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Frost & Sullivan: Rising Middle Income, Medical Tourism Create Impact for APAC Healthcare Market
Taking a look at the Asia Pacific Healthcare market in 2012 and beyond
Frost & Sullivan finds that by 2020, the APAC healthcare expenditure will increase 151% over 2010 to US$2927 billion at a CAGR of 9.2%. The Malaysian healthcare expenditure market is expected to reach US$25 billion in 2020 with a CAGR of 8.4% over the 2010-2020 period.
Medical tourism is becoming a major economic factor for APAC. In 2012, the Asian medical tourism market is expected to reach US$4.4 billion.
“International accreditations, for example JCI, are likely to become the prerequisite for hospitals targeting to participate in medical tourism. Stringent operational and stringent accreditation requirements are likely to escalate the clinical and operational quality standards, thus increasing market competitiveness,”
JCI accredited hospitals in Asia have increased by almost 7-fold over the past 6 years (2005-2011). Malaysia currently has 9 JCI accredited hospitals. The portability of health insurance further expands the potential for intra-regional medical visits.
The positive healthcare market outlook for APAC is also based on the expansion of middle class and aging populace that changes healthcare services configuration and market strategies.
“Asia’s population is expected to grow to 4.5 billion by 2050, which accounts for 60% of the world’s population. Currently there are about 4.8 million Asian households with income above US$50,000 p.a. and this is expected to grow by 3% to 5% for Southeast Asia,” said Rhenu.
She continued, “Rapid urbanization seen in many Asia countries will create super cities which gather intense concentration of population of high consumption. The incremental demand for health services will impact the volume of routine hospital procedures, such as ambulatory exams, ultrasound, and X-ray, among others.”
In terms of industry specifics, Mobile Health is to become the biggest business model disruptor creating access for healthcare delivery on a mass basis especially in emerging economies.
“Innovation is all about finding opportunity when business models change. The centuries old relationship between doctor and patient is changing in a massive way, driven with increased velocity by mobile and wireless technologies,”
There is a shift from the hospital approach to a personal-driven approach i.e. Home care, where people will take care of themselves with help from family, friends and technologies. A recent survey indicated that 78% of consumers are interested in mobile health solutions.
“Medical and healthcare apps are the third fastest growing category for iPhone and Android phones. The Apple App store now has 17,000 health care related apps, 60% of which are aimed at the consumer. We will certainly see a huge amount of product innovation, such as the new iPhone-based blood pressure monitor from Withings,” said Rhenu.
Snapshot of the Malaysian Healthcare Market
Malaysia spent an estimated of 4.4% of GDP on healthcare in 2011. Despite low spending on healthcare, the performance of Malaysia’s public sector is commendable and comparable with some of the developed countries; the allocation per capita in 2010 was US$366, which is the second highest in ASEAN region.
At present, government expenditure constitutes 56.4% of total expenditure with the balance being covered by healthcare insurance, out-of-pocket spending and the private sector. The relatively lower participation of public funded services, as compared with developed countries, shows certain inadequacies in the provision, which are being filled by private sector.
The private hospital services market earned revenues of RM7.48 billion in 2011 and is expected to reach RM13.79 billion in 2015 growing at a CAGR of 16.5% from 2010-2020.
A rather high out-of-pocket expenditure can be explained by the insufficient presence of the health insurance industry in Malaysia that is one of the least efficient and most inequitable means of financing of healthcare.
At present, there is no national insurance scheme and most of the private sector attendance is born either by employees or by private health insurers.
Healthcare Human Resources remain one of the largest challenges in the Malaysian market. The public sector suffers from a severe shortage of medical personnel, especially doctors. Kuala Lumpur has the highest ratio of physicians to 10000 population. The most underserved state is Sabah where for every 10000 of population there are only 4.37 of medical officers.
The target ratio of one nurse to 200 population can only be achieved in the year 2023 provided there will be continuous growth of the training institutions matching the population growth. Allied Health Professionals are the second group among healthcare professionals in terms of shortage.
According to Malaysian MoH, in 2008 the ratio to population of Laboratory technicians was 1:6,865, required 1:2,000; Physiotherapists was 1:46,760, required 1: 10,000; Occupational Therapists was 1:65,091, required 1: 15,000.
Several expansion strategies are being pursued by MoH such as:
• The construction of new medical training centres
• The recruitment of foreign doctors and specialists
• Acknowledging foreign medical degrees formerly not recognised (with conditions attached)
• An increase in the number of scholarships for the foreign training of Malaysian doctors
• The establishment of new medical colleges and twinning programmes
Growth Engines for Healthcare in Malaysia
1. Specialized hospitals based on therapeutic area for medical tourism
2. Healthcare infrastructure, Mobile health, EMR
3. Primary care, primary HC due to increased chronic disease awareness and shift to out of hospital care
4. Private health providers & insurers due to expanding middle class
5. Medical manpower & training
6. Medical devices & equipment due to increased health demand
7. Chronic disease drugs for rapid increase in burden
8. OTC drugs due to reliance on self-medication
About Frost & Sullivan
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Frost & Sullivan, the Growth Partnership Company, partners with clients to accelerate their growth. The company's research and consulting services empower clients to generate, evaluate, and implement effective growth strategies.