Covid-19’s Disparate Effects on Asia-Pacific Healthcare Markets

To say 2020 was a volatile year for healthcare throughout the Asia-Pacific region is an understatement. Hospitals and healthcare professionals faced a frontline battle against Covid-19, waves of external challenges and operational disruptions, and acute personal protective equipment shortages. Healthcare providers’ total shareholder returns were not spared the turbulence: Overall, returns declined on average, with significant disparity in value creation across Asia. Markets like India relatively outperformed others, due to strong multiple growth—share prices increased 40% to 50% in 2020, partially offset by a decline in patient volume. Meanwhile, providers in Thailand and Singapore delivered negative total shareholder returns, due to their heavy dependence on international patients.

As Covid-19 spurred lockdowns across the region in the first half of 2020, most Asia-Pacific patients deferred nonurgent care and medical tourism came to a halt, contributing to a sharp drop in occupancy. On average, bed occupancy rates fell 20 to 30 percentage points from the first to second quarter. However, as governments lifted restrictions and demand for elective surgeries climbed, most markets saw occupancy inch back toward near prepandemic levels. There were some exceptions: Malaysia experienced a resurgence of Covid-19 cases in the fourth quarter, resulting in more restrictions and sustained low occupancy rates.

When patient traffic declined, so did hospital revenues. As governments reduced restrictions in the second half of the year, revenues rose to around 85% to 120% of prepandemic levels. However, the pace of recovery differed by market. Following the initial Covid-19 outbreak, China had the earliest dip and rebound in revenues compared with other geographies. In Thailand, where large private providers depend on medical tourism for about 30% to 65% of their revenues, the recovery was much slower. Malaysia’s recovery also suffered from the country’s multiple lockdowns. And Indonesian providers had the strongest comeback at the end of 2020, supported by government reimbursements.

Despite a year of instability, we expect Asia-Pacific healthcare providers to see more favorable performance metrics in 2021 and 2022 as strong demand returns and providers work through the pandemic-induced backlog of patient visits.