Georgia’s healthcare services market (including hospitals, polyclinics and pharma) was estimated to be worth GEL 3.8 billion in 2018. The market maintained a strong compound growth momentum of 14% between 2011 and 2017 and is expected to continue growing at 8% between 2018 and 2021. Since the introduction of the UHC, its budget more than doubled from GEL 338 million in 2014 to GEL 704 million in 2018, accounting for 65% of all state healthcare expenditure. For 2019, the UHC budget is projected at GEL 754 million. Elective inpatient services and emergency services constitute the major part of the UHC budget, while outpatient services have a limited coverage.
Healthcare service providers (both state and private) generate revenue from out-of-pocket payments (including fee-for-service and the UHC co-payments), transfers from state healthcare programmes and payments from private medical insurance companies. Pharma companies’ revenue generation is primarily driven by out-of-pocket retail revenue of the pharmacies, together with wholesale revenues from hospitals, insurance companies and the state. Medical insurance companies depend on revenues from medical insurance policies purchased by employers for their employees and by individuals for their own use. Out-of-pocket expenditure on healthcare in Georgia still exceeds public financing and private insurance. The share of out-of-pocket expenditure in total healthcare expenditure in Georgia was 61% in 2016, the share of Government expenditure was 37% and the remaining 2% came from other sources.
Both state and private healthcare providers (clinics and hospitals) compete in the Georgian market with private providers accounting for the vast majority of the country’s total supply. The market is relatively fragmented, with the six largest competitors (all of which are private) accounting for only 40% of the total number of beds in the country. This may indicate further growth potential for both new and incumbent market participants through mergers and acquisitions. The outpatient clinics market is even more fragmented and no competitor controls more than a 1% market share, with the Group’s own market share at 3%. Therefore, it is likely that there will be further consolidation and emergence of a large participant in the market via mergers and acquisitions.
The pharmaceutical market in Georgia is highly concentrated, three major players holding approximately 75% of the market share. Two main competitors in the pharma market are also present in the hospital and medical insurance markets, with much smaller market shares than GHG. GHG therefore remains the only large player across all these markets as the competitors have not managed so far to establish scalable businesses in all respective sectors.
As of 30 September 2018, c.554,000 voluntary medical insurance packages have been reported to the Insurance State Supervision Service of Georgia. The Georgian insurance market is represented by 17 companies, 12 of which operate in the health insurance segment. The market is highly concentrated, with top three companies holding a c.75% market share by Gross Premium Revenues (“GPR”). After winning the recent tenders and increasing its client base starting from 2019, our medical insurance business gained more than one-third market share by revenue and became the Country’s largest medical insurer.
While Georgia has achieved significant success in certain fields of healthcare, some areas remain underdeveloped and there are a number of service gaps in the country. Many laboratory tests are still performed abroad. There are two PET/CT scanners in Georgia, while at least four are required to comply with the WHO recommendations. There are also shortages in Georgia of the following equipment: laparoscopic instruments, equipment for interventional endoscopy, including endoscopic retrograde cholangiopancreatography, microwave tissue ablation systems, arthroscopes, choledocoscopes, muscle reinnervation systems, intraoperative ultrasound probes, vacuum machines, Flowtron mechanical compression units pH meter units, Intraoperative Neurophysiology and navigation system in Neurosurgery. Private investment in high-technology equipment should strengthen local capabilities, increase the number of procedures and improve the quality of care.
A Government-funded healthcare programme that provides basic healthcare coverage to the entire population was introduced in March 2013 and eventually replaced the existing two State Insurance Programmes (“SIPs”). UHC is an undertaking by the Government to reimburse healthcare providers directly for the delivery of treatment to patients. The programme is subject to certain limits and service and coverage exclusions, beyond which the patients have to fund treatment on an out-of-pocket basis or rely on a private medical insurance coverage.
Pricing, reimbursement and settlement of services under the UHC programme: The actual prices that are charged to patients by healthcare providers are not regulated by the state. However, the reimbursement paid by the SSA to the healthcare providers under the UHC differs depending on the type of service provided and the location of the facility (in some cases reimbursement rates are higher in Tbilisi than in the regions).
The Georgian healthcare market has shown double-digit growth in recent years, estimated at GEL 3.8 billion in 2018 and forecast to reach GEL 4.8 billion by 2021. The hospital segment accounted for 37% of all revenues generated in the 2018 healthcare market, outpatient clinics 20% and pharma 43%. According to forecasts by Frost & Sullivan, the total healthcare market is expected to grow at a compound annual growth rate of 8% from 2018 to 2021. The outpatient clinic segment is forecast to outpace the total market and grow at a compound annual growth rate of 10% in the same period. The main growth drivers are the following: