PRIVATE HOSPITALS

Group 8:

Chua, Dela Cruz, Joaquin, Rayel, Redota, Teo, Uy

Background of the industry

The hospital system is composed of the public and private hospital sectors, classified into primary, secondary and tertiary levels according to their service capabilities

It includes: – 1,728 licensed hospitals, of which, 1,061 are private hospitals and

667 are government owned. – Among the government hospitals, 72 are DOH hospitals, 5 are

military hospitals and 590 are local government hospitals.

Some definitions…

Tertiary Level - fully departmentalized and equipped with the service capabilities needed to support certified Medical Specialists and other licensed physicians rendering services in the field of Medicine, Pediatrics, Obstetrics and Gynecology, Surgery, their subspecialties and ancillary services.Secondary Level  - equipped with the service capabilities needed to support licensed physicians rendering services in the field of Medicine, Pediatrics, Obstetrics and Gynecology, General Surgery and other Ancillary Services.Primary Level - equipped with the service capabilities needed to support licensed physicians rendering services in Medicine, Pediatrics, Obstetrics and Minor Surgery

– Source: Revised Rules and Regulations Governing the Registration, Licensure and Operation of Hospitals in the Philippine

Private Hospital- is a hospital owned by a for-profit company or a non-profit organisation and privately funded through payment for medical services by patients themselves, by insurers, or by foreign embassies

Public Hospital- is owned by a government and receives government funding. This type of hospital provides medical care free of charge, the cost of which is covered by the funding the hospital receives

Background

Private tertiary referral hospital Location: Quezon City Bed capacity: 652 Offers services most especially

cardiovascular medicine, neurology and neurosurgery, and cancer

Ten institutes, 13 departments, and 22 Centers of Excellence

Open to the public and caters to A to D, mostly A and B.

Players in the industry

Makati Medical Center

Asian Hospital

The Medical City

Type of Market and Market Structure

Number of firms in the market – Relatively, many private tertiary hospitals, mostly

concentrated in Luzon as compared to the total number of private hospitals or total number of hospitals in the country.

– Influenced by patient needs. Basic healthcare services- many private tertiary hospitals Complicated surgeries (e.g neurosurgery)- few private tertiary

hospitals Specialties- e.g. deep-brain stimulation by Cardinal Santos

Medical Center, PET-CT by St.Luke’s Medical Center

Type of Market and Market Structure

Product differentiation- Health care services - Difference mainly on:

- Who - Where/Type of Environment, - How services are delivered to lead to customer

satisfaction

Type of Market and Market Structure

Differentiating factors in the industry: 1. Cost

“Simplistically, this implies that cost is the only categorical advantage of government facilities over private facilities. In terms of client satisfaction, the Report also states that “overall satisfaction” or “appreciation” of health facilities was significantly higher for private facilities than government. Government hospitals get higher ratings from rural areas and among the lower classes”

National Objectives for Health 2005-2010www.doh.gov.ph

For private tertiary hospitals, cost is comparatively high due to high capital (state of the art equipment) and annual operating cost of the hospital.

Influenced by: equipment, professional fees, prestige

Type of Market and Market Structure

Differentiating factors in the industry: 2. Achievements and breakthroughs

http://www.themedicalcity.com/

The Medical City

First successful pediatric liver transplant surgery (Patient is three-year-old who was diagnosed with end-stage liver disease complicated by portal hypertension) performed in the country by an all-Filipino team.

Type of Market and Market Structure

Differentiating factors in the industry: 2. Achievements and breakthroughs

St. Luke’s PET/CT scanner is the first and only PET/CT scanner in the Philippines, and the first in Southeast Asia to fuse PET with a 64-slice CT scanner.

Type of Market and Market Structure

Differentiating factors in the industry: 3. Marketing and Advertising

Type of Market and Market Structure

Differentiating factors in the industry: 3. Marketing and Advertising

First choice of medical and health-related practitioners and patients for executive check-ups. This is also the hospital where the high

and mighty wants to be admitted.

Barriers to Entry

Hospitals need to provide– Medical services– Hospital services

Facilities, Technology and Equipment

– Drugs– Accessibility

Barriers to Entry

– 1. Cost Either have high capital costs or extremely high annual

operating costs Land, Infrastructure Technology Marketing/advertising Staff/manpower

– 2. Competition with established hospitals– 3. Connections/relationships in the health industry

Increasing Demand in the Private Health Sector

The industry is growing in the country because of– Consumerism combined with nature of Philippine

Health SystemIncreasing demand for quality health care

– New technology (information, diagnostic, therapeutic)

1⁰ 2⁰ 3⁰Patient

Patient1⁰

3⁰

3⁰

2⁰Philippine

Health System

OtherHealth

Systems

Expansion of Private Tertiary Level Hospitals

• January 16, 2010, St. Lukes Medical Center-Bonifacio Global City is now open to public

TMC Satellite Clinics and Acquired Hospitals

Sattelite Clinics• Robinsons Place Cainta • Antipolo, Rizal • Ever Gotesco Commonwealth Quezon

City • SM City Fairview Quezon City • SM City Lipa City • SM City Marikina • Ever Gotesco Pasig • Trinoma • Ali Mall Cubao • Victory Mall Caloocan City • Walter Mart North EDSA • Sta. Lucia East Grand Mall • Congressional Avenue cor. EDSA

Acquired HospitalsMercedes Medical Center, Pampanga Far East Health Service, Zambales Fleet Health Medical Clinic, Cavite Evacare Medical Clinic, Pangasinan

TMC also owns and operates…

Mercedes Medical Center, Pampanga Far East Health Service, Zambales Fleet Health Medical Clinic, Cavite Evacare Medical Clinic, Pangasinan

Conclusion

Private Tertiary Level Hospitals display properties of monopolistic competition, oligopoly and monopoly, depending on the needs of the patient or the type of health service required.

The private health sector is growing, in response to the growing demand. This is addressed through expansion, mergers and acquisitions, promoting an oligopolistic market structure.