The Australian woman in the lobby bar of Bangkok’s five-star Hotel Muse is upfront about her reasons for visiting. “We’re here for the shopping,” she says, over her second happy hour cocktail. “For shopping and dental work.” Her 28-year-old daughter has a condition that is turning her teeth translucent and brittle. Corrective work in Brisbane would cost AUD 10,000 ($7,200). That amount, she figured, could be better spent on two business class tickets to Bangkok and five days’ accommodation, plus dental treatment in a nearby clinic that is on a par with any back home. “We’ll still have change left over,” she says with a laugh, “and that may include the shopping.”
This is international medical tourism in a snapshot. The business is driven by a combination of rising healthcare costs in developed countries, cheap flights and cross border medical training. Over the past two decades,
Thailand has become a thriving destination for procedures ranging from tummy tucks to heart bypasses and gender reassignments, with foreign visitors attracted by the high standard of the private healthcare industry, easy visa entry and affordable prices. Curtis Schroeder, former CEO of Bumrungrad International, the largest private hospital in South-East Asia, believes the industry is entering a new phase. “The market has matured, the carnival barkers are gone and the business has entered round two,” he says in the office of InterMedika, his international healthcare consultancy in downtown Bangkok.
With the Internet becoming ever more prevalent and insurance premiums and co-payments increasing, Schroeder expects that patients will want more control over healthcare providers. “We may soon see something like TripAdvisor for healthcare,” he reflects. “Patients are picking up more of the bill, so inexpensive, quality, foreign alternatives are likely to become more important to them.”
PLASTIC SURGERY WITH A HOLIDAY
Bumrungrad is the poster child of medical tourism. It looks like a five-star hotel and has services to match. There are 21 VIP suites, a Japanese restaurant, a McDonald’s, and a queue of people buying snacks from Starbucks. The hospital facilities include 19 operating rooms equipped for general surgery and surgical specialties, and 1,200 surgeons and dentists, of whom more than 200 are US board certified.
Cost and quality are the key selling points for Bumrungrad, and for rivals such as Samitivej, Phyathai International and
Bangkok Hospital. At Bumrungrad, a package for coronary artery bypass graft surgery costs $19,000. In the United States, an uninsured patient will be set back $80,000 at least for the same. Yet the success of Bumrungrad was accidental. Schroeder and his team re-opened the 12-storey hospital in late 1996, with 580 beds and a $60 million debt on their books. Then the 1997 Asian financial crisis hit. The Thai baht plummeted, “doubling our debt and halving our potential market overnight,” recalls Schroeder.
During the crisis, squeezed middle-class Thais switched to the
cheaper state-funded healthcare system. Underused private facilities, like Bumrungrad, went into survival mode and offered surplus capacity to foreigners from the region seeking medical and surgical treatments as a cost-effective alternative to providers at home. Consequently, Schroeder bristles slightly at the notion of “medical tourism,” noting the term can be misleading. “People who come for serious medical care don’t ask how close we are to the beaches. They come for quality procedures conducted at a fair price in an environment with good infrastructure.”
Far west of Thailand, Turkey is seen as an up-and coming country for medical tourism. The Health Ministry is hoping to increase visitor numbers to 2 million by 2023. Many of the patients come from lraq and Libya, but expatriates returning from Germany also make a sizeable section of the business. Allianz Turkey is seeking to improve cross-country medical insurance. “Many Turkish guest workers in Germany spend their holidays back home. Merging our contracts with those of Allianz Germany could reduce the cost both for them and us when tourists seek treatment in Turkey,” says Oktay Atay, head of health claims, health provision and provider network management with Allianz Turkey.
The Thai industry really boomed after 9/11. Tightening visa conditions in Europe and the United States meant people from Arab countries preferred to take the seven-hour flight east to Bangkok. Today, Bumrungrad has an Islamic prayer room, a certified halal kitchen and more than 150 interpreters, many of them Arabic for the benefit of Gulf Muslim patients, now one of its most important markets.
Altogether, Bumrungrad serves 1.1 million patients a year, including 520,000 who visit from other nations. In 2013, it generated $477 million in revenue. However, reliable data on global medical tourism is difficult to come by and the numbers are often overblown. In 2008,
Deloitte projected that annual patient outflows from the US would be 10 million by 2012 and worth $21 billion a year to developing countries. It was a brave prediction, considering most Americans do not even own valid passports. The figures were revised down one year later. Only 1.6 million Americans would be seeking healthcare outside the US in 2012.
