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Strong growth seen for Sri Lanka private hospitals: Fitch

ECONOMYNEXT – Sri Lanka’s private hospitals are poised for strong growth given favourable demographic trends in the island which has one of the world’s fastest-growing, ageing populations, Fitch Ratings has said.

Government-run hospitals alone have insufficient capacity to handle the growth in demand for healthcare services with nearly nine percent of the population now 65 years of age and over, a number likely to double by 2030, the rating agency said.

“Demand for private health care is also driven by rising per capita income, enabling more people to afford paid healthcare,” Fitch Ratings said in a new report on the sector.

The top five private hospitals account for 45 percent of the private-sector bed capacity, with most investing in further capacity expansion.

“A favourable demand outlook, strong operating cash flow generation and modest margins in the sector promotes continued investment by these leading players, which is supported by their strong-to-moderate credit profiles,” Fitch Ratings said.

However, the shortage of skilled medical professionals is a key constraint, as they are crucial to attracting patients to private hospitals.

Sri Lanka is just a few years away from reaching the higher-middle-income band, under the current growth trajectory.

“However, per capita healthcare spend of 102 US dollars is significantly below the average per capita for higher-middle-income countries at 465 dollars, highlighting the growth potential in the medium term.”

Fitch said the rising incidence of non-communicable diseases (NCDs) will also support growth in demand for hospital services.

“Non-communicable diseases are on the rise, owing to the ageing population and dietary and lifestyle changes resulting from rapid urbanisation,” the report said.





“These dynamics should be a catalyst for strong demand, given that treatment of NCDs involves long hospital stays and advance procedures.”

The rating agency said private hospital can also capitalise on the medical tourism trend.

“Expanding the global medical tourism market is a key growth driver for the private sector,” it said.

“Most have already upgraded some of their facilities to international standards to cater for this market, and are treating an increasing number of patients from countries such as India, the Maldives, Bangladesh and the Seychelles.”
Colombo/September 29 2015)

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