Retail health companies increasingly invest in primary care, particularly home-based care, with patients demanding low-cost and convenient care delivery. The recent acquisition of home healthcare company Signify Health by retail health giant CVS Health highlights the industry’s growing interest in home-based care.
There is an increased demand for at-home healthcare services and health assessments, especially after the COVID-19 pandemic changed customer preferences towards access to convenient at-home services.
At-home care can bring down expenses by reducing hospital visits and detecting health problems in advance. A study published by the US Agency for Healthcare Research and Quality in April 2021 indicated that at-home patient care could reduce hospital expenses by 32% and hospital readmission rate (within six months after discharge) by 52%. The study claimed that patients receiving at-home care were less exposed to other illnesses, and this kind of care provided consistent attention, which resulted in better management of chronic diseases and prevention of health problems, reducing hospital readmissions. Apart from lowering the overall cost of care, healthcare providers are also incentivized to lower readmission rates under Medicare incentive programs, and hence, many healthcare companies have realized the potential of investing in at-home services.
One example of this was CVS Health’s acquisition of home health company Signify Health, completed in March 2023, for a total value of US$8 billion. Signify’s network of 10,000 clinicians, nationwide healthcare providers, and proprietary analytics and technology platforms is expected to help CVS extend its at-home health business. Adding Signify’s capabilities, such as at-home healthcare services, health assessments, patient data analytics, Accountable Care Organization (ACO) management, and provider enablement solutions, is likely to strengthen CVS’s abilities to offer better accessibility to services, improved patient-provider connectivity, better coordination of services, and improved quality of services.
CVS increases focus on the Medicare population with at-home health offerings
Looking at the recent acquisitions in the healthcare industry, it can be seen that major players in the retail health space, such as CVS Health, Amazon, Walgreens, Walmart, Dollar General, and Best Buy, are acquiring companies to strengthen their capabilities in offering primary care. These retail health companies are trying to tap into the growing demand for consumer-centric care. In particular, there is an increased focus on senior citizens and patients with chronic diseases.
Almost 19% of the US population is covered under Medicare plans, making it one of the most lucrative segments. In 2022, McKinsey estimated that, by 2025, up to US$265 billion worth of healthcare services provided to traditional Medicare and Medicare Advantage beneficiaries by traditional primary care facilities could potentially navigate to at-home healthcare providers offering at-home health services and virtual primary care services. Retail health companies view primary care services offered at home, traditionally dominated by independent clinics, as an opportunity to enter the healthcare delivery segment. CVS is also heading in the same direction.
CVS Health began expanding beyond its pharmacy services by acquiring health insurance company Aetna in 2018. Aetna is the fourth-largest Medicare Advantage plan, with 3.3 million enrollees in 2023.
In recent years, CVS Health has made significant efforts in building value-based care capabilities. Apart from acquiring Signify Health, which also includes Signify’s Caravan ACO business, the company acquired Medicare-focused primary care provider Oak Street Health in May 2023. These acquisitions indicate CVS’s increasing focus on enhancing healthcare services for the Medicare population.
Signify’s acquisition brings CVS closer to its aim to become a full-service health provider
With the acquisition of Signify Health, CVS should be able to enter the at-home healthcare space in addition to its existing 9,900 retail drugstores and 1,100 MinuteClinics. CVS now has the capabilities to fulfill patient needs across the entire care spectrum, operating as a payer, a pharmacy benefit manager, an ACO manager, a chain of medical clinics, a network of primary care centers, and a home-based care provider, becoming a full-service healthcare provider.
This means CVS can make it simpler for patients and providers to navigate the complex healthcare system by centralizing services, as all these healthcare activities are performed under the same company. For instance, CVS can offer Medicare Advantage programs to patients, provide home visits, prescribe medicines, which can be delivered by CVS pharmacy, and track patients’ medication intake, which helps in making pharmacy reconciliations and offering follow-up care by primary care centers if needed. CVS can be able to access accurate and real-time data updates from all patient activities, which would improve care coordination and navigation of healthcare services for patients with real-time data sharing with providers.
CVS-Signify synergies can amplify companies’ growth and capabilities
CVS is enhancing digital capabilities to improve interoperability of electronic health records (EHRs) and enable remote patient monitoring. The company has already developed digital capabilities such as automated messaging on prescriptions, appointments, and vaccinations. CVS can integrate these digital capabilities into Signify’s systems to streamline communication between providers and patients.
CVS is expected to make use of Signify’s home care services to introduce at-home health assessments, which is a highly-demanded service by customers. Signify provided over 2.3 million unique at-home health assessments in 2022 and has witnessed a 16% year-on-year increase in the number of at-home assessments in Q2 2023. Using CVS’s nationwide primary care capabilities, Signify Health is likely to be able to expand its reach in the at-home health assessment space.
Signify’s technological capabilities are likely to strengthen CVS’s position in the market as customers appreciate increased convenience, such as remote patient monitoring, data-driven health predictions, and better navigation through the health systems. CVS can also benefit from Signify’s technological capabilities, such as provider enablement tools that would help manage population health, turnkey analytics, and practice improvement solutions to help providers transition to a value-based reimbursement model and improve the quality of care.
Furthermore, CVS also offers payer-agnostic solutions such as virtual primary care and pharmacy benefits management (CVS Caremark). CVS Caremark has the largest market share in the US pharmacy benefits manager market, with a 33% share in 2022. Signify’s client network of 50 health plan clients, including government, other payers, and private employers, can help CVS expand its payer-agnostic solutions to a diverse set of health plan and employer clients.
EOS Perspective
CVS outbid its rivals, such as Amazon, UnitedHealth Group, and Option Care Health to acquire Signify. Having acquired one of the most sought-after home healthcare companies, CVS has strengthened its position in terms of its expanded capabilities, such as primary care, home health, at-home health assessments, and provider enablement solutions. The company has the benefit of a large customer base, being the largest pharmacy chain in the US in 2022, which will help it expand its primary care and at-home services quickly. It will be interesting to see how CVS would be able to direct 8 million senior citizens who walk into CVS pharmacy stores annually to Oak Street clinics for a wellness visit or encourage them to schedule a home visit via Signify.
However, the competitors, especially the Medicare Advantage competitors, are not lagging behind. The largest Medicare Advantage Plan, UnitedHealth Group, boasting 8.9 million Medicare Advantage enrollees in 2023, announced the acquisition of two home health companies, LHC Group and Amedisys, this year. Humana, the second largest Medicare Advantage Plan with 5.5 million enrollees in 2023, acquired a stake in Kindred at Home in 2021.
Similar to CVS, UnitedHealth Group and Humana also own pharmacy and provider capabilities (including clinic-based, at-home, and telehealth). All three companies are on the task of deriving synergies among the different businesses they own with the aim to improve patient outcomes and reduce overall costs. To outperform the strong competition, the winning company needs to keep focusing on improving healthcare accessibility and patient experience, as well as catering to the evolving consumer needs.
The utilization of retail health clinics (RHCs), also known as convenience care clinics, peaked during the coronavirus outbreak with people rushing to get COVID-19 vaccinations or treatment for minor ailments when access to other care settings was restricted. FAIR Health (a non-profit organization managing a repository of 40 billion claim records) indicated that the utilization of RHCs increased by 51% from 2020 to 2021. Accordingly, the US retail health clinic market grew from US$1.78 billion in 2020 to US$3.49 billion in 2021 (as per estimates by Fortune Business Insights). With increasing familiarity and utilization, are RHCs set out to play a bigger role in the nation’s healthcare system?
RHCs move beyond low-acuity care
RHCs began with the concept of providing low-acuity care, spanning from minor illnesses and injuries to occasional visits for vaccinations or wellness screening. Increasingly, retailers are eyeing a larger share of the primary care market by making inroads into chronic disease management. Several are even expanding into mental and behavioral health.
Vaccinations
In 2022, nearly 40% of the patients at the RHCs came in for vaccinations. Much of this footfall can be attributed to the public health advisory recommending booster shots for COVID-19 vaccination. Even though the need for COVID-19 vaccinations is gradually expected to decline, the pandemic has established RHCs as a convenient venue for vaccinations. Before the coronavirus outbreak, about 50,000 adults died every year from ailments that could be prevented by vaccines, highlighting the value offered by RHCs in immunization delivery.
