A healthcare professional using cloud solutions in their daily work

Is digital transformation the answer to healthcare’s inflation crisis?

With inflation affecting consumers’ affordability, healthcare providers are turning to hybrid digital solutions to provide patient-centric care

11 July 2023

The healthcare industry is at the forefront of digital change. Providers can utilise the power of digital transformation, powered by the cloud, to advance ahead while managing costs, especially during today’s inflation crisis.

Employee identifying investment & growth opportunities using the cloud

The inflation crisis today impacts multiple industries. Healthcare faces a myriad of higher input costs that put a strain on both consumer prices and profitability of providers.

According to McKinsey, the cost pressures on healthcare providers are across the board. Labour costs grew by 25% between 2019 and 2022 while pharmaceutical costs are up by 21%.

Adding to inflation pressures, the industry is expected to experience a nursing shortage of up to 450,000 professionals by 2025. This shortage threatens to create a $170 billion increase in labour costs by the end of 2023.

In Asia-Pacific (APAC), healthcare benefit cost is expected to soar by 10.2% in 2023 with the leading driver of medical costs attributed to the overuse of care.

To stay ahead of the curve, healthcare providers have to embrace digital transformation such as the cloud. This helps streamline their processes, cutting costs while increasing their reach to protect their bottom line. 

Innovating ahead while reducing costs

Consumers today are evolving. Within the APAC region, more than 90% of consumers prefer a single touchpoint to manage their healthcare needs. Additionally, over half of consumers would adopt digital delivery methods like telemedicine. 

Healthcare providers have to embrace new hybrid digital solutions to cater to changing consumer needs as costs continue to inevitably rise. The cloud allows organisations to evolve their processes, automate their workloads and digitalise their offerings without having to fork out huge upfront costs necessary for on-premise infrastructure.

Cloud capabilities have the potential to generate significant and lasting value for healthcare companies. In fact, US$1 trillion of value can be accessed through the power of the cloud, with disproportionate shares given to early adopters.

This is helping to fuel the rise of the APAC healthcare cloud computing market, which is poised to grow at a CAGR of 30.1% between 2022 to 2027.

With the hybrid cloud, healthcare companies will be able to also explore new patient delivery models. In APAC, telehealth adoption has doubled since 2019 and is expected to soar through 2024. Over half of physicians surveyed mentioned that more than 25% of their consultations could be delivered virtually in the coming years.

Enabling smarter digital investments

Driving innovation is essential, but smarter allocation of capital is necessary, especially in today’s inflationary environment. Inflation does more than just drive costs up, it reduces the amount of investment dollars healthcare companies have to spend.

Whether it is developing a new drug or personalising a new healthcare ecosystem for patients, the cloud helps providers to accelerate their research and development without prohibitive costs.

Pfizer, for example, has been using the cloud from Amazon Web Services (AWS) to help speed up their clinical research, especially in 2020 during the race against the COVID-19 virus, working to develop, test, manufacture, and distribute a safe and efficacious vaccine.

At T-Systems, we help healthcare providers in their digital transformation journey to scale their business operations. One such transformation we supported was helping Mitra Keluarga, an Indonesian hospital group, migrate its SAP systems to the AWS cloud. This helped to lay the foundations in the event they needed to effectively access their data and expand their operations.

Harness the power of data analytics

Employee using the cloud to analyse data for insights

To unlock their full potential, providers need to harness the value in their data. In a study by McKinsey, 75% of value in 2025 in the healthcare sector will be driven by the digitalisation of healthcare delivery. This includes telemedicine, remote monitoring and more effective disease screening.

This requires companies to go beyond the cloud and utilise data analytics to enhance decision-making.

Whether the goal is to accelerate the discovery of a new drug, enhance patient outcomes or to optimise revenues, data-driven insights are essential for success.

Hospitals, for example, can utilise the power of data analytics to gain insight into their processes, helping to deliver better patient experiences and outcomes. These include:

  • Lowering readmission rates
  • Reducing any potential errors
  • Identifying at-risk populations

This helps healthcare providers to innovate ahead and develop new payment models to suit their customers' needs and to maximise profitability.

Developing a hybrid workforce while managing costs

Employee using the cloud to automate processes and obtain data-driven insights

Maximising profitability also means boosting productivity. Time is money and the faster time to market you have, the more costs you can save while gaining a competitive edge.

GSK, for example, utilises public cloud platforms to bolster their operations to harness the power of artificial intelligence (AI) and machine learning (ML) to drive its analytics. This helps the organisation to drive drug discovery. Using the cloud, they are building towards a 0-60 vision, building an infrastructure that is robust and fast enough to get a product into production within 60 minutes.

To accomplish this, multiple processes and workloads have to be automated in the cloud to develop a reliable pipeline that is a quality “production-ready” system.

T-Systems helped Zuellig Pharma, one of the largest healthcare services groups in Asia migrate to the Microsoft Azure cloud. This allows Zuellig Pharma to progress further in its digital transformation journey, achieving greater business agility and scalability for smarter innovation.

Powering the healthcare industry ahead of inflation

As providers continue to innovate ahead, inflation will be an ongoing concern that needs to be addressed. The reality of reducing costs is essential, but so is the need to constantly innovate to build new revenue streams.

By embracing digital transformation, hybrid solutions can be developed to help companies optimise their costs in both a scalable and elastic manner. Faster innovation can be achieved at a fraction of the cost, allowing healthcare providers to meet and exceed their consumer’s needs.

With T-Systems, healthcare providers can receive end-to-end support to combat these challenges with tailored cloud-based solutions.

Speak with us today to kickstart your digital transformation journey towards building a seamless healthcare economy.

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