Vietnam has a lot of hospitals, most of which are well established but still facing many challenges. The majority of Vietnamese public hospitals were built more than two decades ago, and their infrastructure is outdated and needs to be upgraded.
There are about 1,531 hospitals in Vietnam, 86% of which are public hospitals and nearly 14% are private hospitals, which are mainly located in large urban areas such as Ho Chi Minh City, Hanoi and Da Nang. 1,318 public hospitals are managed under hierarchical system, classified by central, provincial, and district or commune levels.
Overcrowding often occurs in specialized hospitals or some of the leading public hospitals. The number of patients who want to be treated at central hospitals is too large due to the availability of medical equipment and highly skilled doctors and nurses. As a result, doctors and nurses are overwhelmed, have to serve large numbers of patients, and work long hours in stressful conditions for relatively low wages.
With hospital system in need to be upgraded in terms of facilities, equipment and services¹. Existing healthcare gaps can create opportunities for foreign investors to improve healthcare service quality. Potenially opportinity for health care information services [¹editorial comment].
Opportunity for investors
The potential of Vietnam’s healthcare in general and digital healthcare in particular can be seen in the growth value of this industry. In 2019, the total expenditure for health reached more than 17 billion USD, equivalent to 6.6% of GDP (Fitch Solutions). The figure is forecasted to reach 23 billion USD in 2022 with a compound annual growth rate (CAGR) of about 10.7%.
According to Fitch Solutions, the application of telecommunications technology to the healthcare sector in Vietnam will thrive in the coming time, partly thanks to the Government’s efforts in encouraging the use of telecommunications services in the health sector, helping people to access more public health care services.
On June 22, 2020, the Ministry of Health issued Decision No. 2628/QD-BYT approving the project “Telemedicine examination and treatment” for the period of 2020 – 2025. According to this scheme, there will be 24 upper-level hospitals participating in the telemedicine network. Hospitals provide training, technology transfer, professional support for remote medical examination and treatment, etc.
The private sector is also very responsive to this shift. Many startups have entered this field in Vietnam before the COVID-19 outbreak. Some companies offer booking services that allow patients to book appointments with doctors without going to the hospital, thereby reducing queue times and the risk of infection. Patients can communicate and receive advice from medical professionals about health concerns.
Similarly, digital health companies also have more opportunities to contribute to higher quality and more cost-effective healthcare in Vietnam. With a population of nearly 100 million people and more than 1,000 hospitals nationwide, the potential for IT application in healthcare in Vietnam is huge.
According to a report by YCP Solidiance, private hospitals now have relatively advanced health management systems compared to public hospitals for a number of reasons. Higher income patients are willing to pay for higher quality and modern healthcare services. With digitization as a competitive advantage, private hospitals have promoted investment and upgraded their digital infrastructure.
Although the digital health sector in Vietnam is attractive, policy barriers and weak regulatory frameworks may pose challenges for inexperienced foreign investors.
First of all, doctors, medical professionals and patients are used to paper documents. Secondly, cumbersome and complicated administrative processes may slow down digital adoption. The application of electronic signatures in national health insurance payments is a typical example. In addition, medical IT systems have not yet shared patient data with each other. Hospitals also use different solutions and softwares, so connecting data with each other will be a relatively big challenge.
In fact, the digital health sector in Vietnam has not yet been commensurate with its potential, attracting significantly less investment capital than related fields such as payment or e-commerce.
Recently, the Government has passed the revised Investment Law 2020 No. 61/2020/QH14 including 7 chapters and 77 Articles, effective on January 1, 2021, to encourage investment in 5 key areas, including medical and healthcare service. Projects in these fields will benefit from corporate income tax incentives, land rent exemption and reduction, and credit support.
Bonny Le – VietnamCredit
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