Side effects: Challenges facing healthcare in Asia

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Side effects: Challenges facing healthcare in Asia, is an Economist Intelligence unit white paper, sponsored by AstraZeneca, Bayer HealthCare, IBM, Ernst & Young, GlaxoSmithKline, Microsoft, MSD, Pfizer and sanofi-aventis. The Economist Intelligence Unit bears sole responsibility for this report. The Economist Intelligence Unit’s editorial team gathered data, conducted interviews and wrote the report. The findings and views expressed in this report do not necessarily reflect the views of the sponsors.
Paul Kielstra was the author of the report and Laurel West was the editor. The cover image was created by David Simonds. Gaddi Tam was responsible for design.

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Side effects: Challenges facing healthcare in Asia

  1. 1. Cover_final.pdf 3/23/2010 7:06:28 PM Paper size: 210mm x 270mm C M Y LONDONCM 26 Red Lion SquareMY LondonCY WC1R 4HQCMY United Kingdom K Tel: (44.20) 7576 8000 Fax: (44.20) 7576 8500 E-mail: london@eiu.com NEW YORK 750 Third Avenue 5th Floor New York NY 10017 Side effects United States Tel: (1.212) 554 0600 Challenges facing healthcare in Asia Fax: (1.212) 586 1181/2 E-mail: newyork@eiu.com HONG KONG Lead sponsors: 6001, Central Plaza AstraZeneca A report from the 18 Harbour Road Bayer HealthCare Economist Intelligence Unit Wanchai Hong Kong IBM Tel: (852) 2585 3888 Fax: (852) 2802 7638 Supporting sponsors: E-mail: hongkong@eiu.com Ernst & Young, GlaxoSmithKline, Microsoft, MSD, Pfizer, sanofi-aventis
  2. 2. Side effects Challenges facing healthcare in AsiaContentsPreface 3Executive summary 4Introduction 6Chapter 1: Transitioning 8 Side-effects of growth 8 The “silver tsunami” 11 Fighting on two fronts 14 Systemic challenges 15 Information deficit 16 Funding issues 17Chapter 2: Case studies 19 China’s health reform package 19 Singapore: Preparing to age gracefully 21 Prescription: Business model innovation 22 Thailand: AIDS and the persistence of infectious disease 23 India: The politics of creating a country doctor 25Chapter 3: Country summaries 27 China 27 Hong Kong 30 India 33 Indonesia 36 Malaysia 39 The Philippines 42 Singapore 44 South Korea 47 Taiwan 50 Thailand 53 Vietnam 56 © Economist Intelligence Unit 2010 1
  3. 3. Side effects Challenges facing healthcare in Asia © 2010 The Economist Intelligence Unit. All rights reserved. All information in this report is verified to the best of the author’s and the publisher’s ability. However, the Economist Intelligence Unit does not accept responsibility for any loss arising from reliance on it. Neither this publication nor any part of it may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the Economist Intelligence Unit.2 © Economist Intelligence Unit 2010
  4. 4. Side effects Challenges facing healthcare in AsiaPrefaceSide effects: Challenges facing healthcare in Asia, is an Economist Intelligence unit white paper, sponsoredby AstraZeneca, Bayer HealthCare, IBM, Ernst Young, GlaxoSmithKline, Microsoft, MSD, Pfizer andsanofi-aventis. The Economist Intelligence Unit bears sole responsibility for this report. The EconomistIntelligence Unit’s editorial team gathered data, conducted interviews and wrote the report. The findingsand views expressed in this report do not necessarily reflect the views of the sponsors. Paul Kielstra was the author of the report and Laurel West was the editor. The cover image was createdby David Simonds. Gaddi Tam was responsible for design. © Economist Intelligence Unit 2010 3
  5. 5. Side effects Challenges facing healthcare in Asia Executive summary A sia’s stunning economic growth is once again the subject of global attention as the battered economies of the West continue to work through the damage caused by the global financial crisis. But Asia’s spectacular rise—and bright prospects for growth—have created some serious challenges for governments in the region, not least of which is the impact that rapid economic expansion has had on health and healthcare systems. This paper, published to coincide with The Economist Conferences’ Healthcare in Asia 2010, sets out the challenges faced by 11 countries—China, Hong Kong, India, Indonesia, Malaysia, the Philippines, Singapore, South Korea, Taiwan, Thailand, and Vietnam—as well as some of the innovative solutions being adopted to cope with them. Among the key findings: • Wealth needs to come with a health warning. Non-communicable diseases have become the leading cause of death in Asia. This is partly a result of progress against infectious disease, but the conditions now taking the greatest toll are becoming prevalent because of factors associated with economic development. For example, largely through a combination of the impact of environmental degradation, lifestyle choices made possible by wealth, and ageing, heart disease is either the leading or second biggest cause of mortality in every country in the study, while cancer is among the top three killers in eight out of 11. • Much of the region is in the midst of an epidemiologic transition, forcing health systems to fight on two fronts. While non-communicable diseases have become leading causes of mortality in Asia, infectious diseases remain a significant part of the disease burden in many countries. Health systems built largely to provide cures or acute episodic care must now find a way to deal with the very different matter of chronic disease management and patient education. Even in the field of public health, shifts are necessary: vaccination and sanitation efforts now have to be joined by attempts to influence lifestyle choices such as smoking and diet. At the same time, health systems cannot afford to relax efforts against infectious disease old or new. As Thailand’s experience with AIDS shows, it is possible to make progress against even difficult diseases, but microbes will seize any opportunity when healthcare lets down its guard. • Healthcare systems will need to come to grips with rapidly ageing populations. The percentage of citizens over the age of 65 is rising across the region, most notably in Singapore, Taiwan, Hong Kong, and South Korea. This will require some major preparations such as those being introduced in Singapore, which, among other measures, has created a separate healthcare funding scheme for seniors, is making geriatrics a core part of undergraduate medical training and is improving integration of care for seniors— an essential aspect of successful geriatric care.4 © Economist Intelligence Unit 2010
  6. 6. Side effects Challenges facing healthcare in Asia• Access gaps are wide and could grow. A large percentage of healthcare is funded by private—frequently out-of-pocket—payments in the countries under study. This tends to result in disparity inprovision. The most striking gaps are where geography and wealth inequality mix, with the countrysideoften faring very badly: in India, for example, there are six times more doctors per capita in urban areasthan in rural ones. There is a serious risk that the differences in provision for rich and poor will increaseas growing patient demand puts greater pressure on health systems and the private sector plays a greaterrole in the region’s healthcare. Just as studies in Taiwan found that disparities of access decreased afterthe institution of its national insurance, Vietnam is now seeing a possibility of poorer citizens beingunable to use medical facilities—even public ones, which often require formal fees and unofficial bribes.• There is no single regional model for the public-private split of funding and provision, but mostcountries seem headed for a bigger private sector role. As governments in the region struggle toexpand and adapt their healthcare systems, there is a growing reliance on the private sector eitherthrough choice or neglect. Governments in wealthier states such as South Korea and Hong Kong, whichcover most of the cost of at least basic care universally, are now seeking to contain growing outlays andimprove the quality of care. Poorer countries already have a greater private sector role which is increasingeither through conscious policy, as in Indonesia, or neglect of the public system. China used to be themost prominent case of the latter, but now it is the biggest exception to this shift toward more privatesector involvement, with a major effort to reform its public health system.• Similarly, innovative solutions to healthcare challenges come from a range of sources. The regionhas numerous examples of efforts to address healthcare issues, including China’s attempt to reform itsentire system, India’s efforts to address urban-rural inequality through its National Rural Health Mission,and various private hospitals with high quality, low-cost, universal access models of their own. Each ofthese has strengths and weaknesses, and each holds potential lessons for healthcare systems across Asia. Asia has been the scene of some remarkable achievements in recent decades—including rapideconomic growth, a reduction in infectious disease, and an increase in longevity. These all give cause forcelebration, but they also create their own problems. Now, Asian countries need to address the challengeswhich come from success with the same vigour they have shown in getting to this point. © Economist Intelligence Unit 2010 5
