Privatization of select hospitals in Vietnam continue despite poor revenue realizations

While most private investors remain wary about investing in Vietnamese hospitals, a few distinct investments are challenging the trends. In September 2015, T&T group (real estate company) became the major shareholder in Vietnam Central Transportation Hospital located in Hanoi. This hospital is owned by the Ministry of Transport and became the first medical center to be equitized in the country. The deal was worth around US $7.4 million with the group now holding a majority stake of 51.43%, and the government maintaining a 30% stake. Continuing this trend, T&T group is looking to invest in two more public hospitals, also run by the Ministry of Transport. These hospitals are located in Vinh and Da Nang cities and is likely to culminate into the creation of a network of hospitals, with the Central Transportation hospital being the hub.

When the Central Transportation Hospital initially was courting investors, strong competition was expected from foreign entities. Singapore’s Brookline Medical and other real estate developers Vingroup and FLC group were expected to bid after declaring interest. However eventually, only two companies formally bid for the hospital shares; thus bringing a rather harsh spotlight on Vietnam’s weak healthcare sector. Despite a population of 90 million, a rapidly growing middle class and high potential, investors remain cautious. For instance, Singapore’s Parkway Hospital has been running an office in Vietnam for 10 years and is being primarily used for bringing local patients overseas for treatment. There are no further indications that the Singapore based would invest in building hospitals locally in Vietnam in future. Private hospitals are facing problems to recover costs in the country as they operate at less than half capacity due to high costs and lack of qualified doctors. In the past 10 years, although private hospitals have quadrupled to 170; about half of them remain low in profitability, close to being shut down.  Thus, there is a significant way to go before private investors can be confident of recouping their costs in Vietnam.