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Decentralisation of Southeast Asia's Healthcare Ecosystem

Following the money

Yoshihiro Suwa, Partner, Roland Berger

The healthcare ecosystem in Southeast Asia is set to decentralise, with delivery of medical care shifting away from the confines of hospital walls to clinics and homes. Four major forces are disrupting the industry's traditional value chain, changing industry's business models as well as cost and revenue attainment of incumbent businesses.

For decades, hospitals in Southeast Asia functioned as the central hub for patients to receive healthcare. Patients needing diagnosis and treatment, from the mild to the severe, converge together at the hospital. In a trust-based industry like healthcare, hospitals are the paragon. Yet cost of visiting a hospital is increasing at an unsustainable rate, driven by rapid growth of the Asian middle class that is creating an industry crunch.

As healthcare costs continue to skyrocket and trend upwards, new forces are slowly morphing the regional healthcare ecosystem. More consumers will increasingly demand quality service at a more manageable price point. Today, game-changing innovation such as health monitoring wearable devices, machine learning platforms for screening, and online consultation services have won over a subset of consumers and showcased that they are the way of the future. These technologies are disrupting a market that used to be dominated by hospitals, and are enabling remote delivery of healthcare service in locations closer to consumers.

Southeast Asia's healthcare players need to prepare for strong disruptors along four major fields: (i) services at home by digital health consultation platforms and point of care technology, (ii) services at clinics by clinical decision support systems, (iii) by insurance companies' gear-shifting towards proactive cost containment programmes, and (iv) corporate actions by conglomerates with their massive corporate reach across Southeast Asia.

Decentralisation will not be a matter of 'if' but 'when'. As consumers embrace new healthcare technology and new model of healthcare delivery, the flow of money will change. In the future, revenue attainment and associated cost will no longer be concentrated in hospitals. Players across all segments of healthcare value chain will then have to assess the impact on their businesses when decentralisation materialises.

Four areas to watch

Why do people prefer hospitals so much despite the existence of alternative care providers such as clinics and pharmacies? Trust, or lack of it elsewhere, is key to explaining the healthcare consumer behaviour in Southeast Asia. Nonetheless, not all hospital admissions are necessary. In an ideal and more efficient world, hospital visitations would be focused for patients requiring treatment from critical care.

Now with the arrival of technology, a diversified set of players is equipped with the necessary skill sets to provide quality and specialised care to compete with hospitals. Tech-facilitated care would penetrate a patient's journey to a varying degree that is from preventive checkups, diagnosis screening, to treatment and treatment follow-ups.

All in all, emerging health-tech has thrown the spotlight on four areas that set the forces of decentralisation in motion. The four areas to watch are:

1. At home, driven by strengthening of online platform's gate-keeping role, growing sophistication of devices to manage chronic lifelong diseases, and innovation of point-of-care (PoC) testing systems
2. At clinics, facilitated by datacentric clinical decision support
3. Insurance providers and HMOs shifting their orientation towards digital solutions for cost containment
4. Asian conglomerates – the region's power movers – finding newfound interest in integrated healthcare network

Decentralised delivery of care implies gradually moving outside the confines of hospital walls and to more distributed locations. In this model, a diversified set of players comprising of clinics, pharmacies and at-home service providers will compete with hospitals. This set of players will come equipped with the necessary skill sets and financial incentives to provide care. Old and new healthcare companies would then need to prepare for a new reality in a decentralised ecosystem.

1. Decentralised healthcare at home

Rapidly developing online consultation technology has allowed digital healthcare platform players to transition as a credible gate-keeping management of primary care. This means that diagnosis can be done virtually anywhere without requiring hospital visit, allowing for time and cost savings for consumers. The benefit is clear, in that bringing doctors' expertise online will be substantially cheaper and more efficient than requiring patients to spend hours in a hospital visit.

In Philippines, online platform provider MyPocketDoctor has been a part of Medicard, the country's leading Health Maintenance Organization (HMO). It offers 24/7 remote online consultations with doctors, while delivery and pick-up of medication are done at selected pharmacies. With the arrival of MyPocketDoctor, consumers saw an estimated 80-90 per cent reduction in their consultation cost and over 90 per cent savings in time spent. MyPocketDoctor’s low cost offering is effectively sustained through corporate partnership, with AXA in this case, which grants it access to large-scale membership and in turn greater leverage to secure lower prices from providers. With MyPocketDoctor, insurance providers and HMOs can more effectively contain healthcare budget expenditure.

Another key utility of digital healthtech is in bringing the management of chronic disease to the hands of patients and caregivers at the comfort of their home. Chronic disease, defined as an illness persisting or recurring for a long time, will be a source of perpetual medical spending to consumers. When multiplied over a lifetime, hospital visitation will accumulate as cost in perpetuity which can burden patients and/or payers if left unmitigated.