  7. 7. Side effects Challenges facing healthcare in Asia Introduction T he Asian healthcare picture is no less diverse than the region itself. Of the countries and territories this report covers—China, Hong Kong, India, Indonesia, Malaysia, the Philippines, Singapore, South Korea, Taiwan, Thailand, and Vietnam—some have disease profiles and healthcare arrangements which differ little from those of developed countries. Others continue to battle widespread infectious disease with basic, poorly performing medical systems. Despite the diversity in the countries under discussion, they have much in common: changing disease incidences arising from epidemiologic and demographic transitions (themselves driven by economic development); a growth in chronic diseases and lifestyle choices with negative medical outcomes that require complex changes to healthcare systems; rising patient expectations; existing systems that are frequently understaffed and underfunded; urban-rural splits in the quality, or even existence, of care in a large number of countries; and financial constraints that make policymakers reluctant, or unable, to take on much of the health spending currently left to private individuals. Understanding these challenges requires some context. They largely represent new problems arising from economic success rather than from the complications of failure. By most measures, Asians are far healthier now than ever before. As the accompanying chart shows, for example, life expectancy at birth has risen rapidly. In all but three of the countries in question, it grew faster than the world average, and now only India has a lower life expectancy than the global figure. Moreover, these countries have accomplished this while expending far less proportionately on healthcare than Western countries. Figure 1: Rising Life expectancy in Asia China India Malaysia South Korea Taiwan Vietnam Years Hong Kong Indonesia Philippines Singapore Thailand World 85 80 75 70 65 60 55 50 45 40 35 5 0 05 5 5 10 0 70 5 5 60 0 5 6 00 01 9 9 8 5 97 8 19 0 20 19 19 19 19 19 19 19 2 -2 -2 -1 0- 5- - 0- 5- 5- 0- 0- - - 00 10 05 70 55 75 6 9 9 6 8 8 5 19 19 20 20 20 19 19 19 19 19 19 19 19 Source: UN Department of Economic and Social Affairs, Population Division (forecasts use median population projection). Taiwan data from Taiwan Statistical Data Book 2009, Directorate General of Budget, Accounting and Statistics.6 © Economist Intelligence Unit 2010
  8. 8. Side effects Challenges facing healthcare in AsiaIndeed, this level of spending has recently come in for criticism from the World Health Organisation(WHO). Says Dr Henk Bekedam, WHO’s Director for Health Sector Development in the Western PacificRegion: “The level of government spending on health is too low in many [Asia-Pacific] countries. Thesegovernments need to develop strategies to increase investment and public spending on health.”1 1 “Governments not spending enough on health”, WHO This paper will look at the challenges facing Asian healthcare systems and some of the attempts to Press Release, 3 March 2010,overcome them. http://www.wpro.who.int/ media_centre/press_releas- es/pr20100303.htmFigure 2: Low by comparisonHealthcare spending as a % of GDPCountry/Region 2005 2006 2007 2008 2009 2010 China 4.7 4.5 4.7 4.7 4.7 4.7 Hong Kong 6.1 6.1 6.0 6.0 6.2 6.3 India 5.0 4.9 4.6 5.0 5.0 5.0 Indonesia 2.8 2.8 2.8 2.7 2.8 2.8 Malaysia 4.2 4.3 4.3 4.3 4.3 4.3 Philippines 3.5 3.5 3.5 3.6 3.8 3.9 Singapore 3.5 3.4 4.0 4.0 4.1 4.1 South Korea 6.0 6.5 5.7 5.9 6.0 6.1 Taiwan 6.3 6.4 6.4 6.5 6.6 6.7 Thailand 3.5 3.5 3.3 3.3 3.3 3.3 US 15.7 15.8 16.0 16.1 16.3 16.0 Vietnam 3.1 3.4 3.5 3.5 3.7 3.8 Western Europe 9.7 9.6 9.9 9.9 10.2 10.3Source: Economist Intelligence Unit © Economist Intelligence Unit 2010 7
  9. 9. Side effects Challenges facing healthcare in Asia Chapter 1: Transitioning Asia’s healthcare systems have made major strides. But they are now struggling to cope with shifts in the disease burden, rising demands from wealthier citizens and the challenge of how to provide access to all in a cost-effective manner T he one absolute demographic certainty is that 100% of the population will eventually die. The only real question is how. As public-health measures and better medicine have over the last few decades cut infant mortality rates and deaths from infectious disease, other conditions have inevitably filled the void. As the accompanying chart of the causes of death for 2004 (the latest comparative WHO data) shows, non-communicable diseases have become leading causes of mortality in Asia. Such conditions, usually chronic, now account for at least half of the deaths in all the countries and territories under consideration, and in some cases over 80%. The specific types of disease, and the age of their onset, however, are in no way pre-determined by demographic necessity. Largely through a combination of the impact of environmental degradation, lifestyle choice, and ageing, heart disease is either the leading or second biggest cause of mortality in every country and territory, while cancer is among the top three killers in eight out of 11. Put simply, people tend to develop many non-communicable diseases because of genetic predisposition, the accumulation of damage—whether environmental or self-inflicted—over time to their bodies, or a combination of both. Side-effects of growthIndia and China The rapid economic and social changes in Asia have brought a number of developments which acceleratealone make up the stress on human beings. One obvious effect has been noticeable environmental degradation in manyroughly 60% of the Asian countries. In 2002, for example, the WHO estimated that in its West Pacific Region—containingworld’s deaths from China, the Philippines, South Korea, Hong Kong, Malaysia, and Singapore—between 200 and 230air pollution even people per million inhabitants die each year from air pollution, the highest figure for any region. Chinathough constituting in particular has the highest global incidence of COPD (chronic obstructive pulmonary disease; that is,roughly one-third chronic bronchitis and emphysema), and the WHO’s latest figure for annual deaths in the country from airof the global pollution is 850,000. In India the equivalent figure is 527,000. On their own, the two countries make uppopulation. roughly 60% of the world’s deaths from air pollution even though constituting roughly one-third of the global population. Air pollution is, of course, only one environmental problem: water pollution, toxins in2 “Chinese Air PollutionDeadliest in World, Report the soil and other pollutants can all contribute to a range of non-communicable diseases, notably certainSays”, National Geographic types of cancer. Overall, WHO analyses attribute about 20% of all deaths in China and India to pollution inNews, July 9th 2007; WHO,“Country profile of some way.2Environmental Burden ofDisease: China,” 2009; WHO An even bigger health issue facing Asian countries comes from changes in lifestyle related to economic“India National Health System development. In particular, the increasing popularity of Western foods and lower levels of physicalProfile”;8 © Economist Intelligence Unit 2010
