Southeast Asian hospitals prioritise investment over staff safety– study

Southeast Asian hospitals plan to increase investment and capacity in the next three years to meet growing healthcare demands.

The healthcare sector in Southeast Asia is experiencing a significant shift in investment priorities after consistently prioritising staff safety in recent years, according to a study by L.E.K. Consulting.

Arnaud Bauer, Partner and Head of Healthcare Services and Healthcare M&A for Southeast Asia, revealed a new focus on capital expenditure and advanced medical technologies.

He said that 2023 marks a pivotal year as hospitals exhibit increased optimism in their budget outlooks. "For the first time, we are seeing hospitals prioritising investment in new medical technologies or cutting-edge treatments over ensuring staff safety," Bauer said.

This strategic shift, he noted, is a direct result of improved financial outlooks in the healthcare sector.

With an increase in capital expenditure by more than 5% reported by a significant number of private hospitals, there is a clear indication of confidence in the sector's growth potential. "This is great news for patients, as it translates into enhanced medical services and treatments," Bauer added.

Bauer identified diagnostic imaging, primary care, dental, and general surgery as key investment areas for private hospitals in the next five years. These priorities reflect the increasing maturity of the regional healthcare landscape, with a growing focus on preventative care and robust primary care systems.

Digital solutions also remain a top priority, with Southeast Asian hospitals showing a higher rate of digital solution implementation, particularly in patient administration and data management. 

"They are also investing more in disease management programs, remote consultations, and post-discharge monitoring," Bauer explained.

In terms of patient volumes, Bauer noted a robust recovery from the impact of COVID-19. An annual survey conducted by L.E.K. Consulting showed that 2023 is the first year where providers consistently deliver higher volumes than pre-pandemic levels.

However, the recovery rate varies across countries. Indonesia and Vietnam, for instance, have experienced strong growth in elective procedures. Both markets are dynamic, with strong demand drivers and expanding social security systems that lower affordability barriers.

Conversely, markets like Thailand, Malaysia, and the Philippines present a more contrasted situation. The reliance on medical tourism in Thailand and Malaysia means these markets have not fully recovered, leaving room for further growth.

The Philippines, on the other hand, with a less developed social security system and a high reliance on out-of-pocket payments, faces challenges amidst high inflation. "Patients in the Philippines might elect to defer elective care, leading to a more contrasted situation," Bauer pointed out.

He also mentioned that the shifting landscape in the Southeast Asian healthcare sector represents a critical juncture as private hospitals are transitioning from a focus on staff safety, a crucial element during the height of the COVID-19 pandemic, to investing in technological advancements and infrastructural development.