LatAm Healthcare: The Good, Bad and Ugly for 2018
As we look to 2018, it’s important to note that 2017 was a year with some encouraging indicators for the healthcare market in Latin America after some trying times in 2015 and 2016. Currency depreciation in a number of LatAm countries hit medical equipment and overall healthcare expenditure hard in those years, but since 2016 currency has stabilized significantly. And with more promising economic projections for the region overall—ECLAC forecasts 2.2% growth in GDP for Latin America in 2018 after drops of 1% in 2016 and 0.3% in 2015—currency depreciation should not be a major challenge in 2018.
Here’s a look at what to expect for Latin American healthcare in 2018:
We predict that the Brazilian healthcare market will see a turnaround in 2018, with greater sales of medical devices and equipment. In reviewing import data for Brazil in 2017, we noticed a 15% increase in the value of medical equipment and devices imported into Brazil—as well as a 43% jump in the quantities of imports in this area. This comes after back-to-back drops in medical equipment import value for Brazil: 18% in 2015 and 14% in 2016.
This is significant given that Brazil is the largest hospital market in Latin America, accounting for 7,800 of the 18,000+ institutions across the region.
That said, other hospital markets are also starting to uptick as well: Argentina’s imported medical equipment quantities went up by 7% in 2017 after a 34% drop in 2016, Peru posted a 48% gain in import quantities in 2017 and while Chile went up by 22% in this area. While Mexico dropped considerably in import value (19%) and quantity (19%) in 2017, the end of the sexenio this year should increase government spend—including medical equipment—for its system of public hospitals.
Despite these encouraging import figures—which serve as a proxy to sales—medical equipment providers still find it a challenge to sell high-value products that are more sophisticated, which slows down the growth of the overall market. Part of this may be due to the relatively slow rate of tech adoption in the LatAm healthcare market. For example, penetration of electronic medical records (EMRs) are still only 38% across the region’s hospitals and as low as 17% in larger markets like Argentina. Slow adoption also applies to PACs and RIS, both high-tech systems for archiving medical imaging. Cost challenges limit the ability of LatAm hospitals to acquire more sophisticated equipment, especially those in the public sector, which make up around 60% of the healthcare budget in the region. Adding to this is the fact that health insurance costs are estimated to have risen by 11.5% in 2017. Meanwhile, healthcare expenditure in LAC remains well below global averages, at $713 per capita in 2014 (as per the most recently available WHO data), compared to $8,990 in North America and $4,739 among OECD members.
While the specter of another economic downturn like the one in 2014-2016 doesn’t seem likely, there are a number of possibilities in 2018 that could bode badly for LatAm healthcare. One is whether the Trump administration will drastically revise NAFTA or exit the agreement altogether, which could have significant impact on Mexico’s economy. Moreover, larger healthcare and demographic trends could tax Latin American healthcare systems to the breaking point. For example, according to ECLAC the population of seniors (those 60 and older) in the region stood at 56 million in 2010, but is expected to reach 76 million in 2018—a 35% increase. By 2020, the population of 60+ Latin Americans is expected to reach 82 million—a 7.7% increase. This older population will have ever-increasing need of healthcare to handle a number of common conditions. In addition, non-communicable diseases are growing at significant rates in the region, ranging from obesity and high blood pressure to kidney disease and cancer. With the economies of several countries still in a recovery mode, these changes could overburden systems in terms of costs, affecting both patient care and the healthcare market in general.
Contact us to learn how our LatAm healthcare market intelligence team can help you prepare for 2018 with extensive demographic data (including equipment counts, procedures and personnel) for Latin American hospitals, market share/size for medical equipment manufacturers, benchmarking to help hospital administrators determine how they compare to competitors and much more.