Increasing demand for health services, diagnostic treatment and care presents a growing and untapped market opportunity for many investors to invest in the nation’s health sector, an international Finance Corporation (IFC) report titled “Guide for Investors in Private Health Care in Emerging Markets” reveal.
[pro_ad_display_adzone id=”10″]
With the private sector contributing over 60 percent of health care services in Nigeria, the multi-billion dollar industry has continued to experience growth, driven by economic growth, rising consumer incomes and corresponding ability to pay for healthcare, population growth, extended life expectancy, shifting[pro_ad_display_adzone id=”10″]
disease burden, which is growing in some areas and emergence of advanced medical treatments and technologies.
The IFC report stated that growth opportunities exist in health service providers, including large facilities that use cutting-edge technology and promote medical tourism; and high-efficiency hospitals [pro_ad_display_adzone id=”10″]
that serve a range of income groups and medical professionals in solo practice.
The report identified the private health sector as becoming patients’ preferred choice because of greater accessibility, a higher perceived quality of services, the continuity of care it offers, and the availability of
[pro_ad_display_adzone id=”8″]
drugs.
An important indicator of the significance of an expanding private health care market, the report noted, is health expenditure data which describe the volume of funds being channelled to the health sector from different sources, including private and out-of-pocket payments.
“High out-of-pocket payments usually reflect a high level of market activity and private provision of health services, although user fees and payments also can be made to public-sector facilities. Out-of-pocket spending represents 80 percent or more of private health spending in some countries, including Nigeria, Guatemala and Vietnam,” the report stated.
As investors position themselves to enter the market by recognizing key success factors, managing risk through market research, development of appropriate products, and sound credit analysis and structuring, economic stability and growth, supportive regulatory framework, patients’ ability and willingness to pay for health services, maturity and development of private medical insurance and availability of qualified staff fuels its demand.
Although investors may seek to invest in the sector, a number of factors constrain investment and increase their perception of risk. According to the report, many financial institutions have not invested in the health sector due to limited information on size of the market, its financing needs, as well as the risks, opportunities, and trends.
“Clinicians who do not have a business background often own health care businesses. Investors cite limited management capacity as a risk in the sector – and it is a key barrier to business growth. Many investors complain about the type of collateral that health service providers’ offer, including facilities and specialized medical equipment.
“Due to the nature of the business, many health service providers require longer term investments, particularly in the case of equity or project financing for larger organizations such as hospitals” the report highlighted.
It will be recalled that the former Minister of Health, Onyebuchi Chukwu, in August 2012, inaugurated a ministerial committee to unlock the private sector’s investment into healthcare delivery and improve healthcare availability at tertiary level.
The goal of the committee, chaired by Tony Elumelu, founder, Tony Elumelu Foundation, is to enhance the investment of the private sector in order to establish six international-standard hospitals and diagnostic centres in Nigeria by 2015.
The timing of the committee’s formation, experts say, comes at a period when the country takes a critical look at the essential pillars for maintaining a robust health sector and seeking to explore essential requirements of attracting and sustaining appropriate private sector investment. This, in the long run would transform the healthcare system, since long-term sustainability of quality healthcare requires holistic considerations of the demand for and supply of healthcare delivery.