Thai authorities seek to secure the country's position as a leading medical centre

Thailand has been reaping the benefits of an expanding global health care industry, as its large number of internationally accredited hospitals and qualified practitioners continue to attract clientele from both developing and developed countries. At the same time, the universal coverage framework has succeeded in providing health care to nearly the entire population. All this has been achieved despite investment falling below global levels; according to the World Bank, current health expenditure per capita totalled $217.14 in 2015, up from $62.26 in 2000, yet well below the world average of $1001. Meanwhile, health expenditure as a percentage of GDP grew from 3.2% in 2000 to 3.8% in 2015 – compared to the world average of 9.9%.

In an aim to solidify the country’s position as a medical centre in South-east Asia, government policies have focused on fostering the growth of support industries, including pharmaceuticals manufacturing, medical tourism, and research and development (R&D).

Universal Cover

The World Health Organisation (WHO) describes Thailand as having “vibrant primary health care, innovative health system development and a progressive health promotion programme”. Successive governments have considered health care to be a fundamental right for all, as stipulated under the 1977 constitution. While the first universal coverage plan was introduced in 2002, it still required patients to pay BT30 ($0.87) per visit. This policy was abolished in 2007, ensuring access to a larger share of the population.

Public health care is provided through three funds: the Universal Coverage Scheme (UCS), the Social Security Scheme and the Civil Servants Medical Benefit Scheme (CSMBS). According to the latest figures, the proportion of citizens benefitting from health care coverage rose from 92.47% in 2002 to 99.95% in 2015. The success of public health care initiatives can be attributed to several factors, one of which is strict budget controls. However, rising costs – driven primarily by an ageing population and the growing prevalence of non-communicable diseases (NCDs) – raise questions about Thailand’s ability to sustain its health care system.

In January 2018 the National Health Security Office (NHSO), which oversees the UCS, targeted a BT193.9bn ($5.6bn) budget for the 2019 financial year, which runs from October 1, 2018 to September 30, 2019. If granted, this figure would represent a 9.3% increase over the 2018 budget. Piyasakol Sakolsatayadorn, the minister of public health, attributed the need for a greater budget allocation to inflation, rising prices of medicines, higher pay for medical personnel and an expansion of benefits for the 48.6m people covered under the scheme. However, despite repeated requests for more funding, the government has indicated to the NHSO that it would like the office to reduce funding requirements and find more innovative ways to cope with rising costs, since tax revenues are not increasing.

Reform Attemps

In recent years, a number of reforms have been proposed in an effort to make the sector more financially sustainable, although none have been successfully implemented. Policy proposals aimed at revamping the national health code in 2014 hit an impasse, while 2016 plans to privatise the CSMBS did not materialise. The government felt private insurance firms could better manage the budget for the CSMBS and cut instances of fraud that were inflating costs for the state. The Ministry of Finance expected the transfer of management to occur in 2018. However, concerns over care provision and profit targets of the insurance companies won out. Opponents believed the private sector could not deliver services or medicines at lessthan-cost prices as the government could, and would therefore cut certain aspects of the programme. Given Thailand’s nearly two-decade-long tradition of universal coverage, authorities risk social unrest if benefits are trimmed too much under the framework.

However, a draft National Health Security Bill was being assessed in 2018, which could change the universal health care scheme. The main additions to the framework would be the reintroduction of co-payments – with patients contributing to part of their medical expenses – and collection centres to help hospitals gather the money owed to them under the schemes. Other elements in the bill concern lowering hospital overcrowding by operating specialised clinics outside normal working hours, introducing referral systems that allow large hospitals to transfer patients to smaller facilities for rehabilitation, increasing the number of family-medicine units and introducing certain types of one-day surgeries at a number of major hospitals.

