6th Annual Health Insurance Asia, 2012 Addressing Diversity in Government Health Policies and Health Insurance Regulatory ...
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Agenda•     INTRODUCTION•     KEY GLOBAL TRENDS IMPACTING HEALTHCARE•     HEALTHCARE SPENDING IN ASIA•     HEALTHCARE INSU...
KEY GLOBAL TRENDS IMPACTING HEALTHCARE                                         4
Globalization, consumerism, and prosperity are the 3major trends that will impact healthcare…Globalization:               ...
South East Asia is Becoming World’s Hospital                                           Central EuropeMexico               ...
Increased Prosperity and Middle Class Consumption willFuel Healthcare Expenditure      Middle Class Consumption (2009)    ...
By 2020, two-third of the Asia-pacific population over 65 years will have  at least one chronic disease                   ...
HEALTHCARE SPENDING IN ASIA                              9
Compared with the developed countries, most Asian countries spendsmaller proportion of their GPD on health…               ...
Most developed governments spend >15% of their budgets onhealthcare, while most Asian governments don’t spend half as much...
Compared with the developed countries, most Asian countries’private healthcare expenditure is more than that of the govern...
In most Asian countries most people pay for health out-of-pocket; PHI  is restricted to certain part of the societies in t...
HEALTHCARE INSURANCE                       14
Government   PHI   Out- of-pocket                                15
In countries like Canada, there is one governmentinsurance…   • Greater bargaining power         • Monopoly   • Risk is di...
In countries like Egypt, there are more than onegovernment insurance schemes, with minimal private…   • More choice and   ...
In countries like the UK, there is one government insurancewith multiple supplementary private players…   • PPP           ...
In countries like the US, there is one government insurancecompeting with other private players…   • Fosters innovation th...
In countries in the West Indies, there are multiple privateplayers, with no government player…    • Fosters responsiveness...
Key Markets Healthcare Insurance Environments in Asia Pacific                                India           China        ...
The 3 elements of healthcare: High quality, reasonablecost, and ease of access…                         Access            ...
FUTURE OF HEALTH CARE                        23
Healthcare Paradigm Shift  A modern healthcare system is on the horizon, demanding a paradigm shift             From...   ...
FFocus: moving from physicians to patients                                     O       M                                  ...
FInnovation in hospital business models: Hospitals go virtual;                       O       Mdevelopment of community bas...
FVirtual Hospitals: Shifting the Financial Gravity of the System                                                          ...
FInnovation in Hospital Business Models: Trends towards                                         O       Mspecialized care ...
FWellness of the body, the mind and the soul                                       O                                      ...
FWhy Wellness?                                                                                                            ...
FHealth and Wellness: Shift in Healthcare Trends From                                                         O       MTre...
What does that mean for the insurance companies….        From...                                ...To   Provider Centric  ...
Government   PHI   Out- of-pocket                                33
Thank you   Dr. Milind Sabnis, MD, MBA               Donna Jeremiah                                            Director   ...
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Addressing diversity in govt health policies n health insurance regulatory frameworks for effective business development

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Addressing diversity in govt health policies n health insurance regulatory frameworks for effective business development

  1. 1. 6th Annual Health Insurance Asia, 2012 Addressing Diversity in Government Health Policies and Health Insurance Regulatory Frameworks for Effective Business Development July 17, 2012Dr. Milind Sabnis, MD, MBAPrincipal ConsultantHealthcare, Asia Pacific 1
  2. 2. 2
  3. 3. Agenda• INTRODUCTION• KEY GLOBAL TRENDS IMPACTING HEALTHCARE• HEALTHCARE SPENDING IN ASIA• HEALTHCARE INSURANCE• FUTURE OF HEALTHCARE 3
  4. 4. KEY GLOBAL TRENDS IMPACTING HEALTHCARE 4
