Digital Remedies for the Consumerization of Healthcare
White Papers | October, 2017
By Asia Pacific
Asia's Healthcare Conundrum
On the face of it, Asia’s dynamic growth tells a story of unparalleled economic success. People are better off, governments are largely stable, infrastructure has been well planned and executed, and the mood is – for the most part – upbeat. The Asia miracle is in full swing. But with rising incomes come new and unprecedented public expectations for enhanced government support and services. At the cross-hairs lies healthcare.
The Internet of Things (IoT) is an aggregation of endpoints - or "things" - that are uniquely identifiable and that communicate over a network without human interaction using some form of automated connectivity, whether locally or globally.1
And if you consider that 90% of all healthcare services in the region are government funded, Asia is facing a healthcare conundrum2.
Projections show that the demand for healthcare professionals from physicians, to nurses, to lab technicians will accelerate over the next 10 to 15 years. Talent shortfalls are imminent, with China facing some of the biggest challenges. We addressed this issue in March of this year in a paper entitled “China’s Coming Healthcare Crunch.” (Please refer to the “Insights” section of the DHR International website to view or download a copy.)
The question now is what can be done about it? For some, the Holy Grail is the Internet of Things (IoT), which if effectively deployed, could fill the gap left by talent shortfalls in the medical sector, while at the same time, creating new categories of healthcare professionals. Part of the leap is cultural, and by this, we mean a break from the pattern of building a country’s healthcare needs on the back of hospital-based care.
As dynamic Asia continues to grow, develop, and adapt at a fever pitch, traditional hospital systems across the region are steadily and systematically set to lose their position as the primary provider of health access and delivery.
Throughout Asia, it’s a matter of making scarce medical diagnostic and treatment resources available to a broader base of patients. And for this, new advances in technology through big data analytics, advanced communications networks, and machine learning all hold promise of a new paradigm for the healthcare industry.
That’s a good thing and a bad thing. Good, because access to healthcare outside of urban centers continues to be a major challenge for most emerging markets in the region, and development of clinics, mobile care units and micro-hospitals mean improved health for all. Bad, because hospitals remain the epicenter of medical expertise and treatment protocols, and reduced investment in hospitals to feed remote care initiatives can limit the quality of healthcare delivery.
In the next decade, as shown in Figure 1, this consumerization of healthcare will be increasingly focused on home care and elderly management and lifestyle monitoring, giving birth to a new generation of ancillary medical and healthcare services, all enabled with new IoT technology solutions.
The pending shift in healthcare delivery is largely due to demands triggered by staggering new numbers of Asian urbanites. Fifty percent of today’s Asia population live in cities, heralding one of the greatest human migratory patterns in history.
From 2000 to 2010, an astounding 200 million people moved into urban areas throughout Asia, and this is expected to continue at a rate of 3-5% annually for the foreseeable future. According to the World Bank, East Asia (China, Japan, Korea, and Taiwan) alone now has more than 800 urban areas, including eight megacities with populations of over 10 million people. China – driven by its Pearl Delta Region – accounted for almost 80% of the urban migration over this timeframe.
Each of these mega cities averages 5,000 to 8,000 people per square kilometer (with Hong Kong skewing the average with almost 32,000 people per square kilometer). Figure 2 shows the growing urban populations in key Asian countries.3
While the results have meant higher incomes, education levels, and overall quality of life, it has also ushered in an unprecedented level of financial burden on public healthcare systems now struggling to meet demand.
For the most part, governments in the region have responded practically, subsidizing primary care, while shifting the burden of chronic disease management to consumers and insurers. They have also thrown open the door to private healthcare providers recognizing that a growing percentage of the population has grown wealthy and can afford to pay out of pocket.
Urbanization carries costs both in terms of quality of health and cost to serve. Put millions of people in close proximity to one another and the rate of communicable disease will surely rise. This, in turn, places untold pressure on public healthcare systems designed for managing care, but less well equipped to tend to and finance the cure of more modern diseases such as diabetes, cancer, and heart disease.
According to WHO, a staggering 10% of adults in China, or 100 million people, live with diabetes. Another 230 million suffer from at least one type of cardiovascular condition, with another 120 million heart patients entering the system between now and 20304. Figure 3, for example, shows the proportion of people who died from diabetes before the age of 60 – China and India being one of the highest in the world.
This worsening epidemiological landscape is not limited to China. Throughout South and Southeast Asia, the disease burden is rising. Unchecked urban migration is associated with pollution, social isolation, overcrowding, changes in dietary and physical activity patterns (see Figure 4), and inadequate service capacity for health and sanitation5.
