Forecasts Promising for Consumer Healthcare Spending in Asia

Posted on Jan 28, 2013 by Sergio Ulloa (G+)  | Tags: Asia Healthcare, Healthcare

There are more reasons to keep an eye on Asia other than its emerging economies. Research from UBS CIO, a global firm providing financial services to private, corporate and institutional clients, indicates that the consumer spending will continue to increase at an annual growth rate of about 13 percent and reach US$1 trillion by 2016. In an article published in the South China Morning Post, Carl Berrisford, an analyst for UBS CIO Wealth Management, explains the report's findings and what it means for the region. One of the many reasons for the projected growth in consumer spending on healthcare is that populations in Asia are generally getting older. The number of people who are 65 years old or older continues to increase and will rise by 50 percent by 2020. In addition, the region is growing economically and becoming richer. This has resulted in higher demands from citizens that governments offer improved healthcare services on a continent that was previously much more frugal in terms of spending on healthcare. In the report, Mr Berrisford cites China as an example of a country that has had to adjust its healthcare spending. As China's elderly population grows, with little relief of more young people as a result of the one-child policy, the country faces issues in terms of providing medical care. During the next 20 years, 200 million people in the mainland will reach the age of 60 or older. Government healthcare funding has increased by 18 percent per year during the last five years - one of the highest growth rates in Asia. With the mixture of increased medical spending and industry reforms, the Chinese healthcare industry could see a growth rate of about 20 percent per year during the next five years. Another reason that Mr. Berrisford points to is the increasing urbanization seen throughout the region. This movement, in turn, increases the need and demand for more healthcare services for city dwellers. As more people move to large cities, it also becomes easier and more economical to offer more varied healthcare services to a large number of people, as opposed to the need for more but smaller-scale facilities in more rural areas. Along with urbanization creating higher demands for improved healthcare services and facilities, Asia also continues to grow as a medical tourism destination, particularly in Singapore, Thailand, Malaysia and India. Savings from medical tourism, or the traveling to a different country for medical treatment, are substantial. For example, the average cost for a heart bypass surgery in the US can cost US$113,000, while it would cost about US$20,000 in Singapore and only about US$ 10,000 in India. Cosmetic surgeries are another attraction for medical tourists. For example, American women looking to have breast implants can have the surgery for only about one-third of the cost in Asia as compared to at home in the United States. Currently, Singapore and Thailand serve as the major medical tourism hubs in Asia, with India quickly catching up. One reason why Singapore is such a popular medical tourism destination is that the city-state has one of the world's most advanced healthcare infrastructures, and ranks sixth in the World Health Organization's ranking of global health systems. Thailand follows somewhat closely behind Singapore with its mixture of of high-quality yet affordable healthcare services. In addition to these attractive components, those traveling to the country for medical tourism may chose to recover while surrounded by Thailand's natural beauty. The biggest thing helping India's medical tourism is cost. Industry research shows that Asia's medical tourism market has the potential to double from now until 2015, with the number of medical tourists surpassing 10 million by 2015. What this forecast for growth in terms of consumer spending for healthcare services means for the health insurance industry in Asia is still unknown. While some big-name insurance companies have seemingly successfully entered the expanding market and continue to experience promising growth, such as William Russell opening new offices in Hong Kong, other companies have had trouble tapping into the specific needs of local markets and ICBC AXA in particular has struggled with how to create and market health insurance policies that meed the unique requirements of mainland Chinese. Globalsurance will continue to keep an eye on the situation and expects much more activity from the region in the future.