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MSQH. The other two partners are the Association of Private Hospitals of Malaysia (APHM) and the Malaysian Medical Association (MMA). In 2001 only 75,210 foreign patients came to Malaysia for care. By 2008 the figure had become approximately 370,000. They generated revenues of about US$76.6 million. The numbers are growing by 25 per cent to 30 per cent a year. Approximately 70 per cent of the foreign patients are from Indonesia (especially neighbouring Sumatra, the Riau Islands and Java: a day trip for a consultation, even combined with an afternoons business, can easily be scheduled). A further 10 per cent are drawn from Singapore and 5 per cent from Japan. Patients from the UK, the US, Australia and the Middle East are an increasing proportion of the throughput. Eager to attract patients from old sources and new, Malaysia has liberalised its entry procedures. New arrivals who have been accepted by a hospital are permitted a six-month stay. Singapore and Malaysia are in competition for the Indonesian market. Since between 200,000 and 1 million Indonesians are believed to go abroad each year for medical care (it is estimated that they spend in excess of US$1 billion), there is room for both players in the market. Malaysia has a head start in terms of linguistic and cultural affinity. Apart from that, serviced accommodation and leisure-time activities in the convalescent phase are considerably less expensive. Medical care itself costs less in Malaysia than in Singapore. Both countries have staff who can communicate in Arabic, Mandarin and Japanese as well as English and Malay. Both countries have spare capacity. The bed-occupancy rate (citizens plus foreigners) in the Malaysian private sector is about 80 per cent. Foreign patients are clearly not pushing the locals out. Waiting times are clearly not a deterrent.

10.4

THAILAND

Singapore was the regional leader in the colonial period. It was overtaken by Thailand in 2001. In 2008 about 1.5 million foreigners entered Thailand for medical treatment: 300,000 from Asia, 257,000 from Europe, 152,000 from the Middle East (it had been 20,000 only five years before), the rest from a wide range of other markets. In terms of percentages, about 23 per cent are Japanese, 10 per cent South-East Asian, 11 per cent American, 19 per cent European (Teh, 2007: 3). Medical tourism is growing annually at a trend rate of 25 per cent to 30 per cent. In 2006 it earned the country about US$1.15 billion. Thailand is the principal exporter of health care services in the whole of Asia. Proximity helps: in 2007 it received 36,000 patients from Myanmar,

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plus large numbers from Laos, Cambodia, Bangladesh and other lessdeveloped countries in the region. There is considerable traffic from Europe and America. Care in Thailand costs less despite the airfares and the weak US dollar. Of 471 hospitals in Thailand about 33, all private, are actively involved in international business. Cosmetic surgery and dentistry are major attractions. Sex-change surgery is one of the top ten most popular procedures among foreigners (Demicco and Cetron, 2006: 529). The most prominent hospitals are Bangkok Hospital Medical Center, Samitivej Sukumvit Hospital and Bumrungrad International Hospital. All three are accredited by the JCI: this is required by third-party payers in the USA. Effectively, all doctors are Thai. The professional examination is conducted only in Thai. No more than seven foreigners have passed in the last quartercentury. That is more than all the foreign doctors in practice in Japan, where only citizens can obtain a licence. The policy is a mixed blessing. While doctors who speak Thai will be able to communicate with the local population, international patients might prefer to be seen by doctors who are fluent in the clients own language and can pick up the cultural cues. Virtually all Thai doctors speak good English. Not all, however, are equally fluent in Arabic, Korean or Spanish. It is also the case that, because the inflow of doctors is negligible, the country is only able to tap into foreign knowledge and expertise where its own nationals have gone abroad for further training. Inward investment is limited. While some hospitals in Thailand have had an infusion of foreign capital, the beneficiaries are almost entirely in Bangkok and the amounts involved are not very large. Foreign ownership by law cannot exceed 49 per cent. Citizens are expected to retain the controlling interest. The largest investors are from Japan and Singapore. Foreign direct investment accounts for less than 3 per cent of total direct investment in the Thai private hospital sector (Arunanondchai and Fink, 2007: 13). Private hospitals are disproportionately represented in Bangkok, where 43.3 per cent of Thailands bedstock is situated. Such concentration is bound to mean tough competition and also some excess capacity. Market saturation will lead to devolution as an economic alternative to thinning out. As well as the push there will be the pull. Profit-seeking hospitals will recognise the commercial potential of under-supplied regions. Examples of such regions would be the highly industrialised Eastern Seaboard from Chonburi to Rayong, tourist and retirement destinations such as Hua Hin and border areas such as Mukhdahan which have easy access to the rapidly-growing economies of Indochina. Bangkok Hospital Medical Center is part of Bangkok Dusit Medical

