International trade in health services

Yodi Mahendradhata

International trades in services

Cross-border trade

Consumption abroad

Commercial presence

Natural presence

International trades in services

Cross-border trade

Consumption abroad

Commercial presence

Natural presence

Consumption abroad (Medical Tourism)

Indonesia is the biggest outbound global medical tourism country source

Number of Indonesian patients seeking treatment overseas

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

2006 2012

Annual spending on overseas medical treatment (in thousand dollar)

0

2000

4000

6000

8000

10000

12000

14000

16000

2006 2012

“Overview of the development of Malaysia Healthcare towards Medical Tourism”, Dr Mary Wong Lai Lin, CEO of Malaysia Healthcare Tourism Council, 2012

Indonesia is a source of patients for its next-door neighbours

• Singapore– Indonesian market accounted for 56 per cent of total medical tourism

revenues in 2013– Revenue from Indonesian medical tourists in 2013 was S$463 million

(US$347.35 million), down 38 per cent from 2012

• Malaysia– 2011 data: >330,000 Indonesians sought treatment in Malaysia spending

over $150 million in direct medical costs. – 2013 data: > 400,000 Indonesians sought treatment in Malaysia -> may be

worth close to $1 billion in 2013 for Malaysia and this figure is growing around 30% a year

Source: http://www.edelman.id/medical-tourism-in-southeast-asia-indonesias-opportunity-cost/; http://www.asianewsnet.net/Singapore-losing-medical-tourists-to-neighbours-74854.html

Why do patients go abroad?

“Many people suggested that we come to Kuching because they said that the medical treatment here

was good. The guy over there had the experience of falling ill and being cured here. We weren’t sure about

coming to Kuching, but after we heard about it through word-of-mouth, we decided to come.”

(Wife of an Indonesian medical traveller in Malaysia,

a civil servant in his 50s)*

*Source: Ormond (2014)

“I think that 90 percent of patients here come fromIndonesia – especially from Pontianak. We understand why.

Doctors here are more open, honest, and explain to us whether illnesses can be cured or not. They will keep us

informed – giving us the percentage of likelihood for a cure, giving us all the information we need. They are clearer and

more open – friendlier, more familiar.”

(Indonesian medical traveller in Malaysia,

a small business owner in her 40s)*

*Source: Ormond (2014)

“People are forced to come here [to Malaysia]. It’s about our lives. We already spent money on local

health treatment [in Indonesia] without being cured. The situation makes it difficult for Indonesia to

develop its health services..”

(Indonesian medical traveller in Malaysia,

a small business owner in his 60s)*

*Source: Ormond (2014)

Familiarity Affordability

Perceived quality

Availability

Drivers for foreign medical care(Glinos et al 2006)

International patients visits*

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

2001 2002 2003 2004 2005 2006 2007 2008

Thailand

Singapore

Malaysia

*Kanchanachitra et al 2012

Annual Medical Tourism Revenue 2006-2008*

0

200

400

600

800

1000

1200

1400

1600

Malaysia Philippines Singapore Thailand

Mill

ion

USD

*Kanchanachitra et al 2012

Revenue per international patient*

0

500

1000

1500

2000

2500

Malaysia Thailand Singapore

Mill

ion

USD

*Kanchanachitra et al 2012

Popular Medical Tourism Services*Services Malaysia Philippines Singapore Thailand

Cosmetic surgery

Health screening

Orthopedics

Cardiology

Coronary artery bypass

Neurosurgery

Oncology

Hip replacement

Stem cell

Internal Medicine

Endocrinology

Health rejuvenation

*Kanchanachitra et al 2012

Areas of origin of the medical tourists attending five hospitals, Thailand, 2010*

Origins Number of med tourist (%)

Eastern Mediterranean 40,554 (38.7)

Southeast Asia 14,730 (14.1)

Europe 14,004 (13.4)

South Asia 12,703 (12.1)

North America 9,481 (9.0)

East Asia 4,166 (4.0)

Africa 3,957 (3.8)

Australasia 3,949 (3.8)

Unknown 1,252 (1.2)

Other area 34 (0.0)

TOTAL 104,830 (100.0)

*Ref: Noree et al (2016)

Medical Travel costs from major US cities (US$)

