Major private hospitals in Ho Chi Minh City are struggling to turn a profit despite making massive investments in infrastructure and equipment.
Some of them have even called it quits or have sold out to other investors.
By the time International General Phuc An Khang Hospital in District 2 wrote to health authorities in April to inform them it would be closing after just two years, it had had already racked up accumulated losses of VND60 billion ($2.64 million).
With 500 beds meeting international standards, Phuc An Khang hospital used to make VND3 billion per month in revenue.
But that sum was only enough to cover staff salaries, and the hospital had to use its own capital for other expenses such as medicine, director Mai Tien Dung told VnExpress in an earlier interview.
“The pressure from the loan we took out in the first place to build the hospital is probably the main reason for our downfall,” he said.
International General Phuc An Khang Hospital in HCMC's District 2. Photo by VnExpress/Tran Ngoan
The hospital's investor plans to sell equipment worth VND200 billion and other assets to pay outstanding salaries to staff.
It's a similar story for Phu Tho General Hospital in Tan Phu District.
This hospital closed its doors after its investor failed to pay interest on a total loan of VND120 billion to 30 lenders.
After the investor jumped ship, the lenders seized the hospital’s equipment and turned it into a parking lot.
Once regarded as a bright light in the country's high-end medical sector, Vu Anh International General Hospital in Go Vap District is now looking for partners to save its business.
Doctor Vo Xuan Son, director of Exson International Clinic in District 10, said that a number of factors are making it difficult for private hospitals, including unfair policies between public and private facilities.
“Revenue at private hospitals is fairly stable, but their profits are always low because, unlike public hospitals, they have to bear expenses for hiring premises, equipment depreciation and corporate income tax,” Son said.
Management is another headache for private hospitals as most directors are doctors with no business experience, he added.
More than 170 private hospitals with 45,000 beds are operating in Vietnam, according to data from the Vietnam Private Hospital Association, and the country has been calling for more private investments in public hospitals to improve service quality in the public sector.
Total expenditure for healthcare service in Vietnam makes up 5.8 percent of the country's economy, the highest in the region, said the Vietnam 2035 report released last year by the World Bank and Ministry of Planning and Investment.