october 2017 digital remedies for the …...all. bad, because hospitals remain the epicenter of...

Copyright © 2017 DHR International, Inc. All Rights Reserved. Digital Remedies for the Consumerization of Healthcare • 1

WHITE PAPER • OCTOBER 2017

Digital Remedies for the Consumerization of Healthcare

BY STEVE STINE, MANAGING PARTNER – ASIA-PACIFIC, DHR INTERNATIONAL, AND

ASHWIN MODUGA, RESEARCH MANAGER, IDC HEALTH INSIGHTS 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.

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.

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

http://www.dhrinternational.com/insights/chinas-coming-healthcare-crunch


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

Change

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.

1. IDC's Worldwide IoT Infrastructure Taxonomy, 2017 2. IDC estimates based on WHO data 3. World Bank 4. WHO 5. NCBI 6. Forbes China Health 7. IDC Asia-Pacific Health Industry Trend Survey 2016

https://www.idc.com/getdoc.jsp?containerId=US41860616

http://www.worldbank.org/en/topic/urbandevelopment/publication/east-asias-changing-urban-landscape-measuring-a-decade-of-spatial-growth

http://www.wpro.who.int/china/mediacentre/factsheets/cvd/en/

https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5003380/

http://fortune.com/2016/07/10/china-healthcare-costs-debt/

Copyright © 2017 DHR International, Inc. All Rights Reserved. Digital Remedies for the Consumerization of Healthcare •

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