HEALTHCARE SECTOR
Compiled by Tamara Rebeira
HEALING MEDICAL STRAINS
Badrajith Siriwardana elaborates on how barriers in healthcare can be overcome
Q: How would you describe the state of the medical fraternity – particularly private healthcare?
A: Following the economic crisis, Sri Lanka’s healthcare sector is recovering though challenges remain.
During the crisis, shortages of essential medicines led to stockpiling; and while the immediate crisis has eased, rising costs of imported healthcare inputs – including basic needs such as over the counter pharmaceuticals and surgical items – have raised affordability concerns.
Exchange rate fluctuations have doubled some prices, pushing many patients back to the government sector.
The brain drain is another critical issue with highly qualified doctors, nurses and other healthcare professionals migrating for better opportunities, leading to workforce gaps.
And the high cost of medical equipment such as high-end MRI and CT machines poses challenges to recover investments within their lifespan – especially due to shortened lifespans caused by technological obsolescence.
As experienced professionals head towards retirement, shortages of skilled personnel are expected to worsen, creating an uncertain long-term outlook for the sector.
Q: What challenges do hospitals face in maintaining high quality healthcare standards amid economic challenges?
A: The healthcare sector faces two major challenges – viz. the scarcity of skilled professionals and difficulties in adopting new medical technologies.
Meanwhile, the brain drain is severe with medical consultants, nurses and technicians migrating for better opportunities. This is driven by stagnant salaries, as healthcare providers cannot charge adequately due to limited disposable incomes of patients.
The second challenge is the high cost of advanced medical technologies such as imaging machines and cancer treatment systems. Recovering these costs is tough due to local pricing constraints, putting a further strain on government healthcare facilities.
Recent VAT impositions on medical equipment, now taxed at 20 percent, have increased costs substantially.
Additionally, the regulatory framework favours European suppliers, leading to monopolistic pricing. Broadening the framework to include suppliers from Southeast Asia could reduce costs and improve affordability.
Q: How important is it for private healthcare providers to improve healthcare accessibility and affordability?
A: Affordability is a critical challenge, making it difficult for hospitals to sustain operations. The sector operates on a volume based model where maintaining efficiency and affordability is crucial for survival.
Without sufficient patient numbers, hospitals struggle to cover costs and invest in staff and other resources. Despite efforts to improve affordability through resource sharing and efficiency, high labour and equipment costs remain obstacles.
Hospitals’ profit margins are often lower than expected: margins for earnings before interest, taxes, depreciation and amortisation (EBITDA) cap at 20 percent and operating profits at 18-20 percent. A substantial share of the revenue goes towards labour, medical supplies, equipment and operational costs, leading to inadequate returns on investment (ROI).
Medical tourism presents a potential growth avenue.
Turkey, Thailand and Singapore have successfully leveraged their skilled professionals and healthcare facilities to attract international patients. Sri Lanka, with its highly qualified consultants and nurses, possesses similar strengths but hasn’t effectively marketed its resources globally. Promoting medical tourism could generate much needed revenue, ease the burden on local patients and maintain affordable prices.
Q: As you have noted, brain drain has been a major concern in the healthcare sector. What measures could help mitigate this predicament?
A: The primary reason for people leaving Sri Lanka is the gap between expectations of the quality of life and what other countries offer.
This drives people to seek opportunities overseas – raising salaries or offering perks won’t retain talent in the long term. The core issue is the lack of economic security and confidence in the country’s future.
If the new government demonstrates a clear economic plan and tangible progress, the trend of migration may reverse. However, unfulfilled promises in the past have left many disillusioned. Building confidence is most important.
Another concern is the high tax burden on professionals – especially in the medical field. While taxes are inevitable, tangible benefits must be provided in return. In countries with high taxes, citizens enjoy quality public services but Sri Lanka has not provided such returns.
Ensuring that taxes are used productively and offering direct benefits may encourage people to stay and contribute to the country’s growth.
Q: With the increasing demand for specialised care, how should the sector address the shortage of specialists?
A: A key issue is the barrier to importing skilled labour. To this end, existing restrictions may need to be liberalised over time.
For example, Sri Lanka faces a shortage of skilled nurses while India has an adequate supply. To maintain specialised care, free movement of skilled labour may be needed on a case-by-case basis where there are shortages.
Another opportunity is the education system. While Sri Lanka has state universities, degrees for allied healthcare professionals are limited. Expanding programmes and updating curriculums could address the global demand for theatre technicians, radiographers, nurses and caregivers, thereby enhancing the quality of healthcare.
