Wednesday, January 22 2020


Private healthcare sector faces critical constraints

Update: March, 05/2014 - 08:27
Doctors examine a patient at Trieu An Private Hospital in HCM City. Lack of capital, space and human resources hinder the development of the private healthcare service sector. — VNA/VNS Photo The Anh

HCM CITY (VNS) — The healthcare service sector in Viet Nam has tremendous growth potential but it is not a business that can make profit easily, experts say.

The private sector is not well placed to exploit this potential because of several constraints including capital, space and human resources, they add.

Citing a StoxPlus report, the Dau Tu (Investment Review) newspaper says healthcare revenues in Viet Nam have been increasing continuously, from US$6.55 billion in 2008 to 12 billion in 2013.

In addition, Vietnamese people also spend over US$1 billion on overseas healthcare services every year.

Furthermore, industry insiders say the real turnover at hospitals is likely to be 1.5-5 times higher than the figures they announce.

The Economist Intelligence Unit (EIU) has estimated that public spending on health in Viet Nam will increase by 10.3 per cent per year, from US$7 billion in 2010 to US$11.3 billion in 2015.

The significant patient overload at public hospitals also indicate opportunities for strong development of the private healthcare sector in Viet Nam.

Analysts say growth of the domestic healthcare market is driven by economic growth, higher incomes, higher awareness of health issues, improved living conditions.

However, the number of private hospitals in the country is still modest and concentrated mainly in major cities like Ha Noi, Da Nang and HCM City. The private hospitals that are functioning are also modest establishments, for the most part.

In 2011, private hospitals accounted for just three per cent of the total number of hospital beds in the country. Of 1184 hospitals, just 135 were privately owned. Private hospitals treated just 4.2 per cent and 5.1 per cent of the total number of inpatients and outpatients recorded in 2011.

An investor in the healthcare service sector, who declined to be named, said that many reasons could be used to explain the slow development of private hospitals in the country, one of which was the huge capital investments required.

A hospital project needs between US$20 and 25 million, with medical equipment accounting for half. The profit margin for investments in hospitals is about 20 per cent per year and it takes investors eight to 10 years to recoup their capital, according to the investor.

Dr. Nguyen Huu Tung, former director of the Hoan My Medical Corporation, said at a recent seminar held by the Investment Review that the scope of private hospitals in Viet Nam was still rather small and their profits were still modest. However, there is potential for them to develop strongly in the future, he said.

Nguyen Thi Ngoc Dung, rector of the Pham Ngoc Thach University of Medicine, said that to successfully invest in private hospitals, three crucial factors are: skilled staff, "perfect" infrastructure and modern equipment.

Apart from the capital investment needed to meet these conditions, there are other difficulties that are hindering growth of the private healthcare sector in Viet Nam, analysts say.

The biggest problem for investors is finding suitable space to build private hospitals. Administrative procedures for setting up private healthcare establishments in Viet Nam are very complicated and likely to discourage investors. Another discouraging factor is the current shortage of quality healthcare personnel in the country, they add. — VNS

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