Outsourcing Healthcare

‘First-World Care’ at ‘Third-World Prices’

As healthcare and medical insurance costs skyrocket in the United States, Western Europe, and other developed regions,
patients are increasingly seeking treatment abroad. And they do not have to look far to find qualified doctors and high
tech facilities in developing (and often exotic) countries that offer a full spectrum of comparable services at a fraction
of the price. While there are some potential hurdles for the international health care industry to overcome, hospitals like
Bumrungrad in Bangkok, Thailand, showcased here as a Case Study, demonstrate the successes already achieved and the
vast potential for the industry’s future growth.

An MKThink Research Publication

1 December 2006

For further information, please contact:

Chloe Lauer at 415 288 3394
Outsourcing Healthcare
‘First-World Care’ at ‘Third-World Prices’
Globalization is the language of the day, and the health care
industry is no exception. In the past, foreign patients sought
advanced care in the United States or Western Europe. Today,
the flow of patients is shifting. With the costs of care skyrocketing
and waiting lists lengthening, patients in the U.S. and Europe
are seeking care in places like India and Thailand. And people
who came to the U.S. for high-tech care in the past are finding
internationally renowned hospitals in Asia that offer comparable
or even better care for a fraction of the price (without the
headache of post-9/11 U.S. foreign policy or red tape).
Traveling abroad for medical treatment is not a new occurrence—
people have made pilgrimages to hot springs or famous health
resorts since antiquity. But the trend has grown significantly in
the past five years for two important reasons: the push factor
and the pull factor, according to Businessworld’s December 22,
2003 article, “The Health Travellers.” The push factor is the large
surge in demand for health care in developed nations as life
expectancy continues to rise and the proportion of the elderly (in
comparison to the total population) is rapidly increasing. The pull
factor is the excellent doctors and sophisticated facilities in exotic,
developing countries like Thailand, Malaysia, and India.
The push and pull factors can be broken down into the seven
primary drivers of this global outsourcing evolution: cost, timing
(waiting lists or lack thereof), quality of care, cutting-edge
procedures, privacy, the opportunity for pre/post-op tourism, and
efficiency.
• Cost: approximately. 1/3-1/10 the cost in the U.S. or
Europe, including airfare and lodging.
• Timing: nearly immediate care instead of six to nine-month
waiting lists.
• Quality: complete competency; more RNs per patient; new
facilities; better rooms; state-of-the-art technology.
• Cutting-Edge Procedures: life-changing operations not yet
through the U.S.’s tedious FDA approval process.
Outsourcing Healthcare © MKThink 2006. Reproduction prohibited without permission.
• Privacy: recuperate away from friends and co-workers.
• Tourism: a change of scenery does wonders for the body,
mind, and spirit during recovery.
• Efficiency: Many patients don’t have a lot of vacation
time/sick leave, so the possibility of combining surgery with a
tropical vacation is appealing.
POTENTIAL HURDLES
Quality. Western patients may at first be wary at the prospect
of traveling half way across the world for a surgery that could
mean the difference between life and death. After such initial
doubt, many patients will be convinced by statistics and
anecdotes alike that outsourced care is high-class. Take the
story of Naresh Trehan, a heart surgeon at Escorts hospital
group in India, for example. Formerly earning $2 million/year in
Manhattan, Trehan recently returned to Delhi, where his hospital
completed more heart operations (4,200) than anywhere else
in the world in 2004 with death and infection rates well below
first-world averages (.8% and .3% compared with 1.2% and 1%,
respectively). “Nobody questions the capability of an Indian
doctor, because there isn’t a big hospital in the United States or
Britain where there isn’t an Indian doctor working.”1
And what about the patient experience? Byron Bonnewell
of Louisiana, who received a quintuple bypass surgery at
Bumrungrad Hospital in Bangkok, Thailand, raved about his
treatment: “In Thailand, I bet I had eight RNs just on my section of
the floor alone. First-class care.”2
These international hospitals pride themselves on creating an
atmosphere of luxury. It’s no mistake that the facilities look more
like a five-star hotel than a hospital. Kim Atwater of Oregon
explains, “It’s much nicer than any hospital I’ve ever stayed in the
United States.”2
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Nicer is an understatement. Think private room with private bath,
plus massages and yoga classes. And you can stay as long
as you want. Anne Bell of the British High Commission in New
Delhi is happy that her baby was born in India instead of the
UK: “There’s no pressure to go home after the delivery. We’ve
been welcomed to stay as long as we want…Often in the UK,
you might be out of the hospital within five hours if you’ve had a
normal delivery.”2
Insurance. Very few medical insurers, whether public or private,
currently extend health coverage to another country, with the
exception of emergency services during travel. For this reason,
most patients seeking overseas care are self-financed. People who
have medical insurance typically choose to stay at home where
their coverage is accepted. However, when the wait is too long
or the procedure unavailable, even insured patients will opt for
overseas services.3
Law. It is unclear what recourse patients have in the case of
malpractice since the legal structures in the countries known for
medical tourism differ from those in the United States and Great
Britain. In any case, most patients are very satisfied with their
experiences, so the need to resort to legal measures is minimal,
according to our research thus far.
Accreditation. Some international hospitals are seeking
accreditation from the groups that administer medical facilities
in Britain and the U.S. Bumrungrad (Bangkok, Thailand) is
accredited by the U.S.-based Joint Commission on Accreditation
of Healthcare Organizations, and the British Standards Institute
has given Escorts (near Delhi, India) its stamp of approval.
The Apollo Group hospitals and Escorts are in the process of
becoming certified by the Joint Commission.
Pre- and Post-Op Care. So you make it to India and have
a successful kidney transplant. What happens once you’re
back home and need a post-operative check-up? What about
complications and side affects that you didn’t anticipate? This is
a valid concern. A successful surgery is just the first step toward
better health. The recovery process is completes the procedure.
Outsourcing Healthcare © MKThink 2006. Reproduction prohibited without permission.
5
Digital technology is one part of the solution to the distance
barrier. With the ease of communication enabled by today’s
technology, doctors and patients can be in touch both before and
after the procedure. Web-cams and video conferencing help to
ease the physical divide, but nothing compares to a face-to-face
consultation.
Local Population. Some argue that the medical tourism boom
will reduce the care available for the local populations where
these international hospitals reside. Critics are concerned that
hospitals will cater to the wealthier patients from out of town
while neglecting those from the other side of town. While
these concerns should not be dismissed lightly, it seems that
the opposite may be true. The local population can stand to
benefit from the state-of-the-art care offered by an internationally
recognized hospital as long as both local and international
patients have equal access to care and local patients continue
to represent a significant percentage of those treated. At
Bumrungrad Hospital in Bangkok, Thailand, for example, Thai
residents still accounted for 63% of the hospital’s 2002 revenues.
And the Bumrungrad Hospital Foundation, founded in 1990, is
dedicated to improving the health care for underprivileged Thais.
In India, Apollo Hospital Enterprises responded to criticism from
India politicians by reserving beds for those unable to pay for
care, setting up a trust fund, and pursuing remote telemedicine
throughout India.4
Perception of this region as breeding ground for infectious
diseases. The avian flu and SARS epidemic may keep some of
Asia’s would-be patients at home, but these scares will cause
only minor downturns in an ever-strengthening global healthcare
market.
Government Regulation. In the free market as in health care,
government interference is at an all-time low. Going abroad for
health care is becoming more and more commonplace, and
governments are likely to at least allow—if not encourage—
innovations that bring affordable, high-quality health care to more
of their populations.
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C A S E S T U DY // B U M R U N G R A N D H O S P I T A L . B A N G KO K , T H A I L A N D