  5. 5. Globalization, consumerism, and prosperity are the 3major trends that will impact healthcare…Globalization: 1• World is becoming smaller: cheap air- travel, connectivity,internet, medical tourism• Increased healthcare awareness because of multiple media 1 Consumerism: 3 Globalization • Increased awareness of medical conditions; potential treatments, best physicians, hospitals to treat these conditions • Increased decision making in choosing physicians, hospitals, and insurance plans 2 3 Prosperity Consumerism Prosperity: 2 • Increasing disposable income, financial independence leading to exploring more choices • Increased health awareness has led to consumers spending more on health prevention Source: Frost & Sullivan 5
  6. 6. South East Asia is Becoming World’s Hospital Central EuropeMexico Increased Medical Tourism Traffic StarMedica hospital groups built 7 Thailand from Western Europe hospitals in last 5 years; One Bangkok hospital AmeriMed opening 10 new hospitals (Bumrungrad) served over by 2012; 500,000 health tourists last year GrupoAngeles (largest private hospital group in Mexico) spending $700 million to build 15 hospitals in the next 3 years Korea New Entrants with strong healthcare system offerings Malaysia Medical tourism as an economic thrust Costa Rica One in five visitors is a medical tourist India Singapore Government investing $3.6 Billion More internationally in medical tourism infrastructure. accredited hospital Estimates show Indian medical facilities than any other tourism at $2.3B by 2012 country Source: Frost & Sullivan 6
  7. 7. Increased Prosperity and Middle Class Consumption willFuel Healthcare Expenditure Middle Class Consumption (2009) Middle Class Consumption (2030) Other Asia India 9% Other Asia 4% Other 14% Other 20% China 26% 2% US Japan 7% India 8% 23% EU 14% US EU 21% Japan China 30% 4% 18% Origins of Global Middle Class (%)•Middle class consumption in China and India will 100 5surpass that of EU and US by 2030 6 2 2 Middle East and North Africa•APAC will contribute to 59% of global middle class 80 28 Sub-Saharan Africaconsumption by 2030, rising from 23% in 2009 53 60 Asia Pacific•Over half of the middle class will be from the APACregion by 2020 40 Central and South 36 America•Both factors will be a major growth driver for HC 20 22 EUexpenditure and the growth of the HC delivery market 18 10as demand increases across the region 0 North America 2010 2020 Source: OECD, Smith Barney, Frost & Sullivan 7
  8. 8. By 2020, two-third of the Asia-pacific population over 65 years will have at least one chronic disease Healthcare Industry: Population Aged 65 and The Burden of Disease in elderly, Asia Pacific Above, (Asia Pacific), 2009-2020 400.0 12.0% Percentage of Aged 65 and Above to 350.0 10.0%Population (Million) 300.0 Total Population (%) 250.0 8.0% 200.0 6.0% 150.0 4.0% 100.0 50.0 2.0% - 0.0% 2010 2015 2020 Year Aged 65 and Above (Million) Percentage of Aged 65 and Above to Total Population (%) In 2010, 7.6% (241.7 million) of the Asia Pacific population was aged 65 and above. By 2020, this will be more than 9.7% (333.95) 65.2% of those aged 65+ have one chronic condition Source: WHO, Frost & Sullivan 8
  9. 9. HEALTHCARE SPENDING IN ASIA 9
  10. 10. Compared with the developed countries, most Asian countries spendsmaller proportion of their GPD on health… Total expenditure on health as a % of GDP, 2009 USA 16.2 UKDeveloped 9.4Countries Australia 8.5 Japan 8.3 Korea 6.5 Vietnam 7.2 Cambodia 5.9ASEAN Countries Malaysia 4.8 Thailand 4.3 Laos 4.1 Singapore 3.9 Philippines 3.8 Brunei 2.9 Indonesia 2.4 Myanmar 2 Nepal 5.8 Bhutan 5.5Other Asian Countries China 4.6 India 4.2 Sri Lanka 4 Bangladesh 3.4 Pakistan 2.6 0 2 4 6 8 10 12 14 16 18 % Most countries in Asia spend less than 5% of their GDP on healthcare Source: WHO 10
  11. 11. Most developed governments spend >15% of their budgets onhealthcare, while most Asian governments don’t spend half as much... General government expenditure on health as a % of total government expenditure, 2009 USA 18.7DevelopedCountries Australia 18.3 UK 15.1 Japan 17.9 Korea 12.3 Thailand 14 Singapore 9.8ASEAN Countries Viet Nam 8.9 Cambodia 7.5 Philippines 7.2 Malaysia 7.1 Indonesia 6.9 Brunei 6.8 Laos 3.8 Myanmar 0.8 Bhutan 13.3Other Asian China 10.3 Countries Nepal 8.6 Bangladesh 7.9 Sri Lanka 7.3 India 4.1 Pakistan 3.6 0 2 4 6 8 10 12 14 16 18 20 % Most Governments in Asia spend <8% of their budget on healthcare Source: WHO 11
  12. 12. Compared with the developed countries, most Asian countries’private healthcare expenditure is more than that of the government… Healthcare Expenditure Public vs. Private, 2009 UKDevelopedCountries Australia USA Japan Korea Brunei ThailandASEAN Countries Indonesia Malaysia Singapore Viet Nam Philippines Cambodia Laos Myanmar Bhutan ChinaOther Asian Countries Sri Lanka Nepal Bangladesh Pakistan India 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Public expenditure Private Expenditure Source: WHO 12
