Australia’s Healthcare Has Good Vital Signs, But Sustainability, Costs And Sources Of Funding Are Critical Areas, Says Frost & Sullivan

– Onus to shift to consumers for healthcare spending as an aging population, chronic diseases and healthcare expenses grow

SYDNEY, March 24, 2015 /PRNewswire/ — In 2013, Australia’s healthcare per capita hit A$6,200 per annum, making up 9.3% of GDP. This ranks the highest in the Asia Pacific region in terms of expenditure per capita; and second highest as a percentage of GDP; exceeded slightly only by Japan. From 2013 to 2020, Australia’s spending is expected to increase at a CAGR of 3.2% from A$190 billion in 2013 to A$238 billion in 2020, accounting for nearly 10% of GDP then.

Rhenu Bhuller, Partner and Senior Vice President, Healthcare Asia Pacific, Frost & Sullivan

Rhenu Bhuller, Partner and Senior Vice President, Healthcare Asia Pacific, Frost & Sullivan

In 2013, Australia’s public expenditure was 68% after Japan in first place at 83% and Thailand second at 76%. Healthcare expenditure broken down by sector was 38% in hospitals, 36% in primary care, 20% in capital expenditure and 6% in other recurrent areas. Primary healthcare expenditure increased 61.8% in the last 10 years.

"Naturally with these statistics, sustainability of current levels of expenditure, cost management, and sources of funding are essential factors that need addressing. Privatization of government health service and government funded R&D will be strong focus areas," said Rhenu Bhuller, Partner and Senior Vice President, Healthcare, Frost & Sullivan Asia Pacific.

"While Government spending will focus on development of public healthcare infrastructure, adoption and implementation of technology and chronic and infectious diseases control and treatment, private healthcare spending is expected to see consistent growth to 2020 with out-of-pocket spending expected to rise at more than 8% each year," said Bhuller.

State and territory government funding for hospitals have increased by 78.6% over the last 10 years while non-government expenditure on hospitals increased by 88.6%. In 2013, Australia had 1,355 hospitals, and this is expected to grow largely through more public-private partnerships; such as the Bendigo Hospital and HP with the Royal Adelaide Hospital.

68% of healthcare funding was by the government, whilst the 32% of non government spending was contributed to by 26.3% out-of-pocket, 11.8% private insurance and 8.5% others. Over 2012 and 2013, out-of-pocket spending in Australia grew 8.2% and non-government spending increased 10%. Year-on-year growth in both these areas was more than government spending, indicating the increasing contribution from individuals in healthcare payments.

An aging population and rising incidence of chronic conditions like cardiovascular and pulmonary diseases are forcing the government and healthcare providers to take a two pronged approach towards improving health quality and reducing cost of care through exploring chronic disease management programs that help patients stay out of the hospital; and adopting Population Health Management programs that reduce disease cost and risk over a sizeable population. "Moving healthcare delivery from hospitals to primary and community care is a prerogative for the government. Various public and private providers are exploring technology-based solutions to improve efficiency of healthcare services, as well as drive changes in consumer behavior towards preventive healthcare," Bhuller said. Aged care products and services in areas like home healthcare and remote patient monitoring will be crucial to support independent aging and aging in place. 

The key trends for healthcare in Australia will be that increasingly, consumers will be given responsibility for health, complementary therapies will gain recognition, competition in aged care will intensify, integrated platforms will be a necessity for chronic disease management and a rise of GP super clinics will be inevitable to reduce the load on hospitals.

Complimentary Medicine (CM) includes a wide set of specialty, herbal, and natural or medicines that are regulated under the Therapeutic Goods Act 1989 and typically includes vitamins and minerals, nutritional supplements, homeopathic medicines and Chinese medicines. Scientific literature documenting the medical and cost benefits of complementary therapies is mounting and spreading awareness around wellness and healthy behaviors has the potential to yield billions in net economic benefit. Clinicians as well as regulators will encourage the use of complementary therapies in healthcare, mainly as a step towards prevention and healthy living.

Australia’s population of over 65 will almost double over the next three decades and government spending on aged care is expected to rise by almost 7% year-on-year. Frost & Sullivan expects increased M&As in this area with the sector witnessing an influx of non-traditional players. "Beyond government paid customers, aged care service providers will target the high-end segment with more sophisticated offerings; such as resort-style facilities and in-home health monitoring," said Bhuller.

An increase in chronic diseases means a social and economic burden as more people live with a compromised quality of life, and the cost of care will rise and burden healthcare services. Mobile health platforms will emerge as a vital aspect of chronic disease management and consumers will increasing need to invest in home monitoring devices and use apps and emergency response systems. Practitioners and insurers will promote mHealth platforms for chronic disease management that integrate various mobile devices, patient monitoring technologies and apps.

The Government has allocated almost A$570 million towards establishing 60 GP Super Clinics and expanding 425 existing GP, primary care and community health services. These government sponsored GP Super Clinics providers comprise integrated practices that house practice nurses, AHPs, visiting medical specialists and other healthcare providers to provide primary care services. GP Super Clinics and other models of remote care delivery, such as telehealth at pharmacies and primary care service providers are intended to help move healthcare outside the hospital, a move that Frost & Sullivan believes is crucial to manage long term healthcare costs.

Frost & Sullivan’s 2015 Healthcare outlook comprises global, APAC, individual country and Health IT sections. The full briefing was presented in Sydney on March 19, 2015.

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