side effects: challenges facing healthcare in asia

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A report from theEconomist Intelligence Unit

Paper size: 210mm x 270mm

Side effectsChallenges facing healthcare in Asia

Lead sponsors:AstraZenecaBayer HealthCareIBM

Supporting sponsors:

Ernst & Young, GlaxoSmithKline, Microsoft, MSD, Pfizer, sanofi-aventis

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Contents

Preface 3

Executive summary 4

Introduction 6

Chapter 1: Transitioning 8

Side-effects of growth 8

The “silver tsunami” 11

Fighting on two fronts 14

Systemic challenges 15

Informationdeficit 16

Funding issues 17

Chapter 2: Case studies 19

China’s health reform package 19

Singapore: Preparing to age gracefully 21

Prescription: Business model innovation 22

Thailand: AIDS and the persistence of infectious disease 23

India: The politics of creating a country doctor 25

Chapter 3: Country summaries 27

China 27

Hong Kong 30

India 33

Indonesia 36

Malaysia 39

The Philippines 42

Singapore 44

South Korea 47

Taiwan 50

Thailand 53

Vietnam 56


2 © Economist Intelligence Unit 2010

©2010TheEconomistIntelligenceUnit.Allrightsreserved.Allinformationinthisreportisverifiedtothe best of the author’s and the publisher’s ability. However, the Economist Intelligence Unit does not accept responsibility for any loss arising from reliance on it. Neither this publication nor any part of it may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the Economist Intelligence Unit.



Preface

Side effects: Challenges facing healthcare in Asia, is an Economist Intelligence unit white paper, sponsored byAstraZeneca,BayerHealthCare,IBM,Ernst&Young,GlaxoSmithKline,Microsoft,MSD,Pfizerandsanofi-aventis.TheEconomistIntelligenceUnitbearssoleresponsibilityforthisreport.TheEconomistIntelligenceUnit’seditorialteamgathereddata,conductedinterviewsandwrotethereport.Thefindingsandviewsexpressedinthisreportdonotnecessarilyreflecttheviewsofthesponsors.

Paul Kielstra was the author of the report and Laurel West was the editor. The cover image was created by David Simonds. Gaddi Tam was responsible for design.



Executive summary

Asia’s stunning economic growth is once again the subject of global attention as the battered economiesoftheWestcontinuetoworkthroughthedamagecausedbytheglobalfinancialcrisis.

But Asia’s spectacular rise—and bright prospects for growth—have created some serious challenges for governments in the region, not least of which is the impact that rapid economic expansion has had on health and healthcare systems.

This paper, published to coincide with The Economist Conferences’ Healthcare in Asia 2010, sets out the challenges faced by 11 countries—China, Hong Kong, India, Indonesia, Malaysia, the Philippines, Singapore, South Korea, Taiwan, Thailand, and Vietnam—as well as some of the innovative solutions beingadoptedtocopewiththem.Amongthekeyfindings:

• Wealth needs to come with a health warning. Non-communicable diseases have become the leading cause of death in Asia. This is partly a result of progress against infectious disease, but the conditions now taking the greatest toll are becoming prevalent because of factors associated with economic development. For example, largely through a combination of the impact of environmental degradation, lifestyle choices made possible by wealth, and ageing, heart disease is either the leading or second biggest cause of mortality in every country in the study, while cancer is among the top three killers in eight out of 11.

• Much of the region is in the midst of an epidemiologic transition, forcing health systems to fight on two fronts. While non-communicable diseases have become leading causes of mortality in Asia, infectiousdiseasesremainasignificantpartofthediseaseburdeninmanycountries.Healthsystemsbuiltlargelytoprovidecuresoracuteepisodiccaremustnowfindawaytodealwiththeverydifferentmatterofchronicdiseasemanagementandpatienteducation.Eveninthefieldofpublichealth,shiftsarenecessary:vaccinationandsanitationeffortsnowhavetobejoinedbyattemptstoinfluencelifestylechoices such as smoking and diet. At the same time, health systems cannot afford to relax efforts against infectious disease old or new. As Thailand’s experience with AIDS shows, it is possible to make progress againstevendifficultdiseases,butmicrobeswillseizeanyopportunitywhenhealthcareletsdownitsguard.

• Healthcare systems will need to come to grips with rapidly ageing populations. The percentage ofcitizensovertheageof65isrisingacrosstheregion,mostnotablyinSingapore,Taiwan,HongKong,and South Korea. This will require some major preparations such as those being introduced in Singapore, which, among other measures, has created a separate healthcare funding scheme for seniors, is making geriatrics a core part of undergraduate medical training and is improving integration of care for seniors—an essential aspect of successful geriatric care.



• Access gaps are wide and could grow. A large percentage of healthcare is funded by private—frequently out-of-pocket—payments in the countries under study. This tends to result in disparity in provision. The most striking gaps are where geography and wealth inequality mix, with the countryside often faring very badly: in India, for example, there are six times more doctors per capita in urban areas than in rural ones. There is a serious risk that the differences in provision for rich and poor will increase as growing patient demand puts greater pressure on health systems and the private sector plays a greater role in the region’s healthcare. Just as studies in Taiwan found that disparities of access decreased after the institution of its national insurance, Vietnam is now seeing a possibility of poorer citizens being unable to use medical facilities—even public ones, which often require formal fees and unofficial bribes.

• There is no single regional model for the public-private split of funding and provision, but most countries seem headed for a bigger private sector role. As governments in the region struggle to expand and adapt their healthcare systems, there is a growing reliance on the private sector either through choice or neglect. Governments in wealthier states such as South Korea and Hong Kong, which cover most of the cost of at least basic care universally, are now seeking to contain growing outlays and improve the quality of care. Poorer countries already have a greater private sector role which is increasing either through conscious policy, as in Indonesia, or neglect of the public system. China used to be the most prominent case of the latter, but now it is the biggest exception to this shift toward more private sector involvement, with a major effort to reform its public health system.

• Similarly, innovative solutions to healthcare challenges come from a range of sources. The region has numerous examples of efforts to address healthcare issues, including China’s attempt to reform its entire system, India’s efforts to address urban-rural inequality through its National Rural Health Mission, and various private hospitals with high quality, low-cost, universal access models of their own. Each of these has strengths and weaknesses, and each holds potential lessons for healthcare systems across Asia.

Asia has been the scene of some remarkable achievements in recent decades—including rapid economic growth, a reduction in infectious disease, and an increase in longevity. These all give cause for celebration, but they also create their own problems. Now, Asian countries need to address the challenges which come from success with the same vigour they have shown in getting to this point.


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Introduction

The Asian healthcare picture is no less diverse than the region itself. Of the countries and territories this report covers—China, Hong Kong, India, Indonesia, Malaysia, the Philippines, Singapore, South

Korea,Taiwan,Thailand,andVietnam—somehavediseaseprofilesandhealthcarearrangementswhichdiffer little from those of developed countries. Others continue to battle widespread infectious disease with basic, poorly performing medical systems. Despite the diversity in the countries under discussion, they have much in common: changing disease incidences arising from epidemiologic and demographic transitions (themselves driven by economic development); a growth in chronic diseases and lifestyle choices with negative medical outcomes that require complex changes to healthcare systems; rising patient expectations; existing systems that are frequently understaffed and underfunded; urban-rural splitsinthequality,orevenexistence,ofcareinalargenumberofcountries;andfinancialconstraintsthat make policymakers reluctant, or unable, to take on much of the health spending currently left to private individuals.

Understanding these challenges requires some context. They largely represent new problems arising from economic success rather than from the complications of failure. By most measures, Asians are far healthier now than ever before. As the accompanying chart shows, for example, life expectancy at birth has risen rapidly. In all but three of the countries in question, it grew faster than the world average, andnowonlyIndiahasalowerlifeexpectancythantheglobalfigure.Moreover,thesecountrieshaveaccomplished this while expending far less proportionately on healthcare than Western countries.

Figure 1: RisingLife expectancy in Asia

Source: UN Department of Economic and Social Affairs, Population Division (forecasts use median population projection). Taiwan data from Taiwan Statistical Data Book 2009, Directorate General of Budget, Accounting and Statistics.

South KoreaChinaYears

Taiwan VietnamIndia MalaysiaSingapore Thailand WorldHong Kong Indonesia Philippines

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2010-2015

2005-2010

2000-2005

1995-2000

1990-1995

1985-1990

1980-1985

1975-1980

1970-1975

1965-1970

1960-1965

1955-1960

1950-1955



1 “Governments not spending enough on health”, WHO Press Release, 3 March 2010, http://www.wpro.who.int/media_centre/press_releas-es/pr20100303.htm

Indeed, this level of spending has recently come in for criticism from the World Health Organisation (WHO).SaysDrHenkBekedam,WHO’sDirectorforHealthSectorDevelopmentintheWesternPacificRegion:“Thelevelofgovernmentspendingonhealthistoolowinmany[Asia-Pacific]countries.Thesegovernments need to develop strategies to increase investment and public spending on health.”1

This paper will look at the challenges facing Asian healthcare systems and some of the attempts to overcome them.

Figure 2: Low by comparisonHealthcare spending as a % of GDP

Country/Region 2005 2006 2007 2008 2009 2010

China 4.7 4.5 4.7 4.7 4.7 4.7

Hong Kong 6.1 6.1 6.0 6.0 6.2 6.3

India 5.0 4.9 4.6 5.0 5.0 5.0

Indonesia 2.8 2.8 2.8 2.7 2.8 2.8

Malaysia 4.2 4.3 4.3 4.3 4.3 4.3

Philippines 3.5 3.5 3.5 3.6 3.8 3.9

Singapore 3.5 3.4 4.0 4.0 4.1 4.1

South Korea 6.0 6.5 5.7 5.9 6.0 6.1

Taiwan 6.3 6.4 6.4 6.5 6.6 6.7

Thailand 3.5 3.5 3.3 3.3 3.3 3.3

US 15.7 15.8 16.0 16.1 16.3 16.0

Vietnam 3.1 3.4 3.5 3.5 3.7 3.8

Western Europe 9.7 9.6 9.9 9.9 10.2 10.3

Source: Economist Intelligence Unit



Chapter 1: TransitioningAsia’s healthcare systems have made major strides. But they are now struggling to cope with shifts in the disease burden, rising demands from wealthier citizens and the challenge of how to provide access to all in a cost-effective manner

The one absolute demographic certainty is that 100% of the population will eventually die. The only real question is how. As public-health measures and better medicine have over the last few decades cut

infantmortalityratesanddeathsfrominfectiousdisease,otherconditionshaveinevitablyfilledthevoid.As the accompanying chart of the causes of death for 2004 (the latest comparative WHO data)

shows, non-communicable diseases have become leading causes of mortality in Asia. Such conditions, usually chronic, now account for at least half of the deaths in all the countries and territories under consideration,andinsomecasesover80%.Thespecifictypesofdisease,andtheageoftheironset,however, are in no way pre-determined by demographic necessity. Largely through a combination of the impact of environmental degradation, lifestyle choice, and ageing, heart disease is either the leading or second biggest cause of mortality in every country and territory, while cancer is among the top three killers in eight out of 11.

Put simply, people tend to develop many non-communicable diseases because of genetic predisposition,theaccumulationofdamage—whetherenvironmentalorself-inflicted—overtimetotheirbodies, or a combination of both.

Side-effects of growthThe rapid economic and social changes in Asia have brought a number of developments which accelerate the stress on human beings. One obvious effect has been noticeable environmental degradation in many Asiancountries.In2002,forexample,theWHOestimatedthatinitsWestPacificRegion—containingChina, the Philippines, South Korea, Hong Kong, Malaysia, and Singapore—between 200 and 230 peoplepermillioninhabitantsdieeachyearfromairpollution,thehighestfigureforanyregion.Chinain particular has the highest global incidence of COPD (chronic obstructive pulmonary disease; that is, chronicbronchitisandemphysema),andtheWHO’slatestfigureforannualdeathsinthecountryfromairpollutionis850,000.InIndiatheequivalentfigureis527,000.Ontheirown,thetwocountriesmakeuproughly60%oftheworld’sdeathsfromairpollutioneventhoughconstitutingroughlyone-thirdoftheglobal population. Air pollution is, of course, only one environmental problem: water pollution, toxins in the soil and other pollutants can all contribute to a range of non-communicable diseases, notably certain types of cancer. Overall, WHO analyses attribute about 20% of all deaths in China and India to pollution in some way.2

An even bigger health issue facing Asian countries comes from changes in lifestyle related to economic development. In particular, the increasing popularity of Western foods and lower levels of physical

2 “Chinese Air Pollution Deadliest in World, Report Says”, National Geographic News, July 9th 2007; WHO, “Countryprofileof Environmental Burden of Disease: China,” 2009; WHO “India National Health System Profile”;

India and China alone make up roughly60%oftheworld’s deaths from air pollution even though constituting roughly one-third of the global population.



Figure 3: Causes of death in Asia

Leading Causes (% of total deaths 2004) Of which leading contributor (% of deaths of this type)

China Cardiovascular diseases (34.8%) Cerebrovasculardisease(56.2%)

Malignant neoplasms (19.2%) Trachea, bonchus, lung cancers (21.3%)

Non-communicablerespiratorydiseases(16.6%) Chronic obstructive pulmonary disease (91.4%)

India Cardiovascular diseases (25.9%) Ischaemic heart disease (22.4%)

Infectious and parasitic diseases (18.0%) Diarrhoeal diseases (27.8%)

Respiratory infections (9.8%) Lower respiratory infections (98.5%)

Indonesia Cardiovascular diseases (24.7%) Ischaemic heart disease (47.1%)

Unintentional injuries (13.5%) Non-specificunintentionalinjuries(60.0%)

Infectious and parasitic diseases (12.0%) Tuberculosis (41.2%)

Malaysia Cardiovascular diseases (30.1%) Ischaemicheartdisease(37.6%)

Malignantneoplasms(16.6%) Trachea, bronchus, lung cancers (18.9%)


Philippines Cardiovascular diseases (27.4%) Ischaemic heart disease (37.0%)


Respiratory infections (10.9%) Lowerrespiratoryinfections(99.6%)

South Korea Malignant neoplasms (29.5%) Trachea, bronchus, lung cancers (20.9%)

Cardiovascular diseases (28.7%) Cerebrovascular disease (58.0%)

Unintentionalinjuries(6.9%) Road traffic accidents (47.0%)

Singapore Cardiovasculardiseases(36.2%) Ischaemic heart disease (55.0%)

Malignantneoplasms(26.0%) Trachea, bronchus, lung cancers (22.4%)

Respiratoryinfections(14.6%) Lower respiratory infections (99.9%)

Thailand Infectious and parasitic diseases (22.0%) HIV/AIDS (51.9%)


Malignantneoplasms(16.4%) Liver cancer (23.4%)

Vietnam Cardiovascular diseases (32.5%) Ischaemic heart disease (41.4%)


Malignant neoplasms (12.8%) Trachea, bronchus, lung cancers (18.4%)

Hong Kong* Malignant neoplasms (n/a)

Cardiovascular diseases (n/a)

Respiratory infections (n/a)

Taiwan* Malignant neoplasms (28.1%)

Cardiovascular diseases (18.4%)

Diabetes (7.2%)

* 2009 Taiwan; 2008 Hong Kong.Source: WHO, Economist Intelligence Unit



activityrequiredaswealthriseshavehadanoticeableeffectonwaistlines.A2006studyof168,000adultsin63countriesfoundthat,forthecountriesinthisregion,roughlyone-thirdofmalesandjustunder three in ten females were overweight, while an additional 5% to 10% of the population were obese. On the positive side, these numbers were still lower than those in other parts of the world—for obesity rates, dramatically so.3 The worry, however, is that available data indicate that Asian obesity rates are rising rapidly and therefore could resemble those of other regions soon. South Korea, for example, has the OECD’s lowest obesity rate, at 3.5%, but this is up nearly sevenfold since 1992. A Thai study published in in 2007 found that obesity rates had gone up by 18% between 1997 and 2003. In China, meanwhile, the proportion of overweight and obese children went up 28 times between 1985 and 2000.4

