Economic and Social Commission for Asia and the Pacific

MEDICAL TRAVEL IN ASIA AND THE PACIFIC

CHALLENGES AND OPPORTUNITIES

MEDICAL TRAVEL IN ASIA AND THE PACIFIC CHALLENGES AND OPPORTUNITIES

This report has been produced without formal editing.

The designations employed and the presentation of the material in this report do not imply the expression of any opinion whatsoever on the part of the Secretariat of the United Nations concerning the legal status of any country, territory, city, or area or of its authorities, or concerning the delimitation of its frontiers and boundaries. The views expressed in this report are those of the contributors alone, and in no way reflect the views of the United Nations. The mention of any products or organization in no way implies an endorsement of them by the United Nations in any way whatsoever.

For further information on the materials contained in this publication, please contact: Mr Yap Kioe Sheng Chief Social Protection and Social Justice Section Social Development Division United Nations Economic and Social Commission for Asia and the Pacific United Nations Building Rajadamnern Nok Avenue Bangkok 10200, Thailand Email: escap-healthdev@unescap.org

Acknowledgements This report is based on a draft discussion paper prepared by Srinivas Tata for the theme study for the UNESCAP 63rd Commission session, which served as a basis for the background paper developed for the EGM by Bruce Ravesloot, consultant for UNESCAP. It has been revised based upon the comments received from experts during the EGM. Yu Kanosue, Marco Roncarati and Srinivas Tata from the Health and Development Section of UNESCAP, have contributed to its reformulation and revision. Gehendra Dhakal and Ployparn Khunmuang, also from HDS, have also contributed to the production of the document. The document has been prepared under the overall guidance and supervision of Guennady Fedorov, Chief of HDS.

Preface This report is based upon a background paper prepared for an expert group meeting (EGM) on regional trends in trade in health services in the Asian and Pacific region which was held in Bangkok from 9 to 11 October, 2007. It has been revised by using information contained in the presentations made by experts attending the meeting and their suggestions. The experts were drawn from a wide range of sectors including academia, tourism, public health, as well as regional organizations and international agencies. The recommendations contained at the end of the report were adopted by the experts at the EGM, and reflect key priorities for action at national and regional levels. Medical travel, which refers to the international phenomenon of individuals travelling, often great distances, to access health-care services that are otherwise not available due to high costs, long waiting lists or limited health-care capacity in the country of origin, has been increasing in the Asian and Pacific region. Increased ease in travelling abroad, availability of information to consumers worldwide and joint ventures in the private sector providing health services have all contributed to increased consumption of health care abroad. This report explores the key trends and drivers of such movement as well as opportunities and threats presented by medical travel. It also looks at ways that Governments in the region are supporting this movement, and also analyses potential impacts on delivery of public health. The lack of reliable and standardized data is one of the main constraints to effective analysis and policy formulation in the area of medical travel. This report is one of the first efforts to collate existing evidence from a wide variety of sources and present a comprehensive analytical platform for policy development in the Asian and Pacific region. It is hoped that this would provide the basis for further research and analysis in specific areas, which would serve as a reliable guide for policy formulation and for regional cooperation.

Table of Contents 1. Background _______________________________________________________________ 1

1.1 Medical travel and medical tourism ______________________________________________ 1 1.2 Rise of medical travel ___________________________________________________________ 1 1.3 Medical travel and trade ________________________________________________________ 5

2.

Medical Travel Industry in Asia _____________________________________________ 7

2.1 India _________________________________________________________________________ 10 2.2 2.3 2.4 2.5 Singapore ____________________________________________________________________ 12 Philippines ___________________________________________________________________ 14 Thailand _____________________________________________________________________ 15 Malaysia _____________________________________________________________________ 17 Key players in the industry _____________________________________________________ 18 Key drivers for the industry ____________________________________________________ 20
20 20 20 21 22 22 23 23

3.

Medical Travel Industry Analysis __________________________________________ 18

3.1 3.2

Increased costs __________________________________________________________________________ Limited medical insurance coverage ________________________________________________________ Affordable and quality alternatives _________________________________________________________ Accreditation and assurance_______________________________________________________________ Access to information and ICT _____________________________________________________________ Niche medical services ___________________________________________________________________ Geopolitical events _______________________________________________________________________ Industry linkages ________________________________________________________________________

3.3

Opportunities for health systems _______________________________________________ 23

Economic gain___________________________________________________________________________ 23 Reducing external brain drain _____________________________________________________________ 23 Improved medical infrastructure ___________________________________________________________ 24

3.4

Challenges for health systems __________________________________________________ 24