“Such projections invariably overestimate demand,” says Johanna Hanefeld, senior lecturer in health policy and systems at the
London School of Hygiene and Tropical Medicine. In 2010, only 167,000 medical tourists attended Thai hospitals, according to research she conducted with Thinakorn Noree and Richard Smith – far less than Deloitte and the Thai government expected. The Thai Ministry of Commerce estimated, for example, that in 2006, 1.2 million medical tourists accessed health services in Thailand.
Malaysia is often touted as another medical tourism success story. The country welcomed more than 850,000 global medical tourists and took in $230 million of revenue last year, according to the
Malaysian Ministry of Health. Hanefeld has good reason to treat such predictions with a skeptical eye. The issue is how numbers are counted. For example, almost 30 million tourists visited Thailand in 2015. The group coming primarily for medical treatment was only a fraction. But Thailand counts every interaction with the healthcare system, from the consultation to the x-ray or CT scan, as well as the operation, as separate interactions. By this count, one person can have up to 20 treatments per visit. Such “creative accountancy” greatly inflates medical tourist numbers.
Hanefeld believes that “medical tourism remains on a much smaller scale in Thailand than is promoted, so its effect on the domestic health system is limited.” She also believes it is unlikely that a global medical tourism market in Thailand, or indeed elsewhere, will develop soon along the line the boosters claim. “Most people want to be treated locally or at least in their home region when they’re sick,” she explains. There are also serious issues such as differing national judicial systems that mean there is little chance for compensation should malpractice suits arise, unless patients are prepared for a legal battle in the host country. Continuity of care can also be missing when the patient finally returns home.
Based on the success of Bumrungrad and its rivals, Schroeder believes the value proposition for medical tourism exists, but has not been developed fully. He points out that in the late 1990s, 9% of Bumrungrad revenues came from overseas: this is now at 56%. “Medical tourism is real, so the opportunity is there,” he says. And while he admits that national figures are possibly inflated, he asserts that, “until 2010, when I left the hospital, our international numbers were counted as either one outpatient visit or one admission.”
MEDICAL INSURANCE WHILE IN THAILAND
Allianz Global Assistance (AGA) is seeking regulatory approval to insure non-Thai patients against unexpected complications such as hematoma, and internal and external infections while being treated in Thailand. Estimating 900,000 medical tourists annually, AGA Thailand CEO Steve Watkins hopes to win close to 500,000 of them as clients over the mid- to long-term.
NOT TO BE DETERRED
Malaysia, India and South Korea have long since followed Thailand’s lead, while Cambodia is billing itself as the low-cost, high-quality dental care destination.
According to the World Health Organization, there are 50 countries throughout the world involved in medical tourism, with India, Singapore and Thailand in the lead and comprising 90% of the fragmented Asian medical tourism market. Steve Conway, the Singapore-based regional general manager with Allianz Worldwide Care, a provider of international health insurance, says that insurance companies could drive this. “Insurance premiums currently increase from 6–15% per year. Opportunities in medical tourism are one way for insurers to keep costs at bay.”
One tale he cites to illustrate this is of a Shanghai client who needed anterior cruciate ligament treatment. The local hospital wanted $58,000, but the reasonable cost at location assessed it at $40,000, which left the client facing out-of-pocket costs of $18,000. Alternatively, a Bangkok center offered two business-class tickets, surgery and ten days’ accommodation all for $18,000, which the insurance company would completely cover. “You can imagine which way he went,” says Conway. “It was a win-win for all involved.”
Conway notes that many of the medical tourists in South-East Asia come from developing countries within the Asian region, where economies have created wealth but high-quality health infrastructure is lagging. Indonesians are said to spend $11.5 billion a year on healthcare abroad, much of it in Malaysia, which adheres to halal restrictions such as avoiding pork derivatives in medicine. Meanwhile, the Laos, Cambodians and Vietnamese prefer Thailand, while the Chinese go to Singapore or Thailand for care that is not readily available at home.
Cultural similarity is an important consideration, says Conway, but the big headline is a flight to quality, as people seek access to medication, care and cutting-edge technology. “While tourists from the West may be after cosmetic surgery,” he comments, “for patients from China, medical tourism can be a high-quality solution – and this is unlikely to change any time soon.”