Diagnostics
During the pandemic, RHCs became a key provider of COVID-19 testing. Almost all the RHCs today have point-of-care testing capabilities. Flu and strep tests, lipid tests, pregnancy tests, glucose tests, etc., are among the diagnostics tests commonly offered at the RHCs. As RHCs aim to expand their services to penetrate deeper into the primary care market, the scope of diagnostic services is likely to widen. For instance, Walmart, which opened its first RHC in 2019, provides EKG tests and X-ray imagining services on-site as well.
Chronic disease management
In 2022, the Centers for Disease Control and Prevention (CDC) estimated that six in ten adults live with a chronic disease. This data indicates the vast opportunity this segment has to offer and RHCs are vying for a piece of it. Analysis by Definitive Healthcare suggests that, in 2022, about one in ten diagnoses at the RHCs was related to a chronic condition. Nearly 6% of the claims were with the diagnosis of diabetes (Type 2 diabetes mellitus without complications and Type 2 diabetes mellitus with hyperglycemia).
As the opportunity for RHCs to contribute higher to chronic disease management is vast, retailers are focusing on evolving the clinic offerings to provide treatment for chronic conditions such as diabetes, hypertension, chronic obstructive pulmonary disease, kidney disease, etc. For instance, in 2020, CVS launched HealthHubs, an enhanced RHC format, offering a larger suite of services including chronic disease management.
RHCs are able to provide chronic disease management at a lower cost. For instance, in 2022, the average charge per claim for Type 2 diabetes mellitus without complications was US$160 at an RHC compared with US$367 at a physician’s office, whereas for Type 2 diabetes mellitus with hyperglycemia, the average charge per claim was US$255 at RHC vs. US$639 at a physician’s office. Given that a chronic disease requires continuous long-term care, patients see RHC as a cost-effective and viable option for chronic disease management.
Mental and behavioral health
In early 2022, the Harris Poll data (based on a monthly survey among 3,400 people over the age of 18, physicians, and pharmacists) indicated that 41% of Gen Z and younger millennials were suffering from anxiety or depression conditions. But the same study found that only 16% of those struggling with these mental conditions were comfortable seeking treatment from a therapist or mental health professional. A mystery shopper study (conducted in 2022) investigating 864 psychiatrists across five US states indicated that only 18.5% of psychiatrists were taking appointments for new patients with a significant wait time (median = 67 days). A person going through a breakdown or depression needs immediate attention, thus low availability of psychiatry outpatient new appointments is concerning and one of the main reasons why mental health issues remain under-treated. With walk-in appointments and easy accessibility, RHCs are well-positioned to fill this gap.
Leading RHC chains have forayed into mental and behavioral health services. In 2020, MinuteClinic (an RHC chain owned by CVS) started offering mental and behavioral health counseling services. The company also added Licensed Mental Health Providers to its staff at select locations. In the same year, Walmart announced counseling services for US$1 a minute in partnership with Beacon Care Services, a subsidiary of Carelon Behavioral Health (formerly Beacon Health Options).
Retail Health Clinics Eye a Larger Piece of the US Primary Care Market by EOS Intelligence
Patient-centric approach differentiates RHCs from traditional providers
Definitive Healthcare estimates that as of March 2023, there were 1,800+ RHCs, of which 90% were owned by retail and pharmacy giants CVS (63%), Kroger (12%), Walgreens (8%), and Walmart (2%). Noticeably, the consumer-centric concepts and learnings from the retail segment have helped RHCs improve patient experience and satisfaction. Implementation of proven retail strategies is in turn defining and shaping the convenient care model and setting apart the RHCs from traditional healthcare providers.
Omnichannel engagement
Omnichannel engagement is a key retail concept enabling companies to offer a seamless consumer experience across various touchpoints. Health Care Insights Study 2022, based on a survey of 1,000 US-based respondents, indicated that four in ten people had a virtual consultation in the past year. The same study suggested that ~70% of the respondents think that the virtual consultation is better or about the same as the in-person visit. RHCs, owned by big-box retailers and pharmacy giants, are seizing the omnichannel opportunity by complementing their in-person visits with virtual care services.
MinuteClinic (owned by CVS) started piloting telehealth services in 2015. In 2021, the company provided 19 million virtual consultations, of which ~10 million were for mental and behavioral health. The Little Clinic (owned by Kroger) stepped into telehealth services following the country-wide shutdown due to the coronavirus outbreak in March 2020. And, in 2021, with the aim to extend virtual care, Walmart Health acquired MeMD, a 24/7 telehealth company providing on-demand care for common illnesses, minor injuries, and mental health issues.
Walk-in appointments
The average wait time for a primary care physician appointment in the 15 largest cities of the US was 26 days, as per Merritt Hawkins survey data (2022). RHCs typically accept walk-in patients. Moreover, RHCs are open for extended evening hours and over weekends, when primary care physicians are not available. This allows the patients to visit an RHC at their convenience.
Geographic proximity
RHCs benefit from the wide footprint across the country established by their owners, the big-box retailers. For instance, CVS, operating 1,100 retail clinics across 33 states, indicated that more than half of the US population lives within 10 miles of a MinuteClinic as of March 2022.
However, currently, there is a geographic disparity as the majority of the RHCs is located in urban areas, with only 2% serving the rural population. From the business perspective, it makes sense to concentrate on the metropolitan areas targeting high-income populations. Moreover, just like traditional healthcare providers, RHCs also find it challenging to hire qualified staff to work at remote locations. However, as the popularity and utilization of RHCs increase, expansion to rural areas may come as a natural progression. For instance, Walmart is uniquely positioned to capture the rural market opportunity by leveraging the presence of its 4,000 stores located in medically underserved areas as designated by the Health Resources and Service Administration.
Dollar General is the first retailer to step up and penetrate this unserved market. In January 2023, Dollar General, in partnership with DocGo (a telehealth and medical transportation company), piloted mobile clinics set up at the parking lots at three of its stores in Tennessee. This initiative is Dollar General’s first step into retail healthcare, and there is no clarity yet on whether the company is looking at the in-store clinics model.
Fixed and transparent pricing
RHCs have fixed pricing for different types of treatments offered and the treatment costs are communicated up-front to the patient. The Annual Consumer Sentiment Benchmark report based on a survey conducted in January 2022 indicated that 44% of the 1,006 respondents avoided care because of unknown costs. It is evident that besides the concern over affordability, the anxiety and fear around uncertain costs are making patients avoid healthcare services. RHCs help patients to evade this anxiety through cost transparency.
Multiple payment options
At RHCs, patients receive a more retail-like experience at the time of the payment. Besides the common mode of payment such as cash and cards, the RHCs also allow for contactless payments including digital wallets, tap-to-pay platforms, touchless terminals, and, thus making the payment process faster, simpler, and more convenient. This aligns with the growing popularity of contactless transactions. 80% of US consumers used some form of contactless payment mode in 2021, as per a survey of 1,000 US consumers, conducted by Raydiant (an in-location experience management platform).
Technology and automation
Technology and automation have been an integral part of modern retail. A reflection of this is seen in an RHC setup. For instance, at CVS MinuteClinic, the reception is a form of self-service kiosk. The patient is notified of the wait time (if any) and directed to fill out the electronic forms to share important personal and health-related data. The information submitted by the patient is directly shared with the healthcare professional on-site who then confirms the details and proceeds with the diagnosis and course of treatment. Details of the diagnosis and treatment along with the bill payment receipt are automatically shared with the patient at the end of the visit. The communication for follow-up consultations or other reminders is automated. The process is highly streamlined and backed by automation.
Moreover, in the RHC model, the application of technology can be seen not only to improve patient experience but also to support clinical decision-making. For instance, in 2019, CarePortMD RHCs (owned by Albertsons grocery stores) started using the autonomous AI diagnostic system called LumineticsCore to detect a leading cause of blindness in diabetic patients. Such type of technological additions reduces the chances of human error thus, eliminating potential liability issues, as well as increasing patient confidence. Walgreens, leveraging Inovalon’s Converged Patient Assessment decision support platform that provides insights into possible diagnoses using predictive analytics, is another case in point.