Senior Citizen Care

Much like Japan, China and South Korea, Thailand is having to adjust to the needs and constraints of a rapidly ageing society. According to the National Economic and Social Development Board, the proportion of citizens aged 60 and over had risen to 17.17% of the total population as of 2017, and is expected to jump to 20% by 2021. Local media reported in June 2017 that the elderly health care budget in 2014 amounted to 2.1% of GDP, but was forecast to climb to 3% by 2024. This is expected to put additional strain on public finances and create new challenges to providing health care for the growing number of elderly patients.

Some public hospitals have already begun to develop their elderly care units, yet the UCS does not cover post-discharge rehabilitation services. The government has been working to mitigate the situation by establishing family care units that cater to patients in their homes or at small local doctors’ offices. As of May 2017 there were 48 primary care clusters in 16 provinces, with 3250 clusters expected to be in place by 2022.

In addition, private health care providers are enhancing their service offerings for elderly patients, although stakeholders suggest more is needed to prevent significant gaps from emerging as the proportion of elderly citizens in society grows. “At present, there are not enough programmes being developed by the public or private sector to cater to an ageing population,” Dr Yee Yitathasiri, executive director at Ladprao General Hospital, told OBG. “The capacity being developed is insufficient, and a holistic approach will be required if we want to provide appropriate care to this age group.”

Areas of Focus

An ageing population, coupled with high rates of urbanisation and changing lifestyles, has led to the growing prevalence of NCDs, such as heart disease and stroke, cancer, diabetes and chronic lung diseases. According to the WHO, NCDs are responsible for around 71% of deaths in Thailand each year, which is marginally higher than the 2015 global average of 70%. In an effort to mitigate the impact of NCDs across the country, Thailand adopted the five-year National NCDs Prevention and Control Plan (2017-21) in May 2017. The plan highlights that the number of deaths caused by the four major NCDs – cerebrovascular disease, diabetes, ischemic heart disease and chronic obstructive pulmonary disease – has been trending upwards since 2012.

Various studies, such as one conducted by doctors and microbiologists at Mahidol Oxford Tropical Medicine Research Unit in 2016, also point towards a rise in drug-resistant infections, often exasperated by the overuse of antibiotics in treating patients and raising livestock. Thailand has primarily focused on the quality of pharmaceuticals available and has often overlooked regulations concerning distribution, with antibiotics often available over the counter. In light of this, the 2016 Thai National Action Plan on Antimicrobial Resistance aims to reduce antibiotic consumption by 20% in human medicine and by 30% in veterinarian medicine by 2021.

The prevalence of infectious diseases also remains an issue, with mosquito-borne illnesses, hepatitis, rabies, cholera, Japanese encephalitis and leptospirosis continuing to result in numerous deaths every year. However, the introduction of new medicines and preventative measures to counteract these infections has started to yield positive results, as demonstrated by the dengue vaccine introduced in 2016. During the first half of 2017 some 17,000 cases of dengue were recorded in Thailand, compared to 140,000 in the whole of 2015.

Furthermore, in September 2017 the government unveiled its 2017-30 National AIDS Strategy aimed at ending the AIDS epidemic in Thailand by 2030. Thailand saw the number of infections fall by over 50% between 2010 and 2016, and now its goal is to reduce new HIV infections each year from 6500 to less than 1000, and lower deaths from 13,000 to less than 4000.

Pharmaceuticals

According to research and consulting firm GlobalData, Thailand’s pharmaceutical market was valued at $5.91bn in 2015 and is forecast to grow to $9.47bn by 2020. The rise is expected to be driven by demand for treatments of chronic diseases and NCDs as a result of an increasingly elderly population and unhealthy lifestyles. According to the International Trade Centre, exports of pharmaceutical products amounted to over $461m in 2016, with the bulk going to other ASEAN countries such as Vietnam (18.8%), Myanmar (15.7%), Cambodia (8.7%) and the Philippines (7.2%). Imports, however, grew over $2.1bn that year, with the US (16.7%) and Germany (13.8%) being the main providers. According to the Thailand Board of Investment, the country is seeking to lower its import dependence by 30%, and increase its exports to over BT75bn ($2.2bn) between 2017 and 2027.

