Financial intelligence for Asia's healthcare markets
 
 
Remember me:

Analysis: The US$320 billion healthcare challenge in ASEAN

Fabian Boegershausen, manager at corporate strategy consulting firm Solidiance, takes a look at rising healthcare costs in ASEAN and provides measurable solutions to overcome future challenges.

Malaysia, Singapore, Indonesia, Philippines, Vietnam, and Thailand (ASEAN 6) will all face an unprecedented rise in healthcare costs over the next decade, putting significant strain on public health budgets.

According to our latest white paper, total healthcare spending in ASEAN 6 countries is estimated to reach US$740 billion by 2025, up from US$420 billion in 2017. An increment of US$320 billion in costs is predicted to incur, nearly doubling today’s spending. Since this implies a massive additional burden, policymakers must take early action to sustain the future of the healthcare industry.

In nearly all ASEAN nations, the growth of cost in healthcare per capita has outpaced the growth in GDP per capita, indicating a gap that will further add an economic burden to the region. Meanwhile, other factors driving future demand are the shift in age demographics and unhealthy lifestyle habits.

A profound population transition to an ageing demographic it happening due to improvement of life expectancy and rising income levels. The elder population (age 65 - above) in southeast Asian nations is expected to grow three times that of the working age population by 2040. The rapid change in population structure will burden society with an increased need for healthcare.

Metabolic risk indicators such as smoking and obesity will also translate into a high prevalence of severe non-communicable diseases. The growth rate for obesity is found to be significantly higher than overweight conditions in ASEAN countries, all of which aggravates the demographic impacts on health.

To add more pressure, regional governments have not especially increased their healthcare spending relative to total budgets and these figures have begun to stagnate or decrease in the past five years. Governments in these nations are unlikely to have sufficient means to meet the increased demand for healthcare with equal increases of healthcare spending.

It is clear the massive rise in healthcare demand poses one of the greatest challenges that ASEAN nations have ever faced, yet here lies also immense opportunity. The key to quality healthcare is to look beyond life expectancy to key drivers of disabilities. This can be done by refocusing healthcare efforts away from an ad-hoc treatment model to a model where the causes of illness are treated early on – in people’s risk behaviour and lifestyles.

One way to lessen the burden of healthcare costs is to generate new sources of healthcare funding. A tax on unhealthy commodity goods, for example, such as salt and sugar can improve health behaviour incentives. The Philippines, for instance, imposed a tax on sugary drinks earlier this year. Governments could also streamline co-payment or broader insurance systems and introduce manageable and effective co-payment fees for public hospitals.

As a significant portion of healthcare costs is a result of personnel expenses partly bound to non-patient facing activities (i.e. administrative and support functions), reducing the need of excessive personnel hired for admin work could free up budgets. Instead, hospitals can replace non-patient facing functions with digitisation to manage patient data, reduce the need for administrative procedures, and remove redundant reviews on drug approvals.

Finally, focusing on effective treatments that avoid future costs must become a key pillar of sustainable healthcare policy. Since patient costs accelerate as they get older, thanks to illness and disability, intervention in early stages or even the full prevention of diseases requires additional spending early on but can greatly reduce cost in the future.

The health demands of ASEAN 6 nations present valuable opportunities for healthcare players such as private hospitals, pharmaceutical companies, and medical device companies. An understanding of the changing health landscape would allow healthcare businesses to advise on the most effective use of their equipment and services and also consult, where possible, on the best practices and potential improvements to efficiency.

The demographic transition will force a rapid development of the geriatric care services market in the ASEAN countries. Next to the immediate medical demand arising from the larger aging population also comes a massive demand for elderly care services. Companies could venture into these related fields, help or even invest in retirement and care homes.

The most significant opportunity of all will be the imminent digitalisation of healthcare, which will raise demand for solutions such as hospital information systems, cloud solutions for medical data, digital tracking of patients and treatments, and the automation of health monitoring.

You can read the white paper “The USD 320 Billion Healthcare Challenge in ASEAN”  here.

