Digital Health: Treating industry woes one issue at a time

This article first appeared in Enterprise, The Edge Malaysia Weekly, on March 9, 2020 - March 15, 2020.
-A +A

Medicine prices in Malaysia are on the rise. According to a 2019 report published by global professional services firm Aon, medical rates in the country are estimated to have increased 13.6% last year, the highest in Asia-Pacific. For comparison, the Consumer Price Index nudged up only 0.7% during the period.

A study published by the pharmaceutical services division of the Ministry of Health (MoH) revealed that only 13% of the population receive medication free of charge under the public healthcare system. The remaining 87% have to foot their own medical bills either in cash or through payment schemes such as medical insurance.

However, drug prices are not equal across the board. An exposé published by The Star in October last year revealed that there could be as much as a 150% difference in price between the medicines sold by private clinics and hospitals and those sold by independent pharmacies.

“That is because general practitioner (GP) clinics are suffering from low, controlled medical consultation fees, which have not been revised for more than 27 years. It is extremely difficult to sustain a clinic amid the increasing overheads such as salaries, rents and so on,” says Maran Virumandi, founder and managing director of DoctorOnCall.

“Doctor consultation fees were capped at RM10 to RM35. Fortunately, the government deregulated the consultation rate last December. Hence, private-sector doctors can now determine their own consultation rates.”

Hazwan Najib, co-founder and director of DoctorOnCall, says, “Imagine studying medicine for years just to earn RM15 to RM30 per consultation. A doctor will not be able to sustain his earnings. A simple haircut would probably be more expensive than that.”

He adds that because the low consultation fees threatened the sustainability of GP clinics, the idea was to transfer the profit pool to the price of medicines. This industry practice led to a host of issues, including overprescribing and dispensing more expensive medications than required, some of which would be termed as “non-acceptable practices” by insurance companies.

 

Digitalisation as a solution

Maran and Hazwan founded DoctorOnCall in 2016 to address several underlying issues in the healthcare industry by leveraging technology and business innovation.

DoctorOnCall, also known as Health Digital Technologies Sdn Bhd, started as a medical teleconsultation and medication delivery company, which allows patients to connect with doctors online without the need to go to a physical clinic. It has since evolved to become a digital health company, providing a wider range of products and services such as e-pharmacy and health education content.

DoctorOnCall says it is the first and largest online doctor consultation platform in Malaysia. It is also the largest in terms of active users on its website, generating about a million visits, or about 800,000 monthly active visitors. It has garnered more than 100,000 medical consultations to date, through more than 100 registered doctors on the platform.

Through DoctorOnCall, patients can request for an online doctor’s consultation and obtain drug prescriptions or hospital referrals for more severe cases. With the prescriptions, patients can purchase and have their medicine delivered at 30% to 70% less than they would pay should they visit a private hospital or clinic.

For registered corporate members and insurance holders, patients can obtain medication delivery service for long-term illnesses. The website also houses health blogs and medical forums moderated by qualified medical professionals and a specialist database with which users can search for and book appointments across a network of more than 1,500 specialist doctors from over 30 hospitals.

“Users pay about RM20 to consult with a doctor online, but the doctors are not forced to diagnose or prescribe medication. Even if the doctors did not diagnose or give out medication, we still pay the doctors. So, there is a separation between prescribing and dispensing,” says Maran.

“We recruit, qualify, train and ensure high standards of doctors on our platform. We check their medical certifications and qualifications. We once had a case where a doctor consulted patients on the LRT, so we have a strict policy on the doctors being in their respective clinics or home office.”

Hazwan says, “We also do not dispense and deliver Group A medication and dangerous drugs. We are talking about certain sleeping pills and psychotropic drugs, which are subject to abuse. We also make sure that our pharmacy partners adhere to industry standards and regulations.”

Despite being deeply invested in the healthcare space in Malaysia, the founders do not have medical degrees or an initial background in healthcare. Instead, they are armed with years of consulting experience.

“Hazwan and I met about 11 years ago when we worked at a top management consulting firm. We have a background in strategy and technology consulting, helping large corporations manage their transformations. We used to work with clients to analyse their problems and propose new business models, innovations and technologies to solve them,” says Maran.

“I entered the healthcare space through the acquisition of a couple of clinics — Nexus Group of Clinics. That was my first venture. But from there, I started to realise that the healthcare space was suffering from several fundamental challenges — the capped consultation fees, long payment cycles with certain third-party administrator groups and the rising cost of medications — all of which cannot be transferred to the patients because healthcare costs from the patients’ perspective were already growing 20% to 30% month on month.”

During this time, Hazwan spent a lot of time working with insurers and corporate clients, many of whom were going through cost-cutting exercises. He notes that healthcare is one of the few costs that have consistently increased year on year, which worries many chief financial officers (CFOs).

“One of my previous clients, a large government-linked company, spent about RM700 million a year on healthcare. That was three years ago. By now, the cost has probably hit RM1 billion,” says Hazwan.

“Healthcare costs just keep rising and the CFOs do not know how to control this. One factor is that Malaysians are generally unhealthy. According to the 2015 National Health and Morbidity Survey, about two-thirds of Malaysians have at least one of the three non-communicable diseases (NCDs) — diabetes, high blood pressure and high cholesterol.”

The two founders got together and decided to start a new venture in the digital healthcare space. From their research, they noticed that the Malaysian healthcare system was slow to adopt modern solutions relative to other industries, due to the conservative nature of the space and strict regulations that govern it.

“From a technology perspective, clinics are untouched by technology. Right now, you can order food delivery through Grab and Foodpanda. But for clinics, there is still no proper universal patient health records or a medical consultation and booking platform. You can WhatsApp the doctor if he or she is your personal friend, but most people do not have an easy way of doing that,” says Hazwan.

