Modular Specialized Health Care Facilities
Modular Specialized Health Care Facilities
Business Model Description
Construction of modular specialized healthcare facilities for dialysis patients in remote areas with identified demand and support from local government.
The UP-PGH Diliman Project is a P21 billion (375 million USD) project that involves the construction of a 'world-class' hospital through public-private partnerships. It aims to provide an addition of 700 beds to cater to the growing need in the NCR and neighboring provinces, Rizal and Laguna. The hospital is also expected to cater to 2,000 outpatient visits per day and 36,196 in-patient admissions per year.
The UP-PGH Cancer Center Project is a 30-year concession where a public-private partnership is involved in the planning, construction, and operation. It is expected to provide a 300-bed capacity facility for cancer patients, half of which is allocated for free use of low-income patients.
The Baguio General Hospital Medical Center (BGHMC) Renal Center Building Project involves the development of a renal treatment facility that will house 60-110 hemodialysis machines under a 15-year PPP contract period. It will serve the needs of hemodialysis of renal patients in the northern Luzon regions (Region 1, 2, and Cordillera Administrative Region).
The Department of Public Works and Highways (DPWH) constructed more than 600 COVID-19 facilities, providing a total of 24,513 beds nationwide. These facilities include quarantine and isolation centers, as well as off-site dormitories, and modular hospitals. These healthcare resources are strategically situated in major cities and provinces across various regions in the country, including BARMM.
Expected Impact
Establishing specialized healthcare facilities in the country to cater to the needs for specialized treatment, especially by low-income patients.
How is this information gathered?
Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.
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Country & Regions
- Philippines: National Capital Region (NCR)
- Philippines: Cagayan Valley
- Philippines: Cordillera Administrative Region (CAR)
Sector Classification
Health Care
Development need
In 2018, public spending on health was only USD 50 per person, i.e., only half the amount spent by ASEAN countries that successfully implemented universal healthcare. Post pandemic, analysts expect that the under-five mortality rate has increased compared to the last reported 2019 data of 12.83%.
This is coupled with multiple closures of last mile healthcare delivery services due to severe cashflow issues during the pandemic. Industry leaders highlight the need for reinvestment in the sector to improve basic healthcare within the country. (1)
Policy priority
The Philippine Development Plan 2023-2028 outlines four priorities to improve the health sector and achieve universal health care in the new normal: (1) improvement of the social determinants of health, especially for the vulnerable sector; (2) people empowerment towards healthy choices and behavior.
Gender inequalities and marginalization issues
Although social health insurance coverage (PhilHealth) was 100% as of 2019 with the signing of the Universal Health Care Act, many are still reliant on out-of-pocket expenditure as their primary source of financing for medical care, which is likely to push Filipino households to poverty.
Investment opportunities introduction
The reduced access to healthcare underlines the investment opportunities for the private sector. With health services being devolved to the local governments, coordination for private sector partnerships to develop health care delivery solutions can be easier.
Capiz and Quezon City, through their investor forums, have showcased their readiness to partner with private healthcare sector to create further solutions and opportunities in the space.
Key bottlenecks introduction
The decentralization of budget for key services such as health means that local governments have to increase capacity and be able to plan their local health strategy, which can be a bottle neck for investments. As per experts, challenges in cashflow due to dependence on PhilHealth's information system is a key bottleneck for further investments.
Health Care Providers
Development need
The Philippines' hospital bed density of 1.2 beds for every 1000 population is one of the lowest statisctics in the world. To reach the target of 4 beds for every 1000 population – as that of upper middle-income and high-income countries – additional 400,000 beds are required.
Meanwhile, there are 2.3 million Filipinos with chronic kidney disease and only 372 dialysis centers in the country as of 2023. (6)
Policy priority
The Philippine Health Facility Development Plan for 2020-2040 (PHFDP) emphasizes the importance of investing in specialty health facilities. Specifically, investment of USD 1.446 billion in infrastructure and equipment is required until 2025 and USD 19.4 billion for Specialized Laboratories.
Gender inequalities and marginalization issues
Low-income population and those in remote areas are the most impacted due to inadequate public health services. Health care facilities, including specialised health centers for kidney diseases, often close down due to lack of proper investment and financing solutions, which in-turn adversey impacts such communities.
Investment opportunities introduction
Development of Healthcare infrastructure is one of the main objectives for the Philippine Development Plan for 2023-2028, which promotes private sector investments in this area. Multiple healthcare deliveries are lined up for public-private partnerships.
Key bottlenecks introduction
The decentralization of budget for key services such as health means that local governments have to increase capacity and be able to plan their local health strategy, which can be a bottle neck for investments. There's a decentralization of efforts related to healthcare facilities which puts the burden on the department of health to seek solutions.
