Building a sustainable healthcare ecosystem
Earlier this month, Health Minister Gan Kim Yong emphasised the importance of health promotion and disease prevention as Singapore prepares to meet its long-term healthcare needs in a sustainable manner.
He succinctly defined the paradigm as a move “Beyond Healthcare to Health”.
In an earlier commentary in this newspaper, I had explained that while the move is laudable, Singapore, as yet, does not have a sustainable ecosystem for health.
We do not have healthcare business models; we have “sick care” business models with the greatest perversity being that the more sick that patients get, the more the revenue generated for healthcare providers.
So the question is: Can we develop a vibrant health-promoting and disease-prevention ecosystem?
If so, what would it be like? Given Singapore’s market orientation, such an ecosystem would be one in which private buyers and sellers engage with a “light-touch” Government as regulator and also purchaser.
Such ecosystems do not, unfortunately, exist on a national scale just yet anywhere in the world, but by building up from “first principles” here, we can get a pretty good idea of how this would work in Singapore.
Who will benefit from an effective ecosystem, one in which at-risk individuals do not end up developing diseases and individuals with chronic diseases such as diabetes do not develop complications?
It is Singaporeans of course. But as with smoking, unhealthy eating and a sedentary lifestyle, individuals discount the long-term benefits of changing their lifestyles and have limited willingness to pay to go “Beyond Healthcare to Health”.
Payers for healthcare are the other obvious group, and this includes insurers, employers and the Government.
At-risk individuals avoiding diabetes and other related diseases will obviate the need for long-term medication, while diabetics and those with other chronic conditions will minimise expensive downstream complications such as kidney failure.
There will be huge savings for payers.
But does “wellness” even work, and if so, who gains?
In a Rand study boldly titled “Do Workplace Wellness Programmes Save Employers Money?”, researchers analysing 10 years of data from a Fortune 100 company found that the company’s average healthcare costs were reduced by about US$30 (S$42) per member per month.
But of the two components of the programme, disease management (for employees who already had a chronic condition) was responsible for 87 per cent of those savings.
The US$3.80 return on investment (ROI) for every dollar spent was driven in large measure by a nearly 30 per cent reduction in hospital admissions.
However, lifestyle programmes aimed at employees who were at risk for chronic diseases had a “negative” ROI of US$0.50.
The researchers cautioned that this did not mean lifestyle management programmes were ineffective or not worth pursuing.
Rather, the benefits might be non-financial in nature and that the time horizon for them to take effect might be longer than the study period.
The implications of the Rand analysis for health ecosystem business models are clear: Firstly, there is no doubt disease management programmes are worth implementing, both for the short-term financial savings and the human suffering averted.
Secondly, employers should not hope for or expect financial ROI from lifestyle programmes.
They may improve morale and goodwill towards employers, but the financial impact will only be felt years from implementation.
It could be argued that insurers and governments which have long-term healthcare commitments should take the lead in financing lifestyle programmes.
To the Government’s credit, the Health Promotion Board has seen its budget expand substantially to play an even larger role.
Thirdly, wellness programmes should heavily leverage technology and automated engagement models to drive cost-efficiency.
Unit economics will need to dramatically plummet so that the cost per person is minimal.
This means using expensive labour only for those that really need a human touch. Everything else should be automated. This is not “pie in the sky” daydreaming; Facebook has over 1 billion active users but employs only 17,000-odd staff, or one human employee for almost 60,000 users.
Mr Nawal Roy, CEO of Holmusk — a Singapore company which offers a digitally enabled diabetes management programme called GlycoLeap — shared in a recent conference the experience of a diabetic on the platform: 600-over interactions over a six-month period but total human engagement time was less than five hours.
Technology can and needs to be a game-changer.
Another example which illustrates the ecosystem characteristics necessary is Livongo (“Live on the go”), an American digital health management company whose investors include EDBI, the investment arm of the Economic Development Board.
Livongo’s B2B2C (Business to Business to Customer) model provides diabetes management through technology and coaching, and realises three essential goals: A positive end-user experience which promotes usage and continued engagement, digital-enabled care at lower cost than existing options, and finally, outcomes measurement.
Crucially, the outcomes are also digitally enabled and demonstrate convincingly impact and ROI.
The roadmap to put Singapore on the right path to a vibrant health ecosystem would thus entail the following pieces:
Unmet needs — This is obvious, given Singapore’s pessimistic future health scenarios ; the Government estimates that without action, as many as one million Singaporeans will be diabetic by the year 2050.
Willingness to pay — Companies and insurers, including the Government as steward of MediShield Life pay service providers to offer wellness programmes to their employees or customers, who may chip in with small co-payments. Some tax offsets may be worth considering to further encourage companies.
Proof of concept and value- early adopters — be they employers (for disease management programmes) or insurers (for lifestyle programmes) — have to catalyse development and scaling up of service providers. Some investment support from Government grants, venture capital and the like as for any technology play would be valuable at this early stage in Singapore’s ecosystem maturation.
Ecosystem maturation — a viable business model would encourage more entrants. Providers would compete for business and those that prove ROI, financial or otherwise, will flourish while the rest will fold, as it should be in any competitive market dynamic.
Virtuous cycle of growth — Buyers see value in improved health outcomes and reduced healthcare spending, and this spurs further market interest, investment and growth.
Finally, the really successful providers expand globally and give Singaporeans another reason to take pride in our “Little Red Dot”.
Singapore needs health promotion and disease prevention to become more than lip service or half-hearted initiatives from corporates to tick the proverbial box.
“Wellness” can show its value to Singapore. For our health and for our financial well-being, it deserves a chance.
ABOUT THE AUTHOR:
Dr Jeremy Lim is head of the Health and Life Sciences Practice in Asia at Oliver Wyman, the global consultancy.