Posted on: 30/04/2018 UTC+08:00


News

Chularat Hospital, which operates 13 clinics and hospitals in Thailand, intends to build the Suvarnabhumi Cancer and Radiologist Center Hospital, which will provide specialised medical services to general patients and counterparties in Samutprakan and nearby provinces.
Thomson Medical Group (TMG), Singapore’s second largest healthcare group, has reported EBITDA of S$23.4 million (US$17.1 million) on the back of total revenue for the first half of the year at S$105.5 million.
Healthcare services group Clearbridge Health has reported revenue of S$1.46 million (US$1.1 million) for the three months ended 30 June 2018. The topline growth is nearly four times the S$0.38 million achieved by the group in Q1 and mainly attributed to recent acquisitions including a medical centre in the Philippines in January and in Singapore and Indonesia in April.
Australian hearing implant manufacturer Cochlear delivered net profit of A$245.8 million, an increase of 10% on FY17, which was within the guidance range of A$240-250 million. Chief executive and president Dig Howitt said, “Cochlear continues to deliver on its objective of delivering consistent revenue and earnings growth over time.
Shareholders of Fortis Healthcare, the country’s second largest private hospital chain, have approved the US$584.1 million acquisition plan by IHH Healthcare, Asia’s largest healthcare company – 99.7% voted in favour of the deal.
Retirement village operator Summerset Group Holdings has announced an underlying profit of NZ$45.2 million (US$29.7 million), an increase of 27%, in line with the profit guidance provided in early July.
Leading fully integrated plasma-based biopharmaceutical company China Biologic Products Holdings has appointed Bing Li as chief executive officer. By assuming the CEO position, Li has moved from an independent director to an executive director of the board. Zhijun Tong, the former acting CEO, will continue to serve as an executive director of the board and president of the company.
Beijing-based paediatric healthcare provider New Century Healthcare has taken a 10.1% stake in Chiron Healthcare. Financial terms have not been disclosed.



Analysis

First you must find a clinic space from which to practice. The good news is that space is available at most hospitals. The bad news is that a 1,200 square-foot clinic space at Mount Elizabeth Hospital currently retails for around S$10 million, or US$7.34 million to secure a space less than half the size of a tennis court. By the time you add fittings, equipment and staff, your relationship with your bank manager will likely be under severe strain.
China’s hospital landscape is rapidly changing as operators and owners respond to shifting policy incentives, an aging population, the opportunity to serve Tier 2 and 3 cities, and shifts in consumer preferences.
Today, more and more people are suffering from serious, incurable, and/or rare illnesses. However, access to information on such conditions has been quite limited, to hospitals or internet surfing. Even though there were communities and organizations serving people with certain illnesses, information was not widely available, due to the general nature of the illnesses.
CR Phoenix Healthcare, China’s largest private hospital group, recently announced plans to restructure Beijing Jingmei Group General Hospital, a flagship hospital managed by CR Phoenix under its investment-operation-transfer (IOT) model.
Severe abuses continue in China's organ transplant system – including the sourcing of organs from prisoners of conscience on a large scale – despite Chinese government assertions of reform, finds a new study by the China Organ Harvest Research Center.
Asia Pacific's transition from a volume- to value-based care model has been highly challenging due to the need for large-scale regulatory changes and lack of a funding. Rising healthcare consumerism, digital health adoption, and the growing influence of medical tourism are setting a foundation for population health management, one form of value-based care that shifts the industry focus from episodic, individualised healthcare approaches to collective action against the cost and burden of disease in a society.
Leaders from New Zealand’s health technology industry are looking to Malaysia as a strategic investment opportunity to support the country’s rapidly growing healthcare market.
Ping An Healthcare and Technology, formerly known as Good Doctor, has signed contracts with nearly 200 large corporations, including Vanke, Greentown, Bank of China, China Telecom, China National Nuclear Power, Evergrande Group and provides services to nearly 1.5 million employees, covering 27 provinces, autonomous regions and municipalities.
my images

Podcasts

HealthInvestor Asia twitter feed