These all serve as underlying drivers for chronic and non-communicable diseases, including – but not limited to – diabetes, heart disease, and respiratory disorders. Bottom line: The increase in long-term chronic disease, in combination with the rapidly aging society of many ASEAN countries, poses a massive potential economic threat to the people and nations in the region.
Emergence of Value-Based Healthcare through Information and Communication Technology
Not surprisingly, healthcare cost inflation is one of the leading concerns of governments around the region. They look to the challenges faced by developed markets in the West and see what high-touch hospital-based care has done to bring systems to the verge of bankruptcy. As governments lose the ability to pay, consumers will be forced to pick up the cost or do without.
Official government data in China revealed that 44% of respondents said that a family illness posed the greatest threat in a slide toward poverty6. Similarly, in India, 40% of the economically lowest-tier households reported a net loss of income during an illness. The numbers explode when the condition is chronic. In a 2012 study of urban diabetes patients in China, it was determined that medical costs increased by 25% over two years after being diagnosed. Treatment costs ballooned for those who stopped or reduced treatment, giving rise to complications and requiring additional medical treatment.
Unrestrained, healthcare costs – specifically the cost to government and the patient during hospitalization – are forecast to grow exponentially. Inflation does not discriminate between developed and developing markets. As shown in Figure 5, healthcare spend as a percentage of GDP is on the rise everywhere.
Naturally, the search is now on for a better healthcare model. And technology – so many hope – has a major role to play, both as a substitute to talent shortages, as well as a panacea to the high cost of hospital-based care.
Hospitals, diagnostic centers, clinics, and physician offices will soon need to come to terms with the importance of so-called “value-based care.” Not unlike the revolution in education and the shift to student-centric learning, in healthcare, it’s the patient, not the doctor, who now takes center stage. It’s a fundamental shift in the way we have thought about healthcare. Just as e-commerce reshaped the retail landscape by empowering the consumer with choice, price comparison, and speed to fill, so will the patient of the future assume greater ownership of his or her own healthcare.
Value-based care is designed to address the holistic needs of the patient vs. cater to the single-sighted diagnosis of a physician. The shift is toward “health outcomes,” where a 360-degree view of the patient allows multi-faceted monitoring, feedback, and treatment to deliver a better all-round result. Think how different this would be from today’s treatment protocol where patients must travel to a clinic or hospital, wait long hours, endure the same set of questions from receptionists, to nurses and doctors, and then watch as hand-written notes are logged on paper print-outs. It’s no wonder that healthcare services remain so hugely inefficient.
There’s also the cultural anomaly of doctor’s withholding or parceling out information to patients based on a “need to know” basis. In effect, the current system discounts the patient in deference to the physician’s means of diagnosis.
It’s because medical care and treatment protocols are so complex that healthcare is among the last industries to transform, but technology, diagnostic tools, data, and communications networks are now converging to make the patient-centric care a possibility.
Despite the enormous pressure on governments to adapt or face years of inflationary financing of their healthcare systems, there is resistance. Hospitals, after all, are for the most part doctor-led institutions, and like the teacher who enjoys a lectern and full attention of the class, physicians fear relinquishing too much control lest they become servants to the system they created.
Remote monitoring of care is also a concern. Some doctors cite privacy issues or insist that only face-to-face a proper diagnosis and treatment plan can be determined. The numbers seem to back this up. In a 2016 IDC survey, it was discovered that only 3.5% of hospitals in ASEAN countries are considering virtual consultation portals as a business priority for patient engagement.
Indeed, Asia hospitals lag their counterparts in other parts of the world. By extension, in another survey of the largest hospitals in the region, over 25% of respondents in Korea considered ‘virtual services’ as a key business priority, while only less than 10% of hospitals in India, China and Philippines deemed it important (see Figure 6)7. Hospital owners/operators in India, the Philippines, and China, thought it even less important. Perhaps because of the already exorbitant cost of healthcare provision in the U.S. and the U.K., between 40% and 50% of hospital operators in those countries said virtual care services were a priority.
Competing with Disruptive Forces - Understanding the Importance of Chance in Management in Hospitals
To the degree that medical professionals have concerns about the efficacy of healthcare delivery that depends on new technologies, data-sharing, mobile networks, and cognitive computing, it is essential that governments address regulatory laws and compliance to ensure the patient’s interests and personal information is protected.
