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The Private Medical Sector in South Asia (Bangladesh, India, Nepal, Pakistan,
The private health care sector is tremendously heterogeneous, ranging from independent informal and formal practitioners to small, medium and large hospitals, charitable hospitals and corporate hospital chains and diagnostic centres. While there are similarities among all the five countries as far as presence of a private sector goes, there are also significant differences among them with respect to the size, nature, and importance of the private sector, and the relationship between the private and public healthcare segments. A bird’s eye view indicates that in this region Sri Lanka has a much better resourced public sector, with a smaller private sector, and overall lower levels of commercialisation of healthcare. However, the private sector is reported to be a growing force even in Sri Lanka, due both to greater investment from private players. India has a very large and dominant private sector ranging from large for-profit corporate entities in hospital and diagnostics, not-for-profit trust hospitals, smaller doctor owned hospitals and nursing homes, individual practitioners (qualified and unqualified), chemists, and traditional healers. Similarly, Bangladesh, Nepal and Pakistan have weak public health infrastructure and low levels of public spending, and a private sector including for-profit and not-for-profit hospitals, general practitioners (both qualified and unqualified), chemists, and diagnostic laboratories. The following section gives a very brief country-wise outline.
SRI LANKA has proportionally the smallest private medical sector among the group of South Asian countries, since the public sector accounted for 73% of the hospitals and 93% of bed capacity, while handling over 90% of the total patient admissions in 2014. Public-sector hospitals are engaged in both curative and preventive care, while the private sector focuses mainly on curative care. The quality of treatment and management of inpatient care was found to be better in the public sector despite being available at a lower cost. While the number of private hospitals has increased during 1999 to 2011, private hospital beds represented only 6% of the total hospital beds, consisting mainly of a few leading hospital chains and large number of small regional players. The top five private hospitals accounted for nearly half of the private-sector bed capacity in 2014. Medical tourism was reported to be a key growth driver, which is concentrated in the Western Province, while rising per capita income was also seen as increasing demand for private healthcare. This was accompanied by increase in the technologies available at private hospitals, and a shift in the private sector from smaller to larger facilities having over 100 beds.
In NEPAL nearly two-thirds of healthcare delivery facilities are privately owned and operated. There are an estimated 3000 private healthcare enterprises in Nepal, of which around 70% are diagnostic clinics, and 26% are primary clinics, secondary and tertiary hospitals. The secondary and tertiary private sectors are better organised, and their growth was outpacing growth in the public sector. The number of private secondary hospitals has increased from around 69 in 1995 to 350 in 2015, with secondary and tertiary hospitals largely concentrated in Kathmandu and a few other urban centres like Pokhara. Significant foreign investments have been made since 2010, especially in private tertiary hospitals while established business groups of Nepal, as well as groups of high net worth doctors have set up healthcare companies.
In BANGLADESH private presence in secondary and tertiary level medical care has emerged over the last one and a half decade. As of November 2016 there were 14,337 registered private hospitals, clinics and diagnostic centres, while the total number of government hospitals under the DGHS was 610. Local businesses and entrepreneurs from the pharmaceutical and diagnostic care industries have expanded to set up multi-specialty hospitals. Bangladesh has a liberal FDI regime, with no limit for equity participation and repatriation of profits and income. In the late 2000s, Goldman Sachs identified Bangladesh and Pakistan among the eleven next big emerging markets (N 11), which was expected to have implications in healthcare arena, for healthcare financing and potential for private investment in infrastructure.
INDIA has one of the largest private healthcare sectors in the world, and the private healthcare industry here is much more developed compared to the previous three countries, where it is in an emerging phase. The private healthcare sector in India is more established as well as diversified, and more influential in policy making. Available reports show that the private sector is dominant and provides about 80% of outpatient services and 60% of inpatient services. Further, private facilities are expanding to smaller towns and cities, with 48% of all private hospitals and two thirds of corporate hospitals reported to be located in smaller cities. The most significant development is that there has been organized promotion of healthcare provision as a big business opportunity and the rise of the healthcare industry, projecting healthcare provision as a highly profitable economic venture. The health care sector in India has become an attractive area for private capital investment by global investment firms, private equity funds, and high-net-worth-individuals, and also by global financial institutions such as International Finance Corporation (IFC). Further there are several Indian multinational healthcare companies that have growing presence in neighboring South Asian countries, as well as in the Gulf and in some African countries.
In PAKISTAN, health care is highly privatised, with public health expenditure as percentage of GDP falling from 0.72% in 2000-01, to just 0.42% in 2014-15. Private spending on healthcare was estimated to be 70%, out of which 98 % expense was borne by households. Private services include for-profit clinics, high-tech specialty hospitals, and not-for-profit clinics and hospitals that provided free or discounted care to the poor, pharmacists and laboratory technicians, nurses along with shopkeepers, unqualified practitioners and traditional healers. According to an IFC report (2011), an increasing number of trusts, NGOs and social welfare organizations had invested in not for profit health facilities, which were serving a very large cross section of the population. Most businesses were individual or family owned, however there was an increasing trend of individuals considering hospitals as investment business for commercial return.The government was exploring PPPs and encouraging private sector to provide facilities in villages and small towns. The IFC report observes that “Low public expenditure by government, lack of expansion in the public health sector, increasing population with rising income levels indicates a high potential for growth for the private hospitals”.
An important, noteworthy development in the region is the active role of the International Finance Corporation (IFC - a World Bank institution) in not only promoting the growth of the private sector in these countries, but also actively financing its growth and expansion through measures such as lending and directly investing in hospitals for expansion, and also investing in private equity funds and companies that in turn invest in healthcare companies in ‘emerging economies’. In fact several large global private equity companies have created specific funds for investing in hospitals in South Asia and the MENA (Middle East North Africa) region.
Groups of private hospitals are also present and growing in Latin American countries such as Brazil, Mexico, Colombia and Peru. It is reported that the industry is, however, less developed in this region than in some the emerging markets of Malaysia, India and South Africa. Healthcare companies from the latter countries have expanded to multiple other countries and have listed on stock exchanges to access more capital to finance their expansion. Overall in LMICs across the world, the private medical sector is a growing and significant player in almost all healthcare systems.
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The term “healthcare industry” is used as an umbrella term while referring to hospitals, diagnostic centers, drugs and pharmaceutical- medical equipment and devices and the insurance industries. The hospitals sector is reported to be the major segment, and hence the term healthcare industry is often used while talking about corporate and other big private hospitals.
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