Diabetes is an example of chronic disease requiring constant monitoring and access to caregivers. Digital health providers such as Holmusk’s Glycoleap, Malaysia's HypoBand, Indonesia's Teman Diabetes, and Philippines' Diamate are offering convenient and cheap alternatives for diabetes monitoring in the form of wearables and blood glucose tracking apps. Payers benefit because doctor can monitor patients remotely without requiring expensive visits to hospital. Rest-of-life management of diabetes becomes more affordable through digitally-enabled preventive analysis, better quality of-life treatments, and disease selfmanagement.

The outlook of decentralisation becomes stronger considering positive momentum of PoC testing system. In Southeast Asia, reception and the popularity of PoC testing are increasing as consumers extract substantial value from the devices, especially through improved their access to early diagnosis. Tests can be done at remote locations, which fit the market and meet a diversity of medical needs in developing regions. Healthcare professionals also benefit as remotely-administered PoC tests will optimise clinical efficiency, reduce use of staff time, and is geared towards leaner process sequence.

Fujifilm’s CureSign is an example of a Do-it-Yourself (DIY) PoC testing where patients take their own blood sample, send it via mail, and receive results within 1-2 weeks. As a Blood Test Mailing Service Kit, CureSign enables rapid and early risk monitoring, particularly for lifestyle diseases and cancer. Currently available in Japan and Thailand, it is being used by about 12,000 users annually and is estimated to grow in adoption through health insurance tie-ups. Alongside Fujifilm, Southeast Asia's POC market is also home to healthcare giant Siemens. Available across Southeast Asia, Siemens Healthineers covers chronic disease management as well as POC testing for critical care and clinical setting solutions. Siemens Healthineers covers a broad range of tests, ranging from cardiac and diabetes to blood gas and urinalysis.

All in all, the availability of remote health-tech solutions for home use is incentivising patients to reduce their frequency of hospital visits, freeing up hospital resources for critical quality care. At-home health-tech solutions are changing the orientation of healthcare business to be more patient-oriented than ever, with services delivered at greater convenience at a more manageable cost. For consumers, this will be a monumental phase in the history of healthcare in Southeast Asia.

2. Decentralised healthcare at clinics

The second area of decentralisation is taking place at primary care clinics with the advent of Clinical Decision Support Solutions (CDSS). CDSS is defined as any application that analyses data to help healthcare providers make decisions and improve patient care. CDSS use cases in Southeast Asia include TeleMedC for Diabetic Retinopathy screening and Singapore's eHINTS. As competition to better serve and attract patients heats up, CDSS will be the differentiating factor among healthcare providers.

One prominent example of CDSS in Southeast Asia is TeleMedC, which helps healthcare providers perform preliminary eye-health screening without having to purchase expensive telemetry equipment. It combines advanced hardware technology with AI targeted specifically at patients with high propensity for eye damage caused by chronic diseases, including diabetes, glaucoma, AIDS/HIV, or high myopia and cataract. Primary screening is done using TeleMedC’s portable hardware, which is then processed and interpreted through its AI model. Diagnostic results are generated within minutes with surprising level of accuracy – close to 97 per cent sensitivity and 92 per cent specificity in Diabetes Retinopathy grading. TeleMedC then links patients to suitable eye treatment from optometrists, eye clinics, and hospitals.

TeleMedC brings new capabilities to general practitioners (GPs) and primary care clinics, allowing them to perform a wider array of healthcare service, to intervene early, and to diagnose using multiple data sources. CDSS effectively brings selected eye hospital services downstream, delegating a narrow subset of medical care to clinics and thereby decentralising healthcare. It benefits high-risk patients by lowering cost through early diagnosis.

TeleMedC is one form of CDSS that relies on visual-based indicators for screening for early intervention. Another form of CDSS that helps healthcare providers make better decisions through data is Singapore's eHINTS, a data repository providing decision making analytics for healthcare institutions. An acronym for Electronic Health Intelligence System, eHINTS integrates clinical and operational patient data from multiple systems to provide medical professionals with comprehensive selfservice analytics capabilities and better clinical data documentation. eHINTS cleanses, consolidates and standardises data for day-to-day use and can be applied across healthcare institutions.

In the past, consumers relied on hospitals to serve as central hubs for delivery of specialised care, ranging from eye check-ups to consultations and treatment. The market has now softly turned towards a scaled and distributed model thanks to access to easy-tooperate screening technology, inclusive ecosystem, and improved "final-mile" linkages between patients and service providers. Segments of healthcare services are pulling away from hospitals and into homes as well as GPs in clinics.

3. Insurance providers getting serious about decentralisation

The role of insurance providers as payers of healthcare effectively grants them control of the flow of money in healthcare industry. By extension, this implies that any real change in healthcare consumer behaviour would require insurance providers to be onboard. Today in Southeast Asia, there are clear signs that insurance companies are navigating consumers to adopt newer technology and decentralised care to better manage healthcare budget. This enables healthtech to work and for decentralisation – healthcare away from hospital and into homes or clinics – to truly take effect.

