The global pandemic has fundamentally changed the world and, along with it, almost every organisation in every industry and country must re-think and re-construct how they have been operating their businesses in the past, and navigate a new path towards a post-pandemic world that is fraught with both challenges and opportunities. Undoubtedly, the pandemic that started two years ago and continues to rage on unabated in many parts of the world, especially in Asia, has impacted healthcare significantly. What are the challenges and gaps? What trends will emerge?
For those acquainted with Asia, you would agree that it is not possible to treat Asia as one monolithic bloc and, tempting as it may be, we simply are unable to apply a broad-brush approach in examining something as complex as healthcare, especially in such a diverse region. Notwithstanding, there are some attributes that can be used to characterise a broad and general spectrum of healthcare systems in Asia to elicit a realistic synopsis that promotes meaningful understanding of both its current and future states. In this article, I hope to examine and provide a summary of healthcare that is representative of the two largest countries in the region, China and Indonesia.
“Putting people and their lives first”
An exhibition in Wuhan has been created about the city’s battle, and ultimate triumph, over the coronavirus pandemic at a convention centre previously used as a makeshift hospital for patients. Photo: Yomiuri Shimbun via AP Images
In the years leading up to the pandemic, there already existed extraordinary, long-standing challenges in most Asian countries (though they are less pronounced in the more developed economies such as Japan, South Korea, Hong Kong, Taiwan and Singapore) in developing world-class doctors, enhancing health services delivery, improving clinical protocols and administrative processes, and improving the overall quality of their countries’ health systems. As a matter of observation, the healthcare sector across many parts of Asia, especially Southeast Asia, can be characterised by a lack of public funding, overcrowded public health systems with varying degrees of quality, and overstretched capacity that is constrained by inadequate primary healthcare systems amidst a tightly regulated labour shortage. The relatively low penetration of private health insurance also meant that any market-driven shifts from a public that is accustomed to basic-to-moderate social and universal healthcare services to a higher premium, higher quality private healthcare scheme would take considerable inducement and effort. This explains why the private healthcare sector remains inherently fragmented and needs to grow faster to match the demand for high-quality medical services.
Vaccine struggles in Indonesia
Overtaking India, Indonesia is now leading the world in new coronavirus cases and deaths. The government pushed for a mass inoculation programme that is administering a million doses a day. But low vaccine stock, bureaucratic hurdles and poor communication about the halal status of vaccines slowed down the initial rollout. Photo: Sipa USA / Alamy Stock Photo
Take China, for instance. It is, by far, the largest healthcare market in Asia. As its large population ages, the country’s demand for disease treatments based on demographics, risk factors and disease incidences continues to rise. However, China’s state-funded medical reimbursement model means that most reimbursable medical treatments are undertaken by the public sector, where the talent pool and specialty know-how are concentrated in large Tier 1 cities such as Shanghai and Beijing.
Indeed, with a supply constraint and geo-clustering of the top physicians, it also means that the public perception is that healthcare services rendered by care teams practising at these large public hospitals are of a higher quality, while institutions that are outside of these clusters face a much wider quality gap perception. Overall, there is a huge, long-term demand for hospitals in providing high quality care across three levels of systems – primary, secondary and tertiary. This creates immense opportunities for providers to invest in world-class clinical education, training and development. A good example is the Hangzhou-based Sir Run Run Shaw Hospital (SRRSH) which recently achieved a ranking in the top 1% of public hospitals in China, according to evaluations conducted by the National Health Commission of the People’s Republic of China. The evaluation uses 16 indicators wherein SRRSH was acknowledged for top performance in key areas such as quality improvement and patient satisfaction. SRRSH is also a member of the Mayo Clinic Care Network – a select group of carefully vetted and independent health care systems that have special access to Mayo Clinic’s knowledge, expertise and resources. Since 2017 when SRRSH joined as a network member, it has continuously worked alongside Mayo Clinic to strengthen its quality and clinical standards through knowledge acquisition, capacity-building and skills training in order to better serve its patients. Their top ranking is a strong testament to SRRSH’s ongoing efforts to invest in medical education, training and development.
At the same time, China has a burgeoning and significant ‘high net worth’ population, with discretionary willingness to pay for expensive and differentiated care using private health insurance or out-of-pocket spend, driving up the demand for premium health care services in the private sector just as the public institutions are trying to cope with their own demand. As compared to other large, developed economies (for example, Japan, South Korea, Australia and the US) where private health insurance coverage is already more than 50%, China only has 15% private health insurance coverage even though it is growing at a compound annual growth rate of 29%. To further complicate the situation, as China continues to adopt a ‘zero-COVID’ policy, the propensity for Chinese patients to seek medical treatment abroad is observed to have fallen significantly – they now have no choice but to seek specialist medical care closer to home until travel restrictions are lifted. What does this mean? The prices and demand for high quality, premium medical services in China will inevitably rise but mainly in the private sector, and will remain largely concentrated within the affluent proportion of the population. As private operators vie to acquire and retain clinical resources to deliver those services, the push for digital convergence and the need for incremental technological enhancements to be embedded into its clinical workflow will also intensify in order to mitigate resource deficiencies. The Chinese government will, however, at the same time, aggressively curtail sharp rises in public healthcare costs by taking a proactive stand in innovating and tweaking its central policies to improve accessibility to innovative drugs and improve overall healthcare quality for the sake of common prosperity.