  10. 10. Side effects Challenges facing healthcare in AsiaFigure 3: Causes of death in Asia Leading Causes (% of total deaths 2004) Of which leading contributor (% of deaths of this type) China Cardiovascular diseases (34.8%) Cerebrovascular disease (56.2%) Malignant neoplasms (19.2%) Trachea, bonchus, lung cancers (21.3%) Non-communicable respiratory diseases (16.6%) Chronic obstructive pulmonary disease (91.4%) India Cardiovascular diseases (25.9%) Ischaemic heart disease (22.4%) Infectious and parasitic diseases (18.0%) Diarrhoeal diseases (27.8%) Respiratory infections (9.8%) Lower respiratory infections (98.5%) Indonesia Cardiovascular diseases (24.7%) Ischaemic heart disease (47.1%) Unintentional injuries (13.5%) Non-specific unintentional injuries (60.0%) Infectious and parasitic diseases (12.0%) Tuberculosis (41.2%) Malaysia Cardiovascular diseases (30.1%) Ischaemic heart disease (37.6%) Malignant neoplasms (16.6%) Trachea, bronchus, lung cancers (18.9%) Infectious and parasitic diseases (12.5%) Tuberculosis (25.1%) Philippines Cardiovascular diseases (27.4%) Ischaemic heart disease (37.0%) Infectious and parasitic diseases (15.9%) Tuberculosis (50.4%) Respiratory infections (10.9%) Lower respiratory infections (99.6%) South Korea Malignant neoplasms (29.5%) Trachea, bronchus, lung cancers (20.9%) Cardiovascular diseases (28.7%) Cerebrovascular disease (58.0%) Unintentional injuries (6.9%) Road traffic accidents (47.0%) Singapore Cardiovascular diseases (36.2%) Ischaemic heart disease (55.0%) Malignant neoplasms (26.0%) Trachea, bronchus, lung cancers (22.4%) Respiratory infections (14.6%) Lower respiratory infections (99.9%) Thailand Infectious and parasitic diseases (22.0%) HIV/AIDS (51.9%) Cardiovascular diseases (18.8%) Cerebrovascular disease (59.9%) Malignant neoplasms (16.4%) Liver cancer (23.4%) Vietnam Cardiovascular diseases (32.5%) Ischaemic heart disease (41.4%) Infectious and parasitic diseases (13.0%) Tuberculosis (27.1%) Malignant neoplasms (12.8%) Trachea, bronchus, lung cancers (18.4%) Hong Kong* Malignant neoplasms (n/a) Cardiovascular diseases (n/a) Respiratory infections (n/a) Taiwan* Malignant neoplasms (28.1%) Cardiovascular diseases (18.4%) Diabetes (7.2%)* 2009 Taiwan; 2008 Hong Kong.Source: WHO, Economist Intelligence Unit © Economist Intelligence Unit 2010 9
  11. 11. Side effects Challenges facing healthcare in Asia activity required as wealth rises have had a noticeable effect on waistlines. A 2006 study of 168,000 adults in 63 countries found that, for the countries in this region, roughly one-third of males and just under three in ten females were overweight, while an additional 5% to 10% of the population were obese. On the positive side, these numbers were still lower than those in other parts of the world—for obesity3 “International Day for the rates, dramatically so.3 The worry, however, is that available data indicate that Asian obesity rates areEvaluation of AbdominalObesity (IDEA)”, Circulation: rising rapidly and therefore could resemble those of other regions soon. South Korea, for example, hasJournal of the American Heart the OECD’s lowest obesity rate, at 3.5%, but this is up nearly sevenfold since 1992. A Thai study publishedAssociation, October 23rd2007. in in 2007 found that obesity rates had gone up by 18% between 1997 and 2003. In China, meanwhile, the4 “Varying Patterns of BMI proportion of overweight and obese children went up 28 times between 1985 and 2000.4Increase in Sex and Birth The health implications may be worse than the numbers suggest. The definitions of overweight andCohorts of Korean Adults”,Obesity, February 2nd 2007; obese in general use—based on Body Mass Index values—are derived from Western data. Statistics seem“S. Korea’s Obesity Rate Low-est in OECD”, The Korea Times, to indicate, however, that significant Asian ethnic groups are even more susceptible to the effects ofApril 12th 2009; “Trends in obesity than Caucasians. Whatever the relative dangers for Asians and Caucasians, these countries andObesity and Associationswith Education and Urban or territories are seeing rapid growth in obesity-related conditions. Diabetes is a particular concern. AmongRural Residence in Thailand”,Obesity, December 12th 2007; adults aged 20-79, India, Hong Kong, Malaysia, the Philippines, Singapore, South Korea and Thailand all“Overweight and obesity in have a prevalence for this condition above the world average, and India has the highest number of adultChina”, British Medical Jour-nal, August 19th 2006. diabetics in the world—over 50m.55 IDF Diabetes Atlas, http:// Mortality and morbidity statistics mask the scope of the challenge because diabetes, especially thewww.diabetesatlas.org/ more prevalent type II variety, tends to damage or kill through its many complications, notably heart6 Ibid. disease. The International Diabetes Federation (IDF) reports, for example, that some studies indicate7 “Smoking attributable that up to 30% of diabetics in the Western Pacific region have some cardiovascular complications ofmortality for Taiwan and its the disease. Its estimate of deaths for which the condition is ultimately responsible would put it amongprojection to 2020 underdifferent smoking scenarios”, the top three killers in India, Malaysia, South Korea and Singapore, in addition to Taiwan, where itTobacco Control, 2005; “ANationally Representative already appears in the top three. Moreover, the threat is growing rapidly. The IDF’s predictions for theCase–Control Study of Smok- growth of the prevalence of diabetes by 2030 in the countries under discussion ranges between 18%ing and Death in India”, NewEngland Journal of Medicine, (the Philippines) and 50% (Vietnam), and in absolute terms the total number of diabetics in all of theseMarch 13th 2008 countries should grow by 60% to 187m.6 Weight is not the only issue: smoking, predominantly among men, is very common. In Indonesia,In Taiwan, where Taiwan, South Korea and China over a quarter of the entire population smokes. In Taiwan, where 47%47% of men of men smoke, the habit is responsible for a quarter of the deaths of males aged 35 to 69. In India, ansmoke, the habit estimated one-fifth of male deaths are smoking related, while China’s habit, along with air pollution,is responsible for influences its high COPD rate and level of lung cancer.7a quarter of the The region’s rapid urbanisation exacerbates these problems. Diet, for example, tends to deterioratedeaths of males in urban settings in the developing world and the opportunities for physical activity decrease. Theaged 35 to 69. unplanned, chaotic state of many cities in the region even add to the number of harmful accidents suffered, especially road traffic accidents. Lifestyle risk factors, however, are spreading to rural areas which have seen less economic development. A recent study by INDEPTH (an international non-profit organisation that studies demographics and healthcare in developing countries), looking at a total of five rural health surveillance sites in India, Indonesia, Vietnam and Thailand, found that:10 © Economist Intelligence Unit 2010
  12. 12. Side effects Challenges facing healthcare in Asia• over half of men smoked, except at the Indian site where 69% chewed tobacco;• three-quarters or more ate fewer than the five recommended servings of fruit and vegetables daily(except at one Vietnamese site where the figure was 60%);• at most sites over half of the people did not engage in vigorous activity, and at the Indian site over halfwere described as physically inactive;• over 30% at the Thai site were overweight, as were nearly 30% of Indonesian women. Were residents of these rural areas able to acquire more resources, the results would likely get worse:the vast majority in all sites reported no moderate or vigorous activity in their leisure time, and obesityrates were usually positively correlated with wealth and education—in other words, weight and inactivityare often associated with perceived health and status in a number of Asian cultures.The “silver tsunami”Finally, as with much of the world, these Asian countries are beginning to see population ageing. Onein five residents of neighbouring Japan, the world’s oldest society, are already over 65 and the numberis growing. For several decades before 1990, in most of the countries under discussion, that proportionwas around 5%. Since that date, however, as Figure 4 indicates, the number has been rising throughoutthe region and the trend looks set to continue. Singapore’s minister of health in 2009, Khaw BoonWan, described the coming change as “a silver tsunami.” Although the growth is steepest in the mosteconomically developed societies—Singapore, Taiwan, Hong Kong, and South Korea—most others willstill see a doubling in the proportion of the population over 65 between 2010 and 2035.Figure 4: Getting older% of population aged over 65 China India Malaysia South Korea Taiwan Vietnam Hong Kong Indonesia Philippines Singapore Thailand353025201510 5 0 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035Source: UN Department of Economic and Social Affairs, Population Division (forecasts use median population projection). Taiwan data from Taiwan Statistical Data Book 2009, Directorate General of Budget, Accounting and Statistics. © Economist Intelligence Unit 2010 11
