As hospitals in APAC recover from the COVID-19 pandemic – stabilizing their finances and returning to elective procedures and routine patient care – executives are looking to medtechs to become strategic partners in meeting increased demand for elective procedures and enhancing digital engagement. That spells opportunity for the medtech sector.
Hospital executives’ expectations for medtech are detailed in L.E.K. Consulting’s third annual survey and analysis of hospital priorities in APAC. The 2022 survey engaged more than 400 hospital executives of both public and private providers in eight key markets: China, India, Indonesia, Thailand, Japan, Australia, South Korea and Singapore.
The survey paints a picture of hospitals in the region that are getting back to normal operations – and resuming expansion – after two years of pandemic disruption. According to the survey, elective procedure volumes are returning to pre-pandemic levels across most APAC hospitals, with more growth expected in coming years. Hospital finances reflect the recovery. Eighty to ninety percent of hospital executives report they have achieved a balanced budget or positive EBITDA margin.
Trend 1: Hospitals are shifting from COVID-19 recovery back to fundamentals
With finances stabilizing, executives’ focus is shifting back to fundamentals such as better clinical outcomes and improved operational efficiency. Expansion is back on the boards. Expansion plans include investing in patient-facing digital solutions and expanding existing facilities or building new ones. Clinical areas slated for expansion include radiotherapy and general surgery.
Executives recognize that medtech will be central to these expansion plans and expect to increase their spending on medical devices and ramping up digital capabilities through investments in physician support systems, patient-facing digital solutions such as telemedicine and e-dispensing, diagnostic imaging equipment and back-end IT systems.
Now that financial optimism has returned, hospital leaders are less focused on cost containment. A significant number of APAC hospital executives are looking for partners, not just vendors – one-third reported they would prefer a relationship in which medtech companies help the hospital achieve its goals, beyond just providing products.
Trend 2: Expanding digital capabilities to augment hospitals’ clinical operations
In digital solutions as well as devices, medtech opportunities are shifting and expanding. Over 50% of APAC hospital executives report they are either already trialing or are interested in expanding their digital offerings to support both patients and physicians.
Increased staff efficiency and capacity and increased patient satisfaction are hospital executives’ goals for digital health solutions expansion – a shift in focus from 2021 when the focus was on reducing medical errors. But leaders worry about patient privacy (63%, up from 38% in 2021) and incompatibility between digital solutions (45%, up from 36% in 2021).
Trend 3: Increasing acceptance and adoption of digital channels for patient and physician engagement
Digital supplier engagement appears to be well accepted across APAC and is expected to complement physical visits going forward. The pandemic appears to have accelerated acceptance of digital solutions for patient engagement – not surprising given the pandemic-related upsurge in telemedicine. Physicians in hospitals that treated COVID-19 patients showed greater acceptance for digital engagement.
While the results spell increased opportunity for the medtech sector in the APAC region, the survey also raises several key issues for medtech leaders and investors to consider: their supply-chain resilience and capacity to meet pent up demand; ability to localize digital capabilities in the region’s different markets; ability to continue to create high-margin solutions and hardware commoditizes (including how to invest to accomplish that), and how to navigate shifting hospital priorities and achieve more efficient and effective partnerships.
The ability to meet these challenges will determine which medtechs stand out in APAC in 2022 and beyond. For more details, please download L.E.K. Consulting’s 2022 Hospital Priorities study – Implications for Medtechs.
Arnaud Bauer, Head of Southeast Asia
Calvin Wijaya, Principal
Mei Young, Senior Manager