Foreign ownership in the health care market

The proposed measure to allow foreign ownership of transportation and telecommunication services clearly sets a precedent for other public services in the Philippines, such as health care.

Opening the Philippine health care market to foreign ownership, obviously, has potential benefits including employment opportunities, better provision of health services, and health technology exchange. Foreign ownership of health facilities/service providers, however, has the potential to negatively affect the already struggling health care system of the country.

First, foreign investors may be enticed by the government to own hospitals and other health facilities (laboratories, ambulatory clinics, etc) in places where the government has failed or is yet to invest in. In this way, the government is lifting itself from the burden of expanding its public health services by allowing foreign investors to build and own these facilities. While this could be a win-win situation, poor regulation might undermine the primary intention of such set-up which is to improve access to health care services. In places where there is only one (monopoly) or few firms (oligopoly) providing health services, there is a potential for these firms to collude in order to maximize profits.

Second, foreign ownership has the potential to further promote a two-tiered health care system, separating the upper class from the low and middle classes. Having a two-tiered system means enabling price discrimination as an effective price-setting strategy. With price discrimination, some consumers will end up paying higher prices.