Health Care Delivery
Pipeline Opportunity
Modular Specialized Health Care Facilities
Construction of modular specialized healthcare facilities for dialysis patients in remote areas with identified demand and support from local government.
The UP-PGH Diliman Project is a P21 billion (375 million USD) project that involves the construction of a 'world-class' hospital through public-private partnerships. It aims to provide an addition of 700 beds to cater to the growing need in the NCR and neighboring provinces, Rizal and Laguna. The hospital is also expected to cater to 2,000 outpatient visits per day and 36,196 in-patient admissions per year.
The UP-PGH Cancer Center Project is a 30-year concession where a public-private partnership is involved in the planning, construction, and operation. It is expected to provide a 300-bed capacity facility for cancer patients, half of which is allocated for free use of low-income patients.
The Baguio General Hospital Medical Center (BGHMC) Renal Center Building Project involves the development of a renal treatment facility that will house 60-110 hemodialysis machines under a 15-year PPP contract period. It will serve the needs of hemodialysis of renal patients in the northern Luzon regions (Region 1, 2, and Cordillera Administrative Region).
The Department of Public Works and Highways (DPWH) constructed more than 600 COVID-19 facilities, providing a total of 24,513 beds nationwide. These facilities include quarantine and isolation centers, as well as off-site dormitories, and modular hospitals. These healthcare resources are strategically situated in major cities and provinces across various regions in the country, including BARMM.
Business Case
Market Size and Environment
> USD 1 billion
10% - 15%
2.3m Filipinos suffer from Chronic Kidney Disease (CKD)
In 2021, USD 9.1 billion of the country health expenditure went to spending on hospitals (12) While in 2022, total country health expenditure on non-communicable diseases, including CKD, is around USD 8 billion. Total number of Filipinos with CKD is expected to increase annually by 15%.The expansion of hospitals likely contributed to a CAGR of 10.9% from 2014 to 2020.
The Department of Health AO 2006-004 prescibes a hospital bed ratio of 1 bed per 1,000 population. A 2022 study on on Philippine health service coverage finds that the median hospital density in the country is 0.735– which is less than the prescribed number.
In the Philippines, hemodialysis is the most common treatment modality for end-stage renal disease (ESRD) patients. According to the Philippine Renal Disease Registry (PRDR), 20,776 ESRD patients underwent hemodialysis treatment in 2016, and the prevalence of hemodialysis patients was 36,253.
The financing of CHE can be broken down into Government schemes and compulsory health contributions (50.3%), Household out-of-pocket payments (41.5%), and voluntary health care payment schemes (8.2%). CHE spending on hospitals amounted to USD 9.1 billion(. 15% annual increase of End-Stage Renal Disease (ESRD) patients in the Philippines from 2015 to 2016.
Indicative Return
> 25%
20% - 25%
ROI projection of 27.66% based on hemodialysis centers' estimated cost and revenue. Projection of 21.67% based on hemodialysis centers' estimated cost and revenue. Initial studies show a range of 10-15% IRR for both projects. Additionally, PPPC offers guidelines on what is consifered a "reasonable rate of return", which a PPP project is supposed to surpass. (8) (9)
The estimated working capital for 100 machines in a hemodialysis center is around USD 850,000, estimated construction cost is around USD 1.1 million, equipment cost is around USD 1.3 million, and the estimated annual revenue is USD 4.3 million, giving an ROI of 27.66% and a gross profit margin of 21.67%.
Investment Timeframe
Short Term (0–5 years)
The average return on capital investment (ROI) for a dialysis center is 3.5 years. However, this ROI can vary depending on the proposed public-private partnership (PPP) structure.
Substantial time is spent between obtaining approvals and actual construction. Returns are only realized upon construction and finalization of operating solutions. The investment timeframe for the specialized healthcare center may also depend on the size and complexity of the center.
Ticket Size
USD 1 million - USD 10 million
Market Risks & Scale Obstacles
Capital - CapEx Intensive
Market - Highly Regulated
Impact Case
Sustainable Development Need
Latest data from the National Kidney and Transplant Institute states that 40 Filipinos develop renal disease per day. In 2021, more than 7M Filipinos had been diagnosed with chronic kidney disease (1). Along with other NCDs, renal diseases belong to the top 10 causes of mortality in the country (2).
Non Communicable Diseases (NCDs), inlcluding kidney problems, related to unhealthy lifestyles and environments and an increasingly ageing population are currently the leading cause of mortality among Filipino adults, which comprised 64% of total deaths in the country as of 2019.
Gender & Marginalisation
Poor families are the most vulnerable in accessing treatment for NCDs, especially due to lack of access and cost. In the Philippines, the average cost of treatment is around USD 700 per month, which is huge burden especially for low- to low-middle income patients whose income ranges from USD 200 to 700 per month (4). This is exacerbated by the long travel needed just to access to such facilities.