24 25 25 26 27

Technocentric approach to health care ______________________________________________________ Internal brain drain ______________________________________________________________________ Regulatory system _______________________________________________________________________ Health equity and ethics __________________________________________________________________ Dependence on foreign clients _____________________________________________________________

3.5

Regional expansion____________________________________________________________ 27

The European Union experience ___________________________________________________________ 28

4.
I. II.

Conclusions and Recommendations ________________________________________ 31

Addressing the gap in data _____________________________________________________ 32 Analysis ______________________________________________________________________ 32

III. Managing the impact on public health systems ___________________________________ 32 IV. Managing the process of medical travel __________________________________________ 33 V. Areas for regional cooperation __________________________________________________ 34

Boxes, Figures and Tables

Box 1 Box 2 Figure 1 Figure 2 Figure 3 Table 1 Table 2 Table 3 Medical travel destinations around the world The four main modes of international trade in health services Estimated international patients treated, 2003 - 2005 Medical travellers to Thailand by country of origin (2005) Hospital supply chain for an international patient Medical travel overview 2006 price comparison: Philippines and United States of America (US$) Cost of surgical procedures (US$) Page 5 6 8 16 19 9 14 21

1.

Background 1.1 Medical travel and medical tourism

Medical travel refers to the international phenomenon of individuals travelling, often great distances, to access health-care services that are otherwise not available due to high costs, long waiting lists or limited health-care capacity in the country of origin. Increased foreign travel, increased availability of information to consumers worldwide and joint ventures in the private sector providing health services have all contributed to an increased consumption of health care abroad. This report looks at the phenomenon in the Asian and Pacific region, with an emphasis on examples from Asia, where it is more prevalent. Medical travel is often referred to as medical tourism. However, medical tourism refers specifically to the increasing tendency among people from developed countries to undertake medical travel in combination with visiting tourist attractions. Medical tourism is often seen as adding medical services to common tourism. On the other hand, medical travel is more about extending health-care services across international borders and expanding choices for patients on where to access health care. Health services in medical tourism packages are often provided through cost-effective private medical care for patients needing surgical and other forms of specialized treatment. This process is being facilitated by the corporate sector involved in medical care in collaboration with the tourism industry - both private and public. 1.2 Rise of medical travel Although medical tourism in its present form is a relatively new concept, medical travel is several thousand years old. One of the first recorded instances of medical travel dates back thousands of years to when pilgrims from the Mediterranean region travelled to a small territory in the Saronic Gulf called Epidaurus to visit the sanctuary of the healing god, Asklepios. While tending to their health requirements they also relaxed in the waters, enjoyed the wines of the regions and travelled within the area. Western Europe has a long tradition of medical travel, going back to the water cures of the spas, where the healing mineral waters purportedly offered miracle cures for all known diseases. In the United Kingdom, dating back to Roman times, patients visited the waters at a shrine in Bath, a practice that still continues today. Moreover, and wealthy Europeans increasingly traveled to spas both in and outside of Europe. Until this time, medical travel had been primarily driven by those having the means to undertake such travel. This changed in the late nineteenth century. Florence Nightingale became one of the first people to promote medical travel as a means to find more affordable treatment when she started directing patients from the spas in Switzerland to the significantly less expensive spas of Turkey. In addition, she extensively documented and studied various aspects of her returning patients to assess the success of their medical tours, and made adjustments to the arrangements for future patients based on what she had learned. In more recent history, health care is an area in which individuals have been taking advantage of globalization. This has been the case since the late 1970s. Initially, medical 1

travel primarily consisted of wealthy individuals from developing countries who travelled to industrialized countries, like the United States of America, the United Kingdom and other European countries, to get specialized medical treatment at internationally renowned health-care centres. This first phase of modern medical travel was characterized by the emergence of a private sector that thrived by servicing a small percentage of the population with the ability to buy medical care at the high end of the private medical sector. At the end of the 1980s and in the early 1990s, medical travel began its development into its present form when the Cuban Government starting promoting medical travel as well as medical tourism as an industry, targeting countries such as Argentina, Chile, Mexico and Venezuela as its main markets. In this way, Cuba was the first country to systematically make a wide range of affordable medical services available to international patients, while at the same time demonstrating that the medical tourism industry could turn a significant profit. It is estimated that during the period 1997-1999, export of health services earned Cuba upwards of US$ 30 million.1 Other countries in that region like Argentina, Bolivia, Brazil, Colombia and Costa Rica quickly followed, specializing in meeting the increasing demand for affordable cosmetic surgery. In the last decade, the medical travel movement has accelerated sharply. The present phase of modern medical travel is characterized by an industry approach whereby uninsured and underinsured consumers from industrialized countries seek first-class quality at developing country prices, a trend commonly referred to as medical outsourcing. At the same time, the medical travel industry is increasingly grounded in tourism. Although exact statistics are not available, it is generally estimated that the present global medical tourism market is estimated to be approximately US$ 40 billion with an annual growth rate of 20 per cent. 2 The International Trade Commission in Geneva says that medical tourism could grow into a US$ 188 billion global business by 2013.3 Medical travel, in particular in combination with tourism, is turning out to be an immense business opportunity for nations that are positioning themselves appropriately. In 2005, India, Malaysia, Singapore and Thailand attracted over 2.5 million medical travellers (see Figure 1). Hong Kong, China, Lithuania and South Africa are now emerging as major health-care destinations. Many other nations, including Croatia, Greece, the Philippines and the Republic of Korea are also in the process of making themselves attractive healthcare destinations. The most recent trend is the expansion of medical tourism from specialized treatment to include a broader form of wellness tourism.4

