Industry Spotlight: Emerging Opportunities in Vietnamese Healthcare
With a rising consumer class threatening to overwhelm health services throughout the country, investment in Vietnamese healthcare presents exciting opportunities in a sector previously closed to foreign investment. For those considering investments of this nature, a clear understanding of where advantages lie and how to tap into them remains an integral component of establishing successful operations throughout the country.
Health in Vietnam
Compared to its ASEAN counterparts, Vietnam’s health care system is able to provide relatively high quality services at a competitive cost. Although one of the regional bloc’s poorest members, infant mortality and life expectancy within the communist nation are relatively low – listed at 19 per 1000 births and 75.61 years as of 2012. The extent of Vietnam’s progress can be seen in greater detail when compared to richer ASEAN member states such as Thailand, Indonesia, and the Philippines, which report life expectancies of 74.19, 70.61, and 68.55 years respectively.
Much of Vietnam’s strong scoring in health related indicators can be attributed to its dedication to health services – both on an individual and state level. Not only has private health care expenditure risen faster than all other major ASEAN states in recent years, the nations spending as a portion of GDP is also higher as well.
Despite this progress, significant challenges remain with regard to the scaling of existing services and provision of high quality care to an increasingly affluent population. At the core of Vietnam’s challenges lie the country’s fast growing economy. Not only has growth and mounting investment triggered migration to city centers, it has also led to wage inflation and increased the capacity of average citizens to bear the cost of existing health services. Although demand for the level of care found in developed nations has yet to emerge, prevalence of health issues such as malaria, tuberculosis, and heart and respiratory conditions, have placed a strong and growing strain on existing health facilities.
The following statistics provided by Vietnam’s statistics office articulate the extent to which existing infrastructure has become overburdened in recent years. Crowding of medical facilities in concert with outdated medical equipment and a lack of qualified medical staff has prolonged treatment times – further complicating the availability of quality treatment.
Unfortunately, with state support for health service already outpacing regional counterparts, the capacity of Vietnamese authorities to alleviate shortages is limited. In addition, regulation of the health sector has remained tightly controlled in the recent past preventing state sponsored programs to be supplemented with private investment.
As a result of these realities, medical outsourcing has emerged as a short term solution to medical shortages. Current estimates indicate that nearly 40 thousand Vietnamese citizens travel abroad for medical treatment, taking with them over one billion dollars in revenue. Top destinations include Singapore, Malaysia, and Thailand depending on the level of care that patients are able to afford. To support this process, many regional medical practices have taken to setting up representative offices within Vietnam as a means of coordinating the logistics of their patients travel.
Although medical outsourcing remain profitable in the status quo and has created a short term solution to Vietnam’s growing middle class, it is little supplement to the inadequacies of the current healthcare system in the long run. Ultimately, the longevity and viability of the outsourcing business model will forever remain tied to state control of the healthcare sector.
Investment Opportunities in Health Care
While investment in Vietnamese health services has proven difficult in the past, recent moves by authorities have created significant liberalization and present a salient opportunity for investment. Reforms have seen the foreign ownership cap for businesses providing health related services raised to 70 percent. Furthermore, Vietnam has made special arrangements to allow for the fast tracking of work visas for qualified medical professionals entering the country. In concert with the prevailing conditions found throughout Vietnam, these changes present significant opportunities to supplement infrastructure gaps and undercut outsourcing alternatives.
Provision of Medical Services
With ownership caps lifted on medical facilities, foreign enterprises will be permitted to enter into joint ventures with minority shareholders within the country and in staffing these facilities, bridge local talent deficits through the recruitment of foreign practitioners.
In addition to the establishment of new businesses, increase of ownership caps will also allow investors to bid for controlling shares of state owned enterprises undergoing privatization. Recent sales of shares by large state owned medical facilities such as The Central Transport Hospital will likely continue as these facilities are in desperate need of capital injections.
Medical Training Facilities
As investment becomes more pronounced in medical centers throughout the country, it is likely that Vietnam will see increased demand for medical professionals. Although outside sources of labor will likely fill some of this demand, the existence of labor shortages in the status quo highlights a significant opportunity for those with the capacity to train workers.
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