Women and older persons are affected the most by the lack of access to dialysis centers in remote areas, especially given their circumstances and roles in the household, taking care of their children, even sick.
Expected Development Outcome
The establishment of specialized healthcare facilities will help in slowing down the mortality rate due to NCDs and other diseases needing specialized care and contribute towards increase in the life expectancy of patients diagnosed with such diseases.
Supplementary to PHC, the creation of specialty health facilities is crucial to the attainment of universal health care. This allows more focused provision of care and services for specific health conditions while increasing the capacity to cater to the health needs of the rest of the population.
Gender & Marginalisation
The provision of financial assistance through health services to low-income patients will ensure proper care and treatment necessary for the betterment of their health conditions. This ensures the attainment of good health and well-being for all regardless of socioeconomic status.
Increased access to specialised health centers will reduced inequalities experienced by women and older persons in relation to time-use for health treatments
Primary SDGs addressed
3.4.1 Mortality rate attributed to cardiovascular disease, cancer, diabetes or chronic respiratory disease
Current mortality rate across such critical illnesses is 4.6. Specialized healthcare centers are specifically crucial for addressing reduction in mortality rate. Renal facilities for example are critical to improve mortality rate against diabetes
N/A for overall target
Secondary SDGs addressed
Directly impacted stakeholders
People
Gender inequality and/or marginalization
Public sector
Indirectly impacted stakeholders
People
Corporates
Public sector
Outcome Risks
Environmental Risk: Waste generated from activities involved in this IOA need to be treated properly and efficiently
Gender inequality and/or marginalization risk: If patient payment sturcture is not affordable, it may put underprivileged families in further debt.
Impact Risks
Substandard equipment or materials may pose further health risks instead of providing cure to patients. Gender inequality and/or marginalization risk: If most infrastructure projects are located in urban centers, it may still require hours of travel time from marginalized communities to access such centers.
Impact Classification
What
Increase specialized healthcare facilities and decrease the distance that patients need to travel just to receive their needed medication
Risk
Procurement processes may delay construction and acquisition of necessary equipment, or may pose quality issues as lowest cost bidders are often selected.
Contribution
Part of more than 7M Filipinos diagnosed with chronic kidney disease in 2021 will benefit with better treatment (1) or 42,500 deaths due to cancer in the Philippines (2) can be lowered
Impact Thesis
Establishing specialized healthcare facilities in the country to cater to the needs for specialized treatment, especially by low-income patients.
Enabling Environment
Policy Environment
The Philippine Health Facility Development Plan for 2020-2040 (PHFDP) emphasizes that investing in specialty health facilities is crucial with investment needs for infrastructure and equipment until 2025 estimated at PHP 82 billion (3). The National Objectives for Health outlines and elaborates general and specific targets within the health sector’s agenda for every five-year period (5).
Administrative Order 2023-0009 of the DOH contains the guidelines on the implementation of projects under the Health Facility Enhancement Program (HFEP) of the current year. The HFEP is the annual manifestation of the plans outlined in the long-term PHFDP 2020-2040 (6).
House Bill No. 7751, or the Department of Health Specialty Centers Act pushes for a specialty center per region.
Financial Environment
Foreign direct investments is limited to 40% maximum ownership for this sector. Fiscal incentives: Duty-free importation of medical equipment Other incentives: Hiring of foreign nationals and special residency visas
Regulatory Environment
(Regulation): Section 29 of the Universal Health Care Act (RA 11223) states that all specialty health facilities in the country shall regularly submit a report of bed occupancies reflecting the prioritization of low-income patients (not less than 70%) (7).
The Health Facilities and Services Regulatory Board (HFSRB) under the DOH is the primary authority that implements and monitors regulatory policies and standards that ensure the quality of practices and services within health facilities
The Republic Act 6957, as ammended by the Republic Act 7718 or also known as the Build-Operate-Transfer (BOT) Law details the general terms of private sector investments and involvement in PPPs involving public infrastructure projects (8).
Marketplace Participants
Private Sector
Medical care companies: AC Health, Quanta Dialysis Technologies, MEDTRONIC, NxStage Medical, Inc., Mediclinic LeapFrog Investments, LGT Impact, Elevar Equity, OrbiMed Advisors, Vivo Capital, Fidelity Biosciences, Global Infrastructure Partners (GIP), Brookfield Asset Management, Acumen, Omidyar Network, Khosla Impact.
