Economic Update

20 Mar, 2017

Vietnam is working to expand health insurance coverage and improve health care delivery, with demand expected to increase as the country’s elderly population grows.

Coverage on the rise

Great strides have been made in expanding health care coverage in recent years, with around 81.7% of the population currently covered by insurance plans, according to Nguyen Thị Kim Tien, the minister of health, up from 68% in 2013.

The minister also reported earlier this month that insured patients accessed care 148m times last year, a 12.2% increase on the 2015 figure.

As the government aims to bring insurance coverage to 100% of the population by 2030, additional initiatives are also in the works to further enhance health care delivery, such as the plan announced last month to roll out electronic health care security cards.

A new digitised system carrying the records of health care registries across the country will accompany the cards, with the aim of making it easier for patients to access health insurance plans and care wherever they may be.

Supporting the elderly

Improving access to health services will be vital in the future as Vietnam’s elderly population increases in size.

A report published by the UN Population Fund (UNPFA) in 2016 warned that Vietnam would have to contend with a rapidly ageing population in the coming decades.

According to the UNPFA’s findings, while the national population will grow by at least 18.1% from 90.5m in 2014 to 105m by 2049, the proportion of Vietnamese aged 65 or above will increase from 7.1% to 18.8% over the same period.

The mean age of Vietnam’s population will also rise sharply, the report noted, up from its present level of below 30 years, to nearer 41.6 by the middle of the century.

Traditionally, the Vietnamese care for their elderly within the family, and the network of formal health care support services remains underdeveloped, according to Nguyen Tri Anh, CEO of health care services provider MEDLATEC.

“The country is absolutely not ready to handle an ageing population locally in the near future,” he told OBG. “Currently, there is only one state-owned hospital in Hanoi catering for the needs of the elderly.”

Opportunities in the community

There is a growing awareness that an ageing demographic will require investment and specialised services to cater for the shift in health needs.

“There is a need for family doctors,” Nguyen Vinh Tuong, general director of Victoria Healthcare VN Group, told OBG. “The family doctor is not widely used as in developed markets, because the mindset is linked to consulting specialised practitioners.”

As part of moves to ameliorate this issue, the government implemented a family medical practice model on a trial basis between 2013 and 2016, though the initiative came up against challenges.

Talking to the press last year, the minister said that while most health experts agreed with the family doctor model, a shortage of professionals trained in family medicine had made the system’s implementation problematic.

According to statistics on the global health workforce compiled by the World Health Organisation, there were 107,867 physicians practising in Vietnam in 2013, representing 1.2 practitioners for every 1000 patients.

Going private

The government is also looking to the private sector to meet some of the demands being placed on the industry, designating health care as one of 17 sectors open to foreign investment in January last year.

Opportunities for private investment in health care have also risen due to Vietnam’s growing middle class, according to Jean-Marcel Guillon, general director at Far East Medical Vietnam (FV Hospital).

“Vietnam is a country with 95m inhabitants and a middle class that has grown significantly over the past years,” Guillon told OBG. “As in other countries, their needs have expanded.”

These requirements have helped to enhance the level of health care in the country, he added, both in terms of quality and comfort, spurring a wave of new investment. “Today major players are eyeing Vietnam because it is a growing, healthy market,” he said.

Forecasts from health analytics firm IHS Markit Life Sciences support this view, with the company predicting health care spending will grow by 8.6% in 2017 to reach VND302.7trn ($13.3bn). The company also sees pharmaceuticals sales rising 10% this year to $2.2bn

The pharmaceuticals industry is one area in which authorities have made significant moves to encourage foreign investment recently, with Vietnam’s State Securities Commission lifting a foreign investment cap on a third domestic pharmaceuticals company in September.

Domesco Medical Import Export, the country’s third-largest drug manufacturer, is the first pharmaceuticals business to receive approval for 100% foreign ownership, with Chile’s CFR International currently holding a 45.9% stake in the company.