HEALTHCARE | Staff Reporter, India

Funding gaps plague Sri Lanka's public healthcare

These ongoing gaps have created a need for the private sector to fill in.

Opportunities will continue to be restricted in Sri Lanka’s public healthcare sector, as continued lack of medical funding and healthcare infrastructure continue to haunt the sector, a report from Fitch Solutions has revealed.

Sri Lanka’s hospitals are dominated by the public sector due to the government’s policy of providing free universal healthcare. The state operates 603 hospitals with 3.6 beds for every 1,000 people in the population.

Furthermore, demand for quality healthcare has risen over the years with improving incomes and an ageing population, and non-communicable diseases have been on the rise due to changing lifestyles.

However, the state health care sector cannot cope with the demand. The country only has one qualified doctor for every 1,200 people and one nurse for every 570 people in the population. The government funding for healthcare has also been less than 2% of GDP each year since 2015.

Public healthcare infrastructure in the north and east of the country has also been poor owing to damage caused during the country's civil war.

Moreover, the country currently faces an acute shortage of specialist beds for cardiology, surgeries, cancer and neurology, and it is estimated that there is a shortage of 14,000 doctors, and 25,000 nurses.

Fitch warned that the chronic underfunding within the country’s public healthcare system continues to undermine access to care, posing risks to multinational pharma firms’ revenue growth prospects. Underinvestment also contributes to a growing need to pay out-of-pocket for drugs even when using public facilities.

On the other hand, these shortages have created a pressing need for greater private-sector participation to address the prevailing gaps in the public system. The long-term rise of household incomes is expected to provide a boon for private hospitals which generate a substantial amount of their revenues from out-of-pocket payments, the report stated.

Private healthcare spending reached a value of $1.9b (LKR339.3b) in 2019, which is expected to rise to $2.4b (LKR557.7b) by 2024 with a five-year CAGR of 10.4% in local currency terms.

"Sri Lanka’s private healthcare sector has been on a rapid uptrend due to the burgeoning middle and upper-middle-income classes, who seek healthcare at relative convenience," Fitch noted.

The long-term demand outlook of private healthcare also remains favourable due to rising medical insurance penetration, lifestyle-related disorders and physical limitations of the public healthcare system.

As a result, the sector saw some significant investments in building capacity by several players in the last five years. Major private healthcare players also anticipate ongoing strong growth within the sector, which could drive healthcare market growth over the coming years.

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