EOS Perspective
With all the growth and progress, RHCs are penetrating the underserved population and strengthening the current primary care delivery model. A report released by the National Association of Community Health Centers in February 2023 indicated that about a third of the US population does not have access to primary care. RHCs are well-positioned to fill this gap. Moreover, according to the data published by the Association of American Medical Colleges in 2021, the USA could struggle with a shortage of up to 124,000 physicians (across all specialties) by 2034. In the face of physician shortage, RHCs providing non-emergency care can help to alleviate the burden on the primary care providers.
To what extent the RHCs would be able to carve out a space for themselves in the primary care segment is still an ongoing debate. However, the owners of RHCs are determined to compete head-on with the traditional providers for the primary care market share and are rapidly foraying into alternative primary care models.
In May 2023, CVS completed the acquisition of Oak Street Health providing primary care to Medicare patients through its network of 169 medical centers across 21 states.
Walgreens holds a majority stake in VillageMD, offering value-based primary care to patients at 680 practice locations (including independent practices, Summit Health, CityMD, and Village Medical clinics at Walgreens, as well as at-home and virtual visits) across 26 states. In October 2021, Walgreens acquired a 55% stake in CareCentrix, an at-home care provider serving post-acute patients. The company has plans to acquire the remaining stake by the end of this year.
Amazon is another prominent retailer that made inroads in the primary care space this year with its acquisition of One Medical, a primary care provider with a network of 200+ medical offices in 27 markets across the USA.
It is foreseeable that at some point in time, the retailers will try to bring in the synergies between the RHC business and other alternative primary care service offerings with the aim to become a one-stop shop for all healthcare needs. As retailers take on a larger role in primary care delivery, the retailization of healthcare is certainly on the way.
Africa carries the world’s highest burden of disease and experiences a severe shortage of healthcare workers. Across the continent, accessibility to primary healthcare remains to be a major challenge. During the COVID-19 pandemic, several health tech companies emerged and offered new possibilities for improving healthcare access. Among these, telemedicine and drug distribution services were able to address the shortage of health workers and healthcare facilities across many countries. New health tech solutions such as remote health monitoring, hospital automation, and virtual health assistance that are backed by AI, IoT, and predictive analytics are proving to further improve the health systems in terms of costs, access, and workload on health workers. Given the diversity in per capita income, infrastructure, and policies among African countries, it remains to be seen if health tech companies can overcome these challenges and expand their reach across the continent.
Africa is the second most populated continent with population of 1.4 billion, growing three times faster than the global average. Amid the high population growth, Africa suffers from a high prevalence of diseases. Infectious diseases such as malaria and respiratory infections contribute to 80% of the total infectious disease burden, which indicates the sum of morbidity and mortality in the world. Non-communicable diseases such as cancer and diabetes accounted for about 50% of total deaths in 2022. High rates of urbanization also pose the threat of spreading communicable diseases such as COVID-19, Ebola, and monkey fever.
A region where healthcare must be well-accessible is indeed ill-equipped due to limited healthcare infrastructure and the shortage of healthcare workers. According to WHO, the average doctor-to-population ratio in Africa is about two doctors to 10,000 people, compared with 35.5 doctors to 10,000 people in the USA.
Poor infrastructure and lack of investments worsen the health systems. Healthcare expenditure (aggregate public healthcare spending) in African countries is 20-25 times lower than the healthcare expenditure in European countries. Governments here typically spend about 5% of GDP on healthcare, compared with 10% of GDP spent by European countries. Private investment in Africa is less than 25% of the total healthcare investments.
Further, healthcare infrastructure is unevenly distributed. Professional healthcare services are concentrated in urban areas, leaving 56% of the rural population unable to access proper healthcare. There are severe gaps in the number of healthcare units, diagnostic centers, and the supply of medical devices and drugs. Countries such as Zambia, Malawi, and Angola are placed below the rank of 180 among 190 countries ranked by the WHO in terms of health systems. Low spending power and poor national health insurance schemes discourage people to use healthcare services.
Health tech solutions’ potential to fill the healthcare system gaps
As the prevailing health systems are inadequate, there is a strong need for digital solutions to address these gaps. Health tech solutions can significantly improve the access to healthcare services (consultation, diagnosis, and treatment) and supply of medical devices and drugs.
Health tech solutions can significantly improve the access to healthcare services (consultation, diagnosis, and treatment) and supply of medical devices and drugs.
For instance, Mobihealth, a UK-based digital health platform founded in 2017, is revolutionizing access to healthcare across Africa through its telemedicine app, which connects patients to over 100,000 physicians from various parts of the world for video consultations. The app has significantly (by over 60%) reduced hospital congestion.
Another example is the use of drones in Malawi to monitor mosquito breeding grounds and deliver urgent medical supplies. This project, which was introduced by UNICEF in 2017, has helped to curb the spread of malaria, which typically affects the people living in such areas at least 2-3 times a year.
MomConnect, a platform launched in 2014 by the department of health in South Africa is helping millions of expectant mothers by providing essential information through a digital health desk.
While these are some of the pioneers in the health-tech industry, new companies such as Zuri Health, a telemedicine company founded in Kenya in 2020 and Ingress Healthcare, a doctor appointment booking platform launched in South Africa in 2019 are also strengthening the healthcare sector. A study published by WHO in 2020 indicated that telemedicine could reduce the mortality rates by about 30% in Africa.
The rapid rise of health tech transforming the African healthcare landscape
Digital health solutions started to emerge during the late 2000’s in Africa. Wisepill, a South African smart pill box manufacturing company, established in 2007, is one of the earliest African health tech success stories. The company developed smart storage containers that alert users on their mobile devices when they forget to take their medication. The product is widely used in South Africa and Uganda.
The industry gained momentum during the COVID-19 pandemic, with the emergence of several health tech companies offering remote health services. The market experienced about 300% increase in demand for remote healthcare services such as telemedicine, health monitoring, and medicine distribution.
According to WHO, the COVID pandemic resulted in the development of over 120 health tech innovations in Africa. Some of the health tech start-ups that emerged during the pandemic include Zuri Health (Kenya), Waspito (Cameroon), and Ilara Health (Kenya). Several established companies also developed specific solutions to tackle the spread of COVID-19 and increase their user base. For instance, Redbird, a Ghanaian health monitoring company founded in 2018, gained user attention by launching a COVID symptom tracker during the pandemic. The company continues to provide remote health monitoring services for other ailments such as diabetes and hypertension which require regular health check-ups. Patients can visit the nearest pharmacy instead of a far-away hospital to conduct tests, and results will be regularly updated on their platform to track changes.
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Start-ups offering advanced solutions based on AI and IoT have been also emerging successfully in the recent years. For instance, Ilara Health, a Kenya-based company, founded during the COVID-19 pandemic, is providing affordable diagnostic services to rural population using AI-powered diagnostic devices.
With growing internet penetration (40% across Africa as of 2022) and a rise in investments, tech entrepreneurs are now able to develop solutions and expand its reach. For instance, mPharma, a Ghana-based pharmacy stock management company founded in 2013, is improving medicine supply by making prescription drugs easily accessible and affordable across nine countries in Africa. The company raised US$35 million investment in January 2022 and is building a network of pharmacies and virtual clinics across the continent.
Currently, 42 out of 54 African countries have national eHealth strategies to support digital health initiatives. However, maximum number of health tech companies are concentrated in countries such as South Africa, Nigeria, Egypt, and Kenya, which have the highest per capita pharma spending in the continent. Nigeria and South Africa jointly account for 46% of health tech start-ups in Africa. Telemedicine is the most offered service by start-ups founded in the past five years, especially during the COVID-19 pandemic. Some of the most popular telemedicine start-ups include Babylon Health (Rwanda), Vezeeta (Egypt), DRO Health (Nigeria), and Zuri Health (Kenya).
Other most offered services include medicine distribution, hospital/pharmacy management, and online booking and appointments. Medicine distribution start-ups have an immense impact on minimizing the prevalence of counterfeit medication by offering tech-enabled alternatives to sourcing medication from open drug markets. Many physical retail pharmacy chains such as Goodlife Pharmacy (Kenya), HealthPlus (Nigeria), and MedPlus (Nigeria) are launching online pharmacy operations leveraging their established logistics infrastructure. Hospitals are increasingly adopting automation tools to streamline their operations. Electronic Medical Record (EMR) management tools offered by Helium Health, a provider of hospital automation tools based in Nigeria are widely adopted in six African countries.
