Depth of field: The state grants incentives to boost standards and draw business

In 2012 the Thai government, via the Ministry of Public Health (MOPH), adopted a policy package aimed at turning the country into a global medical hub. This meant playing to the country’s obvious strengths – leveraging its current reputation both for high-quality medical services and for health and wellness treatments. Alongside this, the policy aimed to promote traditional Thai alternative medicines, herbs and other health products, and eventually crystallised all of these into a single policy to make Thailand an international centre for health care. To back up this plan, the MOPH soon after released a 2014-18 strategy.

Yet for all the state-sponsored emphasis, some sector observers point out that for many years Thailand has already been just such a centre. Indeed, medical tourism and wellness travel were worth around BT140bn ($4.6bn) in 2011, according to the Kasikorn Research Centre. Overseas visitors spent a full half of this, BT70bn ($2.3bn), at private hospitals; another BT50bn ($1.6bn) on general tourism; and BT20bn ($654m) on health and wellness services such as spas.

Such data are very hard to verify. There is no “medical” box for visitors to tick upon arrival. The term “medical tourist” therefore often covers not only those who visit specifically for treatment, but also those who incidentally need treatment while visiting. Such figures may also include foreigners living in the country, or those whose reasons for visiting are partly for health, and partly for general travel. Yet from private hospital chiefs to government officials, all agree that medical tourism is a dynamic and growing part of the Thai economy, and worth encouraging further.

Deep Deman, Small Supply

The sector’s very success is causing strains within the system. Demand for qualified (and experienced) doctors, dentists and nurses in the private sector, a segment boosted by medical travellers, may be outstripping supply. This has clear knock-on effects for the public sector. To plug this gap is among the chief goals of the new policy, which stresses education and training for medical personnel.

Medical Travel

According to MOPH chief Wittaya Buranasiri, in 2012 some 2.5m foreigners visited Thailand for medical reasons – more than any country in the world. This figure, according to the MOPH and Kasikorn, was up from 2.2m in 2011 and 2m in 2010.

Revenue growth has also been robust. The above sources reckon revenues were BT78.7bn ($2.6bn) in 2010, rising to BT121bn ($4bn) in 2011 and BT140bn ($4.6bn) in 2012. Though 2013 figures were unavailable as The Report: Thailand 2014 went to press, industry insiders who talked to OBG said they expected the numbers to have been higher still. Political turbulence began to affect arrival numbers at the end of 2013.

To take a longer view, arrivals have risen from a mere 550,000 in 2001, according to the Thai Export Promotion Department. Having doubled in less than five years, the number of medical travellers peaked at 1.4m in 2007 before political upheaval and the financial crisis knocked figures back to 1.36m in 2008. The 2010 figure, therefore, represents a dramatic rise of its own.

The main source country for these visitors in 2012 was Japan, followed by the US, the UK, the GCC countries and Australia. In 2010 and 2011, the number two spot had been held by member countries of the ASEAN, but this region fell sharply as a source of visitors in 2012 due to increased competition from Malaysia and Singapore, Thailand’s rivals in the industry.

Even as ASEAN arrivals have fallen, Thailand seems to have increased its share of long-haul travellers. Those from the US often come for the affordability of treatments. Those from the UK and other European countries with state health systems come both for affordability and for speed (i.e. to avoid long waiting lists for public health services). Thai prices compare well with those countries’ private sectors. According to data from the Medical Tourism Association, the price of a heart bypass operation in Thailand in 2012 averaged $11,500, compared to $125,000 in the US. Singapore, Thailand’s regional rival, meanwhile, averaged $19,300 for the same operation. Hip replacement surgery averaged $12,000 – identical with Singapore, but considerably less than the $43,500 price tag in the US.

Still others come for the expertise. This is especially true for those from the Gulf who come looking for ultra-specialised treatments. ASEAN visitors also tend to come for expertise, but within a range of more straightforward treatments that may not be available to a high standard in their home countries.