Thehealthimplicationsmaybeworsethanthenumberssuggest.Thedefinitionsofoverweightandobese in general use—based on Body Mass Index values—are derived from Western data. Statistics seem toindicate,however,thatsignificantAsianethnicgroupsareevenmoresusceptibletotheeffectsofobesity than Caucasians. Whatever the relative dangers for Asians and Caucasians, these countries and territories are seeing rapid growth in obesity-related conditions. Diabetes is a particular concern. Among adults aged 20-79, India, Hong Kong, Malaysia, the Philippines, Singapore, South Korea and Thailand all have a prevalence for this condition above the world average, and India has the highest number of adult diabetics in the world—over 50m.5

Mortality and morbidity statistics mask the scope of the challenge because diabetes, especially the more prevalent type II variety, tends to damage or kill through its many complications, notably heart disease. The International Diabetes Federation (IDF) reports, for example, that some studies indicate thatupto30%ofdiabeticsintheWesternPacificregionhavesomecardiovascularcomplicationsofthe disease. Its estimate of deaths for which the condition is ultimately responsible would put it among the top three killers in India, Malaysia, South Korea and Singapore, in addition to Taiwan, where it already appears in the top three. Moreover, the threat is growing rapidly. The IDF’s predictions for the growth of the prevalence of diabetes by 2030 in the countries under discussion ranges between 18% (the Philippines) and 50% (Vietnam), and in absolute terms the total number of diabetics in all of these countriesshouldgrowby60%to187m.6

Weight is not the only issue: smoking, predominantly among men, is very common. In Indonesia, Taiwan, South Korea and China over a quarter of the entire population smokes. In Taiwan, where 47% ofmensmoke,thehabitisresponsibleforaquarterofthedeathsofmalesaged35to69.InIndia,anestimatedone-fifthofmaledeathsaresmokingrelated,whileChina’shabit,alongwithairpollution,influencesitshighCOPDrateandleveloflungcancer.7

The region’s rapid urbanisation exacerbates these problems. Diet, for example, tends to deteriorate in urban settings in the developing world and the opportunities for physical activity decrease. The unplanned, chaotic state of many cities in the region even add to the number of harmful accidents suffered,especiallyroadtrafficaccidents.Lifestyleriskfactors,however,arespreadingtoruralareaswhichhaveseenlesseconomicdevelopment.ArecentstudybyINDEPTH(aninternationalnon-profitorganisationthatstudiesdemographicsandhealthcareindevelopingcountries),lookingatatotaloffiverural health surveillance sites in India, Indonesia, Vietnam and Thailand, found that:

3 “International Day for the Evaluation of Abdominal Obesity (IDEA)”, Circulation: Journal of the American Heart Association, October 23rd 2007.

4 “Varying Patterns of BMI Increase in Sex and Birth Cohorts of Korean Adults”, Obesity, February 2nd 2007; “S. Korea’s Obesity Rate Low-est in OECD”, The Korea Times, April 12th 2009; “Trends in Obesity and Associations with Education and Urban or Rural Residence in Thailand”, Obesity, December 12th 2007; “Overweight and obesity in China”, British Medical Jour-nal,August19th2006.

5 IDF Diabetes Atlas, http://www.diabetesatlas.org/

6 Ibid.

7 “Smoking attributable mortality for Taiwan and its projection to 2020 under different smoking scenarios”, Tobacco Control, 2005; “A Nationally Representative Case–Control Study of Smok-ing and Death in India”, New England Journal of Medicine, March 13th 2008

In Taiwan, where 47% of men smoke, the habit is responsible for a quarter of the deaths of males aged35to69.



• overhalfofmensmoked,exceptattheIndiansitewhere69%chewedtobacco;

• three-quartersormoreatefewerthanthefiverecommendedservingsoffruitandvegetablesdaily(exceptatoneVietnamesesitewherethefigurewas60%);

• at most sites over half of the people did not engage in vigorous activity, and at the Indian site over half were described as physically inactive;

• over 30% at the Thai site were overweight, as were nearly 30% of Indonesian women.

Were residents of these rural areas able to acquire more resources, the results would likely get worse: the vast majority in all sites reported no moderate or vigorous activity in their leisure time, and obesity rates were usually positively correlated with wealth and education—in other words, weight and inactivity are often associated with perceived health and status in a number of Asian cultures.

The “silver tsunami”Finally, as with much of the world, these Asian countries are beginning to see population ageing. One infiveresidentsofneighbouringJapan,theworld’soldestsociety,arealreadyover65andthenumberis growing. For several decades before 1990, in most of the countries under discussion, that proportion was around 5%. Since that date, however, as Figure 4 indicates, the number has been rising throughout the region and the trend looks set to continue. Singapore’s minister of health in 2009, Khaw Boon Wan, described the coming change as “a silver tsunami.” Although the growth is steepest in the most economically developed societies—Singapore, Taiwan, Hong Kong, and South Korea—most others will stillseeadoublingintheproportionofthepopulationover65between2010and2035.

Figure 4: Getting older% of population aged over 65

0

5

10

15

20

25

30

35

2035203020252020201520102005200019951990

Source: UN Department of Economic and Social Affairs, Population Division (forecasts use median population projection). Taiwan data from Taiwan Statistical Data Book 2009, Directorate General of Budget, Accounting and Statistics.

South KoreaChina Taiwan VietnamIndia MalaysiaSingapore ThailandHong Kong Indonesia Philippines



People living longer is not inevitably a disaster for health systems: the best current evidence suggests that greater longevity brings compressed morbidity and more years with a higher quality of life. Nevertheless, an older population will see more conditions associated with ageing. A higher number of chronic, non-communicable diseases will inevitably result and, as is typical of elderly populations, so will the number of complex cases with more than one such condition. In South Korea, for example, 52%ofthoseaged60to84yearsoldhaveatleastonecardiovascularcondition,and48%havetwoormore morbidities of some type.8 In addition to increasing the probability of various chronic conditions, however, age is the leading risk factor in a number of others. Between 2005 and 2020, the prevalence of dementia in the countries being discussed looks set to rise by 74%, and in three (Malaysia, Singapore, and South Korea) it will more than double. Over 5.5m new cases per year will appear by the later date across all these countries.9

Although not a disease per se, the frailty of older people will also have an impact. Falls are a major health issue for the elderly: a survey in northern India, for example, found that more than half of individualsover60yearsofagehadfallen.Ofthese,80%hadsustainedsomeinjury,and21%afracture.Moreover, falls were correlated with increased psychological distress about falling in future. Even in developed country medical systems, there is poor recognition of the impact of falls on the elderly population. As populations age in the countries in this study, health systems will have to address such issues.

Mortality, however, is only one way to measure the burden of disease. The use of disability adjusted life years (DALYs) to measure the cost in terms of disability and early death presents a slightly different picture. DALYs are a measure of overall disease burden, adding together years of life lost and years lived with disability—where one DALY is one year of healthy life lost.

The most striking element using DALY analysis is the widespread impact of neuropsychiatric conditions, in particular unipolar depression—another issue that tends to grow as a proportion of a country’s disease burden with ageing and the human dislocation brought about by economic development. It does not tend to show up on mortality data—although, for instance, over 5% of deaths in South Korea are suicides—but nonetheless can be debilitating. Many states in the region are simply ill-prepared, with a strong stigma stillattachedtomentalillness.China,forexample,wherethehealthministryhasidentifiedsuicideasthe leading cause of death for those aged 20 to 35, has only 1.29 psychiatrists per 100,000 population—compared with 11 for the United Kingdom and 13 for the United States. The Chinese Psychiatric Association estimated in 2007 that 90% of those who needed treatment for depression did not receive it. If anything, China actually compares well with most of the countries in this study: even the richest territories have just two or three times the number of psychologists, and Hong Kong has not conducted a large scale mental health survey of adult depression in two decades. More typical is India, where there are two psychologists for every million people, three-quarters of mental hospitals are understaffed, and some states have no mental hospitals at all.

8 “Morbidity and related fac-tors among elderly people in South Korea: results from the Ansan Geriatric (AGE) cohort study”, BMC Public Health, January 22nd 2007.

9 Data from Access Economics “Dementia in the AsiaPacificRegion”, September21st2006.

The Chinese Psychiatric Association estimated in 2007 that 90% of those who needed treatment for depression did not receive it.



Figure 5: Another way to measureDisability adjusted life years* (DALY)

Leading Causes (% of total DALYs 2004) Of which leading contributor (% of DALYs of this type)

China Neuropsychiatric conditions (18.4%) Unipolar depressive disorders (32.3%)


Unintentional injuries (11.2%) Roadtrafficaccidents(36.4%)

India Infectious and parasitic diseases (19.3%) Diarrhoeal diseases (29.7%)

Neuropsychiatric conditions (11.8%) Unipolar depressive disorders (42.1%)

Perinatalconditions(11.6%) Prematurity and low birth weight (41.1%)

Indonesia Unintentional injuries (20.5%) Otherunintentionalinjuries(60.0%)

Infectious and parasitic diseases (13.3%) Tuberculosis(36.3%)

Neuropsychiatric conditions (11.5%) Unipolar depressive disorders (34.5%)

Malaysia Neuropsychiatric conditions (19.2%) Unipolar depressive disorders (32.8%)


Cardiovascular diseases (10.9%) Ischaemic heart disease (38.3%)

Philippines Neuropsychiatric conditions (15.8%) Unipolar depressive disorders (28.7%)



South Korea Neuropsychiatricconditions(26.2%) Unipolar depressive disorders (27.5%)

Sense organ diseases (13.2%) Refractive errors (43.5%)

Malignant neoplasms (12.7%) Liver cancer (19.5%)

Singapore Neuropsychiatric conditions (22.3%) Unipolar depressive disorders (41.2%)

Cardiovasculardiseases(12.6%) Ischaemicheartdisease(54.6%)

Sense organ diseases (11.8%) Refractive errors (25.2%)

Thailand Infectious and parasitic diseases (22.5%) HIV/AIDS(54.6%)

Neuropsychiatricconditions(16.3%) Unipolar depressive disorders (29.1%)

Sense organ diseases (10.3%) Adult onset hearing loss (33.1%)

Vietnam Neuropsychiatric conditions (18.5%) Unipolar depressive disorders (31.3%)

Infectious and parasitic diseases (15.3%) HIV/AIDS (20.2%)


Source: WHO



Fighting on two frontsTheDALYfiguresalsoshowthat,despitethegrowthofnon-communicablediseasesinthesecountries,infectious diseases remain a major concern, even if less deadly than they once were. Many of these states arestillundergoingthetransitionintheirdiseaseprofilesfromthatofadevelopingstatetothatofadeveloped one. South Korea, Singapore, Taiwan and Hong Kong have more or less completed the journey, with mortality and morbidity statistics very similar to those of long-developed countries. That said, even inSingaporemorethanoneinsevendeathscomesfromrespiratoryinfections—thehighestfigureinanyof the places under consideration.

Others are still very much in the middle of the transition. According to the WHO, in 2004 communicable, maternal, perinatal and nutritional conditions accounted for 39% of deaths in India and 43% of its DALYs, comparedto5.1%and6.3%inSouthKorea—typicaldeveloped-countryaverages.Leishmaniasis,denguefever,filariasis,malaria,tuberculosisandevenpolioallremainconcernsinIndia,andtheleadingcauseofdeathamongthoseunderfiveisdiarrhoea.AlthoughIndiahasthehighestmorbidityandmortalityfiguresinthisstudyforcommunicableconditions,suchdiseases—especiallydenguefever,malariaandtuberculosis—remain serious issues in countries such as Indonesia, Malaysia, and Vietnam.

HIV/AIDS, meanwhile, is present in every country in the region. Although not especially widespread in many of them, some do have worryingly high local concentrations. The exception to this picture is Thailand, where one in nine deaths and one in eight DALYs result from the disease, making it one of the top health problems.

Finally, new and emerging diseases have been a repeated challenge in this region—even for countries which have progressed far in the epidemiologic transition, as microbes do not respect borders. Severe acute respiratory syndrome (SARS), for example, began in China, but after that Hong Kong, Taiwan and Singapore all felt its effects. In health terms, the impact may have been minor but the broader costs of containing the disease were much higher. In Singapore, for example, 33 deaths resulted which is small compared with the annual average of roughly 19,000 total deaths from all causes. On the other hand, in December 2003, econometricians at the National University of Singapore estimated that overall the disease took 2.5% off of national GDP.10Ahistoryofnewstrainsofinfluenzaoriginatingintheregionalsomeansthatanycountryintheregionmaybeatthesharpendofanymajoroutbreaks:Birdflu,forexample, has hit Indonesia and Vietnam the hardest of any countries so far.

Little wonder that this epidemiologic transition is sometimes referred to as a double disease burden, withpublichealthandmedicalsystemsneedingtofightactivelyontwofronts.Thedifficultyisthatthe appropriate weapons for the two battles do not always overlap. Health systems built largely on providing cures or acute episodic care must now deal, without abandoning existing efforts, with the very differentmatterofchronicdiseasemanagementandpatienteducation.Eveninthefieldofpublichealth,shiftsarenecessary:vaccinationandsanitationeffortsnowhavetobejoinedbyattemptstoinfluencelifestyle choices. These two involve fundamentally different activities, as convincing someone to use a source of clean water that the state has provided is much easier than convincing the same person to give up smoking. Dr Srinath Reddy, president of the Public Health Foundation of India, speaking about his country, explains that the health sector has not yet fully recognised how many “determinants lie in

10 “Revisiting SARS: Impact on the Singapore Economy”, Econometric Studies Unit, National University of Singa-pore Press Release, December 11th 2003.



vectors outside health. The price of fruit and vegetables, taxes on tobacco, urban design, freedom from crime all come up. Intersectorality is critical in chronic disease prevention, but at the moment, India is just waking up to the challenge.”

Systemic challengesIn facing this disease burden, many of the healthcare systems considered here share a variety of systemic challenges. As noted above, economic development is bringing a host of changes beyond simple wealth generation. These look set, if anything, to accelerate. McKinsey, a consultancy, predicts that 900m people willmovefrompovertyintothemiddleclassindevelopingAsiancountriesby2020—whichitdefinesashaving a family income of US$5,000 per person in PPP terms. China’s per capita GDP reached that level in 2005, and the Economist Intelligence Unit expects India’s to do so in 2013.11

Throughout the world, greater wealth brings higher patient expectations. Experts across Asia have noticed such an increase in patient demands and the need for countries to react. The WHO country profileforMalaysia,forexample,explainsthat“amoreeducatedandaffluentpublicwitheasyaccesstoinformation, coupled with demographic changes and rapid advances in medical technology, has led to rising consumer demand for better health care and expensive new technology”. Professor Peter Sheehan, director of Victoria University’s Centre for Strategic Economic Studies and an expert on healthcare economics,findsthetrendintheregion“verywidespread”.Heexplains:“Aspeoplegetricherandgetmore aware, they increasingly want good healthcare.”

Existing data on the phenomenon tend to be anecdotal, but are indicative of rapid change. China’s private United Family Hospitals, for example, used to be almost exclusively patronised by foreign patients. Now, 40% of them are from middle- and upper-class Chinese families. A survey of middle-class families in Beijing, Shanghai and Chengdu in 2008, designed to address the lack of data, found that they want greater privacy and dignity from healthcare, more involvement in decisions and more personalised service—all without having to pay much more, if any.12

Perhaps the biggest sign throughout Asia of patients developing a consumer approach to healthcare is in the area of cosmetic surgery, which is booming. South Korea’s Chosun Ilbo newspaper reported in 2007 on a survey for a doctoral study that found that 80% of women in that country thought that they needed such surgery, and half had already had it. These numbers seem remarkably high, but a 2009 poll of female Korean college students by the newspaper found that a quarter had already had cosmetic surgery. Of those who had not had operations, 80% wanted to have one and, of those who had, 80% wantedfurtherprocedures.Itisnotoriouslydifficult,however,togetaccuratefiguresbecausethereareso many unregulated practitioners—Time magazineestimatedin2002thatover20,000illicitoperationstook place in Jakarta alone.13Asforofficialoperations,theInternationalSocietyofAestheticPlasticSurgery’s most recent estimate is nearly a decade old (2002) but even then Hong Kong had the sixth most procedures per capita of any country or territory in the world.