  13. 13. Side effects Challenges facing healthcare in Asia People living longer is not inevitably a disaster for health systems: the best current evidence suggests that greater longevity brings compressed morbidity and more years with a higher quality of life. Nevertheless, an older population will see more conditions associated with ageing. A higher number of chronic, non-communicable diseases will inevitably result and, as is typical of elderly populations, so will the number of complex cases with more than one such condition. In South Korea, for example, 52% of those aged 60 to 84 years old have at least one cardiovascular condition, and 48% have two or8 “Morbidity and related fac- more morbidities of some type.8 In addition to increasing the probability of various chronic conditions,tors among elderly people inSouth Korea: results from the however, age is the leading risk factor in a number of others. Between 2005 and 2020, the prevalence ofAnsan Geriatric (AGE) cohort dementia in the countries being discussed looks set to rise by 74%, and in three (Malaysia, Singapore,study”, BMC Public Health,January 22nd 2007. and South Korea) it will more than double. Over 5.5m new cases per year will appear by the later date9 Data from Access across all these countries.9Economics “Dementia in the Although not a disease per se, the frailty of older people will also have an impact. Falls are a majorAsia Pacific Region”,September 21st 2006. health issue for the elderly: a survey in northern India, for example, found that more than half of individuals over 60 years of age had fallen. Of these, 80% had sustained some injury, and 21% a fracture. Moreover, falls were correlated with increased psychological distress about falling in future. Even in developed country medical systems, there is poor recognition of the impact of falls on the elderly population. As populations age in the countries in this study, health systems will have to address such issues. Mortality, however, is only one way to measure the burden of disease. The use of disability adjusted life years (DALYs) to measure the cost in terms of disability and early death presents a slightly different picture. DALYs are a measure of overall disease burden, adding together years of life lost and years lived with disability—where one DALY is one year of healthy life lost.The Chinese The most striking element using DALY analysis is the widespread impact of neuropsychiatric conditions,Psychiatric in particular unipolar depression—another issue that tends to grow as a proportion of a country’s diseaseAssociation burden with ageing and the human dislocation brought about by economic development. It does not tendestimated in to show up on mortality data—although, for instance, over 5% of deaths in South Korea are suicides—but2007 that 90% of nonetheless can be debilitating. Many states in the region are simply ill-prepared, with a strong stigmathose who needed still attached to mental illness. China, for example, where the health ministry has identified suicide astreatment for the leading cause of death for those aged 20 to 35, has only 1.29 psychiatrists per 100,000 population—depression did not compared with 11 for the United Kingdom and 13 for the United States. The Chinese Psychiatricreceive it. Association estimated in 2007 that 90% of those who needed treatment for depression did not receive it. If anything, China actually compares well with most of the countries in this study: even the richest territories have just two or three times the number of psychologists, and Hong Kong has not conducted a large scale mental health survey of adult depression in two decades. More typical is India, where there are two psychologists for every million people, three-quarters of mental hospitals are understaffed, and some states have no mental hospitals at all.12 © Economist Intelligence Unit 2010
  14. 14. Side effects Challenges facing healthcare in AsiaFigure 5: Another way to measureDisability adjusted life years* (DALY) Leading Causes (% of total DALYs 2004) Of which leading contributor (% of DALYs of this type)China Neuropsychiatric conditions (18.4%) Unipolar depressive disorders (32.3%) Cardiovascular diseases (12.2%) Cerebrovascular disease (54.9%) Unintentional injuries (11.2%) Road traffic accidents (36.4%)India Infectious and parasitic diseases (19.3%) Diarrhoeal diseases (29.7%) Neuropsychiatric conditions (11.8%) Unipolar depressive disorders (42.1%) Perinatal conditions (11.6%) Prematurity and low birth weight (41.1%)Indonesia Unintentional injuries (20.5%) Other unintentional injuries (60.0%) Infectious and parasitic diseases (13.3%) Tuberculosis (36.3%) Neuropsychiatric conditions (11.5%) Unipolar depressive disorders (34.5%)Malaysia Neuropsychiatric conditions (19.2%) Unipolar depressive disorders (32.8%) Infectious and parasitic diseases (11.5%) Tuberculosis (23.0%) Cardiovascular diseases (10.9%) Ischaemic heart disease (38.3%)Philippines Neuropsychiatric conditions (15.8%) Unipolar depressive disorders (28.7%) Infectious and parasitic diseases (15.2%) Tuberculosis (40.0%) Cardiovascular diseases (10.9%) Ischaemic heart disease (37.2%)South Korea Neuropsychiatric conditions (26.2%) Unipolar depressive disorders (27.5%) Sense organ diseases (13.2%) Refractive errors (43.5%) Malignant neoplasms (12.7%) Liver cancer (19.5%)Singapore Neuropsychiatric conditions (22.3%) Unipolar depressive disorders (41.2%) Cardiovascular diseases (12.6%) Ischaemic heart disease (54.6%) Sense organ diseases (11.8%) Refractive errors (25.2%)Thailand Infectious and parasitic diseases (22.5%) HIV/AIDS (54.6%) Neuropsychiatric conditions (16.3%) Unipolar depressive disorders (29.1%) Sense organ diseases (10.3%) Adult onset hearing loss (33.1%)Vietnam Neuropsychiatric conditions (18.5%) Unipolar depressive disorders (31.3%) Infectious and parasitic diseases (15.3%) HIV/AIDS (20.2%) Cardiovascular diseases (10.7%) Ischaemic heart disease (43.4%)Source: WHO © Economist Intelligence Unit 2010 13
