Sep 28, 2015 (LBO) – Sri Lanka’s private hospitals are poised for strong growth, with the rise ageing population and rising per capita income, a report said.
“Nearly nine percent of the islands population are over 65 years of age and over at end 2014 and likely to double by 2030 and the public sector alone has insufficient capacity to handle the growth,” a Fitch rating report on Sri Lanka’s health care sector said.
“Non-communicable diseases (NCDs) are on the rise, owing to the ageing population and dietary and lifestyle changes resulting from rapid urbanization,”
Data shows that in 2012, 71 percent of the deaths were on account of chronic NCDs.
Sri Lanka’s Health Ministry estimates that 25 percent of the adult population is already suffering from hypertension, and half of the population is likely to suffer from diabetes by 2050.
These dynamics should be a catalyst for strong demand, given that treatment of NCDs involves long hospital stays and advance procedures.
The report says demand for private health care is also driven by rising per capita income, enabling more people to afford paid healthcare.
“Sri Lanka is just a few years away from reaching the higher-middle income band, under the current growth trajectory,”
“Per capita healthcare spend of 102 US dollars (2013) is significantly below the average per capita for higher-middle-income countries at 465 US dollars, highlighting the growth potential in the medium term.”
However, the shortage of skilled medical professionals is a key constraint, as they are crucial to attracting patients to private hospitals.
“Congestion at public hospitals and low government investment has created a pressing need for greater private-sector participation.”
Private-sector investment should also be supported by prevailing gaps in the public system, the report says including diagnostics, laboratory services and outpatient care, where there is low public service.
The top five private hospitals account for 45 percent of the private-sector bed capacity, with most investing in further capacity expansion.
A favourable demand outlook, strong operating cash flow generation and modest margins in the sector promotes continued investment by these leading players, which is supported by their strong-to-moderate credit profiles.
Sri Lanka’s hospitals are dominated by the public sector due to government’s policy of providing free universal healthcare.
The public sector accounted for 73 percent of the hospitals and 93 percent of the available bed capacity as of end-2014, while its share of patient admissions and outpatient visits was over 90 percent.
However, private hospitals have been able to boost their share in hospital beds through capacity expansion at a compound annual growth rate (CAGR) of 21 percent over the last four years, compared with 10 percent for the public sector.