Indonesia is Southeast Asia’s largest country in terms of population, but its public health system is underfunded, which has led to insufficient capacity to service its large and growing population amidst an increase in the burden of non-communicable diseases. Similar to Vietnam and the Philippines, it has a poorly developed and low-capacity primary care sector, with an over-reliance on specialist level care. Yet, as compared to the rest of the Southeast Asian countries, it has the lowest number of surgeons and nurses per 100,000 people,1 creating higher quality variability and a severe constraint on the talent required to deliver specialist care. The result? A huge outflow of medical tourists from Indonesia travelling to neighbouring countries such as Singapore and Malaysia or even as far out as the US to seek high quality medical care. Latest government estimates reveal that Indonesians have spent approximately 93 trillion rupiah (SGD8.9 billion) on medical treatment overseas. In earlier government estimates, at least 600,000 Indonesians travel to Singapore and Malaysia every year, each spending between USD3,000 and USD10,000, which is a significant sum, when compared to Indonesia’s gross domestic product per capita of around USD4,000.2
Gaps in the national healthcare system
Despite its success in widening coverage towards the goals of including all Indonesians, BPJS-Kesehatan, the agency that manages Indonesia’s national health insurance, has been suffering a huge financial deficit since its establishment. Other service quality challenges include long queue time for elective surgery, limited BPJS-approved wards in private hospitals and lack of access to top specialists. Photo: Pacific Press Media Production Corp / Alamy Stock Photo
Whilst a huge outbound medical tourism market may suggest a large potential market for private health insurance, this is unfortunately not being met. In the highly fragmented private hospital sector, the top five players have only 11% of the market share, with significant concentration in and around the capital Jakarta. As such, many local private hospitals have no choice but to accept a popular and widely used social insurance scheme known as Badan Penyelenggara Jaminan Sosial Kesehatan (BPJS), which covers approximately 85% of Indonesians.³ Faced with an ongoing situation of insufficiently-trained doctors, the determinant factor for the average Indonesian patient who chooses to seek local medical treatment therefore lies in whether the hospital accepts BPJS, rather than its clinical reputation, service quality and brand. This will not be sustainable in the long run, and government policymakers will have to consider how to adopt new legislation to future-proof and accelerate capacity-building in the healthcare sector. In recent times, the government has already signalled that it will simplify the process for foreign doctors to obtain a licence, with the caveat that only those who are deemed to have high expertise will be allowed to practise, so that local doctors will benefit from the transfer of knowledge. This is a good sign but will take strong political conviction and active industry participation to ensure sustainability.
An overwhelmed healthcare system
The surge in COVID-19 cases has been a burden to Indonesia’s healthcare system, which even before the pandemic was relatively weaker compared to its neighbouring countries. Many Indonesians have little choice but to isolate at home due to overcapacity in hospitals. Photo: Sipa USA / Alamy Stock Photo
Over the next decade, I foresee three major convergence trends that will impact healthcare in China and Indonesia and could very well be applied across many parts of Asia. Firstly, in capacity-building, there is an urgent need to lift each country’s overall quality of healthcare services, and this can only be achieved with more specialised healthcare education, and professional medical training and development. Both countries will carry out these activities differently. I foresee that Indonesia will roll out more business-friendly legislative measures that allow both the public and private sectors to assimilate world-class expertise and know-how to enhance its local practice, so that it can elevate its quality and stem the outflow of Indonesian patients. China, on the other hand, will look to securing knowledge and know-how and apply them mostly at its second- and third-tier cities through an intensification of formal exchanges, educational collaboration and even licensing of intellectual property from abroad.
Next, we will also observe a gradual closing of gaps in the variability of the quality of healthcare services between public and private spectrums. When the pandemic eventually transitions into an endemic state in China, it is even more likely that the healthcare sector will remain a national priority agenda, in which the public healthcare sector would assume the role of central ideological bellwether in defining what good healthcare quality in a post-COVID China would look like. There will be a strong and long campaign of post-COVID victory by the central government which will not only raise the prominence of healthcare as a ‘do-good’ sector but also, more importantly, incentivise the provincial governments to push and compete for excellence in public hospitals to close the gap with the private sector. Indonesia will see a similar closing of gaps, but between the domestic and overseas private sectors, as start-ups, private equity, sovereign wealth funds and investors attempt to improve their services to capture a hugely underserved market that has not been able to travel abroad for medical treatment. At the same time, the convergence between public and private healthcare sectors in Indonesia will be spurred on through a government-coordinated effort in upgrading key state-owned healthcare enterprises and disposing of or privatising non-performing assets.
Thirdly, we shall witness an ever-increasing and significant adoption of digital tools and digital convergence across the continuum of care, augmented by ‘made-at-home’ or acquired technologies that aim to disrupt traditional processes and models of care. Even as China finds itself being shut out of the global technology race due to geopolitical tensions as well as its own tighter regulations on data usage, it will continue to develop and integrate its own homegrown version of technological innovations to augment its healthcare capabilities. Once it has proven its dominance domestically, it will eventually start to re-configure to export those healthcare technologies. Indonesia, to a lesser degree, will prefer to develop capabilities focused on its archipelago of territories, and will do so with external help. It will encourage and entice such private players to experiment and innovate, to win the ultimate prize of producing national-level medtech champions serving a diverse and growing population.
MR ROYSTON LEK
Mr Royston Lek is the Executive Director for Asia Pacific at Mayo Clinic. Based in Singapore, he is responsible for driving Mayo Clinic’s vision to bring Mayo’s unique care model to the Asia Pacific and creating strategic partnerships to elevate the practice of healthcare. He has more than 20 years of international business experience, having lived and worked in China, Germany and Singapore with regional healthcare responsibilities covering Southeast Asia and Australia. He is a graduate of the Tsinghua-INSEAD MBA programme and has a Master’s in Supply Chain Management at Cranfield University and a Bachelor’s in International Business, Finance & Economics from Manchester University.