Unprecedented Transformation in Care Delivery Across Asia Pacific
Healthcare across Asia Pacific today is in a state of constant evolution due to changes in care delivery, solutions and technology applications across the value-chain. As governments strive to provide public healthcare services ranging from community hospitals to acute care services to meet population demands, private healthcare service provision continues to expand due to economic growth, increasing incidence of chronic diseases, greater consumer awareness of health issues, medical tourism and the overall desire for quality healthcare. Greater availability of online information is also enabling the consumer to take up reins, leading to consumerization of healthcare as they seeking quality information, engagement and control.
2013 was a turning point for the healthcare consumer in Asia-Pacific. There was a palpable jump in the pulse of the industry as regulators, payers and users raised a call for increased transparency and accountability in the healthcare system. Governments across the region had been investing in healthcare infrastructure development over the past few years and are also placing more emphasis on measuring the returns on investment. This has been manifested in regulatory changes (for example, enforcement of medical device regulations, health technology assessments), which indicate the growing need for cost efficient and outcomes based healthcare delivery.
"Healthcare stakeholders in Asia Pacific are and will increasingly need to cater to a well-informed audience, who is cognisant of treatment options, industry innovations as well as global trends" said Rhenu Bhuller, Senior Vice President for Healthcare at Frost & Sullivan, Asia-Pacific.
"However, the focus in Asia Pacific is still very much on treatment, as consumers prefer to seek treatment at hospitals and specialist centers. We are also seeing the rise of other service providers such as diagnostic service providers and aged care service providers, reflecting the growing trend in preventive health as well as the requirements for aged care services, especially in countries with fast growing aging populations," she added.
Healthcare expenditure has been a source of concern for governments as well as private sector enterprises across the region. However, not only the dollar amount but also the source of funding is beginning to increasingly concern payers and consumers. Out-of-pocket expenditure has been rising steadily in non-reimbursed markets while the sustainability of government expenditure in countries like Australia, Japan and South Korea is questionable. Such conditions create a market need for prudent investment in healthcare which is transparent to the public and is attached to measurable performance metrics. A growing concern is the lack of regulations to support reimbursement of diagnostics, patient monitoring and long term care devices across Asia Pacific countries to support preventive healthcare. Better education and access to advance technologies are creating a demand for sophisticated devices but payors and consumers are apprehensive of spending a sizeable amount which is unlikely to be covered or reimbursed or has yet to prove cost effectiveness.
At the other end of the spectrum, more and more countries are exploring opportunities in medical tourism as a high value export of specialized services. While Thailand and India enjoy a thriving medical tourism market, Singapore is fast rising up the ranks and the Malaysian government is investing to build the industry. Advanced countries like South Korea, who cannot compete with the market leaders in typical medical tourism procedures due to their high cost, have invested in creating a niche market for themselves, such as in highly specialized surgeries like neurosurgery. Technology helps further the scope of exporting medical specialization with Japanese, Singaporean and Australian doctors providing telemedicine consulting, telesurgery and tele-diagnostic services to patients based in other countries.
The stage is set for companies to explore unchartered territories in healthcare and experiment with novel business models. Focus on collaboration and innovation is driving companies to forge unprecedented partnerships, particularly those that involve a marriage of diverse industries and products, so that they can offer holistic solutions to clients. At a global level we are seeing the formation of alliances, such as those between healthcare and non-healthcare providers, like the Samsung-Merck collaboration in biopharmaceuticals, as well as those between cross border healthcare providers like the Sime Darby-Ramsay joint venture.
Frost & Sullivan presents the APAC Healthcare Outlook each year which highlights industry evolutions that impact businesses across the ecosystem. The Frost & Sullivan APAC Healthcare Outlook for 2014 highlights are as follows:
Transparency in Pharmaceutical Pricing
In an effort to curb corruption, improve access to therapies and control healthcare monetization a number of governments across Asia-Pacific such as Australia, China and Korea will continue to take measures to create transparency in the pricing of pharmaceutical products. Additionally, governments will create conditions for more aggressive pricing and also improve drug reimbursement regimes to support access to care for underserved communities. The trigger for this change was the realization that current pricing methods, used by both governments and pharmaceutical companies, which include cost-effectiveness analysis (CEA) and willingness-to-pay (WTP) analysis, are not sufficient for supporting a sound pricing decision. A third parameter, the ability of consumers to pay, is now being evaluated, leading to differential pricing across countries and communities. The result is a dynamic pharmaceutical environment which requires players to rapidly respond to external changes by adjusting their pricing policies across different regions in order to reduce margin erosion.
