Some second-tier hospitals are expanding to Tier 2 markets to unlock value.

Asia’s major hospital chains face growing competition from more affordable healthcare providers that target middle-income households, whose number is expected to reach almost 800 million by 2030.

Emerging hotspots like India, Singapore, and Vietnam are spearheading healthcare growth, driven by demographic shifts, geopolitical headwinds, rising affluence, and significant investments, according to Boston Consulting Group.

For instance, Vietnam’s Xuyen A General Hospital, which started in 2012 and operates four hospitals across the country, expanded into Tier 2 markets in the Mekong Delta and Central Highlands instead of focusing solely on metros and Tier 1 cities, it said in a report last month.

The consulting firm said Asia’s healthcare sector is a fertile ground for companies seeking to unlock value and bridge critical gaps in access and infrastructure. The region’s healthcare market is expected to reach about $5 trillion in five years and will contribute 40% to the global healthcare growth, it added.

“Despite being home to 60% of the global population, Asia accounts for only 22% of global healthcare spending, with chronic conditions such as diabetes and cancer disproportionately affecting the region,” it pointed out.

The consulting firm said mid-tier healthcare providers are expanding to developing markets instead of just serving the elite as medical costs rise. In countries like India, Vietnam, and Thailand, private healthcare remains costly despite increased government funding.

“A significant portion (38% to 48%) of expenses is still covered out of pocket,” it pointed out.

Asia’s middle-income households are projected to surge from 181 million in 2000 to 756 million by 2030. “Providers, meanwhile, are looking to streamline operations, reduce costs, and focus on delivering specialised and value-added services.”

A separate report by management consulting and technology firm ZS Associates showed that consumers are willing to embrace alternative care models if they are affordable and convenient.

“Most consumers in our survey said they’re open to receiving many forms of care from someone other than a doctor,” it said. “This includes interactions like prescription refills and referral requests, as well as more personal and high-acuity ones, such as annual exams and chronic disease management.”

Some providers such as India’s NephroPlus Dialysis Centre, a chain that specialises in renal care, focus on high-demand specialities and price treatments at about $25, which is as much as 40% lower than large hospitals in India, Boston Consulting said.

This trend is evident in Singapore, where outpatient care speeds up procedures in an overwhelmed healthcare system.

Meanwhile, the Indian government has announced that all district hospitals would have dedicated day cancer centres in the next three years. “We see an emergence of specialised models of healthcare delivery that have created focused business models at greater efficiency and lower costs,” the consulting firm added.

Questions to ponder:

How can premium hospital chains compete with mid-tier healthcare providers?

How might Asia’s healthcare landscape look by 2030 as mid-tier providers continue to expand?