Medicine distribution start-ups have an immense impact on minimizing the prevalence of counterfeit medication by offering tech-enabled alternatives to sourcing medication from open drug markets.
For any start-up in Africa, the key to success is to provide scalable, affordable, and accessible digital health solutions. Low-cost subscription plans offered by Mobihealth (a UK-based telehealth company founded in 2018) and Cardo Health (a Sweden-based telehealth company founded in 2021) are at least 50% more affordable than the average doctor consultation fee of US$25 in Africa. Telemedicine platforms such as Reliance HMO (Nigeria) and Rocket Health (Uganda) offer affordable health insurance that covers all medical expenses. Some governments have also taken initiatives in partnering with health tech companies to provide affordable healthcare to their people. For instance, Rwandan government partnered with a digital health platform called Babylon Health in 2018 to deliver low-cost healthcare to the population of Rwanda. Babylon Health is able to reach majority of the population through simple SMS codes.
Government support and Public-Private Partnerships (PPPs)
With a mission to have a digital-first universal primary care (a nation-wide program which provides primary care through digital tools), the Rwandan government is setting an example by collaborating with Babylon Health, a telemedicine service that offers online consultations, appointments, and treatments.
As part of nationwide digitization efforts, the government has established broadband infrastructure that reaches 90% population of the country. Apart from this, the country has a robust health insurance named Mutuelle de Santé, which reaches more than 90% of the population. In December 2022, the government of Ghana launched a nationwide e-pharmacy platform to regulate and support digital pharmacies. Similarly in Uganda, the government implemented a national e-health policy that recognizes the potential of technology in the healthcare sector.
MomConnect, a mobile initiative launched by the South African government with the support of Johnson and Johnson in 2014 for educating expectant and new mothers is another example of a successful PPP. However, apart from a few countries in the region, there are not enough initiatives undertaken by the governments to improve health systems.
Private and foreign investments
In 2021, health tech start-ups in Africa raised US$392 million. The sustainability of investments became a concern when the investments dropped to US$189 million in 2022, amid the global decline in start-up funding.
However, experts predict that the investment flow will improve in 2023. Recently, in March 2023, South African e-health startup, Envisionit Deep AI, raised US$1.65 million from New GX Ventures SA, a South African-based venture capital company. Nigerian e-health company, Famasi, is also amongst the start-ups that raised investments during the first quarter of 2023. The company offers door-step delivery of medicines and flexible payment plans for medicine bills.
The companies that have raised investments in recent years offer mostly telemedicine and distribution services and are based in South Africa, Nigeria, Egypt, and Kenya. That being said, start-ups in the space of wearable devices, AI, and IoT are also gaining attention of investors. Vitls, a South African-based wearable device developer, raised US$1.3 million funding in November 2022.
Africa-based incubators and accelerators, such as Villgro, The Baobab Network, and GrowthAfrica Accelerator, are also supporting e-health start-ups with funding and technical guidance. Villgro has launched a US$30 million fund for health tech start-ups in March 2023. Google has also committed US$4 million to fund health tech start-ups in Africa in 2023.
Digital future for healthcare in Africa
There were over 1,700 health tech start-ups in Africa as of January 2023, compared with about 1,200 start-ups in 2020. The rapid emergence of health tech companies is addressing long-running challenges of health systems and are offering tailored solutions to meet the specific needs of the African market.
Mobile penetration is higher than internet penetration, and health tech companies are encouraged to use SMS messaging to promote healthcare access. However, Africa is expected to have at least 65% internet penetration by 2025. With growing awareness of the benefits of health tech solutions, tech companies would be able to address new markets, especially in rural areas.
Companies that offer new technologies such as AI chatbots, drones, wearable devices for remote patient monitoring, hospital automation systems, e-learning platforms for health workers, the Internet of Medical Things (IoMT), and predictive analytics are expected to gain more attention in the coming years. Digitally enabled, locally-led innovations will have a huge impact on tackling the availability, affordability, and quality of health products and services.
Digitally enabled, locally-led innovations will have a huge impact on tackling the availability, affordability, and quality of health products and services.
Challenges faced by the health tech sector
While the African health tech industry has significantly evolved over the last few years, there are still significant challenges with regards to infrastructure, computer literacy, costs, and adaptability.
For instance, in Africa, only private hospitals have switched to digital records. Many hospitals still operate without computer systems or internet connection. About 40% of the population are internet users, with countries such as Nigeria, Egypt, South Africa, Morocco, Ghana, Kenya, and Algeria being the ones with the highest number of internet users (60-80% of the population). However, 23 countries in Africa still have low internet penetration (less than 25%). This is the major reason why tech companies concentrate in the continent’s largest tech hubs.
On the other hand, majority of the rural population prefers face-to-face contact, due to the lack of digital literacy. Electricity and internet connectivity are yet to reach all parts of the region and the cost of the internet is a burden for many people. Low-spending power is a challenge, as people refuse to undergo medical treatment due to lack of insurance schemes to cover their medical expenses. Insurance schemes provided in Africa only cover 60% of their healthcare expenses. Even though health tech solutions bring medical costs down, these services still remain unaffordable for people in low-income countries. Therefore, start-ups do not prefer to establish or expand their services in such regions.
Another hurdle tech companies face is the diversity of languages in Africa. Africa is home to one-third of the world’s languages and has over 1,000 languages. This makes it difficult for companies to customize content to reach all populations.
Amidst all these challenges, there is very little support from the governments. The companies face unfavorable policies and regulations that hinder the implementation of digital solutions. Only 8% of African countries have online pharmacy regulations. In Nigeria, regulatory guidelines for online pharmacies only came into effect in January 2022, and there are still unresolved concerns around its implementation.
Lack of public investment and comprehensive government support also discourage the local players. Public initiatives are rare in providing funding, research support, and regulatory approval for technology innovations in the health sector. Private investment flow is low for start-ups in this sector, compared to other industries. Health tech start-ups raised a total investment of US$189 million in 2022, which is not even 10% of the total investments raised by start-ups in other sectors in Africa. Also, funding is favored towards the ones established in high-income countries. Founders who don’t have ties to high-income countries struggle to raise funds.
EOS Perspective
The emergence of tech health can be referred to as a necessary rise to deal with perennial gaps in the African healthcare system. Undoubtedly, many of these successful companies could transform the health sector, making quality health services available to the mass population. The pandemic has spurred the adoption of digital health, and the trend experienced during the pandemic continues to grow with the developments in the use of advanced technologies such as AI and IoT. Telemedicine and distribution have been the fastest-growing sectors driven by the demand for remote healthcare services during the pandemic. Home-based care is likely to keep gaining momentum with the development of advanced solutions for remote health monitoring and diagnostic services.
Home-based care is likely to keep gaining momentum with the development of advanced solutions for remote health monitoring and diagnostic services.
With the increasing internet penetration and acceptance for digital healthcare, health tech companies are likely to be able to expand their reach to rural areas. Right policies, PPPs, and infrastructure development are expected to catalyze the health tech adoption in Africa. Companies that offer advanced technologies such as IoT-enabled integrated medical devices, AI chatbots, drones, wearable devices for remote patient monitoring, hospital automation systems, e-learning platforms for health workers, and predictive analytics for health monitoring are expected to emerge successfully in the coming years.
Affordable and accessible health care service is a common objective for governments across developed as well as developing nations.
Global trends suggest that generally countries, as they attain prosperity, tend to move towards a Universal Health Care (UHC)/ Social Health Insurance (SHI) regime, in which 100% population is provided with health care coverage (scope varies from country to country). There are some exceptions in the developed world, with the USA being an example.
In the Southeast Asian region, each country is at a different phase/stage regarding the implementation of universal health access. Several of these countries, such as Indonesia, Philippines, and Thailand, have implemented UHC (as a policy). The remaining countries in this region have various types of health insurance schemes to cover certain sections of the population, and are experimenting with some schemes to judge their effectiveness. It is expected that these countries will eventually work towards the common goal of achieving 100% UHC.