Overview. A 200 bed facility in 1980, Bumrungrad Hospital
re-invented itself in 1997 as a completely digital facility and the
largest private hospital in south East Asia. With one million square
feet over 12 floors and 554 inpatient beds, BH treated more
than 350,000 international patients from 154 different countries
in 2004, up from 161,000 in 2000. A range of impressive
outpatient clinics covers a spectrum of specializations. Over
2,000 employees, including over 700 doctors (one-third of whom
are certified in the U.S.) and dentists “provide efficient world class
healthcare with caring and compassion.”5,6
Technology. IT is the key to BH’s outstanding service and
amazing success. Global Care Solutions (GCS) is a worldwide
provider of IT solutions specially designed for the health care
industry. Through Hospital 2000, an integrated front office and
back office operational solution with a single database that
operates on “platforms such as Intel architecture-based servers
from Dell and Microsoft Back Office products such as SQL server
2000”7. Only eight IT personnel are needed to maintain this vast
system that supports the over 2,000 hospital employees and runs
in nearly every language!
Ownership. BH is traded on the Stock Exchange of Thailand as
a public company.
Certification. BH is accredited by both U.S. and Canadian
standards and has an internationally certified laboratory.
Impressive Statistics:
• 40% increase in patient volume since 2000 (with no need to
increase back office or IT staff)
• 33% gross margin in 2003
• 850,000 outpatient visits per year with an average visit
of 45 minutes, “including registration, treatment, diagnostic
procedures, pharmacy, and bill paying”5
• Medical errors and infection rates have fallen.
• The database holds 35 million scanned images and adds
10,000 per day.
• The hospital collects 93% of its charges due to billing
efficiency.

