COVID-19 is spurring a digital health revolution - can private hospitals keep up?

The COVID-19 pandemic is testing hospitals and healthcare systems across the globe like never before. Public hospitals’ emergency and intensive care units have swollen to capacity whilst the resources for elective and outpatient care are redirected to aid urgent functions.

In contrast, many private hospitals and clinics have significantly reduced patient footfall. Social distancing measures have influenced patient behaviours, with many delaying surgery, cancelling GP and outpatient visits or seeking online alternatives for and the prescription and dispensing of medicines.

As a result, private hospitals will likely see revenue streams dwindle. Major private hospitals in the APAC region have already seen occupancy fall as low as 20%. Generally, 60% occupancy is the minimum needed to breakeven. So, private hospitals – many which operate without reserves – could face long-term viability issues. Asia Care Group predicts that without action, occupancy rates in private hospitals will hover between 25 – 40% for the remainder of this year and into early 2021. Distressed assets are already beginning to emerge, and we expect M&A’s to pick up in the latter part of 2020.

Conversely, health-tech innovators, often working with insurers, have rapidly identified new ways to ensure individuals are able to access care safely and efficiently. Digital health companies have used the ongoing pandemic as an opportunity to demonstrate how telemedicine, remote monitoring and pharmacy dispensing lockers can offer significant value to patients, whilst costing less than traditional services.

Telehealth has been the most rapidly adopted intervention for care delivery during the pandemic. AXA Asia was among the first insurers to offer free telehealth consultations, making it available to over 6.5 million people in Asia. The initiative is designed to support underserved populations with limited access to healthcare in rural areas. These direct partnerships with Asia’s top telehealth companies negate the need to collaborate with traditional providers to reach patients.

Diagnostic solutions also continue to develop at pace, aided by novel health industry partnerships that are likely to continue beyond the pandemic. Prenetics, a prominent Hong Kong DNA testing innovator, have partnered with insurers and other health investors to offer at-home testing for COVID-19. By contrast, less than half of private hospitals offer COVID-19 testing. For those that do, most follow the traditional approach of telephone-booking for test appointments. Whilst insurers and start-up health innovators are at the forefront of developing solutions, there is a danger that if unable to diversify from traditional business models and adapt to the rapidly changing health system, private providers will be left behind.

The pandemic has necessitated acceptance of health technology, that may well see a sustained paradigm shift in healthcare. Private providers can expect a change in patient flows and patient expectations of care. For organisations to recover from the financial and operational hit of the pandemic, inventive digital strategy to increase market penetration and even diversify service offerings is essential. 

Telemedicine is likely to remain a standard component of care delivery beyond the pandemic. Private hospitals and clinics could look to utilise telehealth platforms to broaden their reach to patients, previously inaccessible due to geographic proximity. In the Wuzhen Scenic Area in China, Ping An Good Doctor, offers telemedicine through their “One-minute-clinic” consultation booths. Patients can enter the booths at any time without appointment and have a consultation delivered by an artificial intelligence (AI) doctor and then, a ‘real’ clinician for confirmation. Each booth is equipped with over 100 common drugs for immediate dispensing. For less common drugs, patients can order through the online service, to be delivered within the hour.

Private care organisations could partner with such innovators to broaden their reach but also, reduce need of the costly set-up and maintenance of traditional physical clinics. These and other remote consultation, monitoring and analysis platforms can support private care organisations experiencing low-volume, to reduce operational costs through pooling clinical resource and enabling round-the clock service coverage at a lower cost.

To improve service efficiencies, the Japanese Government is expected to invest more than $100m to build 10 AI-backed model hospitals by 2022. The aim is to reduce demand for traditional medical staff and combat the rising cost of medical care. Similarly, Singapore’s Changi Hospitals are exploring the application of AI robots to support automation of logistics, surgeries, and rehabilitation. These changes in care would not only reduce the need and cost of human staff, but offer quality, first-in-class care to distinguish their services from others in the private care market.

Clearly, the private health system is taking a sizable knock during the pandemic, which requires digitisation, new ideas and robust new partnerships to rebound from. If done right, not only can private hospitals overcome their current malaise, they can evolve with the rapidly shifting health system to position as front-runners in the health technology revolution.