Engaged patients do not necessarily mean consumers who insist on bad medical decisions, but this happens. Beijing hospitals, for example, are developing a reputation for giving intravenous antibiotics to patients who have common colds because they insist on such treatment. In South Korea a detailed

11 Economist Intelligence Unit “The Big Tilt: The Rise of the East and What it Means for Business”, January 2010.

12 “Emerging trends in Chinese healthcare: the impact of a rising middle class”, World Hospitals and Health Services, 2008 (issue 4).

13 “Half of Korean Women Have Had Cosmetic Surgery”, The Chosun Ilbo (English Edition), 22 February 2007, http://eng-lish.chosun.com/site/data/ html_dir/2007/02/22/ 2007022261030.html;“PlasticSurgery All the Rage Among College Students”, The Chosun Ilbo (English Edition), 8 Sep-tember 2009, http://english.chosun.com/site/data/html_dir/2009/09/08/2009090800 228.html; “Changing Faces”, Time Asia, 5 August 2002, http://www.time.com/time/asia/covers/1101020805/story.html



Figure 6: Understaffed, underservedDoctors and hospital beds in Asia, 2008

Doctors (per 1,000) Hospital Beds (per 1,000)

South Korea 1.7 6.6

Taiwan 1.5 6.4

Hong Kong 1.5 5.0

China 1.6 2.5

Singapore 1.6 2.5

Thailand 0.3 2.1

Malaysia 0.8 1.8

Vietnam 0.6 1.7

Philippines 1.2 0.9

India 0.6 0.6

Indonesia 0.3 0.6

Source: Economist Intelligence Unit

study found a strong link between patient demand and the inappropriate use of injected medicine.14 More engaged patients, whatever the challenges, can become a positive part of healthcare arrangements if they are educated in what medicine can and cannot provide. Other issues common in this region, especially outside of the relatively developed economies, are invariably more problematic.

Information deficitThemoststriking,andperhapsmostbasic,issueisaninformationdeficit,eveninsomerapidlyemergingcountries.Dataasbasicasmortalityfiguresarefrequentlyflawed.A2005studyintheBulletinofthe World Health Organisation, for example, found mortality registration incomplete and statistical compilation irregular in China. India’s national health policy of 2002, meanwhile, admits that “the absenceofasystematicandscientifichealthstatisticsdata-baseisamajordeficiency...healthstatisticscollected are not the product of a rigorous methodology”. Although the health policy seeks to address the issue, expert estimates of something like the total number of diabetics in the country can vary by over10%.SizeofferssomejustificationforChinaandIndia,buttheWHOcountryinformationprofileforVietnamstatesbluntlythatthereis“noavailableinformation,withtheexceptionofafewspecificdiseases”ontheburdenofdisease.TheprofileforthePhilippineslists“alackofreliable,disaggregatedand integrated health and health-related data, evidence and information” among the challenges facing the health system there. The paucity of data is not limited to disease rates. The Philippines also lacks any systematic database on health human resources in the country.

Dr Reddy points out that to some extent the poor data are less of an impediment than one might imagine. What evidence does exist points to several large problems that require clear public health interventions. Moreover, whatever the exact number of people suffering from some of these conditions, there is an obvious need for a capacity to treat far greater numbers than can currently be accommodated.

14 “Relationship between physician characteristics and their injection use in Korea”, International Journal for Quality in Health Care, August 24th 2007

India’s national health policy of 2002 admits that “the absence of a systematic and scientifichealthstatistics data-base is a major deficiency...healthstatistics collected are not the product of a rigorous methodology”.



Nevertheless,theinformationdeficit,inProfessorSheehan’swords,“remainsaseriousissue.Inmanyareas the lack is not so much data on basic incidence of disease, but the fact that information on many of the more analytical issues about treatment, cost and burden is still very limited”. This can have important strategic consequences: how much of a country’s heart disease is diabetes related, for example, or how much comes from a possible genetic mutation making the majority population more susceptible than other people, would have a direct bearing on how the issue is best addressed.

Anotherproblemisinadequateresourcestomeetexistingneeds.Figure6showsthenumberofdoctorsand hospital beds per 1,000 people in the population. OECD countries typically have between 2 and 4 of theformer,and3to8ofthelatter(SouthKorean’sfigurefordoctorsisthesecondlowestinOECDafterTurkey’s).

Although for wealthier states resources are less of a problem, data show that they are under-served (and the data say nothing of quality). India’s 2008/09 Economic Survey calculated that there was a shortage of 4,833 primary health centres and 2,525 community health centres in 2008. In November of the following year Manmohan Singh, the prime minister, called the shortage of doctors “one of the biggest impediments to strengthening of the public-health delivery system and scaling up access to health care”.

What is true of general medical personnel is even more so of specialists. Many countries globally are experiencing shortfalls, and the Asia region is no exception. Malaysia’s health minister, Liow Tiong Lai, admitted at a press conference this February, “we are really short of specialists throughout the country inallfields”.Giventheageingofthepopulationinthesestates,thelackofgeriatriciansisanoteworthyexampleofthisgeneralproblem.Asof2006Malaysiahadonlyninesuchdoctorsforapopulationof1.9mpeopleover60.Meanwhile,neitherChinanorIndiaevenhasboardcertificationsingeriatrics,andtheirtiny number of geriatricians invariably come from other specialties.

Making matters worse, for the Philippines and India at any rate, is the tendency of trained medical personnel to move abroad where they can obtain higher remuneration. A 2004 study by the former’s National Institute of Health found that in the previous decade over 100,000 Filipino nurses had left to work abroad, a number which included 3,500 doctors who had taken conversion courses in nursing in order to join the exodus. India instead exports doctors. The over 50,000 Indian physicians in the United States—the largest foreign group—mean that Americans have more Indian doctors per person than rural Indians do.

Funding issuesMedical personnel and infrastructure, however, cost money and these countries face the global problem of dealing with rising demand and patient expectations with limited resources. Moreover, how anycountrydecidestopayforitshealthsysteminvolvesacomplexbalancingnotonlyofefficiencyconsiderations but also of matters of equity and morality. The result is invariably a combination of public and private funding and provision.

In a number of the territories under discussion—usually the wealthier ones—the state covers most of the cost of at least basic care universally, usually by some form of mandatory national insurance. Typically, however, these health systems suffer from rapidly growing costs and frustration at the quality of

The over 50,000 Indian physicians in the United States mean that Americans have more Indian doctors per person than rural Indians do.



care. South Korea’s national health insurance has long waiting lists even though it covers only basic care andTaiwan’snationalhealthinsuranceschemehasperennialfinancialdifficulties.Meanwhile,althoughThailand’s universal health provision is popular, waiting times and declining quality in public healthcare have kept the private market healthy and growing there as elsewhere in the region.

Moreover, the extent of what these systems provide should not be overestimated. According to WHO figures,inonlyoneofthecountriesinthisstudydoestheproportionofprivatespendingonhealthcaredipbelow40%ofthetotal—Thailandat36%.Moreover,thecountrieswithbroadhealthprovisionareallactivelytryingtocontaincostsandfindnewsourcesoffunding.TaiwanandSouthKorea,forexample,have both attempted to use regulation to cut prescription drug costs and looked at increasing medical tourism.HongKong,meanwhile,isconsideringraisingthelevelofprivatefinancing,eitherthroughgreater use of private insurance or the creation of medical savings accounts.

If wealthier countries are looking at possibly greater private funding, poorer ones are seeing an even greater role for the private sector. In Vietnam, for example, neglect of the public system has made private payments much more common. Indonesia, meanwhile, is actively encouraging private sector investment to bridgethegapswhichthestatecannotaffordtofill.Thebiggestexceptiontothisslowshifttowardsmoreprivate sector involvement is China, which is engaged in a major effort to reform its public-health system.

Onemajordifficultywithgreaterprivateinvolvementintheprovisionofhealthcareistheeffectonequity. Wealth and health are statistically linked in innumerable ways. The increasing disparity in wealth in many of these countries—the China Daily recently reported the widest regional income gaps in the country since reform began15—inevitably will exacerbate the problems with access to care. Just as studies in Taiwan found that disparities of access decreased after the institution of its national insurance, Vietnamisnowseeingagrowthinthelikelihoodofpoorercitizensbeingunabletousemedicalfacilities—evenpubliconeswhichoftenrequireformalfeesandunofficialbribes.Asaresult,infantmortalityinthebottom economic quintile of the population is rising.16

The clearest manifestation of the access gap is in the number of medical personnel and level of facilities in well-off urban areas versus poorer rural ones. In the poorer countries under consideration—Thailand, China, India, Indonesia, Vietnam and the Philippines—doctors, hospitals and clinics tend to be in urban areas, making access in the countryside worse than the national numbers suggest. In Vietnam, for example, average per-capita health spending in rural provinces is under one-third that for city residents and those in rural areas are twice as likely to self-medicate. In India, the doctor-resident ratio in the countryside is six times lower than for towns.17 Such facilities as exist in rural areas are often staffed either by nurses paid so little that they do not bother showing up or nobody at all, leaving people to unskilled local healers.

Richard Smith, director of the United Health Chronic Disease Initiative, notes that in healthcare terms China has been described as three countries in one: “In the West, there is lots of poverty and very poor services. The middle is like a middle-income country—lots of health problems, infectious disease is largely fixedandthelimitedservicesarenotofgoodquality;thenyouhavethecoastalregionwhichisinmanyways a developed country.” Not surprisingly, a recent study in health policy found that disparities in health outcomes—such as those related to maternal and child health and infant mortality—were growing with rapid economic development.

15 “Urban-rural income gap widest since reform”, March 2nd 2010, http://www.chinadaily.com.cn/china/2010-03/02/con-tent_9521611.htm

16 “Take your medicine”, Vietnam Investment Review, 28 November 2005.

17 EIU, “Vietnam: Healthcare and Pharmaceuticals Report”, December 11th 2009, “Choice of healthcare provider follow-ing reform in Vietnam”, BMC Health Services Research, July 30th 2008, “India to turn out over 145,000 rural doctors”, Indo-Asian News Service, February 4th 2010.



Chapter 2: Case studies

TheAsia-Pacificregion,andthe11countriesconsideredinthisstudy,mayhaveavarietyofhealthcarechallenges in common, including both medical needs and similar stresses on delivery systems.

Solutions, however, are unlikely to be regional: healthcare systems are national, or even sub-national, creations—however international the threats they address.

A regional view of how health professionals are addressing these challenges would therefore risk becoming a list of how each country was acting, in some ways duplicating the country summaries at the end of this report. Consideration of a series of case studies from around the region, on the other hand, although far from exhaustive, allows for a more detailed picture of some of the more important developmentstakingplaceandthedifficultieswhichpolicymakersfaceinbringingaboutchange.

China’s health reform packageNo country, developing or developed, has completely squared the circle of providing high-quality care inawaythatisbothequitableandefficient.Asiancountrieshavethesamevarietyofapproaches,andattendant problems, as elsewhere. Thailand’s universal health provision is popular, but waiting times and quality issues in public healthcare have kept the private market healthy. Cost pressures are making HongKong’sgovernmentlookforwaystomakeprivatecitizensshouldermoreoftheheavilygovernment-underwritten care system. Singapore, on the other hand, is facing pressure to increase government spendinginasystemthatislargelyprivatelyfinanced.

China, meanwhile, is undertaking a huge reform to return its health system—currently an ostensibly public one that in many ways has become private and, for many, too costly—to one that will by 2020 provide universal basic care.

The economic changes in China of the 1980s saw a breakdown of the existing public system. This did not lead to a purely private market so much as a contraction of the facilities available—especially in rural areas—and widespread fee charging within the public system. By 2001 the proportion of the consumer shareofhealthspendingpeakedatnearly60%.

The government’s response in the late 1990s was to experiment with a series of insurance plans, funded by a combination of payroll taxes and state contributions. Rolled out nationally in 2003, these have provided widespread coverage—the OECD estimates that by 2008, 85% of Chinese had some insurance. In turn, the overall consumer share of spending on healthcare has dropped to under 50%.18

Serious problems remain, however. These plans simply cannot afford to pay out what they promise or what those covered need. China’s health ministry reported in 2009 that, during 2007, 70% of those with an appropriate referral refused to enter hospital because of the cost, and 38% of the sick received no treatment. Going beyond funding, care has become overly concentrated in urban locations and tends to

18 OECD Economic Survey: China 2010, Chapter 8: “Improving the healthcare system”, pp. 209-234.



take place in hospitals rather than in less expensive primary care facilities and clinics. Perverse incentives abound within the system.

Thegovernmenthasadmittedthatfurtherreformisessential.In2009itannounced,asthefirstinstalment of reform, a plan that involved spending Rmb850bn (US$124bn) by 2011. The goals are wider insurance cover, reaching 90% by 2011; the creation of a list of basic drugs at controlled prices; an improved network of local level clinics; a better public-health system; and hospital reforms to prevent commercialisation.

Theschemeisboldinsizeandscope:totalhealthcareexpenditureinChinain2008—publicandprivate(includingindividualsandcompanies)—wasUS$208bn,makinganextraUS$41bnperyearunderthefirstinstalmentofreformanotableincrease.Moreover,thereformtriestotackledifficultstructuralproblemsaffectingcosts,suchasthepracticeofhospitalsprofitingfromtheirchargesforpharmaceuticalsandtheoveruse of hospital emergency rooms for primary care.

How effective it will be in practice, however, remains to be seen. First, how much of the money will enter the system is uncertain. Total central government spending on healthcare in 2009 was US$17bn, and the budget for 2010 sets aside US$20bn.19 These totals include substantial increases over previous years,buttheheadlinefigureofRmb850bnincludesoutlayswhichwillberequiredofthelowerlevelsofgovernment. How much these governments can afford will vary widely by region.

Thebulkofthenewspending—two-thirds,accordingtoWangJunofthefinanceministry20—will go towards improving insurance. The government has raised the subsidy for its basic urban and rural insurance programmes from Rmb80 to Rmb120 per year per person. Participants usually pay a small amount in addition. The Chinese government reports that 179m additional people had obtained cover in thefirstsixmonthsof2009,suggestingthatitshouldeasilymeetitsgoalof90%nationalcoveragebytheendofthisphaseofreform.Thedifficultyisthatthebasicplansremainunderfinanced,evenwiththeincreased funding.21 Nor will greater coverage necessarily have the desired effect on prices, as there is evidence that health providers charge insured people more.

Moreover, health reforms everywhere reveal systemic impediments to change. China is no exception. Early this year, for example, the government promised to allow greater portability of health insurance across the country in order to allow better coverage of migrant workers. This is particularly important, as their health outcomes are far worse for this group than the rest of the population. But it in effect forces the government to make migration easier. Similarly, the capacity of the system to absorb expansion is an issue.Graduateswithqualificationsinmedicinearefindingitdifficulttosecurejobsbecausetherearejust too many of them. Paying to train new doctors may not be the best use of funds, although retraining existing personnel, especially at local health centres where over one-third of doctors had no university education,hasclearbenefits.Thegovernmentplannedin2009tohelpbuild29,000andupgrade5,000township hospitals. These will bring their own integration challenges.

Addressing incentives in the system is another issue. One of the major planks of the reform has been thecreationofalistofsome300basicdrugsthatwillhavefixed,lowpricesandcanbesoldbylocalhealth facilities as well as hospitals. This is a direct attempt to tackle the practice by hospitals of selling thepharmaceuticalswhichtheyprescribeatahighmark-upinordertomaketheprofitthatfunds

19“SelectedfiguresfromChina’s 2009 budget”, Reuters, March 5th 2009; “Key figuresfromFinanceMinistry’s2010 draft budget report” Xinhua News Agency, March 6th2010.