  13. 13. In most Asian countries most people pay for health out-of-pocket; PHI is restricted to certain part of the societies in these countries… Components of Private Expenditure, 2009 USA Developed Countries Australia UK Japan Korea Thailand ASEAN Countries Malaysia Philippines Indonesia Singapore Viet Nam Brunei Laos Myanmar Cambodia Sri Lanka China Other Asian Countries India Nepal Bangladesh Pakistan Bhutan 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% PHI OOP Other There is a huge potential for PHI in the Asian market…OOP=Out of pocket; PHI=Private Health Insurance; Others=charity, aids, etc Source: WHO 13
  14. 14. HEALTHCARE INSURANCE 14
  15. 15. Government PHI Out- of-pocket 15
  16. 16. In countries like Canada, there is one governmentinsurance… • Greater bargaining power • Monopoly • Risk is distributed • Hinders creative products and responsivenessGovernment PHI Out- of-pocket 16
  17. 17. In countries like Egypt, there are more than onegovernment insurance schemes, with minimal private… • More choice and • Complex to manage customization • Difficult for patients to • Easier to move from one to understand anotherGovernment PHI Out- of-pocket 17
  18. 18. In countries like the UK, there is one government insurancewith multiple supplementary private players… • PPP • Overlaps • Core policy with top-ups • Lack of coverageGovernment PHI Out- of-pocket 18
  19. 19. In countries like the US, there is one government insurancecompeting with other private players… • Fosters innovation through • State insurer with higher competition risk • Overhead duplicationGovernment PHI Out- of-pocket 19
  20. 20. In countries in the West Indies, there are multiple privateplayers, with no government player… • Fosters responsiveness, • More complex innovation through • Overhead duplication competition • Risk selection (need risk- equalization)Government PHI Out- of-pocket 20
  21. 21. Key Markets Healthcare Insurance Environments in Asia Pacific India China Indonesia Malaysia Thailand Australia SingaporeAging Population No Yes No Yes Yes Yes YesDominant Distributer of Life/ Non Life/ Life/ Non Life/ Life Life Life Health LifePHI Health HealthTax Incentives for PHI Yes Group No Yes No Yes YesRestrictions on Premium Notify No No No No Yes notifyRatesGuaranteed Renewal Some Some No No No YesPortability of PHI policy In Discussion No No No No YesGroup biz as % of total 45% 30% >20% 30% 20% <10% 25%portfolio Minimum Benefits YES NO Schedule Medical Underwriting Yes No Yes allowed 21
  22. 22. The 3 elements of healthcare: High quality, reasonablecost, and ease of access… Access Cost Situation Challenges Opportunities Quality • Increasing elderly population Access constraint: Improved access: • Increasing medical travellers • Shortage of hospital bed space Medisave covers 12 private Access • High quality healthcare (2.2/1000, ideal 3/1000) hospitals in Malaysia; offer • Efficient schemes [Medisave, • High cost of healthcare international medical insurance Medical Shield, Medifund, • High premium specialized Eldershield] packages that cover eg. BUPA Pregnancy; … preventive Cost constraints: Cost-effective options: • Flat subsidy per patient of • Not sustainable as cost incurred • Packages for middle & high Cost US$80 paid to the by hospitals is higher leading to income groups who would prefer to hospital/doctor regardless on deteriorating service and quality inpay for high quality the disease treated overburdened public hospitals • Opportunities for foreign (ME) • Popular with public • Cost constraints in other part of insurance companies to lower their the world eg. Middle east, reimbursement costs [60-70% Singapore cheaper than US, 50% cheaper than Singapore Quality constraints: Improved quality options: Quality • 39% population covered by • Inadequate quality; wealthy go to •High premium packages that government insurance, 5% Malaysia and Singapore cover medical travel covered by private; ~56% • Middle class relies on private; •Packages that incentivize local uninsured less pressure on the government treatment at JCI accredited to provide good quality healthcare hospitals 22
  23. 23. FUTURE OF HEALTH CARE 23
  24. 24. Healthcare Paradigm Shift A modern healthcare system is on the horizon, demanding a paradigm shift From... ...To Provider Centric Focus Patient Centric Centralized – Hospital Monitor De-Centralized – Shift to Community Invasive in general hospitals Treatment Less invasive in specialized hospitals Treating Sickness Objective Preventing Sickness – “Wellness” F O M T Source: Frost & Sullivan 24