“But there is a silver lining. The government is in the midst of deregulating doctors’ consultation fees, implementing drug price controls and facilitating the regulatory sandbox for digital health companies. The MoH is also amending the Poisons Act to grant patients more options in terms of where to fill their prescriptions or buy medication.”

Maran says, “In the near future, patients will visit a clinic and receive a doctor’s consultation and prescription. Then, they will walk to the pharmacy across the road and buy medication with the prescription. This is a common practice in the US and Australia.”

In the early days of DoctorOnCall, the company primarily focused on the business-to-consumer segment. Its initial core user segments were college and university students and people inquiring about sexually transmitted diseases (STDs).

“One of the benefits of online consultations is privacy. Issues such as birth control, STDs, erectile dysfunction or premature ejaculation are taboo and are difficult to discuss with your family doctor. But these are still serious issues that need to be discussed and there is a high percentage of such cases,” says Maran.

Despite the demand, business was slow. Hazwan recalls having a team of seven huddling together in a cramped spare room in a partner’s clinic. The team was ecstatic if they managed to receive three consultations and medicine deliveries in a single day.

 

The next stage of growth

DoctorOnCall’s products and services were well received, so the founders decided to leverage their corporate contacts from their consulting years and try their hand at the business-to-business-to-consumer segment. They found that their services piqued the interest of many insurance companies.

“In the early days of DoctorOnCall, of the 10 companies interested in our services, many of them were insurers because they understood the issues surrounding healthcare costs and how these ate into their loss ratio. Our service is a great solution, but these companies were sceptical about our prospects,” says Hazwan.

Maran says, “So, we set up a medical advisory team to advise us on the safety protocols and make sure we adhered to the strict regulations. Once, we did not sleep for three days just to draft a 40-page Word document for the standard operating procedures. We used to be paid thousands to do this as consultants. But now, we were doing it for free.

“One of the issues that was brought up was that all these insurance companies had never heard of DoctorOnCall. Fortunately, we saw a big gap in terms of health content and education in Malaysia, so we started the health blogs and forums. It is similar to WebMD, but in Bahasa Melayu. We put in a huge investment to come out with more than 50,000 articles, listicles, Q&As and videos.”

The health education content has brought in a surge of new customers, who have started to use DoctorOnCall’s online consultation services. Users are attracted to its healthcare services, but are unable to claim their expenses from their employers and insurance companies. Half a year later, the insurers caught wind of the demand and agreed to be part of the platform.

“If you have an Allianz employee benefits card or use the Prudential Pulse app, you can now get your medication and consult a doctor via our platform, cashless,” says Maran.

“We have been working with five state governments and we do health screenings for them. For example, with the Peduli Sihat card, you can use our services and get the medication delivered to you, and we deduct the cost from the card.

“State governments are interested in us because about 20% of the population suffers from diabetes. But a large segment is undiagnosed — they just walk around with headaches and fatigue and assume that it is part of growing old until it is too late. They will not instinctively think that they have an insulin or high blood pressure problem.”

One of DoctorOnCall’s recent projects is DOCpod, a 5G-enabled remote consultation mobile clinic, which was conceived through a partnership with U Mobile, that was launched this January. “DOCpod came out of a challenge by Director-General of Health Datuk Dr Noor Hisham Abdullah, in what he calls the ‘uber-isation’ of healthcare,” says Hazwan.

“One of the pushbacks we have received regarding online consultations is the issue of measuring patient vitals remotely. DOCpod aims to solve that and it is able to monitor blood pressure, blood sugar levels, body temperature and so on, like a mobile medical clinic.

“From the government’s perspective, it is extremely expensive to build and operate clinics and hospitals in every rural town and village. In some rural clinics, they do not even have doctors. So, we took up the challenge to build DOCpod to solve the problem because this is a model prevalent in countries such as China.

Maran says, “When we recently visited China’s largest telehealth player, we saw more than 600,000 teleconsultations per day. China has a rapidly growing ageing population and growing middle class, and a large segment of the population is suffering from NCDs.

“It has to take a pragmatic view that the healthcare system cannot sustain 1.3 billion people. They cannot just build more hospitals and clinics in every town because it is very expensive and they need to staff these with doctors, who will take years to train.”

He points out that Malaysia is facing similar issues. The current public healthcare system is clogged up and he himself experienced a four-hour wait when his father visited a hospital in Kuala Lumpur recently.

“Right now, everyone goes to the hospital for simple symptoms. We need to create a more efficient funnelling system, where you only visit the hospital if you have contracted something serious. To do that, we need low complexity, low-cost transactions, with low risk, and the best way to do that is digitally,” says Maran.

He also points to China as having a booming telehealth industry. A 2019 study by Global Market Insights says the Chinese telemedicine industry is expected to grow at a compound annual growth rate of 23%. With the recent regulatory changes in healthcare, DoctorOnCall is hoping to emulate that success in Malaysia.

Hazwan says that over the last two years, the number of active users on the DoctorOnCall platform has grown an average of 20% on a month-on-month basis, and the company’s revenue is increasing steadily as well.

“At first, we raised our own money, so we were running on fumes. But we raised an angel funding round and won several grants, including Cradle Fund’s. Now, we are set for Series A funding,” says Maran.

“In terms of sustainability, we do not want to be too short-sighted, but our growth numbers right now are encouraging. Going forward, we are looking to integrate with more insurers and hospitals and raise a significant amount of money to expand in Malaysia before going regional.

“We are looking to establish ourselves in Thailand and Indonesia next year. We have already talked to some overseas partners who are interested in our services. But right now, we want to spend a better part of 2020 focusing on the Malaysian market.”