Reimbursement cuts to weigh on Thailand hospitals

Hospitals drawing revenue from Social Security payments are most hit.

Thailand’s hospitals are expected to see a short-term drag on their profits by 4-5% due to the reduction of reimbursement rates for treatments made by the Social Security Office (SSO), according to analyst reports.

SSO temporarily reduced the reimbursement rate for high-intensity treatments by 45% during Q4 2019 due to insufficient budget. This is not expected to carry over in 2020 as the country’s medical council has proposed to increase its budget by 12%, according to Maybank Kim Eng analyst Teerapol Udomvej.

According to UOB Kay Hian, hospitals with a large revenue portion from Social Security (SC) payments are expected to be the most affected. Maybank Kim Eng noted that a third of Bangkok Chain Hospital (BCH) and Chularat Hospital’s (CHG) revenues come from SSO.

“If the increase in payment/head is approved, we expect it will be effective as soon as 20 January,” UOB Kay Hian analysts Kowit Pongwinyoo and Siwakorn Mitsantisuk said.

They also noted that in the fourth quarters of 2017 and 2018, the SSO had also reduced its intensity case payments for treatments.