The following illustration captures the current health care sector situation (from UHC/SHI perspective) in four Southeast Asian countries (Cambodia, Indonesia, Philippines, Vietnam), and highlights few areas that require immediate attention in order to successfully manage universal health access for their citizens.
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Details on country-specific social health insurance design and infrastructure:
Thailand has a well-developed healthcare system, as compared with most of the Asian countries. Majority of the health-related Millennium Development Goals (MDG) have been achieved, though a rapidly ageing population and the burden of non-communicable diseases remains a challenge for the public healthcare system. A better disease prevention mechanism, health promotion, and adequate primary care are some of the priorities of the Thai government in the healthcare sector.
This article is part of a series focusing on universal healthcare plans across selected Southeast Asian countries. The series also includes a look into the plans in The Philippines, Cambodia, Vietnam, Indonesia, and Thailand.
Thailand achieved Universal Healthcare Access (UHA) status in 2002 with the launch of health insurance benefits for 30% of the population that was outside the health insurance ambit till then.
Thailand boasts of world class medical facilities (especially in the private healthcare sector), and is among the world’s largest medical tourism markets. The government is looking to further develop Thailand into an “International Health Center for Excellence” under its second strategic five-year plan (2012-2016).
The plan focuses on four major areas: medical services, integrative wellness centers, development of Thai herbs, and traditional and alternative Thai medicines.
With almost 100% population already covered by UHA, and a reasonably developed healthcare infrastructure in place, the government’s focus is likely to be on improving the quality of healthcare services. This will create opportunities for the companies operating in the healthcare industry.
INFRASTRUCTURE
Key Stakeholders
The Ministry of Public Health (MoPH) is responsible for public healthcare services and for governing and regulating the healthcare industry, including healthcare-related NGOs, medical professionals, hospitals, and clinics. In a series of Decentralization Action Plan (1999, 2008, and 2012), responsibility for some of health facilities was delegated to local authorities at provincials (municipal and general hospitals) and sub-district level (health centres); However, the Thai healthcare system still remains highly centralized (and more dependent on public healthcare services).
Healthcare Service Delivery
Public healthcare service delivery system includes:
Primary Care: Community health posts and primary healthcare centres (village level) and health centres (sub-district level)
Secondary Care: Municipal health centres and community hospitals
Tertiary Care: Provincial and regional hospitals, and medical schools
At provincial and regional level, some of the hospitals are under the administration of other government bodies, such as the Army, Police, and Ministry of Education (MoE). All community hospitals and health centres in rural areas are operated by the MoPH. The healthcare infrastructure consist of the following:
Community Care Centers: ~50,000
Health Centers: ~10,000
Community Hospitals and Municipal Health Centers: ~ 1,000
Provincial Level Hospitals: ~ 200
Regional Level Hospitals: ~ 80
KEY CHALLENGES
Unequal Distribution of Services
Despite a well-developed healthcare infrastructure and almost 100% population coverage, inequalities still exist in terms of accessibility and quality of care
There is a variance in the geographical distribution of health workers and other resources; urban centres such as Bangkok have access to better quality healthcare as compared with the rural populace, which faces a shortage of clinical resources
Duplication of Efforts
Thailand’s healthcare sector consists of several stakeholders, including ministries, government agencies, and the local governments involved in management and financing of healthcare facilities. This has resulted in duplication of administrative systems (including payment, reporting, and monitoring), eventually leading to inefficiencies
DESIGN
Beneficiary Classification
In Thailand, the UHA covers the population not covered by
Civil Servant Medical Benefit Scheme (CSMBS) for government employees, pensioners, and their dependents
Compulsory Social Security Scheme (CSSS) for private employees or temporary public employees
Private Health Insurance (for individuals and private firms)
Once registered, people joining the UHA scheme receive a gold card to access services in their health district, and, if necessary, be referred for specialist treatment elsewhere
Healthcare Insurance Financing
Source of finances for different social health schemes is as follows:
UHA – general tax revenue
CSMBS – general tax
CSSS – premium (as a % of salary)
Payment System
The payment system varies according to the insurance scheme
UHA – The payment system is capitation-based for most of the services; and rest of the services, such as dental care are on fee-for-service basis; funding allocated to the contracting facilities for Primary Care are on a population basis
CSMBS – Outpatient services are on fee-for-service basis; inpatient services are on Diagnosis-related group (DRG) system (to classify hospital cases into groups to determine cost)
CSSS – the payment system is capitation-based for most of the services; and rest of the services, such as dental care are on fee-for-service basis
Benefits
The coverage is comprehensive in case of UHA and CSMBS and includes both inpatient and outpatient treatment. However, there are few conditions, such as:
UHA – Treatment available in contracted hospitals only; facilities, such as private bed and special nurses are not available
CSMBS – Private hospitals available in case of emergency care only; special nursing services not available
CSSS – Coverage is coverage is comprehensive except that it doesn’t include annual physical check-ups, and work-related illness and injuries
Co-payment (Reimbursement) System
At present no co-payment regime is applicable for UHA, however, 30-Baht co-payment (per service) is applicable to patients who receive prescriptions and are willing to pay. For the population covered by CSMBS and CSSS, co-payment system is applicable in case of emergency care.
Reimbursement System for Drugs
For UHA, CSMBS, and CSSS the drug benefit package is based on the National List of Essential Drugs (NELD), and the drugs can be reimbursed without any co-payment. Drugs used under CSMBS’ out-patient fee-for-service system, and not listed in NELD, are reimbursed.
KEY CHALLENGES
Absence of Unified Scheme
Theoretically, UHA is for the entire Thai population; however, two other health financing schemes for the government and formal sector private employees operate in parallel wherein the benefits differ from one another. E.g. variance in expenditure per patient, access to healthcare facilities, co-payment regime, and access to special care. It is a challenge for the government to achieve equality in the quality and range of services, which arise due to social health insurance specific policies
Funding Constraints
Due to changing disease profile (e.g. prevalence of chronic diseases and an aging population), Thailand is witnessing increasing cost of healthcare thereby putting burden on UHA, which is entirely funded through taxation. The government needs to look at the cost saving options e.g. payment system for healthcare facilities and procurement of drugs and equipment, to ensure the long term viability of UHA
Opportunities for Healthcare Companies
Healthcare Service Providers
Thailand has a better (as compared with most of the countries in Asia) developed healthcare system with a majority of the healthcare services being delivered by the public network. At present, it appears limited scope for the private providers, as they also are mostly concentrated in the urban centres while there is a greater need (at least at primary and secondary level) in non-urban areas
However, private providers can look for collaboration opportunities in areas/aspect that add value to pre-existing service set-up. For example in the field of mobile healthcare, telemedicine etc.
Medical Device Manufacturers
There is significant growth potential for the medical device companies, as the country’s universal healthcare system continues to support healthcare initiatives. Demand for medical devices is further anchored by the government’s efforts to develop the country into an Asian medical hub
Public hospitals continue to be the main user of medical equipment. Opening of new health facilities would also create demand for equipment and devices
Pharmaceuticals Companies
The government encourages the use of drugs listed in the National List of Essential Medicines, all of which are fully reimbursed by the three major public health insurance schemes
However, the government may review health expenditure pattern and reimbursement policies amid changing demographic profile (i.e. more senior citizens) leading to increased focus on cost-effective healthcare services. This may create better opportunities for generics and low-cost drugs
A Final Word
Thailand’s UHA scheme has largely been a success, and a model for other countries to follow. The scheme provides coverage to a large informal sector, which is a challenging task in itself. The benefit package, which includes curative as well as preventive services, is comprehensive.
The country has demonstrated efficiency in UHA implementation with satisfactory outcomes in terms of meeting healthcare needs of the society, and in attempts towards offering equitable health. A relatively better developed healthcare network and relevant administrative experience helped in achieving the desired results.
Leaving behind the past successes, UHA would be required to gear-up for the challenges ahead. For instance, the country needs to plan for changing disease profile i.e. an increased burden from Non-communicable Diseases (NCDs). This may have cost implications for UHA (and opportunities for the healthcare industry participants) in terms of accommodating suitable interventions and planning for adequate preventive measures at primary, secondary, and tertiary care level. It is expected that the country will witness more activity with respect to qualitative improvement in healthcare services, as compared with geographical expansion of services.
