Increasing demand for health services, including diagnostic treatment and care, presents a growing and untapped opportunity for investors in the nation’s health sector,says an international Finance Corporation (IFC) report.
The report is titled“Guide for Investors in Private Health Care in Emerging Markets”.
It states that 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 national economic development, rising consumer incomes and corresponding ability to pay for healthcare.
Other factors are listed as population growth, extended life expectancy, shifting disease burden- which is growing in some areas, and the emergence of advanced medical treatments and technologies.
The IFC report says that growth opportunities exist for health service providers, including large facilities that use cutting-edge technology and promote medical tourism; and high-efficiency hospitals that serve a range of income groups and medical professionals in solo practice.
The report further identifies the private health sector as becoming patients’ preferred choice because of greater accessibility, a higher perceived quality of service, the continuity of care it offers, and the availability of drugs.
An important indicator of the significance of an expanding private health care market, the report observes, is health expenditure data, which describes 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 states.
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 specialised 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 organisations such as hospitals” the report highlighted.
It will be recalled that the 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, 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.