Government
Department of Health, University of the Philippines - Philippine General Hospital, Public-Private Partnership Center, LGUs, National Kidney and Transplant Institute
Multilaterals
World Health Organization, Asian Development Bank, World Bank, International Finance Corporation
Non-Profit
Philippine Digital Medicine Society, AeHIN, Health Futures Foundtaion
Public-Private Partnership
Public-Private Partnership (PPP) Center,UP PGH Cancer Center, Baguio General Hospital Medical Center (BGHMC) Renal Center, Cagayan Valley Medical Center (CVMC) Hemodialysis Center
Target Locations
Philippines: National Capital Region (NCR)
Philippines: Cagayan Valley
Philippines: Cordillera Administrative Region (CAR)
References
- (1) National Kidney Transplant Institute. (n.d.). Kidney Health Plus. https://nkti.gov.ph/index.php/patients-and-visitors/kidney-health-plus
- (2) Philippine Statistics Authority (PSA). (2023). 2022 Causes of Deaths in the Philippines. https://psa.gov.ph/content/2022-causes-deaths-philippines-preliminary-31-october-2022
- (3) Department of Health (DOH). (2020). Philippine Health Facility Development Plan. https://doh.gov.ph/sites/default/files/publications/DOH_PHILIPPINE%20HEALTH%20FACILITY%20DEVELOPMENT%20PLAN%202020_2040_0.pdf 4.A) Castillo, L. (2015, June 12). Treatment of Filipinos with end-stage renal disease pushed. House of Representatives https://www.congress.gov.ph/press/details.php?pressid=8780 4.B) Novartis (2023) https://www.novartis.com/ph-en/news/world-kidney-day-patient-groups-novartis-enhancing-health-access-renal-replacement-therapy-patients
- (5) DOH. (2021). New Normal for Health. https://doh.gov.ph/sites/default/files/publications/The-New-Normal-for-Health.pdf
- (6) DOH. (2023). Guidelines on the Implementation of Projects Funded Under the Health Facilities Enhancement Program (HFEP) Fiscal Year 2023. https://dmas.doh.gov.ph:8083/Rest/GetFile?id=745861
- (7) Official Gazette. (2019). Universal Health Care Act. https://www.officialgazette.gov.ph/downloads/2019/02feb/20190220-RA-11223-RRD.pdf
- (8) Official Gazette. (2022). BOT Law. https://www.officialgazette.gov.ph/2022/03/31/revised-implementing-rules-and-regulation-of-r-a-no-6957-an-act-authorizing-the-financing-construction-operation-and-maintenance-of-infrastructure-projects-by-the-private-sector-for-other-purpo/
- (9) PPPC (2022). Project Documents on BGHMC, CVMC, and UP-PGH Cancer Center Projects
- (10) Flaminiano et al, (2022). Spatiotemporal Analysis of Health Service Coverage in the Philippines. https://www.pids.gov.ph/details/news/press-releases/27-provinces-with-less-than-0-5-hospital-bed-per-1-000-population-pids-study
- (11) DOH, (2006). https://hfsrb.doh.gov.ph/wp-content/uploads/2021/05/AO-2006-0004.pdf
- (12) PSA, (2022). Health Spending Registered 18.5 Percent Growth, Share of Health to Economy Went Up to 6.0 Percent in 2021. https://psa.gov.ph/pnha-press-release
- (13) UN ESCAP, (2022). https://www.unescap.org/kp/2022/foreign-direct-investment-and-policies-health-sector-asia-and-pacific-20222023
- (14) DOH, (2022). https://docs.google.com/spreadsheets/d/e/2PACX-1vSrKKNMbcErl3HfqMdFmHPwTPdpGDq-m94w3nH5E5wC2mk0ge5Py-fTPCayujNU6yyCOBLYNhhr_-vk/pubhtml
- (15) PPPC, (2022). Sample computation on determining the reasonable rate of return (RROR) for the toll road industry. https://neda.gov.ph/wp-content/uploads/2022/12/PPP-Guidelines-Annex-C-Sample-computation-on-determining-the-reasonable-rate-of-return-RROR-toll-road-industry.pdf
- (16) UN ESCAP, (2022). https://www.unescap.org/kp/2022/foreign-direct-investment-and-policies-health-sector-asia-and-pacific-20222023
- (17) DOH, (2022). https://docs.google.com/spreadsheets/d/e/2PACX-1vSrKKNMbcErl3HfqMdFmHPwTPdpGDq-m94w3nH5E5wC2mk0ge5Py-fTPCayujNU6yyCOBLYNhhr_-vk/pubhtml
- (18) DOF, (2020). https://taxreform.dof.gov.ph/wp-content/uploads/2021/04/RA-11534-CREATE-Law.pdf
- (19) PPPC. List of Projects. https://ppp.gov.ph/list-of-projects/
- (20) PNA. https://www.pna.gov.ph/articles/1197990