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Analysis: What will drive medical inflation in 2017?

The Aon Asia Market Review 2017 report forecasts a net medical inflation rate of 6% in Asia for 2017, marginally down on the 6.3% recorded last year.

Within the region several countries have the unenviable distinction of posting double digit forecast increases for 2017. These include Indonesia, Malaysia, Pakistan, South Korea and Vietnam. Conversely, the key markets of China (3%) and Singapore (8.7%) are forecast to experience significant declines in medical inflation year-on-year.

The now well-established drivers of medical inflation globally include an ageing population, the proliferation of chronic or non-communicable diseases and advanced medical technology. All of these cost-drivers are evident in Asia.

Across the region, two of the chronic diseases most responsible for lost productivity and premature death are hypertension and type two diabetes. The World Health Organisation reports that high blood pressure is the leading risk factor for death, claiming 1.5 million lives each year in southeast Asia. One in three adults in the region is hypertensive.

The Asian Diabetes Prevention Initiative reports that 60% of the global diabetic population lives in Asia, with 113.9 million adults in China affected, representing 11.6% of the adult population. In 1980, the corresponding figure was less than 1%. In India, 65.1 million adults have diabetes. These numbers give China and India the dubious distinction of having the largest number of diabetes sufferers in the world. The high prevalence of these chronic illnesses is largely attributable to modifiable lifestyle behaviours.

Evidence suggests that middle-class consumers in emerging markets increase their spending on healthcare. This is attributable to several convergent factors: adaptation of western lifestyle, demand for improved health outcomes, inadequate public healthcare systems, and proliferation of private healthcare providers inclusive of advanced medical technology.

To illustrate the above point, international consultancy firm McKinsey has forecast that consumer healthcare spending in China will grow at a compound annual growth rate of 11.6% between 2005 and 2025 with India in close proximity of 9% over the same period.

Given the proliferation of chronic illness and the contributory impact of modifiable lifestyle behaviours related to diet, exercise, alcohol, tobacco, and stress, it is encouraging to note that medical plan insurers in several markets are increasing their commitment to wellness-related services. Looking to the future, these services will need to be more targeted, both with regard to addressing the co-morbidities that are driving the claims experience and engaging those demographics most at risk.

You can download the Aon Asia Market Review here.

Posted on: 08/02/2017 UTC+08:00


News

IHH Healthcare, Asia’s largest healthcare company, has reported a loss of M$107 million (US$24.1 million) for the fourth quarter of the year on revenues that rose 15% to M$2.6 billion. It was hit by a M$335.2 million loss on the translation of non-Turkish lira borrowings, a M$53.6 million VAT claim in Turkey as well as charges of M$132.7 million on its investment in Gleneagles Khubchandani Hospital in India.
Shares in Ramsay Health Care slipped more than 3% despite the release of not only solid H1 results but also an upgrade to full year results. The shares of Australia’s largest private hospital operator fell as chief executive Chris Rex, who has helmed the company for nine years, announced that he intended to step down this year.
Vital Healthcare Property Trust, the only NZSX-listed healthcare property fund, has reported a 22.9% slip in profits for the first half of the year to NZ$45.5 million (US$32.6 million). This is thanks to considerably smaller revaluation gain than the same period last year.
Shares in aged care operator Estia Heath surged more than 14% yesterday after it posted a 17% jump in interim profits to A$19.8 million (US$15.2 million) on revenues that rose 34% to A$263.1 million.
Summerset Group, New Zealand's third-largest listed retirement village operator, has reported a 73% jump in net profits to NZ$145.5 million (US$104.2 million) driven by new retirement units built, solid demand and on the back of a significant increase in property value. Underlying profits were up 50% to NZ$56.6 million, beating the company’s positive profit warning in November.
Integral Diagnostics (IDX), Australia’s fourth largest radiology group, has reported a 5.1% decline in H1 underlying profits to A$7.5 million (US$5.8 million) on revenues that rose 7.9% to A$88.6 million. Expectations were that profits would sink as much as 10% following a market update in November.
Two board members have resigned from Mega Medical Technology, which manufactures and trades in dental prosthetics in China. Wu Xiaolin has tendered his resignation as an executive director and Jiang Feng has resigned as non-executive director. Both say that they want to devote more time to other business engagements.
Nursing staffing provider Bamboos Health Care Holdings has received approval to transfer its listing from the junior GEM board in Hong Kong to the main board. Trading will start on 1 March.



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Oxley Holdings has thrown a lifeline to embattled International Healthway Corporation (IHC), a Singapore-listed integrated healthcare services and facilities provider. The property developer and two of its senior managers have agreed a much needed convertible loan facility of up to S$50 million (US$35.3 million).
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