Healthcare sector attracts more investments

VietNamNet Bridge - Vietnam has been witnessing a new wave of investments in hospitals since 2015 after the government called for different sources of funding in the healthcare sector.

VietNamNet Bridge - Vietnam has been witnessing a new wave of investments in hospitals since 2015 after the government called for different sources of funding in the healthcare sector.

According to the HCMC Healthcare Department, in the 2016-2020 period, the city received 80 investment projects in the healthcare sector with total investment capital of VND14 trillion. These included 30 projects on upgrading existing hospitals and building new ones, of which 19 hospitals will be built from now to the end of 2018.

According to the Vietnam Private Medical Practice Association, many foreign investors have shown interest in the healthcare sector. In 2016, Bumrungrad Hospital from Thailand and Lippo Group from Indonesia expressed their intention to develop hospital chains in Vietnam.

Ravindran Govindan, president of Singaporean Mercatus, which has an investment fund in healthcare, also commented it is now the right time to invest in the healthcare sector in Vietnam.

In early 2016, VOF, managed by VinaCapital, announced it had acquired a 75 percent stake in Thai Hoa International Hospital in Dong Thap province with an investment deal worth $10 million. The fund is still seeking opportunities in the healthcare sector, including equitized hospitals.

Vietnam has been witnessing a new wave of investments in hospitals since 2015 after the government called for different sources of funding in the healthcare sector.

In January 2014, Shangrila from Malaysia built the 320-bed Thanh Do International Hospital in Binh Tan district, HCMC, which was renamed City International Hospital (CIH).

Zakirul Karim, a medical quality consultant at Hanh Phuc Hospital in Binh Duong province, said that Vietnam is a magnet for investors, noting that the total spending of all Vietnamese on healthcare services accounts for 5.8 percent of GDP, the highest level in ASEAN.

Singaporean Temasek, at a meeting with the government, expressed its willingness to increase investments in Vietnam, including in private hospitals.

Meanwhile, the government of Vietnam welcomes investments from all sources into the healthcare sector, admitting that spending on public healthcare services is a burden on the state budget.

The government of Vietnam also wants to develop private healthcare, planning to have privately run hospitals account for 20 percent of total hospitals in the country by 2020.

Pham The Dong, president of Saigon ITO Hospital, said the demand for high-quality healthcare services in Vietnam has been increasing rapidly. Vietnamese spends $2-3 billion every year for healthcare services abroad.

Fat profit

In HCMC and Hanoi, the standard minimum floor area for one bed is 50 square meters. The state-owned hospitals in HCMC have become overloaded, so there is a growing tendency of relocating hospitals to the suburbs.

According to Dong, it takes four to five years on average to put one hospital into operation. The investment rate depends on the number of beds, about VND1.5-2 billion for one bed.

It takes five to seven years to take back the investment capital and if hospitals are managed well, the average profit would be 7-8 percent.