Poor public health services drive private clinics

RIGA - “It is a good time for the private [health care services] sector, and the main reason is the problems with our government in building [in improved] public health care system,” says Silvija Lejniece, director of the Diplomatic Service Medical Center in Riga. This is the main reason why many entrepreneurs decide to get into the business of health care.
In this sense, this was also the case of Leons Platacis and Signe Dauskane-Platace, who started Premium Medical Clinic. “The origin [of the business] was to think about what Latvia still needs,” says Dauskane-Platace, the clinic’s director. She is a doctor, but her first experience with Latvian reality was as a lawyer in the Patient Rights Office of Latvia in 2000. The aim was to change the legislation, to design a special law for patients’ rights, in the basic fields of information, informed consent and confidentiality. “We built a place based on patients’ rights, but there is still a lot to do to improve the Latvian health care system,” says Dauskane-Platace.

Since around 29 percent of health care services provided by the Public Heath Care System have to be paid by the patient, some are bypassing waiting lists for non-urgent operations (orthopaedics, cataracts, hernias, etc.), as well as for costly examinations (such as computed tomography, magnetic resonance imaging), as these services have become largely provided by the private sector.

Acording to LIAA (Latvia’s investment and development agency), national expediture on health is one of the lowest in the EU, and currently around 6 percent of GDP. “Even when this business is growing, private medical clinics have to do so much to increase their customer [numbers], taking into account the fact that the general consumption [spending] is so limited in this country,” says Platacis, business manager and board memeber at Premium Medical Clinic.  

This is the reason why private clinics are largely concentrated in specific, prosperous pockets of Latvia, as much of the general populace cannot afford them. “We are focused on differentiating our customer target, mainly Latvians from the upper-middle class who have the ability to purchase these services as they need them,” says Platacis.
But even Latvian citizens often take out local private health insurance to give themselves coverage of medical services which are not covered as part of the public Latvian healthcare system. This is the point where new etrepreneurs see the opportunity.

Private business in this industry appears to be profitable. Private health insurance in the financing of Latvia health care is 2-5 percent of the total financing in the sector. For private medical clinics the numbers are similar. “We had two bad years of benefits due the economic crisis; we are still recovering in [our] growth,” says Lejniece. For Premium Medical Clinic, its prospects are 30 percent, or even 50 percent growth for the next couple of months.

Designing new high quality products
Apart from the certified high quality medical services in combination with attractive prices offered, the greater success is in offering certain advanced diganostic services, high quality and individual attention, well trained doctors, the newest equipment, spa and massage treatments, and almost all dental services, which is a key component of private health expenditure.

Right now, the challenge is to get into a marketing strategy when designing a product or service. It gives the opportunity for the company to keep a step ahead of its competitors. Companies try to take this into account, the future needs of customers, by formulating the products in the market and being the pioneer. “Our main strategy was to set a minimum time for a visit, which we considered to be at least 30 minutes, with a low price. This was completely new in the sector because the payment was previously tied to a [minimum] time of 10 minutes,” points out Dauskane-Platace.
Another pioneering strategy has been the preventive medicine services. This includes regular check-up services.
For Lejniece, the strategy has been collaboration with other private clinics, such as VC4, in improving the diagnostic methods, and through various arrangements with the private insurance sector.

Medical Tourism
The image of health services is changing and modernizing in order to cover the ever more growing needs of the public. The best example is in medical tourism. Nowadays travelling a distance from one’s country in order to have medical care, rather than staying at home with similar or even advanced technology available is being an option for many foreign customers.

This service has great potential, given the competitive salaries and high quality of Latvian medical services, excellent transport links to major cities in Western Europe, Russia and other European and northen countries (Sweden and Norway), and Latvia’s already excellent reputation in Russia as a spa destination.
The main strategy lies in providing an integrated package of services for the patients, and even for their relatives. The patients, in order to travel far from home, also take into account the facilities that they will have here for the period of time they will stay in this country.

Challenges for future entrepreneurs
“The industry still has the difficulty of convincing foreign sectors and customers to come here. People are looking for quality and Latvia hasn’t a good reference in this sense,” says Platacis. What he says is related to the competitiveness against other countries, for example India or Spain, in medical tourism. How to communicate with new patients and how to improve in a new economic context are the new challenges that the private health care sector faces for the following years.

What seems interesting is the way many private medical clinics try to cooperate with the public health care sector, which seems a future challenge for improving the health care system in Latvia. “We have to take into account that the economic situation is still recovering, and the fact that in the next few years it will be possible to try to make arrangements with the public sector for providing heath care services and make them more available to the Latvian population,” says Lejniece.