Frost & Sullivan: Costly Healthcare Steers New Direction For Global Healthcare Sector

Singapore, 21 October 2010 - The healthcare world is changing rapidly, more so after the global financial crisis of 2009. Mega economies such as the United States are struggling even more to contain the rising cost of healthcare that has consumed nearly 17 percent of its GDP in 2009.

According to Frost & Sullivan, the current healthcare business model appears to be the cause for the rise in healthcare expenditure. Healthcare providers are incentivized by insurance providers based solely on the patient's repeated visits rather than assisting the patients to live healthier lives. This subsequently results in 90 percent of a country's healthcare expenditure being spent on only 30 percent of its population, causing a rise in healthcare cost.

"The healthcare system needs to embrace a paradigm shift to incentivize the wellness condition of a person rather than merely treating diseases or sick-care," explains Reenita Das, senior vice president, Frost & Sullivan.

Frost & Sullivan also identified future growth opportunities based on the analysis of the current healthcare system structure. Under the current healthcare system, the physicians' attention is only focused on 20 percent of a person's life, while another 80 percent goes neglected. Medical hours are spent treating symptoms or diseases rather than ensuring the overall wellness of a person. There are huge opportunities for healthcare providers, medical devices sector, pharmaceutical sector and other healthcare verticals to tap into this lucrative but yet to be explored area of a person's life.

The aging population will be another area of concern for the healthcare industry. In 2010, Frost & Sullivan estimated that 10 percent of the global population will be older than 65, and by 2050, more than 2 billion people (21 percent) will be in that same category. Approximately 75 percent of those aged above 65 years is expected to have one chronic disease, while another 50 percent of them might develop a second chronic condition.

The aging population is also affecting the Asia Pacific healthcare sector. It is estimated that within the 8 percent of aging population above 65 years in Asia Pacific, approximately 65.2 percent of them will have at least one chronic condition. Most countries in Asia Pacific spend at least 8 percent GDP of its economies on healthcare expenditure as the aging population often requires extra healthcare services and facilities for treatment.

"Elderly care is more complex and often requires extra attention, equipment and medical consult. Healthcare expenditures on elderly patients are also higher as compared to younger patients," comments Dr. Pawel Suwinski, principal consultant, Frost & Sullivan.

The cost of healthcare is expected to continue rising as the global aging population increases under the current healthcare model, unless there is a paradigm shift in the healthcare system toward a patient-centric model.

Frost & Sullivan reveals that the entire healthcare system will need to undergo a transformation from merely treating acute symptoms to prevention of disease development. The role of the healthcare service providers will have to change and is expected to be more involved in a patient's holistic lifecycle and include personal wellness.

"The goal of a preventive healthcare system or personal wellness is to keep people living longer. It's been established that 75 percent of chronic diseases can be prevented if managed properly at an early stage," says Das.

In the step toward a patient-centric model, the government, healthcare providers, pharmaceutical drug manufacturers, educational institution, medical insurance sector and many other stakeholders have to implement changes to reflect this new direction in the healthcare sector. Personal wellness needs to be incorporated into various national healthcare policies rather than being a standalone in order to facilitate such change. Technology will then be the enabler that will enhance the development of the healthcare industry.

Interconnectivity is needed in the form of a connected health information platform and to deploy healthcare services on the go to institute such a paradigm shift toward wellness. Frost & Sullivan identified the three core technology markets that will form the fundamentals that allow changes toward such paradigm shifts - Remote Patient Monitoring, TeleHealth, Consumer Health & Hospital-based Systems.

The Remote Patient Monitoring (RPM) system is experiencing a 56 percent Compound Annual Growth Rate (CAGR) in the global market from year 2008-2009. Various technologies are combined to aid physicians in monitoring patients' health from the comforts of their home. RPM allows patients the flexibility to go about their daily routine while providing key influential data to physicians on the patient's condition. It is expected that RPM can deliver better result while reducing healthcare expenditures by about USD 197 billion over the next 25 years.

On the other hand, the global TeleHealth market, now valued at USD 5.6 million, is expected to grow a further 70 percent over the next five-year period. The global market for TeleHealth is expected to achieve USD 9 billion in revenue by 2012, with a 10 percent CAGR. Effective telecommunication to facilitate medical diagnosis, patient care and treatment is essential to the healthcare business. Having the mobility to record patients' data instantly or to perform diagnostic procedures on the go not only saves scheduling timing in healthcare institutions, but also increases productivity of physicians to be able to treat more patients.

Another critical component in changing the landscape of the global healthcare system is the Consumer Health Market. Forward-thinking companies such as Apple and Research in Motion (RIM) are now integrating their products to extend into the healthcare business. Products such as the Apple iPAD and Blackberry are being outfitted with healthcare applications to provide consumer wellness care by physicians. Although the market is in its initial growth stages, the global Consumer Health market is already generating USD 169 million in revenue, with a 4 percent growth in 2009. The market expected to expand rapidly in the next three years as the healthcare industry continues to shift toward a patient-centric wellness model.

"The healthcare sector has always been good in the areas of product innovation, but under current situation, there needs to be innovation in the business model as well. Processes, financing and service innovation needs to be taken into thought to move the industry toward a personal wellness mindset," concludes Das.

Together with the aid of technology, the healthcare system of the future will indeed have a very different perspective. The patient-centric model will focus on personalized medicine customized to a patient's genomics, according to data provided by patients on a daily basis from cradle to tomb. Patient monitoring activities will be de-centralized, and hospitals are no longer the only place to perform diagnosis for a patient.

About Frost & Sullivan

Frost & Sullivan, the Growth Partnership Company, enables clients to accelerate growth and achieve best-in-class positions in growth, innovation and leadership. The company's Growth Partnership Service provides the CEO and the CEO's Growth Team with disciplined research and best-practice models to drive the generation, evaluation, and implementation of powerful growth strategies. Frost & Sullivan leverages 49 years of experience in partnering with Global 1000 companies, emerging businesses and the investment community from more than 40 offices on six continents. To join our Growth Partnership, please visit


Donna Jeremiah
Corporate Communications - Asia Pacific
P: +603 6204 5832
F: +603 6201 7402

Nicklaus Au
Corporate Communications - Asia Pacific
P: +603 6204 5836
F: +603 6201 7402



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