20 “China’s Health Care Reform: The Focus Shifts to Basic Health Care Service”, Knowledge @ Wharton, April 15th 2009, http://www.knowledgeatwharton.com.cn/index.cfm?fa=viewArticle&articleID=2021&languageid=1

21 OECD Economic Survey: China 2010, Chapter 8: “Improving the healthcare system”, pp. 209-234



operations.Thedruglistisonlyonewaythattheplanattemptstoaddressmedicalinflationthroughregulation. Public hospitals—which provide 95% of beds in the country—will see a widespread overhaul. Inapilotprojectcoveringallthehospitalsin16citiesacrossthecountry,thefacilitieswillbeexpectedtonolongermakeaprofit.Operationswillbefinancedthroughgovernmentsubsidiesandmedicalcharges.As for replacing lost income that will result, especially from selling prescription drugs at cost, there is little detail. The central government has decreed that city governments are required “to fully motivate all medical workers to provide the public with safe, effective, convenient and affordable medical services”.

How they do so will have a great impact on success. Shanghai, for example, is planning to restrict public hospitals to only general services. High-end medical services will cost more than they do at present and the city plans to encourage the creation of private clinics and hospitals to help provide these. Even if the reforms provide basic care in the city, it would appear that a two-tier health system is inevitable.

China’s health reform, then, is a laudable effort to confront a range of complex problems head on. Just how far it can address them, however, remains to be seen.

Singapore: Preparing to age gracefullyInAugust2009theNationalDayspeechofSingapore’sprimeministerforthefirsttimefocussedonthe challenges of an ageing society. Over the next 25 years the proportion of the country’s population agedover65shouldmorethantriple,fromthecurrent10%to31%.OtherAsiancountrieswillfacesimilar shifts, if not quite on this scale. One area where the government is seeking to prepare is that of healthcare.Itswide-rangingapproachhaselementsthatothercountriesinasimilarsituationmightfinduseful.

First, Singapore is seeking to address the issue of funding, not just for medical care but for long-term care—whetherathomeorinspecialistfacilities—whichelderlycitizensfrequentlyrequire.Healthcarefunding in the country relies heavily on private payments, whether through out-of-pocket payments, Medisave—a programme for individual healthcare savings accounts, or Medishield—an insurance scheme totopuppaymentswhenpatientshaveinsufficientMedisavefunds.ThereisalsoMedifund,alast-resortgovernment fund to pay for care for those who otherwise could not afford it. Singapore is now creating a parallel system for the elderly that will cover both medical and long-term costs. Eldershield was established in 2002 and Medifund Silver—recently renamed Elderfund—followed in 2007. Now the health ministry has announced plans to create Eldersave. It hopes that in 15 years, these three Es will provide a sound basis for funding the medical and long-term care that an older population will need.

The government, however, will also expect families to continue to contribute. In 2009, 51% of those over65hadallorpartoftheirhospitalbillspaidforfromtheirchildren’sMedisaveaccounts—inlargepart because the programme was started too late for older Singaporeans to have built up a high balance. AlthoughSingaporeanshavestrongenoughfamilyties,thisspendingisnotjustamatteroffilialpiety:the2005MaintenanceofParentsActletsparentssuetheirchildrenforfinancialsupport.Moreover,the prime minister said on National Day that the government intends to use the legislation to force recalcitrant children to pay their share of healthcare and long-term care.

Thegovernmentisalsoallocatingitsownresourcestoprepareforageing.Partofitsfive-year,S$4bn



(US$2.9bn)plantobuildoverallhealthcarecapacityhasbeenearmarkedforfacilitiesspecificallyrelevantto older Singaporeans, including an increase in the number of nursing home beds from 9,200 to 14,000 by 2020. Training is another priority area. Geriatrics has been made a core part of undergraduate medical trainingandtherearenowfinancialincentivesforthosewhochoosethisasaspecialtyovermorepopularareas. The government hopes to raise the current number of 48 geriatricians by 30% to 40% over the next three years. More important, given the role that families play in most countries in caring for the elderly, in November 2009 the minister in charge of ageing announced new training programmes that would be made available for family members and domestic servants.

Moneyaloneisinsufficient.Integrationiscentraltomaintainingthequality,andkeepingdownthecost, of care for older patients. The Agency for Integrated Care was established in 2008 to help co-ordinate discharge planning from hospitals to ease the transition of elderly patients to intermediate or long-term care facilities or home care. Meanwhile, public hospitals have created Aged Care Transition Teams.

Not every idea will work. When the health minister pointed out that it would be much less expensive for Singaporean families to place older relatives in nursing homes located just across the border in Malaysia, he faced a press backlash. Nevertheless, by preparing now for the onset of a more aged society, the country is much more likely to be able to provide an older population with the healthcare it needs.

Prescription: Business model innovationThe search for cost-effective, good quality healthcare is a global one. Many experts believe that to achieve this, efforts at reform must focus on business model innovation. According to American expert Professor ElizabethTeisberg,co-authorofRedefining Healthcare, “the most powerful innovation in the coming decade will be structural and organisational”. One particular area needing business model innovation is the typical general hospital, Clayton Christensen of Harvard University and doctors Jerome Grossman and Jason Hwang, in their book The Innovator’s Prescription: A Disruptive Solution for Health Care, say: “In the absence of an array of cross subsidies, restraints on competition, and philanthropic life support, most ... would collapse.” The problem is that facilities which try to do everything are too expensive and less capable of developing expertise.

TheproblemisnotconfinedtheUnitedStates.Forexample,China’sover-relianceonlargehospitalsis a major cost driver. One solution Mr Christensen and his colleagues put forward is the establishment offacilitiesthatspecialiseinspecificconditionsandtherebyachievebothhigherqualityandgreatereconomicefficiency.ThisapproachisbeingalreadyusedbyseveralAsianhospitals.

One of the most famous is the Aravind Eye Care System. Based in Madurai in southern India and now 35 years old, it sees 2m patients per year, performs a quarter of a million surgeries and is responsible for roughly 5% of all India’s eye care. Its surgeons are able to perform eight to ten cataract operations per hour, rather than the typical one to two in India, because other tasks—such as non-medical work, routine examinations and even assistance in theatre—are done by specially trained local villagers. The sheer volume provides economies of scale as does the organisation’s capacity to manufacture its own supplies, suchasartificiallenses,ofthesamequalityandatafractionofthecostofimports.



Four-hundred kilometres from Madurai, in Bangalore, Dr Devi Shetty founded the 1,000-bed Narayana Hrudayalaya Heart Hospital in 2001. It too relies on volume to maintain quality and keep prices down. Its 24 operating theatres see 50 major heart surgeries per day, including the largest number of pediatric heart operations in the world. The facility, along with another that Dr Shetty founded in Kolkata, perform more than 10% of the country’s heart operations. The sheer number of operations, which some have called “assembly-line” surgery, is part of the reason why the average price for open heart surgery is just US$2,000.

Evenwithanentrepreneurialeyeforcostefficiency,however,bothfacilitiesareawarethatmanyofthe country’s poor simply could not afford their services. Among their more striking innovations are theirfinancingmodels.Aravinddoesnotchargeforcataractoperations,itsmostcommonprocedure.Instead it bills patients for post-operative accommodation on a sliding scale, from private rooms throughtoastrawmatonthefloorofacommonsleepingarea.Giventhenatureoftheoperation,ifeven that is unaffordable, family members can take the patient home afterwards without need for any accommodation. Heart surgery requires more post-operative care, so Dr Shetty’s arrangements are even more audacious. He asks people to pay what they can afford. A combination of low costs and high reputation brings in wealthier patients willing to pay above the notional price for procedures. Meanwhile, Dr Shetty has also helped establish a very low-cost microinsurance scheme that provides coverage for many of the poorer patients who come to the hospital. Both hospitals are self-sustaining.

These are more than operation factories. They are centres of innovation. Both, for example, make active use of telemedicine to reach remote areas with little medical care. Dr Shetty is even scaling up his model. Next to the heart hospital in Bangalore are specialist cancer, transplant and eye hospitals, and he has been creating similar Health Cities in a variety of urban areas across India. If the hospital needs to be reinvented, southern India is one place to look for ideas.

Thailand: AIDS and the persistence of infectious diseaseDespite progress against infectious disease in much of Asia, the issue remains a pressing one in a number of countries in this study. Indeed, as global concerns about the emergence of strains of tuberculosis resistant to all current treatments show, microbes are never fully defeated but are merely temporarily controlled. The AIDS virus is no exception. The Thai experience shows that, although a country can achieve much, the need for vigilance never goes away.

AIDStookfirmrootinThailandinanenvironmentofdenialandinaction.Throughoutthelate1980s,theconventionalwisdomwasthatthediseasewasconfinedtoforeignersandafewcasesamonghigh-riskgroups.Oneofficialeveninsistedlateinthedecadethat“ThaitoThaitransmissionisnotinevidence”.22 Nevertheless, the condition was spreading rapidly among high risk groups: a Ministry of Public Health reportputthepercentageofintravenousdruguserswithAIDSataround1-2%in1987.By1989thefigurehad reached 40%. The rate had gone even higher among sex workers in certain parts of the country, especially the north. More generally across Thailand, the infection rate among commercial sex workers fromrose3%in1989to16%in1991.Fromthereitbegantospreadintothepopulationasawhole.

In 1991 the government began to take the disease seriously and introduced a nationwide plan. Funding

22 Yaowarat Porapakkham et al., “The Evolution of HIV/AIDS Policy in Thailand: 1984-1994”, 1995, pdf.usaid.gov/pdf_docs/PNACG546.pdf



tofightthediseaserosefromlessthanUS$2.6min1991—itselfasubstantialincreasefromUS$180,000in1988—tooverUS$80min1996.Theprimeminister’sofficetookoverresponsibilityforaddressingtheepidemic; a public education campaign used widespread radio and television advertisements, as well as school programmes; and the “100% condom programme” enforced the use of condoms in all brothels. The latter programme was extremely effective, taking condom use in such circumstances from 20% to well over 90%.

The campaign proved remarkably successful. All new sexually transmitted illness cases in Thailand plummeted from over 350,000 in 1989 to about 10,000 in 2001. As for AIDS, the graphs show that prevalence among army recruits and those attending ante-natal clinics peaked in the early 1990s and then began a steady decline. The World Bank estimated in 2004 that the number of cases in the country would have been 14 times higher if such steps had not been taken. Thailand became one of only a handful of developing countries that has been able to reduce the incidence of AIDS. Additions to the country’s anti-AIDSefforts,suchasprovidinganti-retroviraltreatmentfirsttoexpectantmotherswiththecondition and then to others living with HIV/AIDS improved the situation further.

Thais soon discovered, however, that AIDS was not a problem which could be simply solved. After the economic crisis of the late 1990s, spending on AIDS programmes dropped, declining in baht terms by nearlyhalfbetween1997and2004.Thereductioninpreventionspendingwasevenhigher—63%.Thishas not resulted in a great increase in the number of cases, but it has led to some worrying behaviour in at-riskgroups.In2006UNAIDSreported,forexample,that85%ofThaiyouthdonotthinkAIDSisanissue of personal concern to them.23 Moreover, even though premarital sex is becoming increasingly common,somesurveyssuggestthatlessthan16%ofsexuallyactiveyoungpeopleuseacondom;UNsurveysfindthatamongthoseaged15to49whohavemultiplesexualpartners,abouthalfuseone.24

Prevalence rates have also remained high for intravenous drug users, and have recently begun increasingformenwhohavesexwithmen.Moreover,althoughofficialfiguresstillindicatehighcondomuse by sex workers, USAID reports that some studies, especially among informal sex workers, indicated usage as low as around 50%. As a result, married females infected by husbands who have gone to these

Figure 7HIV prevalence among army recruits 1992-2006

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HIV prevalence among ante-natal-clinic clients 1991-2007

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Royal Thai army conscript prevalence rates

23 Patrick Brenny, UNAIDS Coordinator Thailand, quoted in “HIV/AIDS Outlook in Asia Mixed”, Voice of America, May 31st2006

24 “AIDS in Asia: Face the Facts”, 2004, p. 82; “UNGASS Country Progress Report Thai-land”, September 2008.



workers are now one of the largest groups of newly infected.Moreover, the progress which Thailand has made is relative to what might have been. AIDS is still one

of the country’s biggest killers, and is generalised throughout the population. From 2007 the government has redoubled its efforts, but faces criticism for not doing enough for socially marginalised groups such as migrants, homosexuals, intravenous drug users and prisoners. Moreover, costs are rising. The total of government and aid money spent on HIV/AIDS topped US$200m in 2008, much of it going to anti-retroviral treatment, which as yet covers only 85% of those living with HIV/AIDS who have symptoms, and only 53% of those with advanced infections.

Infectious diseases are not something countries can ever ignore. Even as they decline compared to other threats, governments will need to maintain their vigilance.

India: The politics of creating a country doctorIn 2005 India launched the National Rural Health Mission (NRHM) to address the wide disparity in health outcomes and in the level of facilities between urban and rural parts of the country. Much of the work in the seven-year project focuses on public health, and the programme has scored some successes, such as the creation and funding of over 450,000 local Village Health Sanitation Committees. In terms of health indicators, the infant mortality rate for the country has begun dropping more rapidly than previously, and childhood immunisation rates are up. For example, in Bihar, one of India’s poorest states, 41% of children now have full immunisations, compared with 21% before the programme began.25

The NRHM has also made some dent in the lack of medical personnel in rural areas. It has led to the training and deployment of 520,000 Accredited Social Health Activists (ASHA). These are female volunteers trained to provide advice and encouragement towards healthier behaviour, and to provide a liaison between the community and the health system. They can also perform very basic medical services, such as dispensing diarrhoea treatments or bandaging cuts. The hiring of nearly 50,000 Assistant Nurse Midwives (ANM) in the 18 states covered by the programme has also improved services for pregnancy and birth.

The provision of more highly trained personnel, however, has been less successful. The states involved havebeenabletoattractonly8,600newallopathicdoctorsand2,400specialists,alongwith7,700practitioners of various traditional medicines. This has not been for want of trying. The state of Sikkim has even attempted to provide social networks for the families of those posted to remote locations. Nevertheless, the NRHM reports that in the states in question only 14% of community health centres have atleast60%oftherequiredstafftorunthem.Typicallythepooreststates,whichlackthecapacitytousecentral government funding effectively, are the worst off.

While improving public-health measures and creating a network of ASHAs is not controversial, a new plan to solve the doctor shortage is causing a great stir. India’s health minister has proposed the creation ofanewqualification,thebachelorofruralmedicineandsurgery,whichwouldallowrecipientstoqualifyafterjustthreeandahalfyearsofstudyinsteadoftheusualfive.Thosewiththedegreewouldthenbeable to work in rural health sub-centres now typically staffed by ANMs.

The Indian Medical Association has expressed its opposition, claiming that to allow doctors with

25 “NRHM – The Progress So Far”, Indian Ministry of Health Website, http://mohfw.nic.in/NRHM/Documents/NRHM_The_Progress_so_far.pdf



lower-standardqualificationstopracticeinruralareasviolatestheIndianconstitution’sguaranteeofequaltreatmentofallcitizens.Oppositionandevengovernmentmembersofparliamenthavecomplainedabout the creation of “half-baked” doctors. The government, meanwhile, insists that the 147,000 doctors foreseen under the scheme—roughly a quarter of the country’s current total—will revolutionise rural care.

If the scheme does break down the urban-rural health disparities in a meaningful way, it will succeed where China’s “barefoot doctors”—the thousands of peasants who were given intensive medical training to serve China’s rural population, on which India’s programme is loosely based—failed and provide a viable model for other large countries.



Chapter 3: Country summaries

ChinaAs China has developed, healthcare spending has risen, leading to an improvement in health indicators. A massive reform programme is now under way.

As with most other economic indicators, healthcare spending in China has risen rapidly, increasing from US$1.7bn in 1980 to US$208bn in 2008. Nevertheless, spending on healthcare remains low by

international standards, at an estimated 4.7% of GDP in 2009, despite the sharp rise recorded in recent years. Most OECD countries spend around 8% of GDP on healthcare. The increase in expenditure on healthcare in recent years will continue in 2010-14. This will be partly because of a further rise in incomes (economies tend to spend a larger proportion of income on healthcare as standards of living improve). However, the rise in spending will largely be driven by the government’s healthcare reform agenda, which aims to roll out a basic package of care for the population by the end of the year and universal access to a full range of healthcare services by 2020.