In Thailand, Bangkok-based Muang Thai Life Assurance (MTL) group has developed a set of insurance product solutions specifically targeting diabetes patients to manage their health through at-home self-monitoring device. The suite of solutions includes blood sugar self-monitoring Roche Accu-Chek and a dedicated app called BetterCare for health consultation with diabetes specialist. In combination with the suite of health-tech solutions, MTL has implemented a dynamic pricing scheme that grants each diabetic paid insured a discounted premium whenever a patient's HbA1c shows improvement.

Over in the Philippines, HMO Maxicare integrates digital health with physical in-house care service to achieve cost containment and membership expansion, primarily through their own network of Maxicare Primary Care Center (PCC). PCC is operated as a 24/7 offline clinic for Maxicare members with available physicians as well as kiosks for online consultation and blood temperature sensors. The accessibility of PCC retail operation has helped consumers to save 80 per cent of claim cost compared to private hospitals expenses and reduce average wait time to only 30 minutes at peak hours. Maxicare also stepped in to partner with major manufacturers and distributors such as Zuellig Pharma to gain cost benefit and large procurement discounts for their insurance holders. This allows them to provide free medicine to at-risk members, thereby minimizing risk of patients contracting chronic rest-of-life diseases which will result in expensive claims and costly hospital visits.

In Singapore, leading insurance and HMO companies such as Cigna, Prudential, AXA and AIA are collaborating with online consultation platform MyDoc. For no additional fees, policyholders can receive free on-demand virtual consultation remotely for health screening. It also offers members an e-prescription that can be processed by 24/7 virtual pharmacists. The impact has been noticeable, with close to 50 per cent drop in Rx cases and cost-savings of at least 28 per cent. Similarly in Indonesia, Allianz has partnered with healthcare network platform HaloDoc in its effort to navigate members towards getting online medical consultation instead of visiting GPs or specialists.

Overwhelmingly, HMOs and insurance providers across Southeast Asia are orientating towards decentralising healthcare services for sustainable medical cost  ontainment. Other HMOs and insurance groups too will need to prepare themselves for the future with a decentralised healthcare ecosystem.

Before and after

Whereas hospitals used to be the centre for all healthcare services, ranging from diagnosis to treatment, the new decentralised reality will see stronger involvement from players such as clinics, pharmacies, insurance groups and HMOs. While healthcare providers used to wait for sickness to occur, players in the new decentralised model will aim to prevent and intervene before sickness occurs in order to manage cost. In bringing about a more affordable  ealthcare for the population, different stakeholders in the healthcare ecosystem will step up their involvement at home and at clinics. Ever more than  ver, health-tech will play a key role in enabling the transformation of healthcare ecosystem.

As the incumbents in the market, how should hospitals respond to new entrants? What role will Asian conglomerates occupy in the new decentralised healthcare ecosystem? The coming decade will bring about distinctive changes in how healthcare takes place in the region. This is still an early stage, but soon our conversation about roles and responsibilities in healthcare will surely change, and all players need to prepare.

4. Conglomerates' response to decentralisation

Conglomerate groups have been the dominant force in Southeast Asia's healthcare ecosystem. As the ecosystem gets decentralised, new players will emerge and conglomerates will need to assess their position in order to continue capturing the lion's share of this industry. Asian conglomerates that used to enjoy  specific 'sweet spot' areas within the healthcare ecosystem will be tasked to re-evaluate their portfolio.

A key trigger of decentralisation is the unsustainability of rising medical cost when where healthcare is concentrated in hospitals. Increasingly, different stakeholders will play key roles to meet the demand for a more affordable healthcare throughout the patient's journey. This framework can assist conglomerates in assessing their strategic position in this new decentralised ecosystem.

Across Southeast Asia, local conglomerates with involvement in the healthcare industry include Indonesia's Sinarmas and Lippo Group, Thailand's BDMS,
Philippines' Ayala group, Vietnam's Vingroup, Malaysia's IHH group, and Singapore's Raffles Medical Group. To a varying degree, these conglomerate groups will take notice of other stakeholders in the value chain who are beneficiaries of growing decentralisation, namely primary clinics, pharmacies, HMOs, insurance companies and health-tech enterprises. Ultimately, as conglomerate groupsexpand their holdings across the value chain, the integrated business network will produce more affordable healthcare for the society.

--Issue 47--

Author Bio

Yoshihiro Suwa

After graduating from Kyoto University School of Law, Yoshihiro joined global strategy consultancy Roland Berger. He has substantial experience in projects for growth strategies, overseas business strategies, marketing strategies, and market entry strategies with a diverse array of clients. In his current leadership role, he supports the needs of an extensive range of healthcare clients, with primary focus on pharmaceuticals, medical devices, hospitals and consumer goods.