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Skill dearth hurts private healthcare sector: Report

25 March 2013 03:00 am - 0     - {{hitsCtrl.values.hits}}

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The shortage of medical professionals in Sri Lanka remains a major constraint for the private sector in exploiting the growing demand for private healthcare, a survey revealed.

Many an eyebrow is likely to be raised at the revelation because on average the state university system alone produces as much as 900 doctors annually.

This is amid the stiff competition between private healthcare sector players that is expected to put pressure on the profitability margins in the medium to long term, RAM Ratings said in a report titled ‘The private healthcare sector of Sri Lanka’.

“The number of medical professionals in Sri Lanka, although progressively higher over the past several decades, is still relatively lower than the number in regional countries and those with equivalent levels of income,” it said.

The matter becomes worrying particularly for the private sector hospitals when 70 percent of the average annual output is absorbed by the public sector hospitals which account for 90-95 percent of inpatients and 50 percent of outpatients in the country.

“Empirical evidence indicate that only around 12 percent of medical graduates are absorbed into the private sector on a full-time basis,” it revealed.

The situation turns even worse when 50 percent of doctors completing compulsory training in developed countries opt to permanently reside overseas (IPS estimates) lured by comparatively higher salaries.

While supply side pressure mounting, the demand side of the healthcare sector too appears to be not all well at least in the short to medium term although the demand for private sector healthcare in the country is on the rise due to the sector supportive demographic and economic changes.

“Whilst demand for private healthcare is expected to be robust over the short to medium term, intensifying competitive pressures may hamper the profitability of players”, RAM noted.

RAM estimates the four listed players (Nawaloka, Durdens, Asri & Asiri Surgical, The Central and Lanka Hospitals) have collectively increased their room capacity by 55 percent during the last five years from 1,150 to 1,647.

“Further increases in room capacity could result in oversupply over the longer term and price competition among players as a result. Given increasing healthcare costs, this could put pressure on profitability margins over the medium to long term,” RAM quipped.

Further on the sector risks, the report said that intensifying competition among players and the need to provide appropriate quality of care to preserve brand name, coupled with the capital intensive nature of the business might act to increase the level of risk in the industry over the longer term.
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