  15. 15. Side effects Challenges facing healthcare in Asia Fighting on two fronts The DALY figures also show that, despite the growth of non-communicable diseases in these countries, infectious diseases remain a major concern, even if less deadly than they once were. Many of these states are still undergoing the transition in their disease profiles from that of a developing state to that of a developed one. South Korea, Singapore, Taiwan and Hong Kong have more or less completed the journey, with mortality and morbidity statistics very similar to those of long-developed countries. That said, even in Singapore more than one in seven deaths comes from respiratory infections—the highest figure in any of the places under consideration. Others are still very much in the middle of the transition. According to the WHO, in 2004 communicable, maternal, perinatal and nutritional conditions accounted for 39% of deaths in India and 43% of its DALYs, compared to 5.1% and 6.3% in South Korea—typical developed-country averages. Leishmaniasis, dengue fever, filariasis, malaria, tuberculosis and even polio all remain concerns in India, and the leading cause of death among those under five is diarrhoea. Although India has the highest morbidity and mortality figures in this study for communicable conditions, such diseases—especially dengue fever, malaria and tuberculosis—remain serious issues in countries such as Indonesia, Malaysia, and Vietnam. HIV/AIDS, meanwhile, is present in every country in the region. Although not especially widespread in many of them, some do have worryingly high local concentrations. The exception to this picture is Thailand, where one in nine deaths and one in eight DALYs result from the disease, making it one of the top health problems. Finally, new and emerging diseases have been a repeated challenge in this region—even for countries which have progressed far in the epidemiologic transition, as microbes do not respect borders. Severe acute respiratory syndrome (SARS), for example, began in China, but after that Hong Kong, Taiwan and Singapore all felt its effects. In health terms, the impact may have been minor but the broader costs of containing the disease were much higher. In Singapore, for example, 33 deaths resulted which is small compared with the annual average of roughly 19,000 total deaths from all causes. On the other hand, in December 2003, econometricians at the National University of Singapore estimated that overall the10 “Revisiting SARS: Impact disease took 2.5% off of national GDP.10 A history of new strains of influenza originating in the regionon the Singapore Economy”,Econometric Studies Unit, also means that any country in the region may be at the sharp end of any major outbreaks: Bird flu, forNational University of Singa- example, has hit Indonesia and Vietnam the hardest of any countries so far.pore Press Release, December11th 2003. Little wonder that this epidemiologic transition is sometimes referred to as a double disease burden, with public health and medical systems needing to fight actively on two fronts. The difficulty is that the appropriate weapons for the two battles do not always overlap. Health systems built largely on providing cures or acute episodic care must now deal, without abandoning existing efforts, with the very different matter of chronic disease management and patient education. Even in the field of public health, shifts are necessary: vaccination and sanitation efforts now have to be joined by attempts to influence lifestyle choices. These two involve fundamentally different activities, as convincing someone to use a source of clean water that the state has provided is much easier than convincing the same person to give up smoking. Dr Srinath Reddy, president of the Public Health Foundation of India, speaking about his country, explains that the health sector has not yet fully recognised how many “determinants lie in14 © Economist Intelligence Unit 2010
  16. 16. Side effects Challenges facing healthcare in Asiavectors outside health. The price of fruit and vegetables, taxes on tobacco, urban design, freedom fromcrime all come up. Intersectorality is critical in chronic disease prevention, but at the moment, India isjust waking up to the challenge.”Systemic challengesIn facing this disease burden, many of the healthcare systems considered here share a variety of systemicchallenges. As noted above, economic development is bringing a host of changes beyond simple wealthgeneration. These look set, if anything, to accelerate. McKinsey, a consultancy, predicts that 900m peoplewill move from poverty into the middle class in developing Asian countries by 2020—which it defines ashaving a family income of US$5,000 per person in PPP terms. China’s per capita GDP reached that level in2005, and the Economist Intelligence Unit expects India’s to do so in 2013.11 11 Economist Intelligence Unit “The Big Tilt: The Rise of the Throughout the world, greater wealth brings higher patient expectations. Experts across Asia have East and What it Means fornoticed such an increase in patient demands and the need for countries to react. The WHO country Business”, January 2010.profile for Malaysia, for example, explains that “a more educated and affluent public with easy access toinformation, coupled with demographic changes and rapid advances in medical technology, has led torising consumer demand for better health care and expensive new technology”. Professor Peter Sheehan,director of Victoria University’s Centre for Strategic Economic Studies and an expert on healthcareeconomics, finds the trend in the region “very widespread”. He explains: “As people get richer and getmore aware, they increasingly want good healthcare.” Existing data on the phenomenon tend to be anecdotal, but are indicative of rapid change. China’sprivate United Family Hospitals, for example, used to be almost exclusively patronised by foreignpatients. Now, 40% of them are from middle- and upper-class Chinese families. A survey of middle-classfamilies in Beijing, Shanghai and Chengdu in 2008, designed to address the lack of data, found that theywant greater privacy and dignity from healthcare, more involvement in decisions and more personalisedservice—all without having to pay much more, if any.12 12 “Emerging trends in Chinese healthcare: the impact of a Perhaps the biggest sign throughout Asia of patients developing a consumer approach to healthcare rising middle class”, Worldis in the area of cosmetic surgery, which is booming. South Korea’s Chosun Ilbo newspaper reported in Hospitals and Health Services, 2008 (issue 4).2007 on a survey for a doctoral study that found that 80% of women in that country thought that they 13 “Half of Korean Women Haveneeded such surgery, and half had already had it. These numbers seem remarkably high, but a 2009 Had Cosmetic Surgery”, Thepoll of female Korean college students by the newspaper found that a quarter had already had cosmetic Chosun Ilbo (English Edition), 22 February 2007, http://eng-surgery. Of those who had not had operations, 80% wanted to have one and, of those who had, 80% lish.chosun.com/site/data/ html_dir/2007/02/22/wanted further procedures. It is notoriously difficult, however, to get accurate figures because there are 2007022261030.html; “Plasticso many unregulated practitioners—Time magazine estimated in 2002 that over 20,000 illicit operations Surgery All the Rage Among College Students”, The Chosuntook place in Jakarta alone.13 As for official operations, the International Society of Aesthetic Plastic Ilbo (English Edition), 8 Sep- tember 2009, http://english.Surgery’s most recent estimate is nearly a decade old (2002) but even then Hong Kong had the sixth most chosun.com/site/data/html_procedures per capita of any country or territory in the world. dir/2009/09/08/2009090800 228.html; “Changing Faces”, Engaged patients do not necessarily mean consumers who insist on bad medical decisions, but this Time Asia, 5 August 2002, http://www.time.com/time/happens. Beijing hospitals, for example, are developing a reputation for giving intravenous antibiotics asia/covers/1101020805/to patients who have common colds because they insist on such treatment. In South Korea a detailed story.html © Economist Intelligence Unit 2010 15
