Rising healthcare costs threaten Singapore's status as a medical tourism hub | Zebelle Pte Ltd

Rising healthcare costs threaten Singapore’s status as a medical tourism hub

The cost of healthcare in Singapore has been on the rise and threatening its status as a medical tourism hub. More and more patients are now seeking out other countries in the region who are offering more cost-effective treatments even as they invest in the quality of their services.

This was pointed out by RHB Research analyst Juliana Cai, who said “as healthcare costs in neighboring countries like Malaysia and Thailand are much lower, they have been attracting medical tourists from the region – thereby eating into Singapore’s market share”.

Cai added that “although there is no official data on the number of medical tourists, our channel checks with the companies under our coverage suggest that these numbers have been declining year-on-year”. He further opined that “this is a structural problem, and will continue to impact the Singapore players in the near term”.

The Republic’s escalating healthcare costs is also negatively affecting local demand. Cai explained that healthcare insurance providers no longer offer integrated shield policies with 100% medical cost coverage, hence demand for private healthcare is likely to drop and result in decreased revenue for private hospitals. She predicts that “some of the private healthcare providers’ margins will be negatively impacted, with the local government keeping tabs on rising healthcare costs, due to public discontent”.

According to the Aon Medical Inflation Index (AMII), medical inflation in Singapore has been forecasted to reach the headline figure of 10% in 2019 – above the global average of 8% – due to rising surgery costs at the inpatient level, as well as increasing diagnostic costs at the outpatient level. Aon attributed this trend to an ageing population and growing prevalence of non-communicable diseases such as cancers and cardiovascular diseases.

On top of that, a number of private hospitals, such as Raffles Medical, IHH Healthcare and Health Management International, are undergoing a capex-intensive expansion phase – which will eat into margins for the financial year 2019.

Aon Asia Pacific health & benefits CEO Tim Dwyer noted that “private healthcare systems work best in tandem with vibrant public systems (as seen) in markets such as Thailand, South Korea, and especially Singapore”. Dwyer urged for concerted cost management efforts by consumers, healthcare providers and medical insurers to come up with chronic disease management programs and carry out effective management of the outpatient claims experience. He added that “employers also have a significant part to play by investing in innovative benefits that promote wellness, and facilitate early detection of chronic illnesses such as cardiovascular disease and hypertension”.

Source: Singapore Business Review

ImageSource: Pexels

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