Chicago Los Angeles Miami

Bogota, Colombia 316 590 299

San Jose, Costa Rica 423 559 333

New Delhi, India 1264 1390 1313

Amman, Jordan 1307 4503 1626

Seoul, Korea 1170 1301 1758

Monterrey, Mexico 737 642 521

Tel Aviv, Israel 1602 4229 5481

Bangkok, Thailand 3617 1369 3509

Kuala Lumpur, Malaysia 2603 1279 3804

Managua, Nicaragua 376 578 346

Average cost of medical procedures (US$)*

Procedure US UK Malaysia Singapore Thai

Heart-by-pass graft surgery

113,000 13,921 9,000 20,000 13,000

Heart valve replacement 150,000 - 9,000 13,000 11,000

Hip replacement 47,000 12,000 10,000 11,000 12,000

Knee replacement 48,000 10,162 8,000 13,000 10,000

*Kanchanachitra et al 2012

Single private hospital room per night

0

200

400

600

800

1000

1200

1400

Malaysia Thailand Singapore US

USD

Touristic healthcare services in demand

Lifestyle Invasive Diagnostic

Life enhancing Dental work General check up

Stress reducing Plastic surgery Bone density testing

Skin improving Eye surgery Heart stress test

Sleep psychology Cancer treatment Lipid analysis

Physical therapy Joint replacements

Holistic healing

Average cost of braces in the US (2012)

US$ 5,200

Dental tourism...

Favored destinations

Hungary

Mexico

Poland

Thailand

Turkey

Spain

Others

Procedures in demand

Implants

Veneers

Crowns

Teethwhitening

Bridges

Braces

Others

‘Innovative’ medical tourism

Toothache tourism

Women on wave/sperm

ship

Dialysis at sea

Fasting tourism

Pregnancy tourism

Detoxtourism

Health research

Suicide tourism

Medical tourism by patient profile

Rich patients Poor patients

From developedcountries

Elective invasive, Diagnostic, Lifestyle

Low-tech invasive, Diagnostic, Border medical care

From developing countries

Elective invasive, Diagnostic Lifestyle

Border medical care

Incidental medical tourists?

• Short term stayers

– Ordinary tourists

– Business traveler

• Long term stayers

– Foreign students

– Foreign workers

– Retirees

8% of traveler to developing country requires medical care (e.g. diarrhea, malaria)

Strategies and comparative advantages: Thailand

• National strategy as Asian Regional Med Hub, e.g. Center for trans-sexual surgery

• Large number of JCI accredited hospitals

• Highly skilled med professionals

• Strong private participation

• Competitive costs

Strategies and comparative advantages: Singapore

• Well-established medical tourism destination

• High technology equipment

• Highly skilled med professionals

• Large number of JCI accredited hospitals

• Strong goverment support

Strategies and comparative advantages: Malaysia

• Strong goverment support

• Competitive costs

• Strategic alliances with foreign partners

• Easy entry for foreign patients

• Destination for Muslim Patients

Targets in medical tourism

Country Target

Singapore • One million patients by 2012• S$ 3 billion revenue (0.95% of its

GDP)• S$ 400 million from related industries• 13,000 new jobs

Thailand • US$ 3,2 billion for 2014

Malaysia’s Economic Transformation Program (ETP)

• Earmarked health care as one of the country’s 12 National Key Economic Areas (NKEAs) deemed to have the potential to spur growth

• Medical tourism is intended to generate MYR 9.6 billion in revenue and MYR 4.3 billion in gross national income and to require 5,300 more medical professionals by 2020

• For-profit hospitals are expected to invest MYR 335 million in hospital infrastructure in order to be prepared for 1.9 million foreign patients annually by 2020.

Common policies and strategies (Johnston et al 2015)

• Creation of visas specifically for medical tourists

• Reduction or elimination of taxation on imported medical equipment and supplies

• Incentives and/or requirements for international hospital Accreditation

• International marketing efforts that advertise the high quality of medical care available

8 success factors for medical tourism

Competitive price

Tourist appeal

Market economicsDeveloped political

and legal institutions

Local R &DHuman capital

Confluence of western and traditional medicine

Developed physical infrastructure

Barriers to medical tourism

Standards. Accreditation and

credentialingInsurance

Legal recourse and protection of

patients

Entry requirements and

transportation

International regulation

International trades in services

Cross-border trade

Consumption abroad

Commercial presence

Natural presence

Yodi_mahendradhata@yahoo.co.uk