Could COVID-19 be the catalyst to a new healthcare paradigm in Asia Pacific?

The current situation, however, is also a clarion call to all stakeholders in the healthcare delivery ecosystem to address long standing pressure points for the industry and for patients. These include the perpetual shortage of medical personnel (access), weak primary healthcare (access), high cost structures of hospitals (affordability) and capital expenditure-intensive business models (availability). Similarly, the pharmaceuticals sector, though less impacted by COVID-19 compared to healthcare services and medtech sectors, will also have to think through its own pressure points brought forth by the pandemic, notably, single-source supply chains and logistical dependencies, offline-only sales strategies, product mix as well as an increasingly insular world calling out for local manufacturing.

The potential changes in the healthcare system will be driven by a mix of factors, ranging from regulation, increasing public focus on healthcare access and infrastructure, to providers adjusting to new realities of the post-COVID-19 era.

Post COVID-19, we expect private hospitals to rationalise their cost structures, as they accommodate additional costs imposed by revised infection protocols and safe distancing norms. Hospitals will also have to rethink their own supply chain strategies, having experienced bottlenecks during the initial phases of lockdowns. The financial impact from deferment of electives as well as macro-recessionary headwinds may act as a catalyst to mergers and acquisitions in this space.

As service providers wait for a ramp-up of elective treatments, private care facilities, in particular those dependent on healthcare tourism, will remain vulnerable to any resurgence in COVID outbreaks. They should remain agile and be open to solutions not considered hitherto, such as repurposing facilities or adding alternative healthcare delivery models, for example, day care or ambulatory care.

Indeed, going forward, digital interfaces may very well be the preferred first touch-point between care providers and patients. The deferment of electives during the pandemic has further illustrated the importance of remote disease monitoring and management. Nonetheless, whilst teleconsultations may support volumes during COVID-19 lockdowns and as economies re-open, this is just the first step in the process of digitising delivery. Private healthcare service providers need to continue to incorporate more aspects of digital technology, such as big data, IoT and AI, in their end-to-end delivery continuum so as to effectively navigate a new societal paradigm that embraces virtual care delivery.

The healthcare sector suffers from a perennial shortage of medical professionals which, at the current rate of growth, may take decades to address. Regulators could look at putting existing resources to better use by empowering experienced non-doctor medical staff, especially in primary care settings, while non-specialists could also selectively manage chronic patients and provide relevant repeat prescriptions. For example, Singapore and Australia allow a select category of nurses to write prescriptions.

During COVID-19, we have already seen how regulatory easing and clarity accelerated the adoption of digital health services. As patients and providers evolve in their digital journey, regulations will have to remain nimble to address any concerns on standard of care and data privacy and protection. Similarly, regulations will have to keep pace with expected standards for home healthcare, which will continue making rapid strides.

Going by the massive investments in research and the global manufacturing and distribution footprint currently being developed, a swift and worldwide availability of multiple vaccine solutions is expected. However, there are still some variables to consider, such as the level and duration of protection offered (lifelong / seasonal), number of doses required (one shot or regular boosters), how will supplies be prioritised, evolution of supply chains and pricing. Considering the globally pervasive nature of this pandemic, it is crucial that countries work closely in a globally coordinated manner to ensure widespread availability of safe and effective vaccines.

There is some uncertainty over supply chain continuity for pharmaceuticals, mainly due to evolving geopolitics, trade wars and vulnerabilities brought forth by lockdowns. These have renewed calls by some countries to relocate essential drug production closer to their own shores. We expect the pandemic to have a lasting effect on how pharmaceutical companies and governments think of drug supply chains, for raw material as well as finished products. Due to the essential nature of the pharma and biotech industries, this pandemic will not immediately spell the end of globalisation for these sectors, but will lead to a gradual and steadfast diversification of supply sources as well as a calibrated increase in near-shoring capabilities for certain drug categories. There will be a cost impact of such moves, unless support is provided by governments, and this remains a key variable to determine the success and extent of such changes.

The future of healthcare is in moving closer to the patient. Patients, when empowered, are active participants in their own treatment, thereby increasing compliance and improving medical outcomes. Systemic changes spearheaded by enlightened stakeholders can act as a catalyst and accelerate the transformation of care delivery, ushering in a post-COVID-19 future whereby digitally-enabled solutions can still bring healthcare ‘closer’ to the patient while maintaining a safe distance.

As one of the world’s top ranked healthcare banks, MUFG provides flexible, high quality solutions through our global platform with US, European and Asian coverage out of New York, London and Singapore respectively.

In Asia Pacific, MUFG is ranked top ten in healthcare loan league tables for 2019. MUFG’s APAC Healthcare team comprises experienced healthcare coverage professionals who are supported by experts from credit, research and products in corporate and investment banking.

Aakash Swaroop
Director
Aakash_Swaroop@sg.mufg.jp

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