Increased health expenditure has been accompanied by an improvement in health indicators. Between 1982and2008averagelifeexpectancyrosefrom67.9yearsto73.2years,whiletheinfantmortalityratefell from 34.7 per 1,000 births in 1982 to 21.2 in 2008. But China’s population is ageing rapidly: the UN expectstheproportionofthepopulationagedover65torisefrom6.1%in1995to9.3%in2015,andprojects that it will then more than double in the subsequent 20 years, to more than 19% in 2035. This process will increase demand for healthcare.

SpendingOrdinary citizens pay for much of their own healthcare out-of-pocket, particularly in rural areas.

By 2014 the Economist Intelligence Unit expects healthcare spending to have risen to Rmb2.8bn (US$487bn),63%higherthanthelevelin2010inlocalcurrencyterms.Intermsofper-headspendinginUS dollars, expenditure will have more than doubled from its 2009 level, to reach US$357.

Inurbanareas,responsibilityforfinancinghealthcarehasshiftedfromthegovernmentandstate-owned enterprises to individuals as the economic reforms of the 1980s have led to more people working outside the state sector. Although it has risen in the past couple of years, in 2005 the proportion of total healthcare expenditure accounted for by the government stood at just 18% (while 30% of the total was accounted for by companies, either state-owned or private). This compares with 87% of total healthcare spending coming from the government in the UK, 82% in Japan and 53% in South Korea.

In 2000 China’s health ministry estimated that 87% of rural patients paid the full cost of medical treatmentthemselves,with60%ofhospitalisedpatientsleavingearlybecauseoftheirinabilityto



Healthcare indicators: China

2005a 2006a 2007a 2008a 2009b 2010c 2011c 2012c 2013c 2014c

Life expectancy, average (years) 72.3 72.6 72.9 73.2 73.5 73.8 74.0 74.3 74.6 74.9

Life expectancy, male (years) 70.7 70.9 71.1 71.4 71.6 71.8 72.1 72.3 72.5 72.8

Life expectancy, female (years) 74.1 74.5 74.8 75.2 75.5 75.9 76.2 76.5 76.8 77.2

Infant mortality rate (per 1,000 live births) 24.2 23.1 22.1 21.2 20.2 19.4 18.6 17.8 17.0 16.3

Healthcare spending (Rmb bn) 887 997 1,244 1,442.0 1,562 1,743 1,951 2,211 2,512 2,844

Healthcare spending (% of GDP) 4.7 4.5 4.7 4.7 4.7 4.7 4.7 4.7 4.7 4.7

Healthcare spending (US$ bn) 108.0 125.0 164.0 208.0 229.0 258.0 303.0 356.0 417.0 487.0

Healthcare spending (US$ per head) 83.0 95.0 124.0 156.0 171.0 192.0 225.0 263.0 307.0 357.0

Healthcare (consumer expenditure; US$ bn) 73.0 83.0 102.0 135.0 155.0 181.0 222.0 271.0 336.0 415.0

Doctors (per 1,000 people) 1.5 1.6 1.6 1.6 1.7 1.7 1.7 1.8 1.8 1.9

Hospital beds (per 1,000 people) 2.4 2.5 2.5 2.5 2.5 2.5 2.5 2.5 2.5 2.5

a Actual b Economist Intelligence Unit estimates c Economist Intelligence Unit forecastsSource: Economist Intelligence Unit

continue to pay. Although rural provision has improved through the introduction of a Co-operative MedicalServicein2003,thesystemremainsdeeplyflawed,andprovisionisalongwayfrombeinguniversal.Officialssaythat200mChinesehavenoinsurance.

PolicyChina’s reforms intend to expand insurance coverage, improve healthcare infrastructure and bring efficiencies to drug-supply.

To tackle these problems, the government unveiled a series of reform plans in November 2008 in a report entitled Healthy China 2020. Its main tenets include:

• Developing the national health insurance system. The aim is to reduce the level of out-of-pocket spending and to provide sustainable funding for medical institutions. The ultimate goal is the provision of universal access to healthcare, funded through national health insurance, by 2020. This will be rolled out instages,withthefirstprioritybeingcoverageforseveredisease.

• Improving and expanding the public healthcare infrastructure. This includes the building of 2,000 county hospitals and 29,000 town hospitals. Another 5,000 town hospitals, 3,700 community health centres and 11,000 community health stations will be renovated and improved. China will train 1.4m villagedoctorsand160,000communitydoctors.

• A strengthening of overall public healthcare through the establishment of a national health database, freemedicalexaminationstounder-3sandover-65s,andimprovedpre-natalcare.Theplansalsooutlined a host of other measures, from tackling tuberculosis and HIV, to unveiling a hepatitis B vaccine programme, and improving water and sanitation systems.



• Creating a national drug-supply system. The government’s main priority is to control centrally the production and supply of essential medicines. A list of essential drugs will be drawn up, the manufacture, distribution and pricing of which will be controlled by the government.

A major objective of the reforms is to prevent government-owned hospitals from relying on payments exacted from patients for tests, medicine and other treatments. Reports in the state-run press say that more than 90% of hospitals’ income comes from charges (which are often poorly regulated and excessive) for providing services and medicine. Weaning hospitals and doctors off these sources of funds will be a difficulttask.

The government plans to publish a list of essential medicines. In the next three years government-run medicalfacilitieswillberequiredtogivepreferencetothedrugsonthelist,andprofitsmadeonthembyhealthcare providers will be phased out. Providers will receive subsidies to compensate for their losses.

Another big obstacle to reform could be a lack of enthusiasm among local governments. Of the planned Rmb850bninspending,officialssaythatonly40%willcomefromthecentralgovernment.Provincialand lower-level authorities may be reluctant to divert resources to areas that do not produce immediate benefitsintermsofboostingemploymentandGDPgrowth.

DiseasesChina faces serious health challenges, most notably from HIV/AIDS and smoking.

TheWHOandtheJointUNProgrammeonHIV/AIDS(UNAIDS)estimatethattherearearound650,000people with AIDS in China.

Thereisgrowingawarenessofthehealthrisksassociatedwithsmoking,inacountrywhere60%ofadult males and 4% of females are regular smokers. The WHO has estimated that smoking kills 1.2m Chinese a year, and there is now a growing resolve on the part of the government to act more forcefully against smoking.

Chinasawarapidriseinthenumberofcasesofswineflu(A/H1N1)inthelasttwomonthsof2009.By the end of 2009 the health ministry reported that the number of cases of the diseases had risen to 120,940,with659deaths.However,thehealthministryalsoreportedthatthatalmost50mhadreceiveda vaccination.

Source: EIU Healthcare Report January 2010



Hong KongDespite relatively low healthcare spending, Hong Kong rates well in comparisons of basic health indicators, such as life expectancy.

Spending on healthcare (which tends to be resistant to economic downturns) ticked up to an estimated 6.2%ofGDPin2009,basedonWHOdefinitions.Thisisstilllowcomparedwithhealthcarespendingof

16.3%ofGDPintheUS,10.6%inGermanyand7%inJapan.The structure of healthcare expenditure has been changing. In the early 1990s the bulk of expenditure

was accounted for by the private sector. However, in recent years public-sector expenditure has become moresignificant,anditnowaccountsforwelloverone-halfofallhealthspending—aproportionthatwillcontinue to rise.

SpendingHealthcare spending in Hong Kong is being pushed up by the same factors that are affecting most developed economies: an ageing population, the emergence of innovative and expensive medical technologies, new sources of demand and rising consumer expectations.

Infiscalyear2008/09(April-March)totalpublicspendingonhealthcarestoodatanestimatedHK$36.8bn(US$4.7bn).Theratioofpublichealthspendingtototalgovernmentspendingisusuallyfairlyhigh,butrecentgovernmenteffortstocushionhouseholdsagainstinflationandothereconomicproblems have pushed up other kinds of public spending, with the result that health expenditure as a proportion of total spending fell to 11% in 2008/09.

The Economist Intelligence Unit expects total healthcare spending to increase from an estimated US$13.2bnin2009toUS$16.6bnin2014.Thiswillbedriveninpartbyexpandingpublichealthinvestment.Butconsumerhealthspendingwillalsogrow,fromaroundUS$5.6bnin2009toUS$7.8bnin2014, driven by rising disposable incomes.

At present, healthcare in government hospitals is not free but is heavily subsidised, and costs can be waived for those receiving comprehensive social security assistance. The disadvantage of this is that waiting lists can be long. Public subsidies cover around 95% of care costs: virtually all in-patient care costs are covered, but there is a slightly lower proportion of coverage for outpatient care. Hong Kong’s private hospitals handled only 20.4% of in-patient admissions in 2007, but the vast majority of outpatient consultations are provided by private doctors. The level of private medical insurance cover is extremely lowinHongKong.Giventheabovefigures,itseemsprobablethatpublichealthcareprovisionispricedlow enough (and is of a good enough standard) to curb the expansion of private-sector provision.

Several options to supplement existing funding have been proposed, including social health insurance (probably funded by a tax on the working population or employers); increasing out-of-pocket payments at the point of delivery; mandatory individual health savings accounts; voluntary private insurance;



mandatory healthcare insurance; and so-called “private healthcare reserves” that seek to incorporate elements of private healthcare accounts and regulated medical insurance plans.

PolicyThe Hospital Authority (HA) is now moving to outsource more of its services to the private sector, amid a general drive to reduce waiting times, shorten the average duration of hospital stays after surgery, place greater emphasis on patient empowerment and reduce demand for HA services.

Hong Kong’s ratio of an estimated 1.5 doctors per 1,000 people in 2009 is below that in Germany (3.8 per 1,000),theUS(3.3)andJapan(2.2).HongKonghadanestimatedfivehospitalbedsper1,000peoplein 2009, a level that has been broadly stable in recent years. The HA runs 48 specialist outpatient clinics and74generaloutpatientclinics.Around4,760doctors—roughly40%ofthe11,961doctorsregisteredinHong Kong—are employed by the HA. Most other doctors are general practitioners in the private sector.

Growth in demand for healthcare services is estimated at 3-4% a year. This has resulted in the need to promote home and community care by building up the family-medicine services offered by the HA, and also by managing demand through the provision of primary care that can reduce avoidable hospitalisation for the elderly and the socially disadvantaged.

The government is keen to see further development of the medical services sector. By attracting paying mainland-Chinese clients to Hong Kong for medical treatment, this would in effect provide a subsidy to the local healthcare sector. Hong Kong has recently proved more politically stable than rival healthcare-tourism destinations such as Thailand and Sri Lanka, but in the long term its advantage may lie in niche sectors, such as traditional Chinese medicine.

Healthcare indicators: Hong Kong

2005a 2006a 2007a 2008a 2009b 2010c 2011c 2012c 2013c 2014c





Healthcare spending (HK$ bn) 84.0 89.0 97.0 101.0 103.0 107.0 112.0 116.0 123.0 129.0


Healthcare spending (US$ m) 10,781.0 11,492.0 12,396.0 12,921.0 13,209.0 13,68.0 14,302.0 14,925.0 15,806.0 16,638.0

Healthcare spending (US$ per head) 1,563.0 1,656.0 1,776.0 1,841.0 1,872.0 1,930.0 2,008.0 2,086.0 2,201.0 2,308.0

Healthcare (consumer expenditure; US$ m) 4,718.0 5,025.0 5,134.0 5,485.0 5,550.0 5,887.0 6,269.0 6,669.0 7,215.0 7,754.0






DiseasesIn the past few decades Hong Kong’s population has aged and grown wealthier, and chronic diseases, cancers, and their associated disabilities have emerged as the leading causes of morbidity and mortality

Cancerwastheleadingcauseofdeathin2008,claiming12,390lives,followedbyheartdisease(6,737),pneumonia(5,399)andcerebrovasculardiseases(3,751),accordingtogovernmentfigures.Infectiousdiseasesarealsoasignificantthreat:in2008therewere5,730casesoftuberculosis,ofwhich237werefatal.

In 2003 Hong Kong’s healthcare system was tested by an outbreak of the highly contagious severe acute respiratory syndrome (SARS) virus. The outbreak was eventually brought under control, but not beforeithadinfected1,755peopleandkilled298.InthewakeofSARS,officialenquiriesidentifiedshortcomings in the organisation of the healthcare system for the control of communicable diseases. A Centre for Health Protection with responsibility for the prevention and control of communicable diseases was subsequently set up.

Theterritory’sexperiencewithswinefluin2009paintsamixedpictureofprogressonpreventingthespreadofdangerousdiseases.Therehavebeenfewfatalitiesfromswineflu,butthediseasespreadrapidlyin Hong Kong, despite initial tough measures to attempt to halt its progress, including quarantine (the measures were criticised in some quarters as an over-reaction). The territory’s experience so far suggests that it is too early to assume that a future serious epidemic could be controlled effectively.

Source: EIU Healthcare Report October 2009



IndiaWhile improving, healthcare provision in India is still characterised by huge inequalities

India spent an estimated 5% of GDP on healthcare in 2009. This is more than neighbouring Pakistan (which spent 2.4% of GDP on healthcare), and China (4.7%), but far less than the G7 average of around

12%. Annual healthcare spending per head is estimated at just US$55 in 2009, compared with US$172 in China. The Economist Intelligence Unit expects spending to more than double by 2014, to about US$143bn, although sustained economic growth in that period means that spending as a percentage of GDP will remain stable.

India has the second-largest population in the world, after China. Life expectancy has been improving, toanestimated69.9yearsin2009(67.5yearsformalesand72.6yearsforfemales),upfrom57yearsin1990 and 37 years in the early 1950s. The infant mortality rate is high, at an estimated 30.1 deaths per 1,000 births in 2009, although this has dropped from around 80 per 1,000 at the start of the 1990s and 150 per 1,000 in the 1950s.

SpendingThe private sector will be driving much of the growth in healthcare spending

Widespread poverty and a lack of investment have prevented a strong domestic healthcare market from taking shape in India. However, building from such a low base and with a strong economic and policy environment, the outlook for growth is promising. Increases in personal income, government healthcare

Healthcare indicators: India

2005a 2006a 2007a 2008a 2009b 2010c 2011c 2012c 2013c 2014c





Healthcare spending (Rs bn) 1,786.0 2,050.0 2,156.0 2,592.0 3,087.0 3,518.0 4,013 4,575 5,220 5,934










outlays and private domestic investment, combined with longer life expectancy, should lead to average annual growth in healthcare spending (in rupee terms) of around 14% in the forecast period.

Over 80% of healthcare spending in India, including that on pharmaceuticals, is out-of-pocket. Only one-tenth of the population has health insurance, and spending on healthcare is a major cause of indebtedness. Formerly, only state-owned companies were allowed to offer health insurance. However, the market was opened up to private participants in 2000, and in 2007 the government removed the limit on premiums.

The private sector accounts for more than three-quarters of total health expenditure, an extremely high proportion by international standards. The government is keen to encourage this trend; the National HealthPolicy2002,whichisstillineffect,envisagesanoverallincreaseinhealthspendingto6%ofGDPby 2010. However, only one-third of this increase would consist of public health investment.

PolicyThe government is trying to address India’s severe shortages of healthcare infrastructure

India has a rudimentary network of public hospitals and clinics, but most healthcare services are provided by the private sector, mainly through independent practitioners. Public hospitals are rare outside large cities,andstandardsofqualityarevariable.Indiaisdesperatelyshortofdoctors,withonly645,825,or0.6per1,000people,in2004,accordingtotheWHO.Accordingtothegovernment’s2008/09EconomicSurvey, there was a shortage of 4,833 primary health centres and 2,525 community health centres in 2008. In November 2009 the prime minister, Manmohan Singh, described the shortage as “one of the biggest impediments to strengthening of the public health delivery system and scaling up access to health care”.

The National Health Policy 2002 stresses the importance of developing primary care and public health measures, and supports a greater role for the private sector in widening the extent and coverage of care. Ongoing public health programmes include immunisation programmes, a tuberculosis control programme andanAIDScontrolprogramme.Thegovernment’s11thfive-yearplan(2007/08-2011/12)focuseson improving the health indicators of marginalised groups, particularly women and girls. Among the plan’s explicit goals are reducing the infant mortality rate to 28 per 1,000 live births, halving the rate of malnutrition among children aged 0-3 and halving the rate of anaemia among women and girls.