In addition to the innovative comprehensive IT solutions, BH

uses cutting edge technology in other areas, such as radiology.
With film less imaging, doctors don’t need to wait for film to be
delivered, images are not lost in the filing system, and the space
that housed the records has been re-allocated as a pediatric
clinic.

The IT system also helps to attract and retain doctors committed to

high standards of practice.

Outsourcing Healthcare © MKThink 2006. Reproduction prohibited without permission. Page 4

IMPACTS/SYNERGIES
hospitals are located and coastal regions where patients tend to
vacation stand to gain from the tourism dollars.
Worldwide Market increases competition; lowers costs. In this
multi-trillion dollar industry, worldwide statistics showing exactly
Digital Technology. As described in the above case study on
how many people travel abroad for healthcare and how much
Bumrungrad Hospital in Bangkok, Thailand, IT is the key to its
they spend each year are not available. Localized statistics give
success. Besides being necessary for accurate, comprehensive
an indication of the magnitude of the world market, though:
care within hospitals, digital technology will be crucial to bridge
medical travelers from the Gulf region alone invested over $27
the gap of physical distance. Faced with the need for doctor-
billion in treatments abroad in 2000, according to a Saudi
patient and international doctor-local doctor communication both
Arabian study.8 And that’s just one part of the global market.
before and after surgery, innovations in digital technology will be
Rupa Chanda, professor at the Indian Institute of Management-
driven by demand.
Bangalore, gives an indication of the huge opportunity: “The
estimate is that the healthcare market in the Organization of
Insurance. The chairman of Apollo Hospital Enterprises,
Economic Cooperation and Development countries alone is worth
Dr. Prathap C. Reddy, is negotiating with Britain’s National
about $3 trillion, and expected to go up to $4 trillion in 2005.”8
Health Service to work as a subcontractor performing medical
In 2003, 1.3 million medical travelers brought over $1 billion in
procedures at a fraction of the rate of Britain’s private or
treatment costs (not to mention auxiliary expenses) to Thailand,
government care. In the future, similar agreements may be
Malaysia, Jordan, Singapore, and India. In these Asian nations,
brokered with private insurance groups.
the medical travel market is growing at over 20% each year. At
that rate, medical tourism could bring in $2 billion per year in
Physical Design. Due to the above-mentioned challenges of
India alone by 2012, according to consulting firm McKinsey.
long-distance care, there is a burgeoning market for pre- and post-
operative care facilities that collaborate with the international hub
If the overseas market ultimately drives down private health care
hospitals. The market is already gaining foothold: for example,
costs in the United States and Britain, it will benefit those on the
Surgeon and Safari, a program jokingly known as the “beauty
margin of access to good care. Insurance companies, on the
and beast” tour, (patients have orthopedic or cosmetic surgery in
other hand, will be forced to reduce expenses to stay profitable.
Africa and then recover while on safari) has a network of doctors
In fact, they already are. According to a CBC News story, U.S.
in London who offer pre-op consultations. And Bumrungrad
insurance companies are outsourcing overnight computer services
Hospital in Bangkok, Thailand, is establishing referral offices in
to Apollo Hospital Enterprises in India.4
Oman, Australia, and the Netherlands.

