Vietnam’s growing demand for healthcare

IMTJ looks at the development of healthcare services in Vietnam, which may reduce the reported (US$2bn) spent by Vietnamese people travelling abroad for medical treatment.

Overcrowding, shortage of medical staff, and obsolete equipment for surgery and intensive care units are the major challenges in the healthcare sector in Vietnam.

These issues have forced Vietnamese people to travel abroad for medical treatment, with overseas annual spending rising to (US$2 billion). This further highlights the opportunities in the industry in healthcare services, for local and foreign investors.

According to Business Monitor International, healthcare expenditure in Vietnam in 2017 reached (US$16.1 billion), which accounted for 7.5% of GDP. Healthcare spending is predicted to grow at an annual rate of 12.5% between 2017 and 2021. Changes in living standards and an ageing population have led to the rapid growth in health expenditure. According to KPMG, healthcare expenditure is estimated to increase to (US$17.2 billion) in 2018, and (US$20 billion) in 2020.

Since 2012, public healthcare expenditure overtook private healthcare expenditure, largely due to the government’s social health insurance programmes. From 2016 to 2021, public healthcare expenditure is predicted to grow at a 9.5% a year, while private healthcare expenditure will at 7.5% a year.

Vietnam has a decentralised system where provinces, districts and communes are given autonomy to implement their own healthcare policies. The organisational structure of the hospital or healthcare system in Vietnam is divided into four groups:

  • Central level – the Ministry of Health is responsible for the healthcare sector for the government and manages several institutions including hospitals, research institutions, and universities. Other ministries also run their own network of hospitals
  • Central affiliated province/city – at a province or city level, there are several hospitals and medicals centres. In addition, they also have medical colleges offering medicine, nursing, and pharmacy programmes
  • District – at this level, district health centres offer medical and preventive services
  • Commune – commune health stations focus on primary healthcare services

In 2016, there were 1,346 hospitals in Vietnam, which included 1,161 public hospitals and 185 private hospitals. The government health departments in the provinces and cities manage 80% of the public hospitals, while the Ministry of Health and other ministries/state-owned firms manage the rest.

The total number of hospital beds increased from 209,485 in 2011 to 254,885 in 2016. The public sector accounted for 240,700 beds, while the private sector accounted for the remaining 14,185 beds. The government aims to increase the share of private hospital beds to 20% of the total beds by 2020, through public-private partnerships.

To meet the growing demand for healthcare services, foreign investment in the sector has witnessed rapid growth in Vietnam. Foreign investment of up to 100% is allowed on hospital, medical, and dental services. Homecare, nursing, and emergency evacuation services are subject to approval on a case-by-case basis. Minimum capital investment for a hospital is (US$20 million), while a polyclinic and specialised clinic would require an investment of (US$2 million) and (US$200,000) respectively

Investment opportunities also exist in public-private partnership projects. Vietnamese government on a central and provincial level have deployed numerous investment models to meet the growing demand for healthcare services and attract capital in the form of PPP in areas such as construction and management of infrastructure facilities, medical equipment, and training.