Universal Health Care Act driving healthcare sector development in the Philippines
From a population of 107 million in 2019, the Philippines is expected to reach a population of 150 million by 2050. Rapid population growth puts pressure to increase the number of healthcare facilities and medical personnel, and to enhance the service level of existing facilities. While the country boasts several world-class hospitals, there is plenty of room for improvement in access to medical treatment: the nationwide doctor-to-patient ratio stood at 1:33000 and the bed-to-population ratio at 1:1121 in 2019. Recent healthcare initiatives and development plans present new opportunities for medical technology providers to be part of the solution.
To address the development needs in the sector, the government enacted the Universal Health Care (UHC) bill into law in 2019, with the objective to ensure that every citizen can receive affordable and quality health care. Department of Health Secretary Francisco Duque III describes the importance in an Oxford Business Group interview: “The UHC Act aims to transform the current system towards primary health care, which entails prioritising preventive care, improving health literacy and treating patients at the earliest possible stage. These measures will not only improve Filipinos’ quality of life, but also facilitate the system’s sustainability.”
Boosting the implementation of Universal Health Care is the ‘sin tax’ law which was passed in December 2012, increasing the taxation of tobacco products and alcohol. Out of the revenues collected through sin tax, 85 percent are earmarked for health care to fund universal health care, upgrade medical facilities, and train doctors and nurses.
The Philippines also developed an eHealth Strategic Framework and Plan for the period 2014 to 2020, aiming to utilize information and communication technologies in the health sector. This will support the delivery of health services and manage health systems for greater efficiency and effectivity, in line with providing universal healthcare to all Filipinos.
Public-private sector collaboration is the way to go
The private sector plays an important role making universal healthcare a reality in the Philippines, as 65% of the country’s health care services are currently rendered by private providers. Strengthened public-private collaboration is expected to pave the way for technology development, infrastructure improvements, and medical equipment updates across the sector.
In line with the government’s call for public-private partnerships, major local conglomerates have laid out investment plans to expand their footprint in healthcare sector:
- Metro Pacific Hospital Holdings Inc. (MPHHI) is the largest private hospital group in the Philippines with a nationwide portfolio of 14 hospitals in Luzon, Visayas and Mindanao, with a combined bed capacity of 3,203 beds. In addition, MPHHI is invested in allied health colleges, a growing network of primary care centers and cancer care centers, and a central clinical laboratory. The goal of the group is to have a portfolio of 30 hospitals and 5,000 beds by 2030 and raised PHP 35.3 billion (USD ~700m) from global investment firm KKR and Singapore’s sovereign wealth fund GIC in October 2019 to help achieve these targets.
- AC Health, the healthcare arm of the Ayala group, currently has 80 FamilyDoc primary care clinics, 10 corporate clinics, seven Healthway multi-specialty clinics and 40 Healthway corporate clinics, with plans to have 100 FamilyDoc clinics, 100 corporate clinics and 10 multi-specialty clinics in the next two to three years. In 2019, the group announced its plans to build the first dedicated cancer specialty hospital in the Philippines. The PHP 2 billion (USD 40 million) facility is envisioned to be a fully integrated, 100-bed facility located in Metro Manila.
In the public sector, the Department of Health (DOH) who is responsible for public hospitals in the Philippines is heavily investing in new healthcare facilities, in line with its development plan 2017-202:
- Renovation and upgrading of 633 government hospitals (small scale, 50-100 bed capacity) in provinces and cities
- Development of five new urban and ten provincial hospitals
- 37 level 3 (best class) hospitals to be further developed and used for specialized centers. 10 specialty centers that exist currently will be used as ‘apex centers’ – training and knowledge hubs.
- Development of 2,289 Rural health units (RHUs) 9,604 Barangay (village) health stations (BHS), and 750 new outpatient clinics
New opportunities for medical technology providers
With development needs and expansion plans comes New opportunities for medical technology providers, since practically all medical equipment is imported, and roughly two thirds of medical disposables are imported. The Philippine market has a strong value recognition when it comes to brands, and many of the hospitals and suppliers prefer US or European brands. Examples of new opportunities for medical technology providers include:
- New hospital projects create opportunities on a wide scale from medical equipment and devices, to waste and linen treatment.
- Philippines recently renewed the hospital classification system which led to many hospitals risking losing their hospital status. To maintain their status, they need to build operating and emergency rooms to their facilities.
- Prevention of new infectious diseases and mitigation of health risks of hospital staff and patients
- As hospitals establish their Infection, Prevention, and Control Offices – more efforts are being done to ensure hospitals systems are up to date with the latest technological developments.
- eHealth: one of the strategic goals of the government is to establish unified and coherent health and management information systems, and also to capitalize on telemedicine to increase coverage and availability of healthcare services.
Here are our Asian Insiders tips on how to tap into these opportunities:
- Engage in dialogue with DOH to find out about the implementation of eHealth and possible opportunities.
- Work together with the private sector players with existing plans to broaden their healthcare portfolio.
- Establish local presence, most often through a distributor
- Focus on your channel sales management capabilities and joint market development activities
For more information on market entry, read the case study of a European healthcare technology company here: https://asianinsiders.com/portfolio/healthcare-market-entry-in-the-philippines/