New Order for Change

7 October 2009 (Last Updated October 7th, 2009 18:30)

Asia is set to be the growth engine for the global healthcare sector. Jyoti Ranjan Padhi, senior analyst with GlobalData, examines the healthcare systems and provisions in Asian and African countries to gain an insight on which countries have the best availability of required healthcare resources to serve their respective patient pool.

New Order for Change

The world economic order is changing as the centre for industry activities rapidly moves from West to East – and the healthcare sector is no exception. As the populations of developing economies become more affluent, their demand for healthcare continues to rise.

China – new system required

China remains the world's most populous country and consequently has a large patient base. The country is home to over 100 million people who are aged 65 or above, a population in continuous need of medical care. In 2006, government spending on healthcare amounted to less than 1% of GDP, putting China at the 156th position out of 196 countries surveyed by WHO. The country's overall spending on healthcare in 2006 was 4.5% of its GDP, significantly less for an economy with over 1.3 billion people.

Regarding healthcare delivery, the country doesn't seem to be fully equipped to serve the healthcare needs of its entire population. China has about 2.7 hospital/clinic beds per 1,000 people and an average of 1.6 doctors serving 1,000 people. However, soaring healthcare costs remain the biggest challenge and the government has long been criticised for quality healthcare services remaining inaccessible and unaffordable for the majority of its population.

Hospitalisation costs in China can be about seven times the annual income of a low-income person from rural areas and four times that of a low-income person in urban areas. There have been instances of out-of-pocket health expenditure increasing the percentage of people below the poverty line (people living on $1.08 per day) by as much as 20% in China. Reportedly, out-of-pocket spending on healthcare services has doubled from 21.2% in 1980 to 45.2% in 2007, while the government spending dropped from 36.2% in 1980 to 20.3% in 2007.

"It is estimated that by 2050, Japan will be home to more than 38 million people aged 65 or above."

However, China is well on its way to securing universal healthcare coverage for its entire population. In January 2009, the government announced its plan to spend $123bn by 2011 to provide basic healthcare services to all people, improve the quality of healthcare services and increase accessibility and affordability of healthcare to people at the bottom of the economic pyramid. The public health insurance system is expected to cover approximately 90% of the population by 2011 compared with only 8% in 2002.

While the system plans to provide an annual subsidy of more than $17 to each person covered by the system, starting in 2010, it also plans to reduce urban-rural disparities in healthcare access. In 2005, a mere 25% of public-health money was routed to rural areas, home to roughly 60% of the country's population.

The plan is also to have at least one medical clinic in every village and at least one hospital in every county. While public and non-profit hospitals will continue to be the leading health service providers, the system plans to encourage the development of hospitals and clinics in cities and rural areas. Essentially, China expects to provide 'safe, effective, convenient and affordable' healthcare services to the entire population by 2020.

India – manpower challenge

Home to more than a billion people, India is the world's second most populous country after China. The country is expected to experience one of the fastest population growths in the region to become the world's most populous country by 2035. With an ageing population pool (65 and older) of over 60 million people, the country doesn't seem to be equipped enough to address the demand for quality medical care.

The healthcare system in India is a three-tier system comprising sub-centres, primary health centres (PHC) and the community health centres (CHC). The country has a wide network of about 145,000 sub-centres, more than 23,000 PHCs and about 4,000 community health centres. Sub-centres provide immunisation and referral services, whereas PHCs provide preventive and curative medicines and family planning services. The CHCs address critical health problems and provide clinical and inpatient services such as general medicine, surgery, labour and delivery, and medical tests.

"The majority of the rural population in India is poor and dependent on the public health system for preventive as well as clinical and inpatient care."

While the country boasts an improving healthcare infrastructure, most of the hospitals and clinics are understaffed by about 15-20%. For example, there are around 850,000 hospital beds, with about 700,000 doctors and 800,000 nurses available to address the medical needs of more than a billion people. By 2018, India will need at least 1.85 million hospital beds, about 1.5 million doctors and 2.5 million nurses to efficiently address the healthcare needs of its entire population.

In a country where over 70% of the population live in rural areas, the significant shortage of healthcare professionals has been a matter of serious concern. The majority of the rural population in India is poor and dependent on the public health system for preventive as well as clinical and inpatient care.

With more than 70% of healthcare expenses being funded out of pocket, many people are left without access to quality health services. India doesn't have a comprehensive national reimbursement system, which continues to pose a challenge in ensuring universal healthcare. The country's per capita expenditure on health remains one of lowest among the countries studied in this report. India spent $109 per capita and overall spent 4.9% of its GDP on healthcare in 2006.

NGO involvement in the delivery of healthcare in India is significantly high. NGOs have been playing a predominant role in government-sponsored health programmes by managing operations at several sub-centres and primary health centres across the country. Affordability, access and awareness will remain the key challenges that India needs to address to serve the healthcare needs of its people – and NGOs have a significant role to play in ensuring this.