There are over 130 pharmaceuticals manufacturers in Thailand, 75% of which are local companies. Most of these do not have the international Good Manufacturing Practice Pharmaceutical Inspection Co-operation Scheme (GMP PIC/S) certification required to export, meaning the majority of pharmaceutical products manufactured in Thailand are aimed at the local market. Some 70% are sold through hospitals that mainly purchase generics and prescription drugs. In this context, pharmaceuticals companies are – to a certain extent – constrained by hospital procurement policies that concentrate on cost-efficiency, resulting in razor-thin margins for manufacturers catering to the needs of the 48.6m people covered under the universal health care system. Fierce competition and pressure on margins mean that small and medium-sized manufactures are usually unable to invest significantly in R&D or upgrade their production facilities to international standards.

In August 2017 the new Government Procurement and Supplies Management Act came into effect, eliminating the requirement of all public agencies – including hospitals – to purchase products and equipment from the state-run pharmaceutical company, the Government Pharmaceutical Organisation (GPO). While many pharmacists claimed that the priority given to GPO products under the previous policy ensured that the price of medicine remained affordable, many private players thought it created unfair competition and hampered innovation. Under a procurement law that allows state-owned enterprises to reduce nominal costs while eschewing competition and the risk-reward mechanics of a neutral market, most non-state pharmaceuticals manufacturers face higher business risks. Therefore, they tend to focus on the generics market instead of investing in innovation and R&D. A low price ceiling could create a downdraught, deterring investments in technology and product development.

R&D

According to the study “Biopharma Industry: Impact to Economic & Health” by Deloitte and the Pharmaceutical Research and Manufacturers Association of Thailand, domestic expenditure on clinical trials amounted to $320m in 2015, approximately 75% of which was spent on phase-3 research. This phase is usually selected due to lower costs and the country’s availability of a large pool of patients willing to test the effectiveness and safety of products. However, spending across other stages of the clinical research process is comparably lower. Thailand’s R&D segment is largely driven by post-patent generic drugs, as there is a heavy emphasis on local cost savings as opposed to participation in the global value chain. Creating an environment that fosters entrepreneurship could attract more investors who are willing to take on the types of risks necessary to innovate, which could enable the country to become more globally competitive in all R&D phases. Early-phase trials are relatively new: the first company to carry out phase-1 and 2 trials in Thailand was US-based Rich Pharmaceuticals, which launched its first clinical trials in ontological treatment in 2017.

Hospitals

As of June 2018 there were 1081 public hospitals and 361 private hospitals in Thailand. While over half of private hospitals participate in the UCS, public hospitals are responsible for the large majority of treatments. Thailand is known for having one of the best hospital networks in the world, with 64 facilities possessing the Joint Commission International (JCI) certification, considered as the gold standard for health care service providers, as of April 2018. Nine hospitals had been accredited since the beginning of 2017 alone.

Larger hospitals are better positioned to compete internationally, as they can make use of economies of scale, absorb market pressures and benefit from a strong capital base. However, budget shortfalls in recent years, coupled with increasing health care prices, have had detrimental effects on smaller public hospitals, especially in rural areas. In April 2017 the Federation of Doctors of Central and General Hospitals reported that 18 state hospitals were bankrupt with debts ranging from BT92m ($2.7m) to BT400m ($11.6m), citing poor management and lack of funding from the UCS. To rectify the situation, Prime Minister Prayut Chan-o-cha approved a BT5bn ($144.7m) emergency budget to rescue five hospitals facing imminent collapse, although no long-term solution has been proposed. Under the current scheme, hospitals in heavily populated urban centres absorb a large number of patients, stretching medical services, while hospitals in more remote locations face liquidity shortages.