Government/International Policy. Both the World Health

Organization (WHO) and the World Trade Organization CONCLUSION
(WTO) have an interest in the medical travel movement. The
As demonstrated by ever-growing success of the internationally
WHO understands that medical tourism can improve medical
known and respected Bumrungrad Hospital in Bangkok, Thailand,
facilities and the medical economy in developing nations while
healthcare is becoming an increasingly globalized industry. The
solving some of the cost and demand problems facing wealthier
benefits of lower costs, immediate availability, high quality care,
countries. The WTO views medical travel as key to upgrading
cutting-edge procedures, and opportunity to travel outweigh
healthcare globally.
any of the potential hurdles mentioned above. By outsourcing
healthcare, it seems ‘first-world care’ may indeed by available at
“Both WHO and WTO understand that medical
‘third-world prices.’
travel could ameliorate much of the demand-supply
imbalance in global healthcare. Developed nations
benefit as costs or waiting times – or both – come
down for a significant chunk of their population.
Developing countries benefit as it brings in revenues
and provides the right spur to improve their overall
healthcare sector, apart from reducing brain drain in
their medical fraternities. Least developed countries,
too, benefit as they lack facilities for cutting-edge
treatment.”8

Tourism Industry. Since patients often buy a package deal that

includes flights, ground transport, lodging, treatment and a post-
operative vacation or resort stay, it’s not only the medical industry
that benefits from the patient’s trip. Both the cities where the

Outsourcing Healthcare © MKThink 2006. Reproduction prohibited without permission. Page 5

NOTES COMPANY PROFILE

1. Trehan qtd. in Randeep Ramesh’s article, “This UK MKThink reveals and optimizes the nexus between people and
patient avoided the NHS list and flew to India for their environments. Led by principals Mark Miller, Steve Kelley
a heart bypass. Is health tourism the future?” The and Nate Goore, MKThink creates dynamic strategies that help
Guardian, 1 February 2005; available at http:// solve organizational challenges.
www.guardian.co.uk/medicine/story/0,11381,140288
1,00.html. The MKThink team, comprised of anthropologists, psychologists
2. “Vacation, Adventure and Surgery? Elective Surgeries By and business people, as well as architects and urban planners,
World-Class Doctors At Third-World Prices” CBS strives to fully understand their clients’ identities, needs, goals
News, 4 September 2005; available at http:// and culture before ever putting pen to paper. With a strong
www.cbsnews.com/stories/2005/04/21/60minutes/ background in learning, workplace, community and healing
main689998.shtml environments, MKThink boasts a wealth of capabilities, including
3. www.medical-touri.org/Medical-Insurances.htm* strategic, analytic and design services.
4. “Medical Tourism: Need Surgery, will travel.” CBC News,
18 June 2004; available at http://www.cbc.ca/news/
background/healthcare/medicaltourism.html
5. Article 13 Best Practice Case Study on Bumrungrad
Hospital, Bangkok, Thailand; available at http://
www.article13.com/A13_ContentList.asp?strAction=Get
Publication&PNID=1179
6 Cumming-Bruce, Nick, “A Thai Remedy for High Health
Costs.” The International Herald Tribune, 27 July
2005; available at http://yaleglobal.yale.edu/
display.article?id=6067
7. “Dell Reliability Vital to Bumrungrad Hospital and Global
Care Solutions”; available at http://www.dell.com/
content/topics/global.aspx/casestudies/en/2002_bum
8. Datta, Prosenjit and Gina S. Krishnan, “The Health
Travellers.” Businessworld, 22 December 2003;
available at http://www.businessworld.in/Dec2203/ *original source no longer available online.
coverstory01.asp

REFERENCES

Bumrungrad Hospital website; available at http://

www.bumrungrad.com/
Datta, Mrinalini and Abhay Singh, “Indian Hospitals
Lure Foreigners With $6,700 Heart Surgery.”
Bloomberg, 26 January 2005; available at http://
www.howardsheart.com/Bloomberg.com-surgery.html
Global Care Solutions Press Release on Bumrungrad
Hospital, Bangkok, Thailand; available at http://
www.hospital2000.com/english/customer_bh.asp
Lancaster, John, “Surgeries, Side Trips for ‘Medical Tourists:
’Affordable Care at India’s Private Hospitals Draws
Growing Number of Foreigners.” Washington
Post, 21 October 2004; available at http://
www.washingtonpost.com/wp-dyn/articles/A49743-
2004Oct20.html
“Over The Sea, Then Under The Knife: Patients worldwide are
heading to hospitals in Asia for affordable, high-quality
surgery.” BusinessWeek, 16 February 2004; available
at http://www.businessweek.com/magazine/content/
04_07/b3870074.htm
Surgeon and Safari website; available at http://www.surgeon-
and-safari.co.za/

Outsourcing Healthcare © MKThink 2006. Reproduction prohibited without permission. Page 6