Prognosis good for healthcare sector
A growing middle class, an ageing population and increasing medical insurance coverage are all set to be key drivers for the healthcare sector in Malaysia.
These factors are also encouraging healthcare players to further invest and expand their operations to cater to increased demand.
There are over 200 private hospitals in the country, with the sector dominated by large hospital chains such as listed KPJ Healthcare Bhd, IHH Healthcare Bhd, and non-listed entities like Columbia Asia Group.
However, there are also a range of smaller groups such as Ramsay Sime Darby chain and stand-alone or development-linked hospitals like the Tropicana Medical Centre Kota Damansara and Sunway Medical Centre.
Despite what might appear to be a crowded space, more private hospitals are expected to be built in the coming years.
One factor that makes the Malaysian market attractive is that a significant amount of healthcare spending goes towards private providers, Columbia Asia CEO Kelvin Loh told a recent press briefing.
In Malaysia, 44.6% of all healthcare spending or US$7.9 bil (RM33.04 bil) goes towards private healthcare, creating a large market for private players to tap into.
This is in contrast to developed countries like the United Kingdom where only 19.7% is spent on private healthcare, or Japan where just under 16% of total healthcare spend goes to private players.
More importantly for the private healthcare players, Malaysians are expected to spend even more over the next five years. Private healthcare spending is expected to see an estimated five-year compound annual growth rate (CAGR) of 13.7% from 2018 to 2023.
With developed markets such as the UK expected to see only 5.9% and Japan, just 2.1% growth over the same period, it is perhaps not surprising that private players are focusing their efforts on the developing Asian markets such as Malaysia.
Growing ageing population
In Malaysia, an increase in the ageing population combined with a growing middle-class is further widening the market for private healthcare, says Loh.
This year, seniors comprised 6.5% of the population. It is expected to rise to 9.7% in 2030 and to 16.4% by 2050.
As people become older, it is fair to assume that the incidence of non-communicable diseases will rise too. This should lead to an increase in demand for healthcare in the coming years.
Loh also points out that statistics show that from 2017 to 2022, the middle-income population is expected to grow from about 13 million of income earners a year ago, to about 14.4 million in 2022.
He highlights that currently there is under-penetration of insurance but that offers room for growth. As healthcare costs rise, medical insurance is expected to gain traction in Malaysia.
In the recent budget, the federal government announced that it will introduce an insurance scheme aimed at providing the bottom 40 (B40) community with medical coverage. This scheme will attract a segment of the population towards the private healthcare sector who previously would have been dependent on the public sector for their medical needs.
Loh further points out that there is low bed to population ratio which creates growth opportunities for healthcare providers.
Currently the ratio is two hospital beds for every 1,000 population.
In contrast, mature healthcare markets like the UK have a ratio of 2.7 to 1,000 population. In Japan the ratio is 12.2 beds per 1,000 people.
Read More at: FocusM