Hospitals: new target for investors
The ongoing patient overload at state-owned hospitals and the US$2 billion that Vietnamese spend on overseas healthcare services are drawing more investors to hospital projects.
TH Group, a dairy producer, has decided to expand its operations after gaining great success in its core business field. It jumped into the educational sector by opening TH School system last month. Now, the next goal is the healthcare sector.
The group last year signed a cooperation agreement with an Israeli partner on building a healthcare center, covering an area of 20 hectares, in Hanoi. This would include a 5-star hospital with 300 beds, a rehabilitation center and a research and development.
The group last year signed a cooperation agreement with an Israeli partner on building a healthcare center, covering an area of 20 hectares, in Hanoi. This would include a 5-star hospital with 300 beds, a rehabilitation center and a research and development.
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A report from the Ministry of Health shows that Vietnam has 1,000 hospitals, including 200 privately run hospitals, a number which is still too small for a market of 90 million people. This means that there are only 25 beds for every 10,000 people.
According to Business International Monitor, the spending on healthcare services now accounts for 5.8% of GDP, the highest proportion in ASEAN. The figure is expected to reach US$24 billion by 2020 thanks to the healthcare process that the government is implementing.
Vingroup, established as a real estate group, began investing in the healthcare sector by opening Vinmec Hospital in 2010. To date, the group has had five general hospitals and two clinics in Hanoi, Quang Ninh, Nha Trang, Phu Quoc and Ho Chi Minh City, and will have five more hospitals in the next three years.
Meanwhile, Hoan My Group and Cotec Healthcare Holdings have been expanding their hospital systems rapidly.
Hoan My, after taking over Vinh International Hospital in Nghe An last year, now owns seven hospitals. Cotec is building a general hospital in Binh Dinh with investment capital of VND1.3 trillion. The group will continue building more hospitals though it has three hospitals with 2,000 beds.
Most recently, VOF, the investment fund managed by VinaCapital, has acquired a 75% stake in Thai Hoa International Hospital in Dong Thap province in a deal worth US$10 million.
However, though hospitals are usually lucrative, they still cannot bring high profits to investors at this moment.
A 2015 report by the HCM City Institute for Development Studies showed that 10-15 of 39 privately run hospitals took losses and had to call for more investment. Phu Tho and Vu Anh General Hospitals, well known for good material facilities and qualified doctors, also took losses.
Nguyen Huu Tung, former general director of Hoan My Hospital, said investors should not expect to make profits in the first five to seven years.