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Services PCL. Dusit is the largest hospital chain in Thailand. Bangkok Hospital has 600 beds in four institutions. About 40 per cent of its patients are foreigners. In 2007 the Centre treated 139,000 foreign patients from 134 countries. It earned about US$53 million in revenue (Velasco, 2008: 15). Expansion is rapid. In some years the volume of international business has increased by 50 per cent. Many of the patients come from the Middle East, especially the Gulf. The group has a Japanese clinic. It is staffed by Japanese-speaking Thais with personal experience in Japan. Bangkok Hospital was the first hospital in Thailand to offer Gamma Knife treatment for neurological diseases. It operates an emergency helicopter service covering the whole of Thailand, Laos and Cambodia. The helicopter is fully equipped. Crew members have skills in areas such as cardiac arrest, burns and neo-natal care. Within Thailand the Bangkok Hospital Group has targeted the health tourism market through hospitals in beach resorts at Pattaya, Phuket, Koh Chang and Koh Samui. Outside Thailand it has been aggressive in developing a new client base. In Nepal it has set up a referral centre: patients might have gone to India if the Bangkok Hospital had not been proactive in arranging appointments. In Cambodia it has entered into a joint venture with the Royal Phnom Penh Hospital: a top-end clinic allows wealthy Cambodians to obtain Thai-standard care without going abroad. Bangkok Dusit (supported by Bangkok Airways which is in the same group) has itself made a similar arrangement with the Royal Ratanak Hospital. The Samitivej Group has a number of hospitals in the Bangkok area. About 40 per cent of patients seen are foreigners (Deloitte Center for Health Solutions, 2009: 1). Samitivej Sukhumvit has considerable experience with international patients. It has 270 beds, 87 examination suites and over 400 specialists. The Group also has hospitals at Srinakarin, near the airport, and Sriracha, near the Laem Chabang Port. The Samitivej Group operates the specialist Samitivej Srinakarin Childrens Hospital. It is the first and only dedicated private hospital for children in Thailand. Most hospitals in Thailand are general. Bumrungrad International Hospital in Bangkok is the largest private hospital in South-East Asia. It was the first hospital in Asia (in 2002) to become JCI-accredited. It has 554 inpatient beds and 1 million square feet of floor space (www.bumrungrad.com). There are 1000 doctors on the Bumrungrad panel. Many have trained or worked in the United States, Japan or other foreign countries. A fifth are Board-certified in the United States. Only the medical executives and a small number of doctors (in the hospitals International Medical Coordination Office) are directly employed.

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They are salaried and full-time. A further 200 are full-time at Bumrungrad but earn their income from professional fees. The other doctors at Bumrungrad split their time between the hospital and other institutions. They see patients on a fee-for-service basis. It is normally the hospital and not the doctor that markets itself on the strength of its reputation. Patients select their hospital first. Only then will they choose a doctor whom the hospital trusts sufficiently to put on its list. In 2007 a total of 1.2 million patients were treated at Bumrungrad. Of that 1.2 million, 430,000 were foreigners and 60,000 were Americans. About half of the Americans were expatriates. Of the other half, about half (25 per cent of the total) were intentional medical travellers who had come to Thailand specifically for medical care. The remainder were tourists who needed unplanned medical attention while in the country. Americans, Japanese and Emiratis were the three largest groups of foreign patients. Nationals of 190 countries have received treatment at the hospital. The census of foreign patients is high. Bumrungrad treats more foreign patients than all of the hospitals in Singapore combined. It also treats some Singaporeans who have been attracted to it by the price. Bumrungrad in 2007 earned over US$110 million from its non-resident business. Foreigners generate about half of the hospitals revenues. About 75 per cent of its patients are self-funding. Only about 25 per cent of its income is derived from insurance companies or corporate contracts. One consequence is that bad debt is not a problem. Most patients pay cash or by credit card when they check out. Bumrungrad is owned locally and operated for profit. It is listed on the Stock Exchange of Thailand. The majority shareholders are the Bangkok Bank PLC and the Sophonpanich family. The management team is, however, international: American, British, Australian and Singaporean as well as Thai. Half of the executives are doctors. Most of the others are experienced health care administrators. Coming from a medical background but with an interest in business, they understand about competition and consumer satisfaction. Bumrungrad is strong on comfort. There is a McDonalds, a Starbucks and a sushi restaurant on the premises. They will deliver to the patients room. Marble floors, fountains and liveried attendants give Bumrungrad the feel of a high-end hotel. Elephant riding, temple tours, cookery classes and convalescence on the beach can be booked with a travel agent in the lobby. Fully-serviced flats are available for relatives. There is high-speed Internet connectivity. As with all leading hospitals in Thailand, there are interpreters on call. There is an immigration centre. It can secure visa extensions for patients who are too ill to travel. Bumrungrad opened in 1980 to service a middle-class Thai clientele. It

