 7% in other European countries.
These are the key challenges that Italy faces, especially as a representative of an innovative medical device company. Addressing these issues requires more than just increased funding; a fundamental transformation of the system is necessary. One critical aspect of this transformation is accelerating the digitalization of the NHS. Digitalization can be a cornerstone for change, enabling better accessibility and quality of care and creating a more efficient pathway for integrating innovations from startups and companies into the healthcare system.
A few weeks ago, Mario Draghi highlighted this in the European Parliament’s competitiveness report, emphasizing that digitalization could drive improvements in healthcare access and quality while also fostering innovation and economic growth across Europe. This is especially relevant for Italy's predominantly public healthcare system, which needs ongoing investment in digital technologies to redesign care pathways closer to patients.
Following the COVID-19 crisis, it became clear that Italy had significant gaps in last-mile care, known as territorial medicine. The European Recovery Fund has allocated €20 billion to Italy's healthcare system, with €14-15 billion earmarked for digitalization as part of the PNRR (National Recovery and Resilience Plan). This funding aims not just to enhance technology but to reshape the structure of the healthcare system itself.
Currently, Italy’s system relies heavily on large hospital hubs across the country. The Recovery Fund aims to transform this model into a network of hub hospitals, smaller hospitals, and local points of care, even extending care directly into patients' homes. To make this shift effective, it is crucial to digitize these various entities, enabling seamless and secure data exchange. Integration across different systems is essential, particularly given Italy's complexity with its 20 regions that can operate independently from the central government. The central government allocates funds to the regions, and while regions have some flexibility in how they use this money, they do not have complete autonomy. This regional structure makes it increasingly necessary to ensure interoperability and integration across the healthcare system.
These pillars—healthcare, sustainability, and digitalization—represent the core areas of investment, aiming to drive comprehensive transformation and growth in Italy's infrastructure and services.
EF: How can we shift the perspective of healthcare from being seen as an expense to being viewed as an investment, particularly in the context of leveraging AI for early diagnostics? And do you see a clear pathway for implementing these changes in the current healthcare system?
AC: Currently, I do not see a clear pathway for implementing AI in healthcare—it would be unusual to have a straightforward path for something so innovative. We still have many questions, even philosophical/ethical ones, about its role. However, there is significant investment in this area. For instance, in Italy, healthcare investments in AI increased by 35% in 2023 compared to 2022, and there is considerable industry focus on the potential of AI, both for clinical applications and operational improvements in hospitals.
At Philips, we are bringing to market solutions like AI-integrated diagnostic tools, interventional systems, and angiographs with machine learning-based software. While a definitive path is not yet visible, I believe AI will play a crucial role in making healthcare delivery more effective by focusing on both clinical and operational aspects.
On the clinical side, AI can enhance diagnostics by processing images faster and more accurately, learning to reduce noise that previously affected image quality. For example, we have implemented a "smart speed" algorithm for MRI scans in Italy’s NHS and private sector, which allows images to be acquired with less noise and up to 40% faster. This can significantly improve productivity in a system that has long struggled with lengthy waiting lists. In some regions, patients may wait months or even up to a year for an MRI or CT scan, so a 40% reduction in scan time could have a substantial impact. This means that within the same amount of time, you can perform up to 1.4 times the number of scans compared to before.
Additionally, if the scan images are more accurate, there is no need for repeat scans, achieving what we call "first-time-right." A single scan provides all the necessary details, which is crucial for efficiency.
We also have another AI-based software integrated into our CT systems, which can reduce radiation doses by up to 80%. This is a significant innovation, as it allows for safer procedures, minimizing exposure to high radiation levels, which is particularly important for patients, clinicians, and technicians.
These AI applications are transformative both in specific, vertical applications—like improving the productivity and output of MRI and CT scans—and in more horizontal applications, such as supporting radiologists in decision-making. For example, AI can help identify lesions that might have been missed previously. Most imaging results, such as MRI, CT, or ultrasound scans, are negative, but they still require reporting by radiologists.
Our goal is to use AI to automatically identify truly negative images with a high degree of certainty, allowing radiologists to focus their attention on more complex cases. If there is even a small risk in an image, it will still be reviewed by a radiologist. At Philips, we believe that AI should assist clinicians by reducing the chance of errors, and we view this as a cultural shift. We integrate the power of AI with deep clinical expertise, combining advanced technology with human experience to enhance patient care across CT, MRI, angiography, ultrasound, and beyond. These messages are also strategic for Philips: combining advanced technology with human and clinician experiences.
