Skilled staff shortage ‘significant’ challenge for private healthcare:RAM
View(s):A ‘significant’ challenge to Sri Lanka’s private healthcare sector growth is a shortage of skilled staff. This gap has also led to escalating staff costs over the years, according to ratings agency RAM.
The ratings agency, which recently also upheld its long-term “A+”, with stable outlook, and short-term “P1″ corporate rating for the Lanka Hospitals Corporation (LHC- formerly Apollo hospital), further noted; “As these cost increases cannot be fully passed on to customers, given the competitive nature of the industry, persistently rising costs may continue to pressure LHC’s profit margins”.
Additionally, RAM also indicated that “LHC’s overall profitability is hampered by its high cost profile. Also, amid keener competition in the fragmented healthcare sector, the hospital’s revenue growth had been relatively slower in FY Dec 2011 than a year earlier”.
However, RAM also opined that “subsequent to the re-nationalisation of Sri Lanka Insurance Corporation PLC (‘SLIC’) – LHC’s major shareholder – in 2009, the Government of Sri Lanka (‘GOSL’) indirectly owns 54.61 per cent of the hospital. State support is, therefore, expected through SLIC and the hospital’s board that is largely represented by key government personnel”.
Meanwhile, commenting on the local private healthcare sector overall, RAM stated: “An increasing number of patients have, over the years, sought treatment at private hospitals as opposed to the government sector, owing to better service quality and shorter waiting times. The growth prospects of the local private healthcare industry remain encouraging, underscored by greater health awareness among the public, higher disposable incomes, Sri Lanka’s increasing ageing population and healthcare insurance coverage among the working population”.
Continuing, it also added: “The local private healthcare sector is fragmented; competition is keen within Colombo, where most of the established players are concentrated and where demand is high owing to higher disposable incomes. Competition from other private hospitals with multiple branches is also viewed with concern”. (JH)
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