Private sector drives innovation in Philippine health care industry

With many hospitals, clinics and pharmacies privately owned, the non-state sector plays a major role in the health sector in the Philippines. Indeed, some 30% of the population uses private services from independent hospitals, offices and clinics with fee-for-service payments. The private sector has expanded in various fields in recent years, from hospitals to stem cell banks.

Middle Class Growth

Strong economic and population growth, gaps in the public system and the recent opening up of health care to create a more integrated and cohesive market in ASEAN have driven expansion. “The health care industry has seen high growth and significant investment, as demand for health services grows in tandem with an expanding middle class,” Salvador P Castro Jr, chairperson and president of project and construction management firm SPC astro, told OBG.

While exact numbers and definitions are rarely agreed upon or released, Asian Development Bank figures show the middle class growing by 12% between 1990 and 2008. With real GDP expanding by 6.7% in 2017 and average growth exceeding 6% in the 2013-17 period, the middle class is likely to have continued on this trajectory. Comprising the main market for private health insurance, the middle class has contributed to the growth of health maintenance organisations (HMOs) in recent years (see Insurance chapter).

HMOs, which since 2015 have been regulated by the Insurance Commission rather than the Department of Health, are benefitting from an expanding workforce as corporates roll out health care plans for employees. “The corporate market continues to grow at a rapid rate, driven by roughly 100,000 new employees added to the workforce each year,” Christian Argos, president and CEO of domestic health care firm Maxicare, told OBG. “However, HMOs cannot count on 40% year-onyear growth based on the corporate market, so the consumer market will be important.”

Key Players

In recent years the number of private hospitals has increased to meet rising demand, led by developers such as SPC astro, Metro Pacific Investments Corporation (MPIC), Mt. Grace Hospitals and QualiMed Health Network. MPIC’s hospital arm, Metro Pacific Hospital Holdings, has plans to build 30 primary health care clinics by 2023 and 25-30 new hospitals by the late 2020s. This expansion could include QualiMed, owned by Ayala Land-Mercado General Hospital, which has four domestic hospitals and seven outpatient facilities. In quarter one of 2018 MPIC was reported to be eyeing QualiMed for potential acquisition. Meanwhile, Fullerton Healthcare has bought 60% of Intellicare.

The new facilities are not confined to Metro Manila: plans for a 40-bed charity hospital in Victorias City, Negros Occidental were announced in October 2017, while the 133-bed Salubris facility was launched in Nueva Vizcaya later that year. Cebu is also seen expansion, with a 100-bed facility in Agus, Lapu-Lapu City opening in the first quarter of 2018. This is run by Allegiant Regional Care Mactan, an Alegrado family line. The same family runs the Bluewater Resorts chain, indicating that medical tourism drives some private sector interest in health. Indeed, the Cebu region is seeking to position itself as a medical tourism centre to rival regional leaders such as Singapore and Thailand.

Tech

The private sector is investing in other specialised areas, such as stem cell banking. “Cord blood and lining banking serves as biological insurance, as it targets a market that has disposable income and values future investments,” Michael Arnonobal, director of Cordlife Philippines, told OBG. Clinical trials are also largely supported by the private sector. Private outfits work mainly on behalf of global clients, though local services are also being developed. Some 100 hospitals have clinical trial experience, with stakeholders reporting that regulatory approval timelines have also improved.

Private sector firms are also pushing the development of more IT-based services in the country. MedGrocer, for example, has partnered with Ayala Healthcare Holdings to offer online purchases of pharmaceuticals.