Executive Top five private hospitals account for

Executive Summery

Sri Lanka’s
hospitals are dominated by the public sector due to government’s policy of
providing free universal healthcare. However, private sector hospitals have
been able to boost their share in hospital beds through capacity expansion at a
compound annual growth rate (CAGR) of 21% over the last seven years, compared
with 10% for the public sector.7The public sector accounted for 73%
of the hospitals and 93% of the available bed capacity as of end-2014.6 Sri
Lanka’s private hospitals are poised for strong and steady growth, with one of
the world’s fastest- growing, ageing population.

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Estimated total
population in Sri Lanka is 22.235 million and country’s private
spending is mainly used to pay private healthcare i.e. Consultant fees and
laboratories, pharmaceuticals and other medical/surgical items. Nearly 9% of
the population was 65 years of age and over at end-2014.4 This is
likely to double by 2030. Moreover, provision has shown robust growth during
1990–2015, increasing more than 120% to reach an estimated 4.210 beds, 266,000
discharges and revenues of Rs. 19 billion in 
2015.1 There are 52-54% of all healthcare expenditures spent
on private health needs.2 Top five private hospitals account for 45%
of the private- sector bed capacity5

The Market Scenario in Sri Lankan Health Care

The private health
care sector consisted of a few number of leading hospitals and a large number
of small medical centers or Channeling Centers. According to Central Bank of
Sri Lanka, the public sector accounted for 73% of the hospitals and 93% of the
available bed capacity in the country, while having over 90% of total patient
admissions and OPD visits. It is estimated that a total of 125 institutions, with approximately
4,200 beds, operated as private hospitals in Sri Lanka in 2011.9
Private hospitals delivered approximately 266,000 inpatient admissions and 4.7
million outpatient visits per year.10 According to records gathered
from Institute for Health Policy, the number of private hospitals increased
from approximately 66 to 125 during the time of year 1990 and year 2011. Thus,
the total number of private hospital beds available for treatments also had
increased from an estimated 2,000 in year 1990 to 4,200 in year 2011.11

A study conducted by Institute for Health policy in 2015
published that the treatment quality and management of inpatient care by public
hospitals are better despite being available at a lower cost. However, patients
who are treated at government hospitals are still required to obtain certain
medicine and laboratory investigations at their own cost, which has resulted in
private healthcare spend remaining above government spend. Total healthcare
expenditure by the Sri Lankan government as a percentage of total GDP is one of
the lowest in the world at 3.24 %( as of end2013) 12 However,
healthcare per capital in Sri Lanka is significantly higher than in most other
Asian and middle-income countries and also this reflects higher hospital bed
penetration of 4.0 beds per 1000 population.

Countries physician density unequally distributed where most
private sector beds are concentrated in the Western Province. Availability of
Magnetic Resonance Imaging (MRI) and Computed Tomography (CT) was low at 0.4
and 1.7 respectively per 1000 population.13

The competition among the top healthcare providers is based
on the quality and reputation of the consultants they are able to attract, and
in addition on pricing and facilities. Asiri Hospital controls the largest
laboratory network in Sri Lanka with close to a 60% market share followed by
other key hospitals i.e. Nawaloka, Lanka and Durdans. Ancillary services like
laboratory medicine and outpatient care generate wider margins of profits.
Reported revenue growth of 10% in FY15 was captured in four main hospitals.
i.e.Asiri, Nawaloka, Durdans and Lanka.