The policy noted that there was particular scope for private-sector expansion in the urban primary-care and tertiary-care sectors, and encouraged the growth of private health insurance.

Although hospitals have traditionally been the domain of the state or private trusts and charities, the new-found prosperity of many Indian households is spurring demand for high-quality medical care, transformingthehealthcare-deliverysectorintoaprofitableindustry.Continuedlackofinvestmentinstate-owned hospitals and the increasing incidence of so-called lifestyle diseases (such as heart disease, canceranddiabetes)thatisaccompanyingrisingincomeswillensurethatthistrendintensifies.However,hospitalswillfacetwosignificantchallengesastheyformulateplanstoexpand:thehighcostoflandinurban areas and a growing shortage of nursing staff.



Although most hospitals are overcrowded and understaffed, a number of world-class facilities have sprung up in the past two decades in India’s biggest cities, catering almost entirely to the rich. So well- equipped and well-staffed are these hospitals that India has become a leading destination for medical tourism. The current global economic slowdown appears to be swelling the ranks of medical tourists even more quickly, as rapidly rising unemployment in developed economies increases the incentive for individuals to look for cost-saving options.

DiseasesMalnourishment is a serious problem, reflecting widespread poverty, as are communicable diseases.

Levelsofinfantandadultmortalityandmorbidityvarywidelyacrossstates,partlyreflectingthedifferinglevels of resources available to state governments.

The National AIDS Control Organisation estimates that over 2.5m people were infected with HIV/AIDS in2007,afigurethatisbackedbytheJointUNProgrammeonHIV/AIDS(UNAIDS).OnaglobalbasisIndia is second only to South Africa in terms of the number of people living with the disease, and still faces great challenges in tackling the virus. Moreover, only 7% of those people have access to treatment. Treatment will become more expensive in 2010-14 as multinational pharmaceutical companies receive patents in India for their AIDS drugs.

Rapid urbanisation is presenting further challenges. Pest-borne and infectious diseases will remain a problem, and the World Bank agreed in February 2009 to provide US$521m to India to control malaria, polioandkalaazar(“blackfever”,aparasiticdisease).Healthserviceswillalsohavetocopewithanincrease in the chronic and lifestyle-related conditions that are associated with rising incomes and greater longevity.

Source: EIU Healthcare Report November 2009



IndonesiaIndonesia remains one of the poorest countries in South-east Asia, and the quality of healthcare available is low and subject to considerable regional inequalities.

Healthcare spending in Indonesia is low by regional standards, accounting for 2.7% of GDP in 2008, comparedwith3.3%inThailandand3.6%inthePhilippines,accordingtoaUK-basedmarket-

researchfirm,Espicom.HealthcareexpenditureperheadwasaroundUS$60in2009.Pharmaceuticalsareexpensive relative to average incomes, but the market for traditional medicines, which are cheaper and readily available, is thriving.

Demands on the state healthcare system are rising: demographic trends show an ageing population and growing migration to the cities. Indonesia’s pensioners do not represent the same potential strain on publicresourcesasthe“silvertsunami”inotherpartsofAsia:peopleaged65oroveraccountedforjust5.8%ofthepopulationin2008andwillmakeuponly6.3%in2013.Nevertheless,theriseinaveragelifeexpectancyfrom62.8yearsin1990tonearly71yearsin2008hasledtoanincreaseintheprevalenceofdegenerative diseases.

SpendingPublic expenditure on healthcare has increased dramatically, but is still low by international standards

Thegovernmenthasincreaseditsspendinginrecentyears.AccordingtotheWHO,in2006(latestavailable data) the government spent the equivalent of 1.2% of GDP on healthcare, up from 1% in 2000. In2006publicspendingaccountedfor49.5%oftotalhealthcarespending,upfromjust38.3%in2000.As a result of this low public expenditure, access to healthcare is closely linked to wealth.

Even at state-owned hospitals patients pay user fees, although public health clinics and family planning posts are free at the point of delivery. The government has developed several health-insurance plans for workers and their families, including a scheme for civil servants (ASKES) and one for the private sector (JAMSOSTEK); the latter has seen low uptake. The military has another such scheme, known as ASABRI. According to the International Labour Organisation, only around 18.7m Indonesians, or 8% of thepopulation,werecoveredbytheseformalhealth-insuranceschemesin2007.Thispartlyreflectsthelow proportion of the employed labour force (at around 37%) that works in the formal sector. But even among formal-sector workers, only about 7m contribute to a health-insurance scheme, since only private enterprises with ten or more workers or payrolls of over Rp1m (US$100) a month are required to enrol their workers in JAMSOSTEK.

However, the number of people with health coverage rises to 95.1m when those covered by the National Social Security System are included. This system, which was launched by the government in 2005, provides poor families with access to free outpatient primary care in local health centres and free



treatment at hospitals, generally third-class public hospitals.

PolicyThe government focuses on providing primary care and basic services while encouraging the private sector at the secondary and tertiary levels

Indonesia’s health system is characterised by marked regional inequalities. Around 55% of the country’s 237.5mpeopleliveinruralareas,andthepopulationisspreadacrosssome6,000islands.Healthcareismost developed on the main island of Java, which is home to around 51% of the population. In an effort to address the uneven availability of health services, the government has established a network of public health centres (or puskesmas) in rural areas.

In 2007 the government operated more than 8,100 primary health centres in Indonesia, as well as an additional 28,000 mobile and auxiliary centres. There were almost 1,300 general hospitals in 2007, split evenlybetweenthepublicandprivatesectors.Thenumberhasrisensignificantlyinrecentyears.

Budgetary pressures mean that the government concentrates on providing primary care and basic hospital services. The amounts spent on community outreach, health education and immunisation programmeshavecomeunderpressuresincethe1997-98Asianfinancialcrisis.Cutsintheseserviceswere blamed for a tenfold increase in measles cases in 2000-04, the outbreak of polio in 2005 and the country’s worst outbreak ever of dengue fever, also in 2004. A child-immunisation programme that was completed in late 2007 has served to address some of the shortcomings of recent years.

Radical administrative decentralisation, which began in 2001, has compounded problems in public-sector healthcare, as management of health services has been devolved to regional governments that lack the necessary experience and adequate funding.

The government has a list of essential drugs, the prices of which are subsidised in the public sector and

Healthcare indicators: Indonesia

2005a 2006a 2007a 2008a 2009b 2010c 2011c 2012c 2013c 2014c





Healthcare spending (Rp trn) 64.0 78.0 93.0 107.0 139.0 150.0 164.0 180.0 198.0 219.0









controlled in the private sector. The government actively encourages the manufacture and distribution of generic drugs, although counterfeiting is rife.

The government is also actively promoting the growth of private healthcare, particularly at secondary and tertiary levels, with the aim of compensating for the more serious shortcomings of the public system. The growing role of the private sector in healthcare raises questions about access, although private facilities must provide subsidised services to the poor. Indonesia is coming under increasing international pressure to open up its healthcare services to international competition.

Indonesia had only 0.3 doctors per 1,000 people in 2008, and most of these practice only in urban areas.Thenumberofhospitalbedsissimilarlyinadequate,atjust0.6per1,000people,andisskewedinfavour of cities, especially Jakarta. According to the WHO, around 53% of beds were in the public sector in2006,downsharplyfromthelevelinthe1990s,whencloseto70%ofhospitalbedswereinthepublicsector. Only a few hospitals provide care to international standards.

DiseasesInfectious diseases, such as malaria, dengue fever and tuberculosis, pose a serious problem in Indonesia, and the prevalence of chronic diseases is growing, though this is a secondary concern.

The country has recently faced outbreaks of polio and measles among children, and is battling an increase in the incidence of HIV/AIDS, as well as of malnutrition in some parts of the country. Indonesia has also recorded115humandeathsfromavianinfluenza(birdflu),representing44%oftheglobaltotal.Otherdiseases, such as chikungunya, an insect-borne virus, have also posed challenges. Lifestyle diseases associated with rising incomes, which are becoming more prevalent in other parts of Asia, remain a secondary concern. Smoking-related diseases are a problem, as an estimated 30% of the adult population are habitual smokers, according to WHO data for 2005.

Source: EIU Healthcare Report September 2009



MalaysiaDespite the low ratio of health spending to GDP, Malaysia’s public healthcare system is lauded as an Asian success story

The value of Malaysia’s healthcare industry is estimated at around US$8.4bn in 2009. Total expenditure on healthcare is estimated at the equivalent of 4.3% of GDP in 2009—a very small proportion by

international standards. The health ministry estimates that spending on public and private healthcare combined needs to rise to around 7% of GDP by 2020 if Malaysia is to match developed-country standards. We expect the ratio of health expenditure to GDP to remain unchanged in 2010-14. It appears likely, therefore, that the government will struggle to meet its healthcare spending target, partly as a result of itsrecentdecisiontoaccordahigherprioritytofiscalconsolidation,whichislikelytoleadtoareductionin overall government expenditure.

However, demand for healthcare is likely to expand in 2010-14 as the elderly increase in number, consumer awareness of healthcare services grows and access to services is improved (in part owing to increased privatisation of services). Continued urbanisation is likely to lead to a rise in the incidence of so-called developed-country illnesses, such as cardiovascular disease, and this will increase demand for healthcare.

Health indicators are mixed: average life expectancy is high for a developing country, at over 70 years, buttheinfantmortalityrateisalsorelativelyhigh,at16.4per1,000livebirthsin2008.Malaysiahasayoungpopulation:around50%ofitspeoplewereaged24yearsorunderin2006,accordingtodatapublishedbythestatisticsdepartment.In2006thepercentageofthepopulationabove65yearsofagestood at 3.9%, but the Economist Intelligence Unit expects it to exceed 5% by 2014.

SpendingThe government accounts for around 60% of total healthcare spending in Malaysia, but it is trying to place greater emphasis on the private sector

Public medical services are heavily subsidised for those unable to pay the full fees and are provided free to the poor.

Only a minority of Malaysians are able to afford private medical care, and the country lacks a compulsory national health insurance plan. As a result, people either take out insurance policies with privatefirmsorpayoutoftheirownpocketsforexpensesincurredwhenusingprivate-sectorhealthcare.

A radical change to the healthcare system is expected, as the government plans to introduce a new national health insurance scheme, but the launch date has yet to be announced. The scheme is expected to be based on a “community-rated” model, according to which the rich and healthy subsidise the poor and sick, but the government has yet to release details of planned contribution levels or how hospitals would receive funds. If such a scheme goes ahead, it is likely to encourage private insurance and over-the-counter sales of medicines.



PolicyMalaysia’s public healthcare system is well developed and provides the population with easy access to primary- and secondary-care facilities

Government clinics are present in almost all urban, semi-urban and rural areas, and the quality of both private-andpublic-sectorhealthcareservicesishigh.Malaysiaisranked66thintheUNDevelopmentProgramme’s Human Development Index for 2009; Thailand, by comparison, is ranked 87th, while Indonesia comes 111th.

Malaysia’s primary-care system is internationally recognised as a model provider of healthcare services at little or no direct cost to consumers, and preventive public healthcare programmes—including the provision of clean drinking water and sewerage services to most Malaysians—are credited with having raised fundamental health indicators close to developed-country levels. In the public sector there were in excess of 33,000 beds in 2008, according to the statistics department. The private sector has more hospitals but they are much smaller, with a total of just 12,137 beds. In 2008 the number of registered doctorsinthecountrystoodat25,102,upfrom15,619in2000,witharound60%ofthemworkinginthepublic sector.

In 2010-14 the government will give some prominence to its efforts to maximise the use of information technology in medical care, medical education and health services management. The government is keen to push “telemedicine”, which allows for the transmission of medical images, virtual consulting and virtual medical training. In recent years the government has also been promoting “medical tourism”, and aimstoattractmorepatientsfromAsia,theMiddleEastandfartherafieldfortreatment.

A National Patients’ Safety Council was established in 2004 to improve the quality of healthcare.

Healthcare indicators: Malaysia

2005a 2006a 2007a 2008a 2009b 2010c 2011c 2012c 2013c 2014c





Healthcare spending (M$ bn) 22.0 25.0 28.0 32.0 30.0 32.0 33.0 36.0 39.0 42.0










DiseasesDengue fever, tuberculosis, and HIV are three of the main diseases afflicting Malaysians

Owing to its tropical climate, Malaysia suffers from a high incidence of dengue fever, a febrile disease that is transmitted to humans by mosquitoes. According to data from the health ministry, Malaysia had anincidencerateof167.8casesper100,000peoplefordenguefeverin2008.Despitethefactthatnovaccine currently exists to prevent the spread of the disease, mortality rates are relatively low in Malaysia, with only around one person per 100,000 population dying from the disease in 2008. By contrast, the mortality rate associated with tuberculosis (TB, the disease with the second-highest incidence rate in Malaysia)wasmuchhigher,at549per100,000population.ThispartlyreflectstheemergenceofTBstrains that are resistant to antibiotics, the highly infectious nature of the disease and the fact that most vaccines do not offer protection from pulmonary TB, the most common form.

By June 2008, according to the health ministry, 82,700 Malaysians had been infected with HIV; of these,75%wereintravenousdrugusers.Aprogrammeofmeasuresimplementedin2006,whichincludedneedle exchanges, had a certain amount of success in bringing down the HIV incidence rate in 2007. In 2010-14 a combination of preventative measures and expanded availability of antiretroviral treatments will help to reduce the mortality rate from HIV/AIDS.

Healthcare spending could be driven upwards by further outbreaks of infectious diseases, and in particularnewstrainsofinfluenza.Thegovernmentisalreadylookingatwaystoincreasethecountry’sstockofantiviraldrugs,followingaglobaloutbreakofinfluenzaA(H1N1),commonlyknownasswineflu.Bymid-August2009atotalof4,225casesofswinefluhadbeenrecordedinMalaysia,and64fatalitieshad been attributed to it.

Source: EIU Healthcare Report December 2009



The PhilippinesThe government must reconcile rising demand for healthcare with a desire for fiscal consolidation

HealthcarespendingperheadinthePhilippinesislow,atonlyUS$68(atmarketexchangerates)in2009,abovethelevelsofUS$60inIndonesiaandUS$39inVietnam,butbelowthoseofUS$1,414

in Singapore, US$297 in Malaysia and US$124 in Thailand. The Economist Intelligence Unit expects the market for healthcare to offer greater potential in 2009-13 than in recent years. Despite a fall in US dollar terms in 2009 owing to the economic downturn, total health spending is expected to grow during the forecast period, reaching US$9.9bn in 2014, as economic growth strengthens and the government responds to the increasing need to improve healthcare coverage.

Government attempts to increase healthcare spending will be limited by a focus on containing the fiscaldeficit,butitislikelythathealthcarewillaccountforagraduallyrisingshareofpublicexpenditureover the forecast period. Demand for healthcare is expected to rise owing to a number of factors, including increasing life expectancy, the ageing of the country’s population and the growth of the urban population.

SpendingMany poorer families still do not have adequate health coverage

The Philippine Health Insurance Corp (PhilHealth) operates the National Health Insurance Programme. Governmentexpenditureisconstrainedbythecountry’spoorfiscalposition,andprivatehealthcareexpenditureexceedsspendingbythestate.Inearly2009PhilHealthhadanestimated80mbeneficiaries,equivalenttoaroundeightoutoftenFilipinos.Some23%ofPhilHealth’sbeneficiarieswereenrolledunder a sponsorship scheme for the poor, but many poorer families still do not have PhilHealth cards entitling them to health services. In private hospitals most expenditure is out-of-pocket, with the remainder being funded through insurance schemes. Out-of-pocket spending as a share of total health expenditure—an important indicator of inequality of healthcare provision between rich and poor—has increasedinthepastfewyears,reflectingbudgetaryconstraintsongovernmentexpenditure.