The goal is to establish a proper framework for the role out of next generation services. If executed well, it could give birth to the establishment of smart deployment of 3rd platform technologies, including cloud, data analytics, and remote patient management, all of which could automate, monitor, and improve health delivery processes and lower costs.
In the near future, medical device and diagnostic equipment companies will also begin to play a more extensive and far-reaching role, transforming themselves as primary manufacturers of these products to full-blown solution providers more deeply engaged in the monitoring and management of patient care. In more developed markets, the transition is under way. Today, medical device and diagnostic players generate an equal amount of revenue from services as they do from the products themselves. In emerging markets, such as China, only 25% of revenue is generated from services and 75% from new equipment sales – a reflection of the growth in initial equipment sales. After-sales servicing is also set to get a boost as manufacturers outfit new equipment with remote sensors, feeding real-time information back to centrally-located service centers, providing maintenance early-warnings and pro-active switch and repair schedules. This new trend shows promise of substantially reducing the number of technicians needed to deploy and manage high-end equipment.
The possibilities that technology now offers in the improved management of patient care is almost endless, as shown in Figure 7. The real issue rests with government and private sector hospital management and healthcare policy.
Over the course of the next two decades, the traditional hospital system will increasingly face disruptive forces. Single physician offices, small community clinics, and virtual health assistance, among other trends, are increasingly popular among upwardly mobile city-dwellers who are fatiguing with the long waits, uneven care, and bureaucratic payment processes that go hand-in-hand with the traditional hospital-based healthcare model.
Outpatient services are categorically less costly and while sometimes hospitalization is a must, there are scores of ailments and conditions that can be treated on an outpatient basis. This, in and of itself, could go a long way to reducing the cost of care.
In order to perpetuate this trend, incentives may be needed to arm remote care givers with holistic intelligent technology platforms and applications that can generate real-time access to patient medical records, offer cognitive computing generated treatment plans, and allow for home ordering and delivery of required treatments and pharmaceuticals.
The success and long-term competitive advantage of non-hospital based healthcare providers depends on their ability to augment the role of the primary physician in order to gain access to critical information capable of ensuring speedy, accurate, and cost-effective care.
Because so much of what a hospital depends on technologically is mission-critical and could mean the difference between life and death, medical departments are commonly closely involved, or at least consulted, on key technology investment decisions.
In the IDC Health Insights 2016 survey, it was discovered that 20% to 35% of hospital ICT (information and communications technology) decision-makers are from the line-of-business now,
including personnel from the departments of radiology or cardiology, as well as staff from nursing care and the pharmacy, reflecting a two-fold increase from 2014 (see Figure 8). So, it is that the line-of-business, patient-facing medical professionals are key influencers in the choices hospitals make.
Perhaps more than any other profession, it is the customer (or the patient in this instance) whose interests the physicians will fight to protect. Consequently, it is the promise, and associated risks, of so-called “value based care,” that must be fully understood and ultimately embraced by the physicians and their medical teams.
Readying the Organization for Change
To this end, the biggest challenge facing the healthcare sector is change management. Hospitals and healthcare institutions, whether physicians or the extended care giving network, remain cautious of change, particularly related to technology uptake, compared to other verticals such as manufacturing or retail. In this context, the Chief Information Officer or the Chief Digital Officer of a hospital would do well to cement the drive to digital transformation as part of the organization’s culture by developing a roadmap that includes buy-in from relevant stakeholders, particularly patient-facing care-giving professionals.
Any leader tasked with driving digital and technological transformation in their organization should be able to answer these questions:
- Is the organization able to cater to the full treatment lifecycle of a patient, disease or disorder both inside and outside of the hospital?
- Does the organization involve stakeholders from the line of businesses or caregiving departments in digital transformation blueprinting?
- How will the organization bring together integration of resources, medical assets and equipment, and patients for value based outcomes – all of which can only bring about care orchestration?
- To what extent is the organization cognizant of the need for deep domain expertise and care process knowledge, and is this being acknowledged through IT reform?
- Are manufacturers of medical technologies embedding enough health opinion leaders from the hospital side to understand changing needs of healthcare access and delivery?
- What are the human capital implications both in terms of required skill sets and redundancies that might occur through the deployment of new technologies and solution
We are only at the cusp of these significant changes, but rest assured that as governments continue to feel the financial pinch of escalating healthcare costs, they will be more inclined than ever to explore and endorse new modes of healthcare management made possible through the Internet of Things.