Burgeoning Challenges for the Medical Device Industry
Relaxation of registration and distribution laws for low risk category medical devices in countries like Singapore and South Korea will heightened market competition. On the other hand, increased scrutiny of high level devices and requirements for registration and assessments in specific local markets will increase costs for device manufacturers. Such dynamics will significantly pressurize margins for companies operating in this space and may also lead to higher end user costs as the costs of complying with increasingly stringent regulations increase operating costs of companies. Medical device companies are seeking innovative partnerships that enable them to package their products into holistic end-to-end solutions for patients. However, good news comes in the form of emerging opportunity across the Association of South East Asian Nations (ASEAN), as 10 countries plan to adopt a common regulatory framework for medical device registration under ASEAN Medical Device Directive (AMDD). The AMDD is expected to be implemented in December 2014 and it will help create a medical device super corridor which will provide companies with access to a population of over 600 million across 10 countries as well as provide consumers with wider choices.
Value-based Care Gains Momentum
Healthcare payers across the region are voicing their opinions on the need for value-based care. The goal of value based care is to lower healthcare costs and improve outcomes. Payers and providers are adopting the concept by learning from healthcare systems of the western world, where payments and reimbursements are tied to the quality of care rather than volume. Rise of value based care threatens the very business model of pharmaceutical and device manufacturers, which was centred around development of blockbuster products and breakthrough technologies which could be sold at a premium. This very philosophy is undergoing a transformation and companies will have to start relying on their existing voluminous data sources to extract value from their service offerings for consumers and show payers the cost effectiveness of their solutions.
Focus on Collaboration and Efficiency
Healthcare organisations are shifting gears from investment to returns. While significant amounts has been spent on digitisation and adoption of sophisticated tools, the impact and return on investment is not perceivable. A key step in ensuring returns on healthcare dollars spent is achieving clinical integration. Asia Pacific has a long way to go in this direction as the region is still struggling with achieving seamless information exchange and service delivery across departments and hospitals. Moreover, healthcare standards, quality and processes are significantly skewed across regions and even within the same countries. Healthcare providers are becoming increasingly aware of these shortcomings and the long-term impact they are having on the healthcare system as a whole. In the coming years, consumers, payers and providers will place a much greater emphasis on efficiency and cost reduction through improved collaboration across departments and organisations, supporting the concept of integrated care across primary and secondary care sectors.
Expansion of Private Care Services in Emerging Markets
The private healthcare services industry is still in a strong growth phase, with key players eyeing expansion activities in countries such as China and Indonesia, where the addressable market remains untapped. The focus on cross border treatment is also driving new partnerships and services where healthcare services merge with hospitality services. The scope of healthcare services too is expanding with proliferation of niche service providers that serve distinct target audiences, such as, senior persons, metropolitan groups or consumers who need specialized treatment and long term care. Additionally, as the penetration of private health insurance grows due to increased consumer awareness on the need of such coverage, as well as government encouragement of such policies, private healthcare service providers are expected to continue to play an important role in supporting the overall delivery of quality healthcare.
The trends and market dynamics of 2014 are a product of the payer and consumer-driven reform in healthcare systems across the Asia Pacific Healthcare industry. Industry stakeholders are working towards the vision of Smart Communities where concerted advancements in healthcare as well as other industries pave way for the progress of the society as a whole.
About the Author
Senior Vice President
Marketing & Business
A founding member of Frost & Sullivan's healthcare team, Rhenu Bhuller oversees the healthcare practice for Frost & Sullivan in Asia Pacific. She has almost 20 years of working experience in the healthcare industry and has advised clients on pipeline development, strategy, acquisitions, pharmaco-economics, policy and new business ventures in all segments of the healthcare industry.
Her strengths lie in an in-depth understanding of healthcare markets across the world from government healthcare structures and policy to end user and market evaluations. This provides her with a sound basis and ability to guide companies on the adoption of methodologies and study designs to suit individualized specifications and needs. As one of the region’s leading healthcare experts, Rhenu’s expert opinions have been heard at private client seminars and industry conferences, as well as in the media like BBC, Bloomberg, CNN and CNBC.
Focused on the pharmaceutical, clinical diagnostics and medical devices sector, she is often sought for her opinions on future trends and directions, and is a frequent contributor to business and trade publications.
Rhenu is also a qualified moderator and trainer and has conducted workshops in healthcare marketing and market research for clients as well as those new to the industry. She is also a sought after moderator for focus groups involving specialist advisory boards and key opinion leaders due to her in-depth understanding and training in this field, and has moderated more than 100 groups with high ranking specialists and officials in both the private and public sector in the last 5 years.
Prior to joining Frost & Sullivan, Rhenu spent 8 years with Bayer Healthcare in various roles from strategy and marketing to in-licensing, portfolio management and research.
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