PolicyAlthough remittances from overseas health workers do boost the economy, the departure of so many medical professionals to work overseas undermines the provision of healthcare in the Philippines

At the end of 2008 there were 3,750 health institutions, including hospitals, clinics and maternity units, accreditedbyPhilHealth,aswellas21,600professionals.Morethan90%ofthecountry’shospitalsare accredited by PhilHealth. According to the health department, there were 1,921 hospitals in the Philippinesattheendof2006,withtheprivatesectoraccountingfor1,202ofthese.However,publichospitals are much larger than those in the private sector, and account for 51% of the country’s 93,180



hospitalbeds.Theaveragepublichospitalhad67bedsin2006,comparedwith38inprivatehospitals.Thehealthdepartmentestimatesthatin2006therewere1.2hospitalbedsper1,000people,thehighestratio since the mid-1990s, but its estimates are based on the population level in 2000. It is therefore more probable that in reality the ratio is around 1 per 1,000.

Primary healthcare services are of a basic standard in rural areas, owing to a lack of infrastructure and investment. Outpatient care in urban areas is mainly provided by public hospitals, although some private hospitalsalsospecialiseintheprovisionofprimarycare.ThereisashortageofqualifieddentistsinthePhilippines,andaccesstoproperdentaltreatmentremainsproblematic.Therewerejust0.6registereddentists per 1,000 people in 2005.

The Philippines is a major provider of healthcare workers and medical staff internationally. A significantproportionofoverseasFilipinoworkersaredoctorsandnurses,andtheremittancesthattheysend home play an important role in boosting economic growth in the country. However, the negative side of this is that healthcare provision in the Philippines is being undermined by the departure of so many medical professionals to work overseas.

DiseasesDiseases of the heart and vascular system are the two leading causes of death

According to the health department, heart disease was the leading cause of death in 2004 (the latest yearforwhichdataareavailable),killing70,860peopleinthatyear.Itwasfollowedbydiseasesofthevascular system, infectious and parasitic diseases and respiratory infections.

According to the National Disease Control and Prevention Centre, by late July 2009 the Philippines had suffered2,668confirmedhumancasesofinfectionwiththeinfluenzaA(H1N1),orswineflu,virus.Sofar the virus has caused three deaths: in one case the victim was already suffering from a serious heart condition, while the other two had existing respiratory problems. Source: EIU Healthcare Report

September 2009

Healthcare indicators: Philippines

2005a 2006a 2007a 2008a 2009b 2010c 2011c 2012c 2013c 2014c





Healthcare spending (P bn) 171.0 190.0 211.0 242.0 282.0 297.0 335.0 383.0 435.0 486.0









SingaporeDespite the relatively low level of spending on healthcare in Singapore, the island state’s health indicators are good

Spending on healthcare in Singapore is relatively low as a percentage of GDP: at an estimated 4.1% in 2009, it is below the average of around 5.3% of GDP in the Asia and Australasia region. Spending will

edge upwards in the next few years, rising to 4.3% of GDP in 2014. This represents a projected 50% rise on 2009 spending in local-currency terms. Healthcare spending by the public sector currently stands at around 0.9% of GDP, with most spending by the private sector coming through savings and insurance funds run by the government.

Average life expectancy at birth was 81.9 years in 2008; for males, it was an estimated 79.3 years, and for females 84.7 years. This compares favourably with average life expectancy of around 73 years in Malaysia and Thailand, 78.1 years in the US and 79.1 years in Germany. The rate of infant mortality stood at 2.3 per 1,000 live births in 2008, down from 3 per 1,000 in 2000. Singapore in general has a developed-countryprofilefordisease.

SpendingThe majority of Singaporeans are covered by the three major government-operated healthcare financing schemes, known as the 3Ms: Medisave, Medishield and Medifund

Medisave is a simple national savings scheme designed to enable patients to save income for future healthcare expenses. At end-2008 there were 2.9m Medisave accounts, the average balance of which stoodatS$14,900(aroundUS$10,600).Medishieldisalow-costinsurancescheme,premiumsforwhichcan be paid out of Medisave accounts, and is aimed at providing patients with cover in the event that balancesinMedisaveaccountsareinsufficienttomeethealthcareexpenses.Attheendof2008,84%of the population were Medishield members, with the ratio for the working-age population standing at 93%.Medifundisanendowmentfundthatisfinancedbythegovernmenttoprovideasafetynetforthosewho cannot afford their part of subsidised healthcare expenses. The Private Medical Insurance Scheme, which allows private insurers to offer medical insurance to members of the Central Provident Fund (a compulsorysavingsschemetofinancepensionpayments)andissimilartothatofferedunderMedishield,has around 500,000 members.

Demand for care for the elderly is expected to increase steadily, and the government is making progress in terms of managing this. In 2002 it introduced Eldershield, an insurance scheme aimed at providing payments to cover private nursing-home expenses, and by end-2008 there were 835,000 policyholders.

Direct government spending on healthcare has risen in recent years. In 2008/09 its recurrent healthcare spending amounted to S$2.4bn (around US$1.7bn) and its development healthcare spending to S$339m. This was equivalent to around 1.1% of GDP and 7.1% of the total public expenditure budget.



At the onset of the 2009 economic recession the government sharply increased the 2009/10 budget allocation for the health ministry, raising it to S$3.7bn, nearly S$1bn more than the allocation for 2008/09.

PolicyThe government’s healthcare policy aims to encourage self-reliance, keep healthcare affordable and involve community-based facilities.

Singapore had 29 hospitals in 2008, with 14 in the public sector and 15 in the private sector, according to the health ministry. The total capacity of these hospitals in 2008 was 11,457 beds. The public sector is more important than the data suggest: although there are slightly fewer public hospitals, their average size,at590beds,isgreaterthanthatofhospitalsintheprivatesector(whichhaveanaverageof210beds).Therewere1.6doctorsand4.8nursesandmidwivesper1,000peoplein2008.Theratiosofdoctorsand hospital beds per 1,000 people are above the global averages.

Governmentfiguresfor2008showthattherewerearound330,000admissionstopublichospitalsinthatyear,comparedwitharound106,000admissionstoprivatehospitals.Inaddition,public-sectorspecialist outpatient clinics served 3.8m patients in 2008, while public-sector outpatient polyclinics (multipurpose clinics) had nearly 4m patients. The private sector accounts for over 75% of all primary healthcare services, with government primary-health clinics accounting for the remaining share. The government subsidises 50% of the treatment cost at public-sector clinics.

Expensive medical treatments, including non-essential cosmetic treatments, are not available in public hospitals. The health ministry determines the charges for any kind of medical treatment. The government introduced the Casemix system of funding in public hospitals in 2000, under which funds are distributed

Healthcare indicators: Singapore

2005a 2006a 2007a 2008a 2009b 2010c 2011c 2012c 2013c 2014c





Healthcare spending (S$ bn) 7.0 7.5 10.0 10.3 10.3 11.1 12.2 13.1 14.1 15.4



Healthcare spending (US$ per head) 992.0 1,075.0 1,440.0 1,510.0 1,414.0 1,563.0 1,713.0 1,788.0 1,873.0 2,014.0







accordingtothetypeofmedicalconditionandthedifficultyoftreatingit,aswellasthefrequencyofitsoccurrence.

Building on the world-class reputation of Singapore’s health services, bolstered by its growing clinical research and biomedical industries, the government is promoting the local healthcare industry as a regional centre of medical excellence. It is also keen to promote not only general surgery and medicine but also specialist services, including organ transplants and cardiology.

DiseasesSingapore in general has a developed-country profile for disease, with cancer, cardiovascular diseases and strokes accounting for over 60% of deaths

SingaporestruggledalongsidemanyothercountriesworldwideincopingwithoutbreaksofinfluenzaA(H1N1),oftenknownasswineflu,in2009,butbyearly2010concernsoverthepotentialthreatfromthevirushaddiminished,withthehealthministrystatingthattherewerenosignsofasignificantriseininfluenzaprevalenceinSingapore.ThegovernmenthasalsoestablishedPandemicPreparednessClinics—in essence, primary-healthcare clinics—as a central part of the health ministry’s pandemic response framework.Italsocommencedaswine-fluvaccinationcampaigninlate2009.Singaporewillremainvulnerable to highly contagious viruses owing to its position as a regional business and tourism hub.

Asidefromtheinfluenzathreat,Singaporeingeneralhasadeveloped-countryprofilefordisease,withcancer,cardiovasculardiseasesandstrokesaccountingforover60%ofdeaths,accordingtothehealthministry. Despite government health campaigns, there is no reason to believe that Singapore’s disease profilewillchangesignificantlyinthecomingyears,althoughproblemsassociatedwithobesityareexpected to increase.

Source: EIU Healthcare Report February 2010



South KoreaHealthcare spending is low by OECD standards and a rapidly ageing population will put further pressure on the system

Total healthcare spending in South Korea is among the lowest in the OECD, at an estimated US$971 perheadin2009,orabout6%ofGDP—comparedwithanaverageofaround9%inotherdeveloped

countries. Healthcare spending as a percentage of GDP is expected to increase, reaching W84.7trn (US$79bn),or6.5%ofGDP,in2014.(However,inUSdollarterms,therewillbeafallinspendingin2009,owing to shifts in the exchange rate.)

SouthKorea’spopulationisageingrapidly.EstimatesfromtheNationalStatisticsOfficesuggestthattheshareofthepopulationover65yearsofageiscurrently11%andthatthelevelwillsoonreach14%,atwhichpointthecountrywillbecomean“agedsociety”asdefinedbytheUN.By2050theratioisexpectedto exceed 38%. This will put pressure on the health system. Life expectancy has been rising steadily in recent decades, to stand at an estimated 79 years in 2009. The infant mortality rate in South Korea has also fallen markedly.

At 1.7 doctors per 1,000 people in 2008, the doctor-to-patient ratio is low by OECD standards, although this represents an improvement from 0.8 at the beginning of the 1990s. The nurse-to-patient ratio is also low, at just 4.2 nurses per 1,000 people in 2007, putting South Korea ahead of only Turkey and Mexico in theOECD’srankings.Hospital-bedprovisionhasriseninrecentyears,reachinganestimated6.6bedsper1,000 people in 2009.

SpendingA universal health-insurance system—financed by employer and employee contribution, and government subsidies—covered 96.3% of the population in 2007, while a medical-aid programme, financed from general taxation, exists for the remaining 3.7%.

Despite universal coverage, public satisfaction with the health system is low because of long waiting lists for treatment and high costs. Treatment is not completely free at the point of delivery and, at anything from 10% to 50% of costs, co-payments by patients can be high. Furthermore, not all medical services are covered by the National Health Insurance (NHI) system. The NHI contribution rate by employees iscurrentlysetat5.08%ofsalary.Thegovernmentannouncedinlate2008thatitwouldfreezethecontribution rate at its current level in 2009. However, we expect the rate to continue to increase in 2010-14.

The split between public and private spending within healthcare expenditure is almost even, with public spending accounting for an estimated 52.7% of the total in 2008, according to OECD indicators. Around 90% of specialist doctors and healthcare institutions are private. The public sector’s role in provision is limited to basic primary-care services delivered through health centres. Patients may choose



Healthcare indicators: South Korea

2005a 2006a 2007a 2008a 2009b 2010c 2011c 2012c 2013c 2014c





Healthcare spending (W trn) 51.9 59.1 55.8 59.9 62.2 65.8 71.4 75.5 81.0 84.7



Healthcare spending (US$ per head) 1,049.0 1,269.0 1,226.0 1,105.0 971.0 1,086.0 1,191.0 1,286.0 1,454.0 1,578.0

Healthcare (consumer expenditure; US$ bn) 22.9 27.3 30.6 28.4 23.7 26.6 30.2 34.1 39.9 45.8




their healthcare provider, and often go directly to specialists. Private providers are mostly paid on a fee-for-service basis, according to a standardised set of charges. Although hospitals may not operate for profit,theytendtoberunalongcommerciallines.

Because patients are allowed unrestricted access to hospitals, simple ailments are often treated inefficientlyandexpensively,withunnecessary(oroverlylong)staysinhospital.Theneardoublingofbed-days for in-patients, from 12m in 1998 to more than 21m in 2008, against a background of continuing improvements in public health, bears witness to this. The fact that around 90% of medical establishments arefor-profitprivateinstitutionsfurtherexacerbatesthistrend.Thecreationoflong-termnursing-careprogrammes should drive the expansion of care facilities for the elderly (as it has in Japan), helping to take some of the pressure off hospitals.

PolicyRising demographic pressures and chronic inefficiencies in the healthcare system are forcing the government to focus on cost management, despite the already low level of spending on healthcare relative to the size of the economy.

Reforms in 2000 changed the way in which prescription drugs were dispensed, removing the economic incentive to overprescribe and misuse medications, but healthcare expenditure has still continued to rise. Doctors’ fees have had to be raised to cover the loss of income from dispensing, the number of formal prescriptions has increased at the expense of self-medication, and more branded medicines are nowbeingprescribedattheexpenseofgenericsbecausedoctorsnolongerhaveafinancialincentivetoprescribecheaperdrugs.Thishasbenefitedforeignpharmaceuticalcompanies.Thegovernmenthas employed other cost-containment measures in recent years, including so-called actual transaction pricing, under which hospitals are reimbursed for the actual price that they pay for a drug.



In an attempt to promote South Korea’s appeal as a tourist destination, the government is seeking to boost medical tourism, copying a model that has been successful in other Asian countries. The Council for Korea Medicine Overseas Promotion targets Korean-Americans without health insurance (whose healthcare costs can be the highest in the world), as well as Chinese and Japanese people seeking cosmetic surgery. The government has made plastic surgery for health tourists tax-deductible, and is investing W1.2bn in promoting South Korea as a regional centre for plastic surgery.

DiseasesAccording to the World Health Organisation, the leading causes of death are cancers, cardiovascular diseases and digestive diseases such as liver cirrhosis.

At around 79 years, life expectancy at birth in South Korea is high by the standards of most countries in Asia. South Korean longevity owes much to the huge improvements in water supply, sanitation, housing and diet that have accompanied the country’s rapid economic growth. However, South Koreans are more likely to commit suicide than nationals of any other OECD country. In 2007 the number of people with cancer reached 493,584, or over 1% of the population. The high incidence rate is partly attributed to the high number of daily smokers, as well as better diagnostic capabilities and an ageing population.

Thegovernmenthasalsoincreaseditsbudgetforresearchintoinfectiousdiseases,afterthefirstcaseofA(H1N1),otherwiseknownasswineflu,wasrecordedinMay2009.Bymid-SeptemberSouthKoreahadrecorded ten deaths from the disease.

Source: EIU Healthcare Report October 2009



TaiwanRecent increases in health expenditure have been a result of rising incomes, the growing incidence of prosperity-related chronic illnesses, such as heart disease, and the rapid ageing of the population.

In 2009 healthcare spending per head in Taiwan was estimated at US$1,074, and total healthcare spendingaccountedforaround6.6%ofGDP.Accordingtothehealthdepartment,theproportionof

Taiwan’s national income spent on healthcare has been rising consistently in recent years. Spending on pharmaceuticals is high, at around US$220 per person per year. Healthcare expenditure dropped in both US dollar and local-currency terms in 2009 thanks to the global recession, but is expected to rise steadily in the forecast period as the population ages and incomes rise.

SpendingAlthough medical coverage is almost universal under the mandatory National Health Insurance (NHI) system, it faces constant financing challenges

Nearly all of the hospitals in Taiwan have a contract with the NHI programme and are reimbursed on a fee-for-servicebasis.TheNHIoffersacomprehensivepackageofbenefits,includingoutpatientandinpatientcare, preventive care, dental services, Chinese medicine services and prescription drugs. The system is financedthroughapayrollpremiumthatispaidbycompaniesandemployeesandgovernmentsubsidies.Co-paymentsarerequiredforoutpatientandinpatientcare.Theseincludefixedfeesforoutpatientvisitsand between 10% and 30% of hospital costs, depending on the length of stay. Certain categories of patient are exempt from these charges.

ThefinancesoftheNHIarepoor,andoverallcontributionratesarenothighenoughtoprovidethequality of coverage that many in the population would like to receive. Since its inception, the Bureau of National Health Insurance (BNHI) has introduced a number of measures to boost revenue and cut costs. Theseincludetheintroductionofaco-paymentsystemin1999.In2006and2007theBNHIloweredtheprices of thousands of reimbursable drugs.

