Southeast Asia is primed for rapid transformation of healthcare over the coming decade, as four evolving megatrends shape the region’s healthcare landscape.
Increased demand for healthcare. The 650 million plus population in Southeast Asia is expected to grow at a modest 1% annually. In addition, a combination of ageing, chronic diseases, consumerism, rising health consciousness and affluence are driving a disproportionate demand in healthcare provision.
Increased financial burden of healthcare. Demographic trends are leading to an ever-increasing cost for healthcare systems. In Singapore for example, health expenditure has increased from 3.3% of GDP to 4.5% over the last decade. This is making governments, insurers, and providers re-think how care systems are organised, and how care is delivered.
Persistent supply constraints. Despite recent advancements, Southeast Asia remains starved of critical healthcare infrastructure. The region averages dramatically lower than OECD countries in terms of both doctors and hospital beds. While governments and private providers are investing to build capacity, the supply deficit is likely to persist for some time.
Rising adoption of technology and changing consumer preferences. With a real annual GDP growth of nearly 5% since 2000, increasingly affluent, tech-savvy healthcare consumers are emerging in the region. These consumers are mobile-first, early tech adopters, and demand levels of service and choice in healthcare that they are used to receiving in other areas of life.
The dawn of digital health ecosystems in Asean
These megatrends pose critical challenges to health systems in Southeast Asia. Digital technologies are emerging as important disruptors to address these challenges. In India and China—countries which face similar challenges—digital health ecosystems have emerged as potential solutions. These ecosystems are virtual one-stop-shops for consumers’ healthcare needs, providing a variety of healthcare products and services through partnerships. AliHealth, Ping An Good Doctor and JD Health in China, Practo, Apollo and 1mg in India are all examples of evolving digital health ecosystems.
In Southeast Asia, a similar trend is emerging, and four unique factors are now providing impetus for the creation of digital health ecosystems.
First, tech innovation and adoption are coming of age, creating new forms of access and interaction. Secure and cost-effective data-sharing solutions, for example, are increasingly available and enable new ecosystem applications.
Second, favourable regulatory developments are adding momentum to digital health ecosystems. Regulations such as Singapore’s National Telemedicine Guidelines have established clear principles for AI, data governance and telemedicine, enabling a smoother transition to digital health.
Third, new competitors are entering the market, including established technology players aiming to disrupt the healthcare space. Grab and Gojek—the region’s most prominent tech players—have increased their attention on the healthcare space with GrabHealth and GoMed. While they have limited healthcare experience, they boast of successful platforms and relevant experience in unlocking business ecosystems through technology.
Finally, COVID-19 has disrupted the landscape, exposing many structural weaknesses of existing healthcare systems, and has forced healthcare players to rethink operations, unlocking collaborative and innovative approaches.
Building digital health ecosystems: five winning principles
Globally, many emerging digital health ecosystem players have achieved significant traction with consumers. Other ecosystem aspirants have a large and growing opportunity, but they must understand why some ecosystems work, and others do not. At Boston Consulting Group, we have identified five key principles to establishing a winning digital health ecosystem.
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First, focus on a big enough problem to solve. Establishing an ecosystem requires a significant upfront investment, justifiable only if it solves an important friction in the healthcare system. China’s Ping An Good Doctor set out to address the fundamental challenge of healthcare access in rural China and now facilitates more than 830,000 daily consultations with 1,800 in-house doctors and more than 10,000 external medical experts.
Second, ensure all essential partners are on board. Convincing the right partners to commit to the ecosystem is often a key roadblock. Ecosystem aspirants must find ways to generously share the benefits of the ecosystem and incentivise partners, either monetarily or through access to services or information. They should focus on cooperation rather than a “move fast and break things” approach.
Third, work closely with public healthcare officials and regulators. Healthcare is a sensitive and highly regulated sector and requires approvals to pilot initiatives and strict adherence to data security and privacy regulations. Successful ecosystem players work closely with local governments and incorporate their inputs early into business models to avoid fundamental business continuity risks.
Fourth, achieve critical mass by first increasing scale, not scope. Several healthcare ecosystems have fallen into the trap of adding too many services and products, diluting their core offering, adding complexity, and struggling to grow. Instead, a more prudent approach is to focus on a core offering and achieve critical mass, followed by broadening of scope. A great example of this comes from outside healthcare. LinkedIn was launched as a social network for professionals to connect. Only after achieving a leading market position did the company begin to add further services, such as online recruiting marketplace and content-publishing platform.
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Finally, invest for the long run. Given the complexity of healthcare and orchestrating partnerships, ecosystems require a long horizon to return profit. Ping An Good Doctor, founded seven years ago, still recorded a net loss in 2020. In the short term, instead of focusing on profits, ecosystem orchestrators need to measure metrics that track the value that ecosystems create for its participants.
The heart of digital health ecosystems is beating strong, and players with a finger on the pulse stand poised to capture significant market potential. Prospective players should act now if they wish to prescribe their own success in this rapidly growing market.
Sumit Sharma, SEA Leader for Healthcare, Managing Director and Partner, Boston Consulting Group
Dr Anurag Agrawal, Partner and Associate Director, Boston Consulting Group
Photo by Stephen Dawson on Unsplash