A comparative with other countries in the region should provide a better perspective on the actual potential of Thailand as a prospective destination for devices and drugs companies alike.
Under its National Health Strategic Plan (NHSP), Indonesia is continuously focusing on improving the quality and accessibility of its public healthcare system. NHSP (2010-2014) aims to enhance health status through involvement of private sector and civil society. It also focuses on the prevention and cure of health problems faced by the community through availability of comprehensive and equitable health services and health resources, supported by good governance.
This article is part of a series focusing on universal healthcare plans across selected Southeast Asian countries. The series also includes a look into the plans in The Philippines, Cambodia, Vietnam, Indonesia, and Thailand.
The Indonesian government is planning to cover every Indonesian under Universal Health Insurance (UHI) by 2019 under a new scheme called Jaminan Kesehatan Nasional (JKN). As of January 2014, about 120 million Indonesians (government servants, police and army personnel, and poor) were automatically included under this scheme. The government has already allocated about 20 trillion rupiah (US$1.6 billion) to cover health insurance premiums for the poor in 2014.
One of the features of the Indonesian UHI is the participation of the private sector wherein a number of hospitals and clinics have signed-up under the JKN.
When implemented fully, UHI is expected to create significant demand for companies operating in the industry, as the scope of the services is bound to increase. However, uncertainties exist regarding the smooth transition of the social health insurance mechanism from the current (prior to 2014) multiple-scheme-based system to a single system. The foundation design and the support infrastructure would determine the long term success of UHI.
INFRASTRUCTURE
Key Stakeholders
Indonesia has a decentralized administrative system since early 2000s wherein each of the 33 provinces is divided into districts and each district is further divided into sub-districts. District Governments are the direct authority in prioritizing the sectors (including health) for development
Healthcare Service Delivery
Public healthcare service delivery is based on a hierarchical referral system, which includes primary health clinics (PHC), district and provincial hospitals (secondary care) and specialty hospitals (tertiary care). Secondary health care is further classified as (Kabupaten (rural) and Kotamadya (urban)
Depending on the range and quality of healthcare services, hospitals are classified in to four categories
Level D – District-level hospital headed by a General Practitioner (GP) and provides some basic inpatient care. These are just one step above the primary health center
Level C – District-level hospital, which provides four basic specialties (surgery, internal medicine, pediatrics, and OBGYN services) and three supporting specialties (anesthesia, radiology, and pathology)
Level B – Provincial level hospital providing more specialist services as compared with level C hospitals. Specialist medical clinics, including pulmonary clinics and eye clinics, and medical supporting care are also included
Level A – These are described as ‘Centers of Excellence’ with sophisticated equipment with state-of-the-art facilities. This level includes specialist hospitals, such as Maternal and Child Hospital, Cancer Hospital, Coronary Hospital
KEY CHALLENGES
Capacity Constraints
Indonesia faces capacity constraint in terms of the number of hospitals as well as resources (qualified doctors, nurses and other staff). Public healthcare system is characterized with high occupancy rate at hospitals, and the situation is likely to worsen as more people come under the coverage of the government-sponsored health insurance scheme
Though a three-tier referral system exists, there is a lack of integration resulting in the by-passing of the lower-tier facilities and overcrowding at the secondary and tertiary level
Uneven Concentration of Healthcare Personnel
Indonesia has 25 health workers per 10,000 people (against WHOs minimum benchmark of 23); however, most of them are concentrated in urban centers, leaving rest of the country (especially the rural area) without sufficient number of health personnel
Healthcare professionals need to be compensated adequately to create a pool of resources large enough to meet the demand of a healthcare system catering to about 250 million people
DESIGN
Beneficiary Classification
Prior to the implementation of UHI in January 2014, certain sections of the population were already covered under different schemes, such as:
Askes (for civil servants and pensioners)
Jamkesmas (poor and near poor)
Jamsostek (private formal sector workers)
Jamkesda (district-level schemes for near-poor)
Healthcare Insurance Financing
Expenditure on public healthcare services under UHI is provided through taxation revenues and member contribution
Formal sector employees (both public and private) will pay 5% of the salary as premium wherein the employer will makes 4% contribution. Informal workers, the self-employed and investors, will pay monthly premiums of between Rp 25,500 (US$2.15) and Rp 59,500 (US$5.1) each
The government would be paying for the premiums of the rest of the groups (mentioned in ‘Beneficiary Classification’)
Payment System
For primary health care, the payment system is to be based on monthly capitation (based on registered users), and the Diagnosis-related group (DRG) system (to classify hospital cases into groups to determine cost) would be applicable for hospitals
Amount under DRG system will be fixed on the basis of negotiations with the hospital associations in various regions
Benefits
The UHI covers comprehensive benefits, including the treatment of commonly occurring illness, such as influenza as well as expensive medical treatment, such as heart surgery, dialysis, and cancer therapies
Co-payment (Reimbursement) System
At present no co-payment regime has been planned at the point of care. Healthcare services are to be fully reimbursed to the healthcare facilities on behalf of the patients
Reimbursement System for Drugs
Drugs specified under the formulary list are covered under the social sector health insurance plan. As mentioned above, the drugs used for the treatment are covered by the zero-co-payment system
KEY CHALLENGES
Concern about Quality
There are apprehensions that the quality of health services may suffer under the current provisions of the universal healthcare schemes
According to the Indonesian Medical Association, the government is paying substantially low amount for the poor, which may not be able to cover expensive treatment, such as cancer therapies. Hospital may struggle to cover costs due to lower reimbursement rates, which may discourage private hospitals from participating in the UHI. This would lead to overburdened state-run hospitals (and hence erosion of quality)
Ensuring Comprehensive Coverage
A large population comprising informal sector is yet to be covered under UHI. It would be a challenge for the government to motivate this section of population to be a part of the scheme. Contribution from the informal sector in the form of premium is crucial, as the Indonesian UHI would primarily draw its finances its expenses through it (along with the contribution from the formal sector employees)
Addressing the Grey Areas
There is lack of clarity about the role of private insurance after the implementation of UHI, as several private employers who have obtained private insurance for their employees may end-up paying double premium
Opportunities for Healthcare Companies
Healthcare Service Providers
The current set-up does not provide enough incentives for the private sector healthcare providers; however, the UHI policy envisages a space for private players. Also, the government has indicated about increasing the premium paid for the poor gradually, therefore private clinics and hospitals have significant opportunities to increase their business as well as to fill the resource gap in the Indonesian healthcare system
Medical Device Manufacturers
Irrespective of the implementation of the UHI, there was significant growth potential for the medical device companies due to years of under investment in the hospital equipment and devices such as MRI, Tomography scanners, mammography etc. A wider UHI coverage would require purchase of such equipment, to cater to the increasing demand
It is expected that new health facilities would come up in the regions where the newly insured population resides i.e. outside Java and other large cities. This would boost the demand for equipment and devices
Pharmaceuticals Companies
UHI is expected to create additional demand for medicines, as the population that was previously unable to purchase medicines comes under the coverage. Demand for generic medicines is expected to increase, as the government focuses on procuring low-cost medicines to keep the cost of UHI down
A Final Word
Considerable ground needs to be covered before Indonesia realizes the goal of 100% healthcare access coverage. The current state of the healthcare infrastructure as well as the healthcare benefits that have been designed (for the population under coverage as of January 2014) pose challenge in creating a working (and efficient) UHI system.
Success of UHI primarily hinges on the inclusion of informal sector population. Introducing an informal sector-specific mechanism for the premium contribution, attractive enough to ensure participation, would be the key in this direction. More clarity about the role of private insurance will help towards creating a system capable enough to cater to 250 million plus population.
Size of the Indonesian healthcare market already presents ample opportunities for pharmaceutical as well medical device manufacturers. 100% coverage under UHI will further boost the prospects of these firms. The expected expansion of healthcare infrastructure beyond the developed regions (cities) is likely to create demand for equipment as well as medicines.
Existing capacity constraints in the public healthcare system may augur well for the private health care service providers. As of now, given the geographical challenges and regional disparity in healthcare services, the goal of 100% coverage under UHI looks a distant dream without the participation of private sector. Therefore a workable payment system needs to be devised to ensure greater participation of the private sector players.