Private hospitals and clinics offer treatments ranging from cardiology to fertility, sex changes to rhinoplasty. Thailand is also a relatively welcoming country culturally, well known as a tourism destination. Lower costs of treatment than rivals such as Singapore are another draw, as is the lower cost of accommodation – important if a medical traveller from, say, the GCC brings along a large extended family. There are also many expatriates living in Thailand, or ex-expats who have lived in Thailand before and are aware of its advantages. Many of these, now retired, return to Thailand for treatment at the places they grew to trust while living there.

Joint Commission International (JCI), a US non-profit that accredits health care organisations, is widely seen as the standard. This fact traces its history to the 1950s and 1960s, decades of major US support for the Thai health sector. During that period, US aid from both the government and organisations such as the Rockefeller Foundation helped many Thai doctors train in the US. A US system of medical training, initiated then in Thailand, largely survives to this day.

Bangkok remains the centre for medical tourism, with eight JCI-accredited hospitals in the city, according to Thailand Medical Tourism, a branch of the Tourism Ministry that promotes the sector internationally. Still other centres have sprouted up in recent years, including Chiang Mai, which has a reputation for holistic medicine and health spa services; Pattaya and Chonburi City, both with JCI-accredited hospitals; Phuket; Koh Samui; and Hua Hin. According to ASEAN figures, in 2012 Thailand had 21 JCI-accredited hospitals – one less than Singapore, but well more than Malaysia’s nine.

Sector Players

More than three-fourths of Thailand’s medical tourism market comes from two main groups: Bangkok Dusit Medical Services (BGH), which runs the Bangkok Hospitals Group and is the largest private provider in the country, and Bumrungrad Hospital Public Company (BH). According to a 2010 report by Credit Suisse, BH held a 31% market share in medical tourism, and BGH held 46% (30 percentage points from its operations in Bangkok and 16 from those in the provinces). Both are listed companies.

Other important private hospital groups on the Bangkok exchange are Bangkok Chain Hospital (BCH), which runs the Kasemrad Hospitals; Chularat Hospital PCL (CHG); Vibhavadi Medical Centres (VIBHA); Sikarin (SKR); and Mahachai Hospital PCL (M-CHAI), among others. There are also some 33 spas in the country that have been dubbed world class, according to the BOI.

Under the new state-led policy, the BOI has granted tax exemptions to several types of health care providers. Potential beneficiaries include rehabilitation centres, hospitals, health food producers and medical equipment manufacturers. To encourage select industries, the BOI launched a “promotional privilege framework” in 2012. Private hospitals are among those eligible.

Challenges

The growth of the sector – now with major government backing – has been good for private hospitals able to orient themselves towards medical travel. In such a scenario, the natural leaders are those that offer high-quality, certified services; have international accreditation and qualified staff; and can deliver in a number of languages including English.

Yet the expansion of the medical tourism sector, and thus the private medical sector, has also increased pressure on human resources. According to interviews conducted by OBG, this is already reflected in low doctor/patient ratios in the public sector. This sort of imbalance is particularly acute in rural areas (see overview). The number of dentists and nurses as a percentage of the population, too, is low. Medical colleges, meanwhile, graduate new doctors at a slower rate than the sector is expanding. The higher wages and less pressured conditions in private hospitals also act as a magnet for doctors working in the public sector.

One solution is to expand medical training and education. Under its new medical industry policy, the government plans to boost the annual number of doctor graduates. Still, medical colleges wish to maintain high standards in graduates, and this necessitates more well-qualified trainers. Another way to ease this pressure would be to employ foreign doctors. However, this is currently blocked by a requirement that all practicing doctors pass local medical exams, conducted in Thai, a language spoken by few outside the country. At the same time, salary packages might also have to be hiked to attract experienced professionals away from Singapore and other medical tourism destinations.

Yet for all these constraints, Thailand continues to offer a remarkably cost-effective package for medical tourists. The sector’s expansion opens up a range of possibilities for investors, from medical supplies and training centres to new hospitals of bricks and mortar.