Ever-increasing healthcare expenditure is signaling a need for the global healthcare business model to move from disease treatment to patient-centric preventative care, and technology is the key enabler to bring about this change, finds a new Frost & Sullivan report released Thursday.
The study attributed the rise in healthcare expenditure to the current healthcare business model, which was further exacerbated by the global recession in 2009. Incentivized by insurance firms, healthcare services providers based their business on repeated visits from patients rather than assisting the patients to lead healthier lives, Frost & Sullivan revealed.
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.
In addition, by 2050, more than 2 billion people, or 21 percent of the world's population will be over the age of 65 years. This will put further strain on the industry and drive up healthcare cost if the situation remains unchanged.
Reenita Das, senior vice president of healthcare practice at Frost & Sullivan Asia-Pacific, noted in the report that the entire healthcare system needs to embrace a paradigm shift and transform from simply a disease treatment and sick-care model, to one that incentivizes the wellness condition of a person patient and preventative care.
According to the research firm, a change in the healthcare business model also presents an unexplored but lucrative area with growth opportunities for verticals such as medical devices, medical insurance and pharmaceutical drug manufacturing.
IT basis of change
Das stressed the need for interconnectivity in the form of a connected health information platform to deploy healthcare services on-the-go. She singled out technology as the enabler to enhance developments in the healthcare industry.
Specifically, Frost & Sullivan pointed to three core technology markets: remote patient monitoring, telehealth, and consumer health and hospital-based systems.
Remote patient monitoring (RPM) systems provide patients the flexibility to go about their daily lives, allowing key data is sent to physicians to keep track of their health condition. Frost & Sullivan added that it expected RPM to reduce healthcare expenditure by about US$197 billion over the next 25 years.
Between 2008 and 2009, the global RPM systems market saw a 56 percent compound annual growth rate (CAGR), the report stated.
The research firm also predicted that the global revenue for telehealth services would increase at a 10 percent CAGR, from its current value of US$5.6 million to US$9 billion by 2010. Effective telecommunications allows patient's data to be recorded instantly regardless of the location. Healthcare providers can also perform medical diagnosis which not only saves time, but also increases the productivity of physicians who can treat more patients.
According to Frost & Sullivan, the consumer health market is now also seeing tech giants including Apple and Research In Motion (RIM) integrating their products such as the Apple iPad and BlackBerry smartphone, with healthcare applications that provide consumer wellness care by physicians.
While such efforts are still in their early stages, the global consumer health market generated US$169 million in revenue at a 4 percent growth last year, the report revealed.
Das noted that while the healthcare sector has been strong in product innovation, innovation in its business model is imperative if the current situation is to change.
She added that technology can help the healthcare sector move to a patient-centric model, where personalized medicine can be customized to a patient's genomics according to data provided by the patient on a daily basis.
Patient monitoring activities will be decentralized since hospitals will no longer be the only place to perform diagnosis, Das said.