I understand that AI can seem intimidating, with concerns about smart machines potentially replacing human jobs. However, we are firmly convinced that AI’s role is to support prevention, diagnosis, treatment, and monitoring—it cannot replace the invaluable experience and knowledge of clinicians.
Our focus in developing AI solutions is to provide better care for more people, not to create machines that take over jobs. In the healthcare industry, where we work closely with sensitive data and directly impact people's well-being, it is crucial to approach AI thoughtfully. This includes considering privacy, ethical, and even philosophical concerns. We see healthcare as an ideal platform for developing AI solutions that genuinely improve patient care and outcomes.
EF: How do you assess the receptiveness and adoption of new technologies, including AI? Are there differences in perspectives across the markets you oversee?
AC: There are quite a few differences across regions. For example, Israel has a very open culture and a strong emphasis on innovation—not just in healthcare or AI solutions but across various sectors. The entrepreneurial spirit is deeply embedded in the culture. In contrast, the situation in Italy is mixed, while Greece faces more challenges in this regard.
In Italy, the adoption of new technologies could accelerate significantly if the processes around hospital procurement were simplified. As previously mentioned, the public tender process is not ideal for fostering innovation. The tender system is designed to compare similar products to increase competitiveness. The more similar products available, the more effective the tender process becomes. However, innovation often introduces unique products that lack direct competition, making it difficult to fit into the tender model.
For instance, about five years ago, Philips faced such barriers when introducing a groundbreaking MRI system. This BlueSeal magnet operates with just seven liters of helium compared to 1,500 liters. This was a game-changer, given the scarcity and high cost of helium. Yet, because there were no competing products, Philips could not participate in the tenders, which limited the ability to bring this innovation to the NHS in Italy.
The challenge is how the Italian NHS could adapt its structure to accommodate such innovations better. However, it takes work, as the tender process is deeply rooted in the system's culture. It also safeguards against corruption, ensuring a fair and transparent procurement process. While I understand the government's rationale, there could be room for more flexibility—to make the system more open to innovative solutions.
EF: How do you attract and retain the very best talent that Italy has to offer?
AC: I fully recognize the wealth of talent in Italy, with its excellent universities and a younger generation that is both highly capable and very international in their outlook. At Philips, we have developed an integrated strategy for attracting and retaining talent because, in my view, the main challenge is not attracting talent but retaining it.
We focus on creating a positive and growth-oriented working environment to address this. Philips has been fostering an inclusive culture for the past 50 years as a Dutch company. While inclusivity has recently become a trend, Philips has been committed to sustainability and inclusion long before it became mainstream. When I joined Philips 12 years ago, I was immediately impressed by the company's emphasis on inclusiveness, training, and open dialogue. This same commitment extends to our sustainability efforts, which are truly ingrained in our practices rather than being just a form of greenwashing.
We invest significantly in the professional development of our employees, offering tailored career paths and continuous training programs. Regarding remote work, Philips adopted a smart working approach 10 years ago. However, I now recognize the importance of maintaining in-person connections—meeting in the office at least twice a week helps to strengthen our culture and foster collaboration.
Employee well-being is a key priority for us. We emphasize work-life balance, knowing that it is essential for recharging and maintaining high energy levels at work. Additionally, we support international opportunities for young talents, offering six-month assignments on specific projects to broaden their perspectives. Although Italians are known for being present worldwide, those who begin their careers in Italy often find it challenging to work abroad later on. That is why we actively promote these international exchanges and short-term projects to encourage a more global mindset among our employees.
Ultimately, while attracting talent is not our biggest challenge, retaining them is where our focus lies, and we are committed to building an environment where they can thrive and grow.
EF: Having been with Philips for 12 years, what are the achievements you are most proud of during your journey, and as the year comes to a close, what accomplishments will you be celebrating with your team, and what would be the message you would share with them in your end-of-year speech?
AC: I am extremely proud of the Philips mission. It is not just about business or work—we genuinely feel that we are making a meaningful impact on people's care. Our focus is on delivering this care in a sustainable way, considering the well-being of our planet while also fostering inclusivity. This commitment is something I take great pride in.
Of course, performance is also important, and we have consistently achieved strong results, particularly in Italy, Israel, and Greece over the years. As we approach the end of the year, I look forward to celebrating with my colleagues and raising a glass to another year of success in delivering sustainable care for our communities.