  17. 17. Side effects Challenges facing healthcare in Asia study found a strong link between patient demand and the inappropriate use of injected medicine.1414 “Relationship between More engaged patients, whatever the challenges, can become a positive part of healthcare arrangementsphysician characteristics andtheir injection use in Korea”, if they are educated in what medicine can and cannot provide. Other issues common in this region,International Journal for especially outside of the relatively developed economies, are invariably more problematic.Quality in Health Care, August24th 2007 Information deficitIndia’s national The most striking, and perhaps most basic, issue is an information deficit, even in some rapidly emerginghealth policy of countries. Data as basic as mortality figures are frequently flawed. A 2005 study in the Bulletin of2002 admits that the World Health Organisation, for example, found mortality registration incomplete and statistical“the absence of compilation irregular in China. India’s national health policy of 2002, meanwhile, admits that “thea systematic and absence of a systematic and scientific health statistics data-base is a major deficiency ... health statisticsscientific health collected are not the product of a rigorous methodology”. Although the health policy seeks to addressstatistics data- the issue, expert estimates of something like the total number of diabetics in the country can vary bybase is a major over 10%. Size offers some justification for China and India, but the WHO country information profiledeficiency ... health for Vietnam states bluntly that there is “no available information, with the exception of a few specificstatistics collected diseases” on the burden of disease. The profile for the Philippines lists “a lack of reliable, disaggregatedare not the product and integrated health and health-related data, evidence and information” among the challenges facingof a rigorous the health system there. The paucity of data is not limited to disease rates. The Philippines also lacks anymethodology”. systematic database on health human resources in the country. Dr Reddy points out that to some extent the poor data are less of an impediment than one might imagine. What evidence does exist points to several large problems that require clear public health interventions. Moreover, whatever the exact number of people suffering from some of these conditions, there is an obvious need for a capacity to treat far greater numbers than can currently be accommodated. Figure 6: Understaffed, underserved Doctors and hospital beds in Asia, 2008 Doctors (per 1,000) Hospital Beds (per 1,000) South Korea 1.7 6.6 Taiwan 1.5 6.4 Hong Kong 1.5 5.0 China 1.6 2.5 Singapore 1.6 2.5 Thailand 0.3 2.1 Malaysia 0.8 1.8 Vietnam 0.6 1.7 Philippines 1.2 0.9 India 0.6 0.6 Indonesia 0.3 0.6 Source: Economist Intelligence Unit16 © Economist Intelligence Unit 2010
  18. 18. Side effects Challenges facing healthcare in AsiaNevertheless, the information deficit, in Professor Sheehan’s words, “remains a serious issue. In manyareas the lack is not so much data on basic incidence of disease, but the fact that information on many ofthe more analytical issues about treatment, cost and burden is still very limited”. This can have importantstrategic consequences: how much of a country’s heart disease is diabetes related, for example, or howmuch comes from a possible genetic mutation making the majority population more susceptible thanother people, would have a direct bearing on how the issue is best addressed. Another problem is inadequate resources to meet existing needs. Figure 6 shows the number of doctorsand hospital beds per 1,000 people in the population. OECD countries typically have between 2 and 4 ofthe former, and 3 to 8 of the latter (South Korean’s figure for doctors is the second lowest in OECD afterTurkey’s). Although for wealthier states resources are less of a problem, data show that they are under-served(and the data say nothing of quality). India’s 2008/09 Economic Survey calculated that there was ashortage of 4,833 primary health centres and 2,525 community health centres in 2008. In Novemberof the following year Manmohan Singh, the prime minister, called the shortage of doctors “one of thebiggest impediments to strengthening of the public-health delivery system and scaling up access tohealth care”. What is true of general medical personnel is even more so of specialists. Many countries globally areexperiencing shortfalls, and the Asia region is no exception. Malaysia’s health minister, Liow Tiong Lai,admitted at a press conference this February, “we are really short of specialists throughout the countryin all fields”. Given the ageing of the population in these states, the lack of geriatricians is a noteworthyexample of this general problem. As of 2006 Malaysia had only nine such doctors for a population of 1.9mpeople over 60. Meanwhile, neither China nor India even has board certifications in geriatrics, and theirtiny number of geriatricians invariably come from other specialties. The over 50,000 Making matters worse, for the Philippines and India at any rate, is the tendency of trained medical Indian physicianspersonnel to move abroad where they can obtain higher remuneration. A 2004 study by the former’s in the UnitedNational Institute of Health found that in the previous decade over 100,000 Filipino nurses had left to work States mean thatabroad, a number which included 3,500 doctors who had taken conversion courses in nursing in order to Americans havejoin the exodus. India instead exports doctors. The over 50,000 Indian physicians in the United States—the more Indian doctorslargest foreign group—mean that Americans have more Indian doctors per person than rural Indians do. per person than rural Indians do.Funding issuesMedical personnel and infrastructure, however, cost money and these countries face the globalproblem of dealing with rising demand and patient expectations with limited resources. Moreover, howany country decides to pay for its health system involves a complex balancing not only of efficiencyconsiderations but also of matters of equity and morality. The result is invariably a combination of publicand private funding and provision. In a number of the territories under discussion—usually the wealthier ones—the state covers mostof the cost of at least basic care universally, usually by some form of mandatory national insurance.Typically, however, these health systems suffer from rapidly growing costs and frustration at the quality of © Economist Intelligence Unit 2010 17
  19. 19. Side effects Challenges facing healthcare in Asia care. South Korea’s national health insurance has long waiting lists even though it covers only basic care and Taiwan’s national health insurance scheme has perennial financial difficulties. Meanwhile, although Thailand’s universal health provision is popular, waiting times and declining quality in public healthcare have kept the private market healthy and growing there as elsewhere in the region. Moreover, the extent of what these systems provide should not be overestimated. According to WHO figures, in only one of the countries in this study does the proportion of private spending on healthcare dip below 40% of the total—Thailand at 36%. Moreover, the countries with broad health provision are all actively trying to contain costs and find new sources of funding. Taiwan and South Korea, for example, have both attempted to use regulation to cut prescription drug costs and looked at increasing medical tourism. Hong Kong, meanwhile, is considering raising the level of private financing, either through greater use of private insurance or the creation of medical savings accounts. If wealthier countries are looking at possibly greater private funding, poorer ones are seeing an even greater role for the private sector. In Vietnam, for example, neglect of the public system has made private payments much more common. Indonesia, meanwhile, is actively encouraging private sector investment to bridge the gaps which the state cannot afford to fill. The biggest exception to this slow shift towards more private sector involvement is China, which is engaged in a major effort to reform its public-health system. One major difficulty with greater private involvement in the provision of healthcare is the effect on equity. Wealth and health are statistically linked in innumerable ways. The increasing disparity in wealth15 “Urban-rural income in many of these countries—the China Daily recently reported the widest regional income gaps in thegap widest since reform”,March 2nd 2010, http:// country since reform began15—inevitably will exacerbate the problems with access to care. Just aswww.chinadaily.com.cn/ studies in Taiwan found that disparities of access decreased after the institution of its national insurance,china/2010-03/02/con-tent_9521611.htm Vietnam is now seeing a growth in the likelihood of poorer citizens being unable to use medical facilities—16 “Take your medicine”, even public ones which often require formal fees and unofficial bribes. As a result, infant mortality in theVietnam Investment Review, 28 bottom economic quintile of the population is rising.16November 2005. The clearest manifestation of the access gap is in the number of medical personnel and level of facilities in well-off urban areas versus poorer rural ones. In