In an effort to generate income without financial assistance from the state, and to redistribute patients who can afford to pay for certain care, a number of public hospitals are making substantial investments to develop new private wings, offering services such as specialist treatments. One example is the largest and oldest hospital in Thailand, Siriraj Hospital, which opened its private subsidiary – Siriraj Piyamaharajkarun Hospital – in 2012. New solely private hospitals are also in the pipeline. Rangsit University has partnered with AMI Healthcare of the US for the construction of a 544-bed tertiary care hospital in Bangkok, expected to be completed in 2020 at a cost of $430m.

Digital 

Health care is included as a target sector under the Digital Government Plan 2017-21. This means the use of IT systems will become an increasingly important method to improve efficiency and service quality, evaluate performance and reduce errors. Under the Ministry of Public Health’s eHealth Strategy, running from 2017 to 2026, Thailand aims for all public health agencies to use secure information exchange tools and work to reduce the holding of paper medical records.

As of early 2017 Thailand had two hospitals at stage six of the Electronic Medical Records Adoption Model, created by HIMSS Europe. The model, which urges health facilities to use digital records in their processes, comprises eight stages from zero to seven. Bumrungrad International Hospital, a private facility in Bangkok, was the first to digitalise its processes in 2009, substantially increasing safety, lowering patients’ bills and more than doubling the number of patients it can handle each day. Furthermore, by 2014 more than 500 domestic hospitals and clinics had incorporated the open-source Hospital OS software platform, created through an R&D project in 2002. The system, oriented towards smaller facilities, has proved particularly beneficial to rural operations with limited financial and human resources.

Other technological advances, especially in telemedicine services, hold the potential to ease challenges related to caring for patients in remote areas. For example, in 2016 the Saensuk Smart City initiative – a partnership between the Saensuk municipality, Dell, Intel and IoT City Innovation Centre – implemented an intelligent health care monitoring system targeted at the elderly population that is largely home alone during the day. One aspect of the programme provides patients with a wearable device that calls for emergency help.

Tourism

Thailand’s numerous accredited medical facilities, competitive prices and well-trained practitioners, coupled with an abundance of natural and entertainment attractions, have made it a leading medical tourism destination, with over 2.4m international patients serviced in 2017. This number is set to grow as Thailand seeks to acquire a larger share of the $55bn global market and entrench its position as a medical centre in the region through its Thailand 4.0 strategy.

Indeed, medical tourism is one of the 10 targeted industries of Thailand 4.0, with the government looking to develop medical centres in areas such as Khon Kaen. Through the “Visit Thailand Enhance Your Healthy Life” programme – aiming to increase medical and wellness tourism – visitors can receive standard health checks in up to 70 internationally certified health care facilities, and stay in the country for 90, rather than 30, days.

In August 2017 Kasikorn Research Centre reported that international patients were set to generate an estimated BT48bn-49bn ($1.39bn-1.42bn) for private Thai hospitals that year, representing a 3-4% uptick on 2016. However, Thailand will likely face increasing competition in the coming years, as regional peers position themselves to profit from projected growth in the global market. Investments across Singapore, Malaysia, Cambodia, Vietnam and the Philippines threaten to dilute Thailand’s leading market share. At the same time, regions that have traditionally been significant sources of patients have begun to develop and promote their own in-bound medical tourism programmes. For example, patients from countries of the GCC – which have gone to Thailand in large numbers over the years – are now increasingly staying in their region. Furthermore, the drop in global oil prices in mid-2014 has restricted growth in medical tourist arrivals from those states.

Outlook

As costs increase and the demographic landscape transforms, the need to move from a cure-based system to a preventative one is becoming more apparent. This means opportunities are growing for the private sector to fill gaps and take some pressure off public facilities by catering to patients with the necessary spending power. At the same time, a stronger focus on developing innovative therapies and streamlined processes should help Thailand maintain its position as a regional medical centre, supported by the emphasis