Thefinancesofthesystemwilleventuallyneedtobereformed.Morefundamentalchangeisessentialas the rapidly ageing population leads to a steady increase in demand for drugs and medical care. The public sector accounts for around two-thirds of healthcare expenditure, largely through the NHI system. Spending on the NHI programme reached close to 4% of GDP in 2007. Most private-sector spending goes towards outpatient facilities, although inpatient services and pharmaceutical costs, both Western and Chinese, are also important elements.



Healthcare indicators: Taiwan

2005a 2006a 2007a 2008a 2009b 2010c 2011c 2012c 2013c 2014c





Healthcare spending (NT$ bn) 738.0 779.0 832.0 829.0 809.0 840.0 899.0 951.0 1,004.0 1,067.0



Healthcare spending (US$ per head) 1,017.0 1,057.0 1,118.0 1,158.0 1,074.0 1,142.0 1,243.0 1,348.0 1,458.0 1,587.0





PolicyWith citizens enjoying good healthcare, Taiwan appears to be increasingly keen to capitalise on local medical skills by encouraging health tourism from elsewhere in the region.

Taiwan had 23,874 medical care institutions in 2008. The largest number of these provided Western medicine(9,910),followedbydentistry(6,031),pharmacies(4,180)andChinesemedicine(2,888).Most hospitals, and an even greater proportion of clinics, are privately owned, and many are small. In 2006therewere547hospitals,ofwhich96%practicedWesternmedicine.Inrecentyearstherehasbeenagradualfallinthenumberofhospitals,butthesurvivinginstitutionshavegrownsignificantlyinsize.In2006therewere131,152hospitalbeds,althoughthenumberofbedsinprivatehospitalswas approximately twice the amount as in public hospitals. Taiwan residents make frequent visits to the doctor,asthoseintheNHIfacenofinancialpenaltiesoradditionalcostsforexcessiveuseofthesystem.Healthcare availability in Taiwan is generally good: there were an estimated 1.5 doctors per 1,000 people in 2009, compared with 1.7 in South Korea.

To curb costs, the government has put pressure on drug prices and declared in 2005 that the insurance system would no longer cover expenses for non-prescription drugs, such as cold and cough medicines. The government has also used reimbursement schemes and licensing regulations to protect local drug manufacturers. Counterfeit drugs are estimated to account for up to 20% of the market, according to unofficialindustryestimates.Alaxattitudetowardsuncoveringandprosecutingthosewhomakeandretail counterfeit products has undermined the threat of legal counter-measures, and sentences for producing counterfeit drugs are particularly light.

Inabidtoattractmorehealthcaretourists,inlate2006theCouncilforEconomicPlanningandDevelopment (CEPD) announced a plan worth NT$10.5bn (US$328m) to develop local medical services,



particularly in areas such as health checks, laser eyesight correction, plastic surgery, dentistry and traditional Chinese medicine. Taiwan is a latecomer to this area (Thailand and Singapore already have successfulhealthtourismsectors),butitseemskeentosucceed.CEPDofficialshavesuggestedthatTaiwan could establish hospitals in Vietnam or even Mongolia to export medical skills.

Less than a year after it approved the creation of the Taiwan Food and Drug Administration (TFDA), the Taiwan government has said that the agency will be formally inaugurated on January 1st 2010. The announcement of this date was made at a meeting of a governmental committee on strategies to develop the biotechnology sector, underscoring the main motivation for this initiative.

The aim is to bring regulatory procedures governing the pharmaceutical and biotech sectors in line with those in major regional markets such as China, South Korea and Japan in order to improve export prospects. Crucially, the TFDA will also aim to make Taiwan a more attractive investment prospect for multinational pharma and bio-pharma players.

DiseasesAccording to the health department, the main causes of death in 2006 (latest available data) were cancer (accounting for 28.1% of all deaths), strokes (9.3% of total deaths), heart disease (9.1%) and diabetes (7.2%).

The people of Taiwan are among the healthiest in Asia. In 2009 estimated average life expectancy on the islandwas75.1yearsformenand81.0yearsforwomen.TheequivalentfiguresformenandwomeninSouth Korea are similar.

Outbreaksofdiseasessuchassevereacuterespiratorysyndrome(SARS)andavianinfluenza(birdflu)haveputadded,albeittemporary,upwardpressureonhealthcarespending.Inaddition,33peopleareestimatedtohavediedfromswineflu,orA(H1N1),inTaiwan,andthegovernmentisrollingoutanationwide vaccination programme.




ThailandThe standard of healthcare in Thailand is relatively high, but there are considerable regional disparities, as well as differences between public and private provision.

As a percentage of GDP, healthcare spending in Thailand has remained at around 3.3% in recent years, below the estimated level in China (of 4.7% of GDP in 2009), Singapore (4.1%) and Malaysia (4.3%),

but close to that in the Philippines (3.8%) and above that in Indonesia (2.8%). Thailand is ranked 87th in theUNDP’s2009HumanDevelopmentIndex,belowSingapore(23rd)andMalaysia(66th),butabovethePhilippines (105th) and Indonesia (111th). Life expectancy at birth stands at around 73 years, up from around68yearsin1990.

Demand for healthcare has grown in line with an ageing population, increasing life expectancy and the introduction of a universal healthcare programme. The programme, while popular, is straining public finances.

SpendingDespite a rise in funding, hospitals and other providers complain that the universal healthcare system is underfunded.

Demand for healthcare services has increased in line with the introduction of a universal healthcare programme in October 2001. Even so, the Economist Intelligence Unit expects spending to fall in both local currency and US dollar terms in 2009 as the economy contracts, although healthcare spending as a percentage of GDP will remain steady. Following the recession, we expect spending to rise rapidly, reaching US$11.9bn in 2014, up from US$8.3bn in 2009.

Thegovernmenthasmadeseveralchangestotheprogramme’sfinancingaspartofitseffortstoextend patient access while simultaneously closing the funding gap. Under the original programme, even patients without any health insurance could visit public hospitals and pay just Bt30 per visit, with the remaining cost of the treatment being borne by the government. After the military coup in September2006,thenewgovernmentkeptthepopularschemeinoperation,andabolishedtheBt30feeinNovember2006.

Accordingtothepublichealthministry,in2006around48%ofthepopulationwascoveredundertheuniversalhealthprogramme,19%enjoyedcivilservicebenefitsand13%weremembersofthesocialsecurity scheme. The remaining 20% opted for private healthcare, either because they were not covered by any of the public healthcare schemes or because they chose not to be covered.



PolicyThe public health ministry has been allocated Bt86bn as part of the stimulus package in 2008, most of which will be spent on rural hospitals and healthcare centres

The healthcare sector includes around 1,200 hospitals, of which around two-thirds are in the public sector. In 2009 Thailand had an estimated average of 2.1 beds per 1,000 people, higher than the 1.8 bedsthatareavailableinMalaysia,1.7inVietnam,0.9inthePhilippinesand0.6inIndonesia,butlowerthan the 2.5 available in Singapore. It is estimated that there were just 0.3 doctors per 1,000 people in Thailandin2009,thesameasIndonesia,butfewerthanthe0.6inVietnam,0.8inMalaysia,1.2inthePhilippinesand1.6inSingapore.

Although the universal healthcare scheme has proved popular among patients, the policy has been widely criticised by participating state hospitals and other healthcare providers who say that the subsidy doesnotreflectthetrueaveragecostperpatient.Therearesignsofanemergenceofadual-trackhealthcare system, whereby the state portion lacks investment and resources as the private sector invests and upgrades to maintain international competitiveness.

However, the government intends to spend large sums on healthcare development projects. In November 2008 the government that was led by the previous prime minister, Somchai Wongsawat, announced that it had approved ten projects requiring a combined investment of Bt105.5bn (US$3.1bn). It aimed to upgrade human resources in public-health services, upgrade community medical centres and hospitals,andcreatespecificcentresforcardiaccare,cancertreatmentandemergencytreatment.ThepublichealthministryhasbeenallocatedBt86bnaspartofthestimuluspackage,mostofwhichwillbespent on rural hospitals and healthcare centres.

Therehasbeenalargeincreaseinthenumberofprivatehospitalsinthepastfewyears.Asignificantproportion of private hospitals’ revenue comes from services administered to foreigners. The number of

Healthcare indicators: Thailand

2005a 2006a 2007a 2008a 2009b 2010c 2011c 2012c 2013c 2014c





Healthcare spending (Bt bn) 248.0 274.0 281.0 301.0 285.0 299.0 319.0 338.0 360.0 383.0










foreign patients treated in Thailand reached around 1.4m in 2008, and the commerce ministry forecasts that the number will grow to 2m by 2010. In 2008 Thailand earned about Bt70bn from medical tourism, of which Bt20bn went directly to hospitals.

The pharmaceutical sector, which is regarded as well-developed and dynamic, is also facing problems owing to the universal healthcare programme. Manufacturers complain that they are being forced to cut profitmarginsbecauseofthehealthsystem’sfundingcrisis,andforeigncompanies(whicheitherimportpharmaceuticals or manufacture them locally) report that the demand for premium products is falling.

DiseasesThailand continues to confront the challenge of preventing the spread of HIV/AIDS, which in the early 2000s emerged as the country’s leading cause of death.

ThailandwasoneofthefirstcountriesinAsiatolaunchacampaigntoraisepublicawarenessofHIV/AIDS,andrecentdataconfirmthecampaign’seffectiveness.Thepublichealthministryhasestimatedthe number of new cases in 2008 at around 13,000, down from 140,000 in 1987. However, despite the downward trend, the rate of new infections is increasing among several groups. Other leading causes of death in Thailand include heart diseases and diabetes.

Sinceearly2004Thailandhasrecorded17humandeathslinkedtooutbreaksofavianinfluenza(birdflu),themostrecentofwhichoccurredinAugust2006.Althoughtheincidenceofthediseasedoesnotyet pose a problem for healthcare provision, there is a risk that the disease will spread more rapidly or mutate into a form that would facilitate human-to-human transmission. In 2007 the government formulatedastrategytoprepareforabirdflupandemic.

Inmid-2009ThailandstruggledtocopewiththeoutbreakofinfluenzaA(H1N1),alsoknownasswineflu.Despitethefactthatthedeathtollremainedrelativelylow,theoutbreakstirredadegreeofpanicinthecountry,andconfidenceinthegovernment’sabilitytocontainthevirusdeteriorated.

Source: EIU Healthcare Report November 2009



VietnamProvision of healthcare in Vietnam is respectable in terms of health indicators such as life expectancy and infant mortality but the poor provision of health services in rural areas is reflected in the health equitability rankings from the WHO, which puts Vietnam 183 out of 194 countries

Healthcare spending as a percentage of GDP has risen slightly in recent years, to reach an estimated 3.7%in2009.SpendingperheadonhealthcareisforecasttorisetoUS$64by2014,froman

estimated US$39 in 2009. Despite this increase, spending per head will remain low in 2014, compared with levels of around US$357 in China and US$170 in Thailand. Consumers will devote greater resources to improving health standards in 2010-14, in line with rising average incomes per head and a growing awareness of medical problems and available treatments. However, access to healthcare in some rural areas will remain inadequate. The government will continue to focus on providing greater access to health insurance, which in mid-2009 covered just 44% of the population.

Life expectancy was estimated at around 72 years in 2009, below that in several of Vietnam’s more developed neighbours. The rate of infant mortality is estimated to have fallen to 22.9 per 1,000 live births in 2009, down from 31.2 ten years earlier, but slightly above the rates in China (20.2 per 1,000) and Thailand(17.6).

SpendingPrivate expenditure on healthcare is increasingly common, owing to poor service provision in the state sector

The government carries out around 30% of total expenditure on healthcare. In 2009 government spending on healthcare totalled an estimated US$2.2bn.

Households currently account for the remainder of all healthcare spending. Long-term health protection is becoming more of a concern, with an increasing number of people purchasing voluntary healthcare insurance. This trend will continue, with growing demand met by a wider array of health insurance options, which will become more readily available as the insurance sector develops.

The number of people covered by the state’s health insurance scheme has risen rapidly in recent years, but in mid-2009 only 44% of the population had health insurance coverage. The scheme, administered by the Vietnam Social Insurance Agency, is in place for employees of state-owned enterprises and many private companies. Under the scheme, employers and employees pay 4.5% of salaries into the scheme (with the employer contributing two-thirds of the total and the employee the remainder). The government provides the poor with health insurance under its Healthcare Fund for the Poor. The government hopes that all Vietnamese will be covered by national health insurance by 2014. However, this target appears unrealistic, given the severity of the problems hindering health services provision, not least of which is the limited availability of services in rural areas. Funding constraints will also hamper



the government’s efforts to achieve universal health insurance coverage by 2014.

PolicyMany public healthcare centres struggle to operate effectively because of poor local infrastructure and inadequate equipment.

The healthcare system in Vietnam is generally of a low standard and, according to the WHO, more than one-halfofVietnamesearedissatisfiedwithit.Thehealthministryprovideshealthcareservicesthrougha system divided into several tiers, namely village, commune, district and provincial. Health centres and hospitals exist at the district level (covering a population of at least 20,000). Provincial hospitals provide specialist services.

According to the latest government data, at end-2008 Vietnam had 974 hospitals with a total of nearly 152,000 beds. (Including other state medical establishments, such as regional polyclinics and commune medical-service units, there were nearly 220,000 beds at end-2008.) It is hoped that by 2015 the number of hospital beds will rise to 25 for every 10,000 people. The expansion in private medical services, which are now an integral part of Vietnam’s healthcare system, will help to improve access to health services. Privatehospitalscurrentlyaccountforjust6%oftotalhospitals,butthegovernmenthopestoraisethisto 10% by the end of 2010.

Healthcare indicators: Vietnam

2005a 2006a 2007a 2008a 2009b 2010c 2011c 2012c 2013c 2014c





Healthcare spending (D trn) 25.8 33.1 40.0 51.7 60.5 67.2 75.4 86.9 98.3 111.8










DiseasesAlthough to date the government has succeeded in containing the spread of the H1N1 virus in humans, the risk of a human epidemic, and the consequences that it would have for Vietnam, should not be underestimated

The government is taking measures to try to prevent the spread of the A(H1N1), virus, commonly known asswineflu.AtotalofD140bn(US$7.8m)hadbeenallocatedtopurchasemedicalequipmentanddosesofTamiflu(theantiviraldrugthatisregardedasthemosteffectivetreatmentforhumansinfectedwiththevirus), and also for setting up isolation wards. The outbreak in Vietnam is a particular worry, given that thecountryremainsatthecentreofglobalconcernsaboutoutbreaksofbirdfluandthepotentialforthevirulentH5N1strainofbirdflutomutateintoaformcapableofhuman-to-humantransmission.Birdfluclaimed more human lives in Vietnam in 2009, bringing the total number of dead from the disease to 57 since 2004.

Vietnamnowhaswell-developedprotocolsforcontainmentofthebirdfluvirus,includingcullinginfected birds, quarantining affected areas, limiting sales of live poultry in towns and cities, and vaccinating chickens and ducks. These procedures have so far kept the prevalence of the disease in poultry at a manageable level. Nevertheless, the government is preparing for a worst-case scenario, with plans to introduce a state of emergency if there is evidence of a human epidemic. Such a development would put a severe strain on the country’s healthcare system.

Vietnam has so far been spared HIV/AIDS infection rates as high as those in neighbouring countries such as Thailand and Cambodia. However, the rate of infection is still a concern: the number of Vietnamese with HIV/AIDS is around 240,000, according to the government. There are concerns that Vietnam will fail to meet its UN Millennium Development Goal of reducing the rate of HIV/AIDS infection to 0.3% of the country’s population by 2010.


Whilst every effort has been taken to verify the accuracy of this information, neither The Economist Intelligence Unit Ltd. nor the sponsor of this report can accept any responsibility or liability for reliance by any person on this report, or any of the information, opinions or conclusions set out herein.

Cover image - David Simonds

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