the poorer countries under consideration— Thailand, China, India, Indonesia, Vietnam and the Philippines—doctors, hospitals and clinics tend to be in urban areas, making access in the countryside worse than the national numbers suggest. In Vietnam, for example, average per-capita health spending in rural provinces is under one-third that for17 EIU, “Vietnam: Healthcare city residents and those in rural areas are twice as likely to self-medicate. In India, the doctor-residentand Pharmaceuticals Report”,December 11th 2009, “Choice ratio in the countryside is six times lower than for towns.17 Such facilities as exist in rural areas are oftenof healthcare provider follow- staffed either by nurses paid so little that they do not bother showing up or nobody at all, leaving peopleing reform in Vietnam”, BMCHealth Services Research, July to unskilled local healers.30th 2008, “India to turn outover 145,000 rural doctors”, Richard Smith, director of the United Health Chronic Disease Initiative, notes that in healthcare termsIndo-Asian News Service, China has been described as three countries in one: “In the West, there is lots of poverty and very poorFebruary 4th 2010. services. The middle is like a middle-income country—lots of health problems, infectious disease is largely fixed and the limited services are not of good quality; then you have the coastal region which is in many ways a developed country.” Not surprisingly, a recent study in health policy found that disparities in health outcomes—such as those related to maternal and child health and infant mortality—were growing with rapid economic development.18 © Economist Intelligence Unit 2010
  20. 20. Side effects Challenges facing healthcare in AsiaChapter 2: Case studiesT he Asia-Pacific region, and the 11 countries considered in this study, may have a variety of healthcare challenges in common, including both medical needs and similar stresses on delivery systems.Solutions, however, are unlikely to be regional: healthcare systems are national, or even sub-national,creations—however international the threats they address. A regional view of how health professionals are addressing these challenges would therefore riskbecoming a list of how each country was acting, in some ways duplicating the country summaries atthe end of this report. Consideration of a series of case studies from around the region, on the otherhand, although far from exhaustive, allows for a more detailed picture of some of the more importantdevelopments taking place and the difficulties which policymakers face in bringing about change.China’s health reform packageNo country, developing or developed, has completely squared the circle of providing high-quality carein a way that is both equitable and efficient. Asian countries have the same variety of approaches, andattendant problems, as elsewhere. Thailand’s universal health provision is popular, but waiting timesand quality issues in public healthcare have kept the private market healthy. Cost pressures are makingHong Kong’s government look for ways to make private citizens shoulder more of the heavily government-underwritten care system. Singapore, on the other hand, is facing pressure to increase governmentspending in a system that is largely privately financed. China, meanwhile, is undertaking a huge reform to return its health system—currently an ostensiblypublic one that in many ways has become private and, for many, too costly—to one that will by 2020provide universal basic care. The economic changes in China of the 1980s saw a breakdown of the existing public system. This didnot lead to a purely private market so much as a contraction of the facilities available—especially in ruralareas—and widespread fee charging within the public system. By 2001 the proportion of the consumershare of health spending peaked at nearly 60%. The government’s response in the late 1990s was to experiment with a series of insurance plans,funded by a combination of payroll taxes and state contributions. Rolled out nationally in 2003, thesehave provided widespread coverage—the OECD estimates that by 2008, 85% of Chinese had someinsurance. In turn, the overall consumer share of spending on healthcare has dropped to under 50%.18 18 OECD Economic Survey: China 2010, Chapter 8: “Improving Serious problems remain, however. These plans simply cannot afford to pay out what they promise or the healthcare system”, pp.what those covered need. China’s health ministry reported in 2009 that, during 2007, 70% of those with 209-234.an appropriate referral refused to enter hospital because of the cost, and 38% of the sick received notreatment. Going beyond funding, care has become overly concentrated in urban locations and tends to © Economist Intelligence Unit 2010 19
  21. 21. Side effects Challenges facing healthcare in Asia take place in hospitals rather than in less expensive primary care facilities and clinics. Perverse incentives abound within the system. The government has admitted that further reform is essential. In 2009 it announced, as the first instalment of reform, a plan that involved spending Rmb850bn (US$124bn) by 2011. The goals are wider insurance cover, reaching 90% by 2011; the creation of a list of basic drugs at controlled prices; an improved network of local level clinics; a better public-health system; and hospital reforms to prevent commercialisation. The scheme is bold in size and scope: total healthcare expenditure in China in 2008—public and private (including individuals and companies)—was US$208bn, making an extra US$41bn per year under the first instalment of reform a notable increase. Moreover, the reform tries to tackle difficult structural problems affecting costs, such as the practice of hospitals profiting from their charges for pharmaceuticals and the overuse of hospital emergency rooms for primary care. How effective it will be in practice, however, remains to be seen. First, how much of the money will enter the system is uncertain. Total central government spending on healthcare in 2009 was US$17bn,19 “Selected figures from and the budget for 2010 sets aside US$20bn.19 These totals include substantial increases over previousChina’s 2009 budget”,Reuters, March 5th 2009; “Key years, but the headline figure of Rmb850bn includes outlays which will be required of the lower levels offigures from Finance Ministry’s government. How much these governments can afford will vary widely by region.2010 draft budget report”Xinhua News Agency, March The bulk of the new spending—two-thirds, according to Wang Jun of the finance ministry20—will6th 2010. go towards improving insurance. The government has raised the subsidy for its basic urban and rural20 “China’s Health Care insurance programmes from Rmb80 to Rmb120 per year per person. Participants usually pay a smallReform: The Focus Shifts toBasic Health Care Service”, amount in addition. The Chinese government reports that 179m additional people had obtained cover inKnowledge @ Wharton, April15th 2009, http://www. the first six months of 2009, suggesting that it should easily meet its goal of 90% national coverage byknowledgeatwharton.com.cn/ the end of this phase of reform. The difficulty is that the basic plans remain underfinanced, even with theindex.cfm?fa=viewArticlearticleID=2021languageid=1 increased funding.21 Nor will greater coverage necessarily have the desired effect on prices, as there is21 OECD Economic Survey: China evidence that health providers charge insured people more.2010, Chapter 8: “Improving Moreover, health reforms everywhere reveal systemic impediments to change. China is no exception.the healthcare system”, pp.209-234 Early this year, for example, the government promised to allow greater portability of health insurance across the country in order to allow better coverage of migrant workers. This is particularly important, as their health outcomes are far worse for this group than the rest of the population. But it in effect forces the government to make migration easier. Similarly, the capacity of the system to absorb expansion is an issue. Graduates with qualifications in medicine are finding it difficult to secure jobs because there are just too many of them. Paying to train new doctors may not be the best use of funds, although retraining existing personnel, especially at local health centres where over one-third of doctors had no university education, has clear benefits. The government planned in 2009 to help build 29,000 and upgrade 5,000 township hospitals. These will bring their own integration challenges. Addressing incentives in the system is another issue. One of the major planks of the reform has been the creation of a list of some 300 basic drugs that will have fixed, low prices and can be sold by local health facilities as well as hospitals. This is a direct attempt to tackle the practice by hospitals of selling the pharmaceuticals which they prescribe at a high mark-up in order to make the profit that funds20 © Economist Intelligence Unit 2010