Africa – resource constraints

Africa has long been a victim of communicable disease such as HIV/AIDS, cholera, tuberculosis and malaria. An estimated 5% of adults were living with HIV/AIDS infection in Africa in 2007. Delivery of quality healthcare remains a challenge in the majority of the African economies, the notable exceptions being South Africa and Egypt.

South Africa spent 8.6% of its GDP on healthcare in 2006, a significantly higher amount than countries with similar economic status. However, the per capita expenditure on healthcare was $869, an inadequate amount for a country that is home to about 6 million HIV/AIDS patients. In South Africa, 40% of healthcare funding is spent in the public sector, which serves 85% of the population whereas 60% is spent in the private sector, which serves the remaining 15% of the population, a trend that has led to severe public-private disparities in healthcare delivery.

Above all, the serious human resources crunch that the country has been a victim of is only compounding the problem. South Africa has an average of 0.24 doctors and 1.1 nurses for every 1,000 individuals. While these figures are significantly low by world standards, the fact that only 30% of all doctors and 42% of all nurses serve in the public sector has been a matter of serious concern. Undoubtedly, making primary healthcare available to its entire population is the biggest challenge that the government of South Africa faces. The government should channel its efforts in reducing public-private disparities while continuing to focus on HIV/AIDS programmes.

"The only other African economy that compares with South Africa in terms of its health provisions is Egypt."

The only other African economy that compares with South Africa in terms of its health provisions is Egypt. Egypt spent 6.3% of its GDP on healthcare in 2006 and the per capita expenditure was estimated at $316, significantly less to tackle the challenges posed by the healthcare sector in Egypt. About 58% of the money spent annually on medicines in Egypt is paid out-of-pocket. This coupled with a serious unavailability of healthcare resources has been a matter of grave concern. In Egypt, 2.2 doctors serve every 1,000 people and there are only 2.1 hospital beds per 1,000 people.

Although public healthcare is either provided free or by charging nominal fees, more than 60% of primary healthcare visits take place in private clinics or hospitals, a trend that's indicative of the lack of public confidence in the quality of public healthcare in Egypt. As is the case with South Africa, making primary healthcare available to the entire population remains the key challenge that the Egyptian government needs to address. A focused effort to reduce public-private and urban-rural disparities in health delivery will boost the health status of the country.

Overall, NGO involvement is the highest in Africa – especially in the Sub-Saharan African region where the prevalence of HIV/AIDS and other communicable diseases remains the highest. In the North African regions, a focused effort by NGOs with support from foreign donor-funded programmes has led to significant improvements in healthcare delivery in rural areas. The NGOs have particularly been active in the development of immunisation.

Japan – need for reform

In 2006, Japan spent 7.9% of its GDP on healthcare. Its per capita spending on health was $2,514 – the highest in the Asia region. No wonder the Japanese population enjoys universal access to world-class, low-cost medical care and is considered one of the healthiest with a longer 'life expectancy at birth' than any other Asian economy studied in this report. However, the fact that more than 22% of its population is aged 65 or above, makes the country more prone to age-related diseases than any other country. It is estimated that by 2050, Japan will be home to more than 38 million people aged 65 or above.

With universal coverage being provided through a network of over 4,000 private and public payers, the situation continues to remain under control. The cost of medical care provided through the National Health Insurance system in Japan amounted to 6.6% of GDP in 2005 and this is expected to increase to reach about 10% of GDP by 2020. The country, it seems, is on the verge of a sizable financial challenge.

"The Chinese government announced a plan to spend $123bn by 2011 to provide basic healthcare services."

However, the country also faces a severe over-use of healthcare infrastructure and other resources. Most hospitals in Japan provide both outpatient primary care and inpatient long-term care, with the result that the majority of hospital-based physicians remain over-used, addressing everything from providing primary care to inpatient care. On average, a Japanese physician performs 6,900 consultations per year – almost three times the consultations that doctors perform in other developed countries. A Japanese person will visit a physician almost 14 times a year on average, three times the number of visits of any other developed economy.

The average length of hospital stay is almost three times as long in Japan as in other developed economies. The country has over 9,000 hospitals, providing 13 hospital beds per 1,000 people – significantly higher compared with its counterparts.

While the availability of healthcare infrastructure is more than what is required, the country faces a resource constraint in terms of the availability of healthcare professionals. Japan, on average, has two physicians for every 1,000 people against an average of three physicians for every 1,000 people in other developed economies.

The government in Japan needs to take immediate steps not only to curtail costs, but also to reduce over-use and increase the availability of human resources. Making healthcare available to the entire population is another challenge that the country must address. Approximately 40% of a population comprising the unemployed, self-employed and retirees find it difficult to pay the annual premium. The result is that more than 0.3 million of Japanese households were without insurance coverage in 2008.