Not long ago, telemedicine was treated as a stopgap, handy during emergencies such as a pandemic or a curfew, but hardly seen as the backbone of healthcare. This perception is changing and not just in the cities. Even across tier-2 cities such as Davao, Surabaya and Ipoh, digital healthcare marketplaces in Southeast Asia are quietly reshaping how patients access doctors, diagnostics and insurance, often through mobile-first platforms that fit the rhythms of daily life.
The shift is primarily being driven by necessity. Factors like overcrowded hospitals in capital cities, shortage of specialists in provincial areas and limited insurance coverage are pushing families to look beyond traditional healthcare channels. In Indonesia, the medical professional-to-population ratio remains below World Health Organisation recommendations, while in the Philippines, around 45% of health spending is still out-of-pocket. In this context, digital health solutions are no longer just convenient; they’re filling systemic gaps.
We look at why second-tier cities are Southeast Asia’s next tech hotspots
At the same time, expectations are rising. As middle-class households expand outside metro cores with high mobile internet penetration, demand for affordable and accessible care is accelerating. Startups and investors are seizing the moment, making tier-2 cities the next battleground for healthcare innovation in Southeast Asia.
Moving beyond capital cities
Jakarta, Manila and Kuala Lumpur remain centres of healthcare demand, but they are increasingly strained. In contrast, provincial hubs are emerging as the growth frontier for startups. Platforms such as Halodoc in Indonesia and Docosan in Vietnam began with strong footholds in major cities but are extending their reach to second-tier locations through partnerships with local clinics, pharmacy networks and insurers. By integrating teleconsultations, bookings and home testing with delivery, they’re making it possible to access urban-level services in places where hospitals may be hours away.
In the Philippines, early signs of this shift are clear. Research has shown that patients in provincial areas see telemedicine as safe and efficient, with affordability improving for routine consultations. While connectivity issues remain a barrier in some locations, adoption is climbing. Startups like MedGrocer provide medicine delivery linked to online prescriptions, while Arooga Health connects users with mental health professionals. In Indonesia, platforms like Halodoc and Alodokter are extending beyond Jakarta, offering virtual consultations backed by logistics partners capable of delivering medication to cities such as Surabaya and Medan.
Investors push healthcare infrastructure
Venture capital has flowed steadily into digital health across the region. HolonIQ’s 2023 Southeast Asia Health Tech 50 highlighted startups not only in telemedicine but also in mental health (Intellect), chronic care (Elocare) and online pharmacies (Thuocsi). For investors, tier-2 cities present an untapped opportunity: populations large enough to sustain platforms, yet underserved by traditional healthcare infrastructure. However, funding patterns remain uneven. By mid-2024, for example, healthtech startups in the Philippines had raised just US$12.6 million, a fraction of regional totals, underscoring both the challenges and the room for growth.
The new generation of digital healthcare marketplaces is designed to go further than basic doctor calls. Docosan integrates teleconsultations with pharmacy fulfilment via partners and home delivery. Intellect combines mental health support with workplace wellness programmes. In the Philippines, Aide offers on-demand home visits alongside online consultations. These integrated models are particularly relevant for provincial centres, where patients often face limited options for chronic disease management or mental health services.
Scope, opportunities and challenges
The region’s digital infrastructure is creating fertile ground for expansion. Southeast Asia now counts hundreds of millions of mobile users, with penetration rates exceeding 100 per cent in some markets. Combined with growing digital literacy and rising middle-class incomes, this connectivity is setting the stage for broader healthcare adoption.
Families in smaller cities increasingly expect care to be not just accessible but also reliable, affordable and tech-enabled, mirroring shifts already visible in retail and financial services.
Still, obstacles remain. Regulatory fragmentation is a major concern: each country has its own licensing, reimbursement and data-privacy frameworks, creating hurdles for startups seeking scale. Insurance penetration is also low. In the Philippines and Indonesia, large shares of the population continue to pay out-of-pocket, limiting the affordability of recurring digital health services. Unless governments, insurers and startups can align on coverage and reimbursement models, the sector risks uneven progress.
Why investors should watch tier-2 cities
Despite these hurdles, the momentum is undeniable. Tier-2 cities represent a convergence of need and opportunity: growing populations, overstretched public health systems and digital infrastructure ready to support mobile-first solutions. For investors, the appeal lies not only in scale but also in sustainability. Platforms that establish trust in provincial markets can build strong, long-term user bases with limited direct competition.
Public-private collaboration will be central. Governments are already signalling interest, from the Philippines’ telehealth initiatives to Indonesia’s partnerships between startups and regional clinics. If these partnerships deepen, they could provide the regulatory support and infrastructure needed for digital health to thrive outside metropolitan cores.
Conclusion
Southeast Asia’s healthcare story has long been told through the lens of its capital cities. But the next chapter is unfolding elsewhere. In places like Davao, Surabaya and Ipoh, digital healthcare marketplaces are bridging gaps once thought too wide to close, connecting patients to doctors, medicine and mental health support with just a smartphone.
The opportunity is clear: a quiet healthcare revolution is underway in Southeast Asia’s tier-2 cities, driven by necessity, enabled by connectivity and fuelled by rising expectations. For startups and investors willing to look beyond the metro skyline, the future of digital health lies in these emerging hubs.