The Southeast Asia’s emerging countries are expected to witness tremendous growth in healthcare spending by 2020. These include Indonesia, Philippines, and Vietnam which are witnessing a widening reach and expansion of their healthcare systems to serve thousands of patients that have for long been deprived of proper care. According to the Economist Intelligence Unit, the CAGR of healthcare spen
The Southeast Asia’s emerging countries are expected to witness tremendous growth in healthcare spending by 2020. These include Indonesia, Philippines, and Vietnam which are witnessing a widening reach and expansion of their healthcare systems to serve thousands of patients that have for long been deprived of proper care. According to the Economist Intelligence Unit, the CAGR of healthcare spending in Indonesia and Philippines during 2016-20 is expected to be 10.6 per cent and 10.8 per cent, respectively, exceeding growth of the BRIC nations. These merging economies have focused on social health insurance to provide affordable healthcare for low-income families. Indonesia has made a reasonable advancement in healthcare provision through its universal health insurance that covered more than 65 per cent of its population as of 2016, growing from 46.7 per cent in 2013. Meanwhile, Vietnam has more than 77 per cent of its population covered under universal insurance scheme, while the coverage for Philippines was just under 90 per cent by 2016. Implementation of the health insurance policies was dependent on partnership with private hospitals as government hospitals were unable to meet demand because of inadequate supplies and lack of proper infrastructure.
While Singapore and Brunei are the most developed healthcare markets in the region, the former is looking beyond a strong healthcare system and aims to drive healthcare innovation to address challenges such as chronic diseases and ageing population. In the fast maturing markets of Malaysia and Thailand, the rise of healthcare systems locally meant better choice of care for patients. Malaysia in particular, has seen rise in spending on healthcare as the health ministry planned to spend around $350 million as of 2016 to better integrate public and private healthcare systems by sharing of data.
Economic growth has spurred funding in public healthcare expenditure in the region’s emerging countries; nevertheless private players do see a great opportunity in the longer run and continue to expand their services. Rising income groups and an affluent popula ion have fueled the demand for access to better healthcare facilities and higher quality of care. The challenge of healthcare delivery is being addressed through allocation of heavy budgets for upgrading healthcare infrastructure and closing in on the demand for hospital beds in the regions. Myanmar is slowly moving towards becoming a growing healthcare market, while Cambodia and Laos have been dependent on private players for healthcare. These merging countries present significant opportunities for private companies. For the universal health programmes to sustain in the long run, governments will look to players that finance and deliver care by improving efficiencies through development of generic drugs and providing affordable healthcare. For healthcare companies, this means widening their reach through higher volumes of affordable products, and innovative business models for serving middle and affluent income groups.
In the cover story, Yoshihiro Suwa of Roland Berger, provides deeper insight into how private players in the region have experienced an i ncreasingly competitive environment and reduced margins in the recent past. While the outlook remains optimistic, private healthcare providers should continue to look at innovative business models to evolve and remain relevant for sustaining in the long-run.