Vietnam is a lower-middle income country (GNI per capita US$1,550 as of 2012) with a population of about 89 million (14th most populous country as of 2012). Entitlement of healthcare to every citizen is imbibed in Vietnam’s constitution, and the country has taken steps to achieve it. National Strategy on Protection and Care of the People’s Health (2001) increased the state’s role in ensuring basic healthcare services to all Vietnamese. The Law on Health Insurance (2008) was formulated with the objective of achieving universal health insurance coverage.
This article is part of a series focusing on universal healthcare plans across selected Southeast Asian countries. The series also includes a look into the plans in The Philippines, Cambodia, Vietnam, Indonesia, and Thailand.
As of 2011, more than 60% population were covered under the Social Health Insurance (SHI) scheme. The government is aiming to cover rest of the population (primarily the people from the informal sector) by 2014.
If achieved, Vietnam would be among few Asian countries with 100% Universal Health Care (UHC) coverage for its citizen. For a private sector player (pharmaceutical company, medical device manufacturer, or a healthcare service provider), this should materialize in to increased sales, as the number of customers (which otherwise are faced with financial constraints to avail healthcare services/products) grow.
However, from a long term perspective, sales prospect are likely to depend on the government’s ability to maintain service levels, to tackle emerging healthcare challenges within UHC mandate, and to ensure availability of finances for SHI. The current design and the support infrastructure would determine the long term success of SHI (and hence the prospects of the companies from healthcare industry).
INFRASTRUCTURE
Key Stakeholders
The Ministry of Health (MOH) is responsible for developing programs and policies, budgeting, personnel allocation, direction and supervision of national institutions
The Provincial Health Bureau administers the provincial healthcare care system. Each province consists of District Health Bureau responsible for district level administration of the healthcare services
The Commune Health Station (CHS) in each district provide healthcare services at Commune Level. District People’s Committee is responsible for the funding of the healthcare services in each district
Healthcare Service Delivery
CHS providing primary healthcare services is the entry point in the public healthcare system in Vietnam
District hospitals offer basic inpatient treatment, emergency services, and pre-natal and delivery services. Provincial hospitals (including specialty clinics) provide outpatient and inpatient services
National hospitals are the most advanced with specialties such as oncology, endocrinology etc.
Current hospital infrastructure:
HC: ~11,000
District Hospitals: ~1,300
Provincial Hospitals: ~ 500
National Hospitals: ~ 45
Private Hospitals: ~ 1,00
KEY CHALLENGES
Regulatory Framework for Private Healthcare
Private healthcare infrastructure has flourished in Vietnam as the government intended to reduce burden from the public healthcare system. However, due to lack of regulations, the private system has failed to complement the public one as expected
Burdened Public Healthcare
People mostly rely on private system for outpatient care, though they may prefer to visit the public system for inpatient services. Therefore, healthcare at primary level has not developed as expected, putting more pressure on secondary and tertiary healthcare infrastructure
Uneven Concentration of Healthcare Personnel
Distribution of human resources is not even, as most of the doctors and support staff is concentrated in the urban centers. Due to it, rural population may not be able to avail the benefits of social health protection, despite being under coverage
DESIGN
Beneficiary Classification
SHI members are classified in to the following six groups:
Civil servants and formal sector workers
Pensioners, meritorious people, beneficiaries of social security/protection allowances, and veterans
The poor and near-poor
Children under six years of age
School children and students
All remaining population
Healthcare Insurance Financing
SHI is funded through government budget, employer and employee contribution, and Vietnam Social Security (VSS). The ‘Healthcare Fund’ for SHI is managed by the VSS.
SHI premium is fixed at 4.5% of the salary/pension/protection allowance/unemployment benefit wherever applicable. The government pays for the premium of poor, children under six years, and meritorious people. For unemployed and pensioners, VSS pays the premium. Group 5 (from above) is eligible for 30% subsidy in the premium, fully paid by the government
Payment System
SHI member are enrolled either at CHS or district hospitals. Capitation system covers all the costs incurred by CHS and district hospitals for providing healthcare services to SHI members.
There is a provision for the refund of capitation payment in case the funds are not fully utilized by CHS/District Hospital in a particular year.
In case of deficit of funds (i.e. more SHI members than planned avail services in a particular year), the provincial social security office reimburses CHS/District Hospitals
Secondary and tertiary hospitals are covered by fee-for-service payment system.
Benefits
Inpatient Service – Birth Delivery, Emergency Services, Other inpatient Services (nursing, tests, catering, pharmaceutical)
Outpatient – Public health services, primary care services, specialist services, pharmaceuticals, tests, and scans
Other Services – Dental care, mental care, dialysis, and transplants
Co-payment (Reimbursement) System
For Inpatient Services – Pensioners, poor, and members receiving social protection allowance (5%), others (20%)
For Outpatient Services – No co-payment for services at CHS; for others, same as applicable for inpatient services
Other Services – Same as applicable for inpatient services
Reimbursement System for Drugs
Drugs specified under the reimbursement list (consisting of more than 800 pharmaceutical products as of now) qualify for co-payment system (mentioned above).
SHI members can avail co-payment benefit only if the required drug is available at the CH/Hospital they are registered at. There is no reimbursement if the drug is purchased from a private drug store
KEY CHALLENGES
Enrollment of People still Outside the SHI Coverage
While there is clarity in the Vietnamese social health insurance beneficiary classification system, a large population still remains outside its ambit. The government needs to introduce a better mechanism to ensure enrollment of the section of the population (e.g. informal sector) who have less incentives to join the scheme (at present), as compared with other groups
Corruption
Due to rampant corruption in the public hospitals, the patients have to pay extra despite a well defined payment mechanism, or else the services are alleged to be unavailable despite being under social health insurance coverage.
Adequate Funding Mechanism to Ensure Long-term Viability of SHI
As the population under coverage increases, the government may need a better taxation policy to fund the services or else the Health Fund is expected to fall short to meet expenses. In 2013, VSS proposed the government to increase health insurance premiums from 4% to 6%, which the government declined in view of the weak economic condition.
Opportunities for Healthcare Companies
Healthcare Service Providers
Contractual healthcare services are not a popular trend in Vietnam; however, subjected to a robust regulatory framework with respect to its linkage with the social healthcare insurance system, private players have considerable opportunities to complement the overburdened public healthcare system in the country
Medical Device Manufacturers
There is a critical shortage of medical devices, such as MRI, Tomography scanners, mammography, etc. in public hospitals. With the SHI, public hospitals would need to purchase such equipment, to cater to the increasing demand, this providing a platform for medical device manufacturers in the country
There is a provision for private investment in public hospitals for the purchase of medical equipment. Greater opportunity lies in provincial hospitals, which lack medical equipment despite witnessing a large number of patient visits every year
Pharmaceuticals Companies
Vietnam is among few countries, which cover outpatient cases under the social health insurance system
Pharmaceutical companies have significant potential to increase sales as a result of wider coverage (once SHI is implemented), and by focusing marketing and sales efforts on the inclusion of their drugs in the reimbursement list
A Final Word
One of the key priorities for the Vietnamese government is to meet the target of 100% population coverage. For a populous country, such as Vietnam, the public healthcare system is hamstrung by the lack of infrastructure (a crucial factor in determining the success of UHC in the long term), which is aggravated by the concentration of healthcare in specific regions (e.g. urban centers). Design of Vietnamese UHC appears to be robust in terms of clarity in beneficiary classification and wider coverage of healthcare services (e.g. outpatient services). However, to ensure success, the government would be required to bring the informal sector population within the UHC ambit.
For healthcare industry participants, there are opportunities for pharmaceutical as well medical device manufacturers, with the expected expansion of public healthcare services in Vietnam. There may be a case for healthcare service providers as well in case the government decides to experiment with contractual healthcare services (to compensate for the lack of public healthcare infrastructure).
A comparative with other countries in the region should provide a better perspective on the actual potential of Vietnam as a prospective destination for devices and drugs companies alike.
