Healthcare is certainly one of the fastest growing industries in Asia. But with rising medical costs, greater use of advanced technologies and equipment to administer care and rising demand for high-quality healthcare, governments may find it increasingly difficult to fund and manage the projects on their own. Large private partners are increasingly being brought in to share the costs and gains in the construction of hospitals and in the provision of medical and senior care services. Asia is becoming the bright spot for such public-private partnerships (PPP).

 In Asia, healthcare is at varying stages of development with varying needs. In China, there’s a huge desire to put money into health infrastructure, particularly in building the facilities to high-quality standards as well as senior care, says Karen Prosser, Partner at built assets consultancy EC Harris. Government funding has built many huge hospitals in China but some of these are “more like care factories”. Increasingly, the Chinese are demanding better quality medical and senior care services. “A lot of the opportunities are linking both health and senior care facilities.”

“I know the benefits of the private sector and what they can deliver. And in China, they have to look at such opportunities because the problems of senior care are so vast that they need that support (from the private sector), they can’t do that on their own.”

A project on the drawing board in Dalian is the development of a rehabilitation hospital with senior care facilities, and the developer is seeking international operators and investment. “In effect, it’s creating a joint venture model.”

There is also a strong desire among investors to put their money into health in Asia and globally because “health is seen as a relatively safe investment,” Prosser says. The issue in China is the ability to exit from the investment and get the returns “that are required”.

“Pension funds are less keen to take on some of the risks associated but certainly those within Asia, those within Singapore are happy to look at the new opportunities that are coming through … The new opportunities in these joint ventures.”

Singapore has an aging population and reducing birthrates. Although the country has spent vast amounts of money developing acute healthcare, it is just starting to look at community care and investments in senior care. “They tried PPP, the joint investment model … They don’t see it as a good solution but they are not averse to using the private sector for the delivery of care.”

Like Singapore, the Hong Kong government is investing quite significantly in healthcare. In terms of investment opportunities, it is still studying the PPP model for healthcare but focusing more on the provision of services rather than the infrastructure, Prosser says. There are better prospects for PPP in senior care services in Hong Kong, she adds.

The more exciting area for external investments in health and elderly care is in Southeast Asia. Currently, the region’s focus is on building the facilities. “Certainly from the Philippines, they are looking at staffing as well.

“The Philippines, it’s definitely on that PPP route … Vietnam has also announced they will have a PPP pipeline, and Myanmar will definitely be there once the politics is stabilised.”

Malaysia, Prosser says, doesn’t need the cash for health infrastructure and services but “what they do need is the international standards”. Brunei is also looking at the PPP model not because of a lack of financing but “because they want to take their healthcare to a different level.” And these countries have continued to face difficulties in recruiting high-quality staffing for the facilities, she adds.

“With the need to bring in clinical staffing, it brings the whole issue of clinical risks and when you start talking to investors, they start to get nervous about it. It is how you explain to the investors, how the risk will be mitigated and managed.”

Typically, the institutional investors in these projects tend to be less risk-averse and there has to be some degree of government promise to make sure the projects are secure. The projects vary in costs and a PPP hospital with 300-400 beds can cost around £300m ($452m) in emerging countries. “It’s a case of moulding it to fit a certain market.”