  25. 25. FFocus: moving from physicians to patients O M T Patients are becoming: Physician Patients • Aware of treatment/medicine choices • Informed decision makers • Responsible for their own health Source: Frost & Sullivan 25
  26. 26. FInnovation in hospital business models: Hospitals go virtual; O Mdevelopment of community based care T Hospital based care Community based care Centralized model Decentralized model Patient overload Reduced patient load Increased costs Reduced cost Strain on health care resources Optimum utilization of health care resources Source: Frost & Sullivan 26
  27. 27. FVirtual Hospitals: Shifting the Financial Gravity of the System O M T100% Healthy, Independent Living Healthy, Independent Living Community Clinic Community Clinic HOME Chronic Disease Chronic Disease CARE Management Management Doctor’s Office Doctor’s Office Quality of life Assisted Living Assisted Living RESIDENTIAL Specialty Clinic Specialty Clinic CARE Skilled Nursing Skilled Nursing Facility Facility Community ACUTE Community Hospital Hospital CARE ICU ICU 0% $1 $10 $100 $1,000 $10,000 Cost of care per day Source: Frost & Sullivan 27
  28. 28. FInnovation in Hospital Business Models: Trends towards O Mspecialized care delivery around specific therapeutic areas T General Hospital Focused Specialized Hospital Value Proposition: Value Proposition: Don’t know what’s wrong? Need care for a specific condition? – We can address any problem you bring – Specialists, experience, world-class facilities Traditional operations Specialized hospitals offering minimal invasive Long post operative length of stay surgeries/ day surgeries Reduces or eliminates length of stay Source: Frost & Sullivan 28
  29. 29. FWellness of the body, the mind and the soul O T M Mood Stress levels Mind Mental health Sense of optimism Attitude Security Safety Sight / vision Touch & feel Personal values Smell / breathing Sound Body Soul Personal fulfilment Self image / self Temperature actualization Wellness Source: Frost & Sullivan 29
  30. 30. FWhy Wellness? O M T 50% Percent of all diseases Medical Costs can be avoided and prevented by lifestyle changes Direct = 31% Indirect = 69% Only 31% of healthcare Lost Productivity: Medical Costs expenditure in organization is - Absenteeism spent on direct medical costs Employee & Customer Workers Dissatisfaction: Compensation - Turnover + Temporary Staffing - Poor Quality 69% of medical costs are Salary Continuation Replacement Workers: due to productivity loss - Training Interim Employee - Administrative re-work 50% of all medical costs can be saved with integrated and comprehensive health 75% caused by chronic diseases that are management. preventable Source: An Unhealthy America: The Economic Burden of Chronic Disease, The Milken Institute Center for Health Economics 30
  31. 31. FHealth and Wellness: Shift in Healthcare Trends From O MTreatment to Prevention TPrevention trends result in greater demand for areas such as weight management and functional foods and beverages Healthcare Spending Per Capita (2007, 2050) If current trends hold - by 2050, healthcare spending will double, claiming 20-30% of 20- GDP for some economies In most countries worldwide, per capita healthcare spending is rising faster than per capita income which is unsustainable Healthcare Spending by Type of Activity Due to rising costs of healthcare, future spending will move away from treatment Source: Frost & Sullivan 31
  32. 32. What does that mean for the insurance companies…. From... ...To Provider Centric Focus Patient Centric Customized Insurance products Insurance products incentivising Centralized – Hospital Monitor De-Centralized – Shift to community care Community Specialized insurance products that cover Invasive in general Treatment Less invasive in less invasive surgeries hospitals specialized hospitals Insurance products that cover and Treating Sickness Objective Preventing Sickness – “Wellness” incentivize preventive care, regular monitoring, vaccinations, healthy habits… The key is to manage quality, cost, and access… 32
  33. 33. Government PHI Out- of-pocket 33
  34. 34. Thank you Dr. Milind Sabnis, MD, MBA Donna Jeremiah Director Principal Consultant Corporate Communications, Asia Pacific Healthcare, Asia Pacific djeremiah@frost.com milind.sabnis@frost.com Tel: +61 (02) 8247 8927 Carrie Low Jessie Loh Manager Executive Corporate Communications, Asia Pacific Corporate Communications, Asia Pacific jessie.loh@frost.com carrie.low@frost.com Tel. (65) 6890 0942 Tel. (603) 6204 5910 34

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