Cambodia is a low income country (GNI per capita US$880 as of 2012) with a population of about 15 million (67th most populous country as of 2012). Though the country has witnessed concentrated efforts towards better healthcare infrastructure and services since gaining independence in 1953, the major push came only in 1993 after the establishment of a dedicated Ministry of Health (MOH). The MOH has been consistently working to overcome major healthcare-related challenges, such as widespread malnutrition, high mortalities from communicable diseases, and low access to healthcare. MOH’s Health Sector Plan (HSP) (2008-2015) focuses on developing healthcare infrastructure and ensuring that healthcare services reach the entire population.
This article is part of a series focusing on universal healthcare plans across selected Southeast Asian countries. The series also includes a look into the plans in The Philippines, Cambodia, Vietnam, Indonesia, and Thailand.
Social Health Insurance (SHI) is still in early stages of implementation, and will take some years before it is firmly established. The SHI Master Plan was launched in 2003 with an aim to develop a stable financing system, and to promote equity in healthcare access. Currently, people from poorer sections of the society and informal sector are covered through Health Equity Funds (HEF) and Community-based Health Insurance (CBHI) Plans. The government plans to introduce a single health financing system by 2015.
About 2.5 million poor and more than 500,000 individuals from the informal sector are covered by HEF and CBHI plans, respectively.
When implemented fully, SHI is expected to provide healthcare protection to urban and rural poor (among others). The success of SHI would depend on the government’s ability in establishing healthcare infrastructure in places where it is currently unavailable, devising a suitable taxation/financing mechanism to support it, and in ensuring an optimum coverage of health conditions. The current design and support infrastructure would determine the long term success of SHI.
INFRASTRUCTURE
Key Stakeholders
The Ministry of Health (MOH) is responsible for health policy and planning, coordinating among various sectors within the healthcare sector, and for securing external aid
The Provincial Health Department (PHD) connects the MOH to operational districts (OD) through the implementation of policies in the HSP via the annual operations plan (AOP)
OD is the primary entry point of the population into the health system; Each OD, comprising a network of health centers and a referral hospital, covers a population between 100,000 to 200,000; health centers are geographically located so as to serve a catchment area of between 8,000 and 12,000 people
Healthcare Service Delivery
Public healthcare service delivery is designed to offer services at two levels — a) minimum package of activity, available at health centres; b) complementary package of activity (CPA), available at referral hospitals
Minimum package includes (among others) initial consultations, primary diagnosis, emergency first aid, chronic disease care, and maternal and child care
Based on the CPA offered, referral hospitals are categorised into:
CPA1: Basic obstetric services, provided mostly by district hospitals
CPA2: Basic obstetric services, large scale surgery, ICU facility, and other specialized services, such as ENT, dental, etc.; services are primarily provided by district hospitals and a few provincial hospitals
CPA3: More advanced than CPA2 with a wider range of specialty services; all national hospitals and most provincial hospitals come under this category
Current hospital infrastructure:
Health Centres: ~1,100
CPA1: ~33
CPA2: ~ 31
CPA3: ~ 26
Private Clinics: ~ 1,500
KEY CHALLENGES
Lower Adoption of Public Healthcare Services
Despite an established referral system with primary care facilities, private clinics are the first point of contact for Cambodians. Poor access and inadequate service delivery have been major issues affecting the adoption of the public healthcare system
Level of expertise is still low among public sector healthcare workforce; this is one of the key focus areas for the government if it intends to improve adoption of public facilities
Cambodia has successfully experimented with the outsourcing of healthcare services; this can be continued to achieve efficiency at primary and secondary level, while investing public resources on tertiary level services
Less Efficient Procurement System
SHI may not serve the purpose if medicines covered under it are not available and patients continue to rely on private pharmacies; the procurement system needs to be overhauled with better demand estimation and/or more autonomy for purchase at the OD level
Bringing in technology into the procurement system should help in developing an efficient system
DESIGN
Beneficiary Classification
At the launch of SHI Master Plan, following four groups were envisaged:
Wealthy (5% of the population)
Urban Formal Sector (10% of the population)
Urban and Rural Near Poor (50% of the population)
Rural and Urban Poor (35% of the population)
Healthcare Insurance Financing
The expenditure on public healthcare services is provided through taxation revenues and external aid; MOH also funds (partially) the HEFs and CBHI schemes
Payment System
Cambodia follows a user-fee model for the payment of healthcare services; all public healthcare facilities charge user-fee for the provision of services
In case of HEFs, user-fee has been standardized across all ODs where the scheme has been implemented
CBHI pays to health centers/hospitals on either case per basis or on the basis of capitation system, depending on the arrangement with local OD
Benefits
Current health insurance schemes cover minimum and complementary packages offered by the public healthcare system
Co-payment (Reimbursement) System
The government subsidizes minimum and complementary packages (for equipment, facilities, and staff salaries) and medicines (covering essential medicines); service users have to pay for the consultation and treatment fee, and out of stock medicines
HEF covers partial or full costs of access to services for poor, including user-fees and cost of transportation
CBHI covers full cost of access to services for the informal sector population under coverage, including user-fees, cost of transportation, and the cost of referral and admission in provincial hospitals
Reimbursement System for Drugs
Drugs specified under the reimbursement list managed by the MOH are reimbursed; MOH is responsible for the procurement and distribution of drugs to the referral hospitals and health centers at operational districts
Drugs mostly covered are for in-patient services; for OPD patients, there is no such provision, except for the prescription of a cost-effective generic formulation
KEY CHALLENGES
Lack of Funding Mechanism to Ensure Long-term Viability of SHI
Success of the SHI would largely depend on its funding mechanism, which at present depends on taxation revenue and external aid; the government will have to look for increased funding for SHI, which may be in the form of a) increased healthcare budget allocation (from current 1% of the GDP), b) SHI-specific tax/surcharge, c) introduction of premium for top 15% (income-wise) of SHI beneficiaries
Participation of informal sector (with no fixed income) is crucial for the success of SHI – a review is required to assess what additional incentives that can be added to the current CBHI scheme (for informal sector) to encourage participation; this may be helpful once a unified financing system is implemented in 2015 (as planned)
Opportunities for Healthcare Companies
Healthcare Service Providers
Outsourcing healthcare services has proven to be an effective way to improve the performance of the healthcare system in Cambodia. Therefore, the outsourcing of services may continue in the future as well, providing opportunities to healthcare service providers
Experienced service contractors help in fulfilling the goals set-out in HSP (2008-2015, especially the Millennium Development Goals) where the country appears to be lagging
Medical Device Manufacturers
There is severe lack of medical devices, such as MRI, tomography scanners, mammography, etc. in public hospitals. SHI aims at providing such facilities, even if outsourced to private players
Increased in-patient coverage is likely to result in demand for devices such as patient monitoring equipment
Pharmaceuticals Companies
SHI implementation may not bring any additional benefits to pharmaceutical companies, as OPD drugs are not included as part of the benefits
Demand for in-patient drugs is likely to increase; the focus of pharmaceutical companies would remain on the inclusion of their drugs in the reimbursement list
A Final Word
The SHI system is still in early stages of development in Cambodia and the government needs to work on both infrastructure and design to ensure success of the scheme. SHI will be effective only if the people under coverage avail healthcare services through it, for which government healthcare services need to be at par with the private system. Provision of OPD services under SHI coverage will also help in greater adoption of the scheme.
Participation of the informal sector population is key to the success of the scheme from a financial perspective (ensuring adequate funds and lower reliance on foreign aid), and for meeting the key objective of ‘healthcare to all’.
From the perspective of healthcare industry participants, Cambodian healthcare service providers are likely to gain the most if the government expands services to a larger set of population (based on positive outcome from previous experiments). On one hand, lack of adequate equipment provides a strong opportunity for medical devices companies, while on the other hand, the expansion of in-patient services (as more people are covered by SHI) should provide an impetus to pharmaceuticals companies. For pharmaceuticals companies, the growth potential may not be fully realized unless OPD services are also covered under SHI.
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Health Equity Fund (HEF) are schemes to support vulnerable groups, supported by the Health Sector Support Program and funds from various development partners and the national budget
Community-based Health Insurance is a voluntary, community-based and not-for-profit health insurance
About 35% of the total population lives below the poverty line, earning US$0.45-0.60 per day