Vietnam’s Healthcare Cost Challenge: Actions to Take

Vietnam continues to face healthcare expenditure challenge in the next six years, according to Solidiance’s white paper, “The ~USD 320 billion healthcare challenge in ASEAN”. The report stated that ASEAN-6 nations are facing an unprecedented rise in healthcare cost in the coming decade. The total healthcare spending is estimated to increase from around USD 420 billion to USD 740 billion by 2025.

The USD 320 billion increment should be addressed by the governments and healthcare industry stakeholders in ASEAN to avoid future crisis and develop more efficient healthcare model in the future.

In addition to the cost challenge, Vietnam healthcare industry is facing several challenges, such as outdated and overcrowding hospitals, obsolete medical equipments, limited State budget, and shortage of qualified medical staffs.

Whereas the growth of healthcare spending along with economic growth is a common sign of developing economies, Vietnam is currently facing healthcare expenditure challenge. Throughout 2013-2017 the growth of Vietnam’s healthcare expenditure per capita reached 26.78%, from USD 112 in 2013 to USD 142 in 2017, outpacing GDP per capita. Vietnam’s public healthcare expenditure was also the highest among ASEAN countries, 3,8% of GDP in 2014.

The report stated the drivers of healthcare demand in Vietnam for 2015-2040 as follows: age 0-14 (-0.44%), 15-64 (0.36%), and above 65 (4.43%) annually (CAGR). The data also recorded 23,6% prevalence of smoking in 2015, while in 2016 overweight level was at 20,4% and obesity level was at 3,5%. The large population of unhealthy elder people might be caused by increasingly unhealthy living people in the working age population in Vietnam.

3 Levers to Improve Vietnam’s Healthcare System

Despite the rising challenges, ASEAN-6 nations including Vietnam could take early actions. Firstly, the country needs to generate new sources of healthcare funding. Vietnam and other ASEAN-6 countries still show an inconsistent pattern of taxation on unhealthy luxury commodities. Vietnam has imposed ~70% tax on tobacco and ~30-60% on alcohol, where sugar and salt are still not taxed. Streamlined co-payment or broader insurance systems could also improve the situation for consumers and governments. As for Vietnam has about 3/4 healthcare coverage for the citizens.

Secondly, Vietnamese public hospitals rely largely on a State budget which has been increased but is still too low to meet the demands. Vietnam and ASEAN-6 countries could rationalize budget and reduce overhead cost.

Thirdly, Vietnam should invest more in prevention at early stages of treatment that might avoid future cost. Early diagnosis and treatment can also greatly improve survival rates of patients and the need for massive treatment. This must become a key pillar of sustainable healthcare policy.

Thus, policymakers in Vietnam and ASEAN-6 countries should be able to face the challenges and strives for the right balance in delivering quality and efficiency in healthcare industry. This recent challenges will also create valuable opportunities for the private sectors for partnering with governments to ease the key problems.