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continues to benefit from rising incomes in a rapidly-growing economy. When the Thai baht collapsed in 1997 in the Asian economic crisis, some hospitals went into liquidation and Bumrungrad was forced to fight for a client base. Unable to depend on local demand, it decided to take advantage of devaluation to promote itself as a cost-effective international option. Thailand was already a popular tourist destination. After 2001, when terrorism made it more difficult for patients from the Middle East to travel to the traditional centres of excellence in America and Europe, Bumrungrad positioned itself as a good alternative. Bumrungrad continues to market aggressively. It has 23 offices abroad: the list goes from Australia and Cambodia to Ukraine and Yemen. Its representatives are able to answer questions and book appointments. Tie-ins exist. Thai Airways through its subsidiary, Royal Orchid Holidays, offers check-in-and-check-up packages that include medical examinations. As with the Singapore hospital groups, Bumrungrad has invested in hospitals and clinics abroad. It owns a 40 per cent stake (the largest single holding) in the Asian Hospital and Medical Center, Manila, where it is involved in management. Bumrungrad also has the management contract for the Al Mafraq Hospital in Abu Dhabi. It has expressed an interest in setting up a Bumrungrad Dubai: it would hold 49 per cent of the equity and undertake the management. Networks such as these send referrals up to Bangkok. Other Thai hospitals have used the same business plan. Piyavate Hospital, for example, has been able to attract international clients through its clinic in Oman. Bumrungrad is successful in no small measure because it is pricecompetitive. It costs $90,000 to repair a herniated neck in the United States. It costs only US$10,000 to restore the same disk at Bumrungrad. Room charges and medical fees are lower than equivalent charges not just in America but in Singapore as well. Prospective patients can use an online service to find out the approximate cost of their treatment. The screen shows what patients actually paid (in 45 different currencies) for the 40 procedures performed at the hospital in the course of the previous year. In each case a high, a low and a medium estimate is given. The precise bill cannot be known until the treatment has been completed and the patient is discharged. Pricing is competitive. One reason is internal efficiency. Administration is electronic: only 13 per cent of US hospitals have computerised their record-keeping. Wireless infrastructure (wifi) is general: hospital staff can access personal data and medical histories anywhere in the building. Satellite can be used to obtain patient records from overseas. Supplies are barcoded to simplify reordering. Computers ensure that misdispensed pharmaceuticals will not necessitate additional treatments. Specialists are on duty 12 hours a day: a referral from a general practitioner

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is not required. There are 150 consulting rooms. They are in use 16 hours a day. CAT scanners are in use 12 hours a day. ECG machines are in use 100 times a day. Bumrungrad has the largest outpatient capacity in the world. It is able to see 6000 patients a day. There is slack. It works to the advantage of the patient. Knowing that they will not have to wait, 50 per cent of patients arrive without an appointment. A bed can always be found: the occupancy rate is only 70 per cent. Idle capacity is consumer-friendly. Throughput is nonetheless sufficient for the economies of scale that keep the average cost down.

10.5

THE WORLD IS FLAT

There is a final thought. China is less than a decade away from being a medical tourism destination on its own. The Renai International Patient Center at Renai Hospital in Shanghai (established in 2001) is already performing cosmetic surgery on 4000 foreign patients a year. Many of them are from Europe and America. The cost of a facelift is a quarter of what it would be in the West. Quality is ensured through a link with the Massachusetts Institute of Technology. The RIPC offers ten different medical specialities, schedules consultations round the clock, and musters expatriate as well as Chinese doctors. China is able to supply a range of medical and dental services. Also, precisely because it is growing so rapidly, it is generating a local consumer base with high discretionary incomes and a local supply of savings which can be converted into plant. State-of-the-art new hospitals are bound to move in to capture this large and dynamic market. Good quality education has expanded the pool of professionals. Singapore will have to move fast to seal in its head start. It will have to exploit first-mover advantage to build up brand loyalty among its Chinese patients. The window of opportunity will one day close. Indonesia, similarly, knows that it is behind in hospitals and needs to catch up. Here a lesson may be learned from the Kenyan experience. Middle-class Kenyans with heart problems used to go to South Africa for treatment. Now they can receive treatment of the same standard at the Kenyatta National Hospital, Nairobi. The next step will be for Kenya to become a medical tourism hub for the less-developed countries in its region. Import substitution is taking place. As with Kenya, so with Indonesia. Indonesia may not be sending its patients to Singapore forever. The world is flat and the flights are short. Singapore, in sizing up the opposition, is obliged to take into account the plethora of treatment