Major healthcare shifts in Southeast Asia

Anurag Agrawal Partner and Associate Director Boston Consulting Group

Alan Ong, Principal Boston Consulting Group

Southeast Asia is a highly heterogeneous region with wide variation in healthcare markets. However, across the board, we see four important trends that will have a major impact in 2023.

First, digital health will continue to be a major focus for all healthcare players. COVID-19 has greatly accelerated digital adoption in the delivery of health services. Video consultation, chat interactions between doctors and patients, remote monitoring, online access to health results, and AI chatbots for triaging, are now widely available and are becoming baked into consumer expectations. Healthcare players, including medical groups, hospitals, and diagnostic chains all now recognise digital patient engagement as core to their business.

Success will require going to market with a differentiated and focused value proposition, delivered through a high-quality digital product, and with a clear linkage to revenue.

Second, we see ongoing efforts in multiple markets to build the primary care sector to try and make healthcare services more costeffective and accessible. Governments increasingly recognise that effective primary care is crucial for the health system to function in an efficient manner. The pandemic has also increased public awareness of the importance of primary care providers as the first line in the healthcare system. For instance, Singapore recently announced a Healthier SG plan under which residents will be encouraged to enrol with primary care practices for better continuity of care and to improve prevention efforts. In Indonesia, the Health Minister has spoken of primary care as being one of six key pillars for Indonesia’s healthcare reform.

Homecare and financial challenges

Third, we also expect to see growing use of home care or home services. The pandemic has shown that a considerable proportion of healthcare services can be effectively delivered at home. This can be as simple as the home provision of phlebotomy for lab tests, or as complex as the provision of comprehensive home care for end-of-life patients. Patient preference and technological advances, supported by investor interest, will drive continued expansion of this space. Finally, we expect that healthcare financing will become increasingly tight. The deteriorating economic outlook means that governments and private citizens will face increasing difficulty in financing health expenditures. At the same time, healthcare costs are expected to continue to increase. Given this, there will be increasing pressure to revise financing frameworks to put them on a more sustainable basis, ensure that payments are effective at driving healthcare value and improve operational efficiency and effectiveness. For instance, PhilHealth, in the Philippines, is in transition to the diagnosis-related group (DRG)-based reimbursement which will better reflect case complexity, improve their ability to monitor the quality of care, and improve PhilHealth’s financial sustainability.

Alex Boulton Partner Bain & Company

Southeast Asian healthcare has become an exciting incubator for innovation as long-term secular forces were catalysed through the pandemic. Whilst admittedly a diverse collection of markets, most are burdened by rising demand from ageing and more affluent populations that overwhelm a constrained supply of medical professionals and infrastructure.

Pre-pandemic, it should be noted, private and public stakeholders are already making positive steps towards embracing structural reform and technology as essential solutions to the region’s healthcare access challenges. For example, both Indonesia and the Philippines underwent significant universal healthcare coverage reform in the five years preceding the pandemic, and the leading regional telehealth providers were founded in 2015 and 2016.

The pandemic was a crucible for stakeholders in the Southeast Asian healthcare markets. Notoriously traditional and slow-moving provider systems experienced extreme stress and were forced to ‘rethink’ the way care was and should be provided. After almost three years of fire-fighting and bootstrap innovation, we should hope and expect 2023 to be a year of proactive innovation.

Opportunities for innovation

Rising consumerism in healthcare. Consumers are willing to prioritise and spend more on their healthcare. 50% of surveyed consumers in the region indicated a willingness to increase out-of-pocket spending over the next few years. Consumers desire more information about their healthcare and options and are more eager to spend on prevention and wellness. A realignment of stakeholder trust. The notion of hospitals as de facto healthcare providers is slowly fading away. The industry is rapidly moving toward delivery models that are more convenient for consumers and less expensive to deliver, and care is moving outside hospital walls. Technology is helping healthcare organisations deliver high-touch services without the time or expense of physical interactions.

Increased desire for simplicity and convenience. More than 90% of surveyed consumers in Southeast Asia wanted a simpler system of care—a single touchpoint to manage all their healthcare needs. That need is being fulfilled differently across the Southeast Asia region. Digitally native companies are racing into markets like Indonesia, where primary care is limited, emboldened by the fact that one-third of survey respondents prefer that the ‘single touchpoint’ be virtual (an app or a hotline). Digital healthcare isn’t replacing established systems; rather, it’s enabling more connected, hybrid experiences. Integrated offline-to-online models have the potential to deliver better patient experiences whilst optimising cost and efficiencies for care providers. Telehealth adoption increased dramatically through the pandemic and recent data on active users from the region’s top digital health apps supports the assertion that telehealth is here to stay.