  22. 22. Side effects Challenges facing healthcare in Asiaoperations. The drug list is only one way that the plan attempts to address medical inflation throughregulation. Public hospitals—which provide 95% of beds in the country—will see a widespread overhaul.In a pilot project covering all the hospitals in 16 cities across the country, the facilities will be expected tono longer make a profit. Operations will be financed through government subsidies and medical charges.As for replacing lost income that will result, especially from selling prescription drugs at cost, there islittle detail. The central government has decreed that city governments are required “to fully motivate allmedical workers to provide the public with safe, effective, convenient and affordable medical services”. How they do so will have a great impact on success. Shanghai, for example, is planning to restrictpublic hospitals to only general services. High-end medical services will cost more than they do at presentand the city plans to encourage the creation of private clinics and hospitals to help provide these. Even ifthe reforms provide basic care in the city, it would appear that a two-tier health system is inevitable. China’s health reform, then, is a laudable effort to confront a range of complex problems head on. Justhow far it can address them, however, remains to be seen.Singapore: Preparing to age gracefullyIn August 2009 the National Day speech of Singapore’s prime minister for the first time focussed onthe challenges of an ageing society. Over the next 25 years the proportion of the country’s populationaged over 65 should more than triple, from the current 10% to 31%. Other Asian countries will facesimilar shifts, if not quite on this scale. One area where the government is seeking to prepare is that ofhealthcare. Its wide-ranging approach has elements that other countries in a similar situation might finduseful. First, Singapore is seeking to address the issue of funding, not just for medical care but for long-termcare—whether at home or in specialist facilities—which elderly citizens frequently require. Healthcarefunding in the country relies heavily on private payments, whether through out-of-pocket payments,Medisave—a programme for individual healthcare savings accounts, or Medishield—an insurance schemeto top up payments when patients have insufficient Medisave funds. There is also Medifund, a last-resortgovernment fund to pay for care for those who otherwise could not afford it. Singapore is now creatinga parallel system for the elderly that will cover both medical and long-term costs. Eldershield wasestablished in 2002 and Medifund Silver—recently renamed Elderfund—followed in 2007. Now the healthministry has announced plans to create Eldersave. It hopes that in 15 years, these three Es will provide asound basis for funding the medical and long-term care that an older population will need. The government, however, will also expect families to continue to contribute. In 2009, 51% of thoseover 65 had all or part of their hospital bills paid for from their children’s Medisave accounts—in largepart because the programme was started too late for older Singaporeans to have built up a high balance.Although Singaporeans have strong enough family ties, this spending is not just a matter of filial piety:the 2005 Maintenance of Parents Act lets parents sue their children for financial support. Moreover,the prime minister said on National Day that the government intends to use the legislation to forcerecalcitrant children to pay their share of healthcare and long-term care. The government is also allocating its own resources to prepare for ageing. Part of its five-year, S$4bn © Economist Intelligence Unit 2010 21
  23. 23. Side effects Challenges facing healthcare in Asia (US$2.9bn) plan to build overall healthcare capacity has been earmarked for facilities specifically relevant to older Singaporeans, including an increase in the number of nursing home beds from 9,200 to 14,000 by 2020. Training is another priority area. Geriatrics has been made a core part of undergraduate medical training and there are now financial incentives for those who choose this as a specialty over more popular areas. The government hopes to raise the current number of 48 geriatricians by 30% to 40% over the next three years. More important, given the role that families play in most countries in caring for the elderly, in November 2009 the minister in charge of ageing announced new training programmes that would be made available for family members and domestic servants. Money alone is insufficient. Integration is central to maintaining the quality, and keeping down the cost, of care for older patients. The Agency for Integrated Care was established in 2008 to help co- ordinate discharge planning from hospitals to ease the transition of elderly patients to intermediate or long-term care facilities or home care. Meanwhile, public hospitals have created Aged Care Transition Teams. Not every idea will work. When the health minister pointed out that it would be much less expensive for Singaporean families to place older relatives in nursing homes located just across the border in Malaysia, he faced a press backlash. Nevertheless, by preparing now for the onset of a more aged society, the country is much more likely to be able to provide an older population with the healthcare it needs. Prescription: Business model innovation The search for cost-effective, good quality healthcare is a global one. Many experts believe that to achieve this, efforts at reform must focus on business model innovation. According to American expert Professor Elizabeth Teisberg, co-author of Redefining Healthcare, “the most powerful innovation in the coming decade will be structural and organisational”. One particular area needing business model innovation is the typical general hospital, Clayton Christensen of Harvard University and doctors Jerome Grossman and Jason Hwang, in their book The Innovator’s Prescription: A Disruptive Solution for Health Care, say: “In the absence of an array of cross subsidies, restraints on competition, and philanthropic life support, most ... would collapse.” The problem is that facilities which try to do everything are too expensive and less capable of developing expertise. The problem is not confined the United States. For example, China’s over-reliance on large hospitals is a major cost driver. One solution Mr Christensen and his colleagues put forward is the establishment of facilities that specialise in specific conditions and thereby achieve both higher quality and greater economic efficiency. This approach is being already used by several Asian hospitals. One of the most famous is the Aravind Eye Care System. Based in Madurai in southern India and now 35 years old, it sees 2m patients per year, performs a quarter of a million surgeries and is responsible for roughly 5% of all India’s eye care. Its surgeons are able to perform eight to ten cataract operations per hour, rather than the typical one to two in India, because other tasks—such as non-medical work, routine examinations and even assistance in theatre—are done by specially trained local villagers. The sheer volume provides economies of scale as does the organisation’s capacity to manufacture its own supplies, such as artificial lenses, of the same quality and at a fraction of the cost of imports.22 © Economist Intelligence Unit 2010

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