The future of the Russian private healthcare services market is very bright
Issue:
September 2013, Vol. 9
Tags:
Private medical services
Our expert in this industry report, Alla Anastos, the clinical director and implantologist at US Dental Care, shares her view about the current state of the Russian private healthcare services in general and her clinic in particular as well as the prevailing market trends and future expectations.
As a representative of one of the leading clinics in this industry how would you characterize the current Russian private healthcare market?
The state of the modern medical services market fairly well reflects the dynamics of the overall development of the private services sector in Russia. In the 1990s, we observed chaotic development of the private healthcare, but the last 10 years have really been positive for the industry. This is partly due to an increasingly competitive environment and the economic crises of 1998 and 2008-09. These factors have cleansed up the market, leaving only the most "viable" players in operation. Private clinics are most actively developing in dentistry, urology, gynecology and ophthalmology. Despite such trends, even these niches are still not filled. In general, the Russian private healthcare market, according to experts’ opinions, is expected to maintain the current high growth rate of 12% in the near future, according to the Russian Health Ministry. Today the most important obstacles significantly limiting development of the Russian private healthcare are the strict government regulation, citizens’ low creditworthiness and a lack of qualified specialists.
By your estimates, what is the volume of the annual turnover of this market and how does it correlate to the sizes of similar markets in other countries, for example, the UK or the US?
The volume of the Russian private healthcare market is constantly growing. Thus, according to experts, the size of this market in 2012 was estimated at about RUB500-540bn, representing a growth rate of 12-15% per year. The main growth driver of the private sector is the inadequate or poor quality of free healthcare services. If we talk about the UK and US, it should be noted that the former operates a public healthcare model, while the latter operates a free-market model of healthcare. In other words, the US healthcare is based on a developed system of private medical institutions, constituting not less than 60% of all the nation’s medical facilities and health insurance-focused corporations. For comparison, the share of private clinics in Russia is only about 10%. In the UK, private medical services represent a relatively small share of the market, but are among the most expensive in the world. Thus, the UK’s total market was about BP29bn. In general, the UK private medical services market is demonstrating a steady growth rate, expected to rise from 3.2% in 2011 to about 5% between 2012 and 2016. A similar situation is also expected in the US, where private medical services market is experiencing a boom, with the industry volume expected to reach $5trln by 2018.
According to official figures, almost all Russian economic sectors are lagging behind other countries in terms of technological progress. How far is this true with respect to private healthcare?
Speaking of Russia’s private healthcare, I would say, despite some time lag, it is more or less in tune with the level of modern technological progress. Besides, the situation is changing for the better, especially in the last few years. Of course, this is a general assessment because in some areas the level of equipment is lower than the average, while in other areas it is quite comparable with those of developed countries. As for my clinic, the level of its equipment and quality of services are fully consistent with the best of US private dental clinics.
“Our clinic is an American facility, not just by name as in the situation in most other clinics with foreign names in Russia. This means that we’ve practicing physicians with US medical degrees, quality standards and methods of treatment.”
Today your company is one of the leaders in its sector, a great feat, especially given the unique conditions of functioning of Russian businesses. In a nutshell, how would you explain such outstanding success?
US Dental Care has been on this market since 2004 and was the first foreign, specifically, American dental clinic in Russia. It is a globally recognized fact that the US dentistry is among the most advanced in the world. Our clinic is an American facility, not just by name as in the situation in most other clinics with foreign names in Russia. This means that we’ve practicing physicians with US medical degrees and each year we undergo the appropriate trainings abroad. We adhere to the best of US quality standards and methods of treatment; have high-tech equipment and strictly comply with the highest hygiene standards as in US clinics. I also need to note that all our doctors have been trained by US specialists. This means that doctors working in our clinic that were educated in Russian universities and have worked Russian dental clinics had to work for some years under American specialists so as to learn and upgrade their skills. In addition, every year, during the past 10-15 years, our doctors take training and refresher courses abroad and Moscow’s best medical universities. The majority of our medical staff are members of the American Dental Association as well as other specialized organizations such as the American Dental Implant Association, the World Federation of Orthodontists and the American Association of Periodontists. In conclusion, I would like to specially note that our success on this market is our reputation.
