This three-part series was jointly developed by Oliver Wyman and Sheares Healthcare, and serves as a guide for health ecosystem stakeholders, investors, and consumers offering a glimpse into the future of healthcare in Asia, as we envision it. In part 1, we explore the amplification of primary care and its new role. In part 2, we highlight the need for coordination and the next generation of enablement – functional capabilities and activities that support payers and/or providers in actively managing health. In part 3, we suggest the ingredients for value-based care in this region, and where Asia sits in its journey towards value.
As primary care providers take on an amplified role and hospitals become more specialized, coordination across the healthcare system can ensure that care takes place in the appropriate setting. Payers and providers must be aligned with patient needs to facilitate the right-siting of care and steerage to new and/or better value channels. This may alleviate rising costs and stretched hospital systems. Technology and the increasing availability of information can help stakeholders to coordinate care and better allocate resources and funding based on patient needs.
In Asia, many payers are multiline insurers (licensed as life insurers and general insurers) who outsource specialized administrative functions to third-party administrators (TPAs). These intermediary companies, often purely administrative organizations, perform claims processing and adjudication functions. Managed care organizations (MCOs) may also undertake some medical management functions, acting as gatekeepers from primary care to either the specialist arena or hospital care. Most functions, however, are retroactive, taking place only after a patient is in the hospital or after they’ve left. Few interventions take place before point-of-care to facilitate right-siting, for instance. Moreover, data analytics remain under-developed, with typically only aggregated insights available at a very high level. Many payers and providers do not have standardized claims reporting between them, making more active interventions or care coordination to ensure value challenging.
Exhibit: Key capabilities by types of enablement companies
Consequences of limited coordination in Asia
TPAs and MCOs providing specific capabilities such as claims administration and medical management can be grouped together as enablement companies, reflecting their role as intermediaries between payers, providers and patients. At their best, enablement companies provide all three stakeholders with services designed to enhance access to more information and integration across the system, which supports greater efficiency in the system. In Asia, however, such companies only act on behalf of the payer for a specific product and/or account. Thus, services are typically measured in terms of speed or number of claims settled rather than claims or value outcomes. The region’s payer-provider coordination remains weak. This has led to several challenges:
Overutilization of hospitals: Asian consumers are used to going direct to hospitals to receive treatment. Many Asian countries have witnessed double-digit annual increases in national healthcare expenditure over the past few years, with medical trend rates in some countries three to seven times general inflation rates. Some markets — for example, Singapore and Hong Kong — are plagued with healthcare overutilization driven by hospital-centric care sites, which tend to be high unit costs.
Misutilization or leakage: Standing at 16%, Asia’s claims leakage outpaces that of the US Medicare and Medicaid claims (10%) and global benchmarks (4%). This can be partly attributed to inappropriate claiming for unnecessary or “excessive” procedures that would otherwise not been performed. In Malaysia, for example, private hospitals billed in excess of at least 20% for medical procedures while about 10-15% of claims in Hong Kong reportedly involve some elements of fraud, including overcharging.
Underutilization of preventive care: Preventive services are underrepresented and often not funded by insurance. Such underutilization of preventive care also contributes to the high healthcare expenditure in Asia as they result in more hospital admissions, of which a significant proportion can be prevented.
COVID-19 exposed the fragile balance between hospital utilization and capacity and the increased need to better allocate resources and minimize the unnecessary and excessive use of care. As primary care providers expand into more services including preventive care and low acuity care, payer-provider coordination can facilitate more active steerage of patients away from hospitals towards these channels. A “next-generation” evolution of Asia’s current intermediary market into a more active enablement role will balance access and utilization across sites of care.
Capabilities for next-generation enablement
There are three key capabilities to develop further for the next-generation enablement companies in Asia: “smarter” administration, providing more active patient steerage, and enhancing customer-centric services.
Exhibit: Evolution of enablement companies
A. “Smarter” administration
Complete automation of routine processes and simple claims cases can reduce unit costs and eliminate manual errors in claims administration processes, such as member enrolment and servicing, eligibility verification, cashless facility, and claims handling. With greater efficiency in low-intervention activities, enablement companies can free up capacity to handle more complex cases and develop other capabilities that drive greater coordination, like data analytics.
Analytics capabilities of enablement companies are largely focused on fraud and abuse detection, with basic top-level cost and utilization analysis. Such capabilities must expand beyond this and look towards aggregating patient data across multiple provider systems and offer more sophisticated analytics on utilization and clinical outcomes to payers and providers as needed for population health analytics. Some Asian managed care organizations (MCOs) have already developed payer- and provider-facing technologies, such as MiCare’s iCare e-infrastructure where payers and providers share and analyze real-time claims and utilization reports.
B. Active patient steerage
Next-generation enablement companies can play a more interventional role in patient steerage, beyond simple processes such as the issuance of letters of guarantee. This means companies would more actively manage patients’ care before the point of claim, with an emphasis on preventive care. They would act as a medical concierge and actively manage referrals to steer patients to the right site of care, either to self-owned healthcare assets or preferred panels formed with select providers. MCOs can also leverage patient data to identify susceptible population cohorts and direct care providers to offer more targeted intervention programs. On the other hand, enablement companies can engage payers through risk-sharing. The payer pays the enablement company up to a pre-determined maximum amount for medical claims. This minimizes perverse incentives to inflate the size of medical claims and promotes the rightsiting of patients to appropriate care channels.
C. Consumer-centric services
Enablement companies should serve patients as much as they do payers or providers. In response to greater consumer demand for more transparency on provider options and the value they are receiving, enablement companies can develop consumer-centric capabilities to empower patients and encourage self-directing to appropriate care channels. This includes digital solutions focused on provider searches and rating aggregations, cost calculators for pricing transparency, and self-diagnosis that guides patients on treatment steps.
One payer example in Asia is Pulse by Prudential, where users search and make bookings for providers. Pulse also provides an artificial intelligence symptom checker and access to telemedicine services. By democratizing data to empower consumers to take more active care decisions, enablement companies in Asia can move from the periphery of the customer journey to the frontlines.
Towards an integrated payer-provider system
The abovementioned capabilities drive coordination between payers and providers and are foundational to the deeper integration of the healthcare landscape. Armed with capabilities that facilitate data sharing and analytics, promote more interventional forms of patient steerage and encourage the democratization of data, the sector can better align incentives to patient needs and take on a more integrated approach to fulfil them across different care sites. Integration — a key tenet of value-based care — may accelerate the sector’s march towards value, a concept we explore further in part 3.