10 predictions for SEA’s healthtech in 2023

As the world leaves the Covid-19 pandemic behind and braces for a recession, questions linger around the future of healthtech in fast-growing Southeast Asia.

Will telehealth adoption continue its rapid rise or will it regress? How will the looming recession impact healthcare consumption? Will we see increased applications of Web3 and AI in the medical sector?

Image credit: Timmy Loen

Let’s look at some predictions for digital health in Southeast Asia in 2023.

1. Telehealth and telemedicine demand to plummet

Obviously, with Covid-19 lockdowns a thing of the past, there will be less demand for telemedicine. The vast majority of patients still prefer in-person care, according to a 2022 report by think tank Trilliant Health.

This is data for the US, but the country has all the ingredients for success as a market: consumer awareness, policy support, payment infrastructure, and a long tail of private family physician practices. If industry experts are pessimistic about the US, that doesn’t bode well for an emerging region like Southeast Asia.

2. Telehealth-centric startups will pivot

As I see it, there are two viable pivots for such companies.

First, they could switch their distribution from B2C to B2B (employers and insurance providers) to reduce customer acquisition costs (CAC) and increase low customer lifetime value (LTV).

Say a telehealth firm has a US$30 CAC, a US$10 average order value with a 20% commission fee (or take rate) on the platform, and two orders per customer per 12 months. We’re looking at a 7.5-year payback period – and that’s to achieve breakeven on just CAC.

This pivot to B2B could work in more developed Southeast Asian markets like Singapore due to the ability to get businesses to pay for a telehealth service. However, it will be much tougher to sled in markets like Thailand, Indonesia, and Vietnam, where private medical insurance penetration rates are significantly lower and the workplace wellness movement is still nascent.

The other way firms can pivot is by changing their value proposition from just telehealth to broader, usually condition-focused, virtual care – often complemented by opening up or buying physical clinics.

Again, this transition will be more feasible in markets like Singapore. However, an added difficulty is rising interest rates and the fact that condition-specific treatments are often episodic, leading to questions about viable unit economics and payback periods.

3. Telehealth companies pivoting to B2B will renegotiate commercial agreements

In the US, telehealth leader Teladoc is infamously known for gaining only 1% to 5% utilization out of its “per member, per month” model. This initially frothy pricing will – if it hasn’t already – increasingly shift toward a more frugal “per visit/use” model.

Is B2B distribution really a panacea? Some healthcare investors would disagree, with CAC still high when providers sell to employers.

4. SEA healthcare D2Cs will pivot to higher-value markets

5. Little consolidation in the telehealth/telemedicine space

6. Hospitals and clinics will adopt telehealth as a tool/feature

7. SaaS startups will try to make healthcare providers more efficient

8. AI in healthcare will remain all sizzle and no steak

9. Medical tourism will return and spawn new startups

10. China’s aging population will drive demand for lower-cost elderly and home care in more affordable SEA markets