The level of competition in the industry is high, partly because almost all players, from small firms to national and even multinational corporations, are active on this market. What are your main competitive advantages over the closest competitors?
I’ve already listed our clinic’s main advantages. One of this is the "American" level of our services. In addition, we maintain a high flexibility in our patient treatment policy. We have signed agreements with most Russian and foreign insurance companies, corporate program that entitles our patients to significant bonuses. Besides, special agreements with major Concierge clubs and banks such as American Express and Citibank that allow their clients to have different privileges in our clinic. Cozy home-like atmosphere, central city location, modern high-tech equipment and the highest level of services, according to our numerous patients’ feedback, are our key competitive advantages in this industry.
One of the clinic’s services is provision of aesthetic dentistry and implantology. Could you briefly a) explain these terms, b) who need these services and c) are they affordable only by rich patients or by the general populace?
Cosmetic dentistry serves to produce the so-called beautiful "Hollywood" smile. The methods of achieving this are many and unique for individuals. Someone may simply need teeth bleaching, while others might need veneers, implants or leveling their teeth and so on. Implantology means the placement of artificial roots and teeth in jawbones. It is clear such services are needed by all, except those with fine, absolutely even, white and healthy teeth. Such people are, unfortunately, not very many in real life. Our services are available to rich Russians and foreigners as well as middle-class citizens. Besides, as I’ve already noted, we treat people with insurance coverage. Medical insurance policies covering all services offered by our clinics are affordable to citizens with different income levels. Also, our clinic has a highly attractive program for post-treatment services, offering patients up to a 50% discount on services not covered by their insurance policies. This is quite a substantial bonus.
What unique clinic services in your offers portfolio, if any, would you like to specifically highlight and what is unique about them?
One of these is our diagnostics potential. For example, our clinic bases its diagnosis on the data obtained from iCAD scanning and 3D-modeling which are done in-house. This is a completely new experience for Russia, where only 3D-modeling is used, and not even everywhere as it is not fully understood by all. How does the iCAD work? Without using complicated medical terms, suffice it to say this equipment scans the oral cavity and projects the image in a 3-D format, which enables doctors to identify even diseases that cannot be detected by a routine physical examination and even by X-ray. This enables patients avoid the inevitable pains that would have followed in the very near future, and thus help save a tooth, or teeth, and consequently, avoid an expensive treatment that would have been required.
If put briefly, and based on experience, taking into account the specific Russian conditions for businesses, how would you formulate the ideal model for a successful business in this industry?
To put it briefly, this is professionalism. In most cases, patients usually go to dentists by recommendations. Therefore, a business in this industry can be successful only if one adheres to the highest of standards. As an example, I can say that a significant percentage of our patients are people that had previously been treated abroad. The same is true for expats living in Moscow. By the way, the ratio of Russian to expat patients in our clinic is about 50/50.
What is your growth forecast for this market in the near future?
I believe that the future prospects of Russia’s private medical services market are very good. Private clinics can compete with state-owned hospitals not only because of the latter’s numerous shortcomings. This is because the private medical services system over the years has learned to provide high-quality care with a high level of service. Private medical centers have better management, more mobility, are quicker to adopt and master new technologies which appear so often nowadays. Also, they create a variety of service programs for the convenience of their patients, and most importantly, they relate to patients in a different way. In other words, private clinics right from incorporation are focused to meet the needs of patients. I think that future development of private clinics will continue in this direction. Otherwise, our private healthcare system will continue to suffer losses as wealthy patients will prefer to continue to seek treatment abroad.
In conclusion, if put briefly, which three-five words would you use to describe your clinic and its services?
These are high quality standards, provision of American cosmetic dentistry services, a really homely atmosphere and family clinic values.
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