David Diaz Benavides, Trade policies and export of health services: a development perspective in Vieira Cesar ed., Trade in Health Services: Global, Regional and Country Perspectives (Washington D.C., PAHO, 2002). 2 Prosenjit Datta and Gina S. Krishnan, The Health Travellers, BusinessWorld, 22 December 2003, accessed from <http://www.businessworldindia.com/issue/pharma.asp>. 3 Avigail M. Olarte, And now, hospitals as tourist spots, Philippine Center for investigate Journalism, 12 September 2006 accessed from <http://www.pcij.org/i-report/2006/medical-tourism.html>. 4 Wellness tourism is used to encompass a broader range of travel activities such as spa, massage, or just to avail oneself of another type of climate for the purposes of health. The term health tourism is also sometimes used.

There are several reasons for the increase in medical travel. First of all, the demographics of the developed nations are causing a significant increase in demand for health care. In Japan, the United States of America, the United Kingdom and many other European nations, the proportion of the population older than 60 years, in relation to the total population, is increasing rapidly. Similar trends are being seen in many countries across the world. At the same time, life expectancy in most countries has also increased steadily over the years; the combined result is significant strain on national health-care systems. The inability of many health-care systems to deal with the increase in demand does, in many cases, lead to compromised levels of service and decreased access through long waiting lists and high costs. This drives many individuals to seek alternatives to domestic health care. Such alternatives can be found in the economically stratified global health-care marketplace, 5 which offers everything from cutting-edge surgical procedures such as organ transplants to cosmetic procedures and wellness packages at a wide range of prices. As is the case in many economic sectors, outsourcing to more affordable health service provision abroad is increasing. Private health-care facilities in countries such as India, Malaysia, Philippines, Singapore and Thailand are utilizing the prevailing cost differentials, relative to countries such as Canada, the United Kingdom and the United States of America, to attract international customers who have the financial means to access medical care abroad. International accreditation and name recognition linked to quality care provision are laying to rest many of the concerns 6 individuals may have regarding professional competence, patient safety and quality in low-cost health care abroad. Combined with inexpensive air travel, low-cost telecommunications, digitized patient records, widespread access to information through the internet, and an increasingly sophisticated medical travel industry to manage all these processes on the patients behalf, travelling abroad for medical treatment is an appealing alternative for uninsured or underinsured individuals. The alternatives available through medical travel are not only within reach of individuals in developed countries but also to people from developing and least developed countries who have the financial means to find sophisticated and affordable medical care in neighbouring countries. It is possible to categorize present-day medical travellers into 4 main groups. The first group includes patients from developed countries who do not have, or have inadequate, health insurance coverage. Many of these individuals come from Australia, Europe and Japan, with the majority coming from the United States of America. For example, in 2003, the number of people without health insurance coverage in the United States of America

Leigh Turner introduces the term economically stratified health care marketplace in his article Canadian medicare and the global health bazaar, in Policy Options, September 2007. 6 Concerns also include continuity of care, separation from family and friends, and reservations about the likelihood of legal redress in the case of negligence or malpractice presumably discourage many individuals from travelling abroad for health care. Other patients weigh the disadvantages of obtaining care overseas against the consequences of waiting for treatment at home, and decide to travel. Leigh Turner, Canadian medicare and the global health bazaar, Policy Options, September 2007.

was 45 million,7 which translates to 15.6 per cent of the total population, and in 2005 the number of individuals without dental coverage in the United States of America was estimated at 120 million.8 The second group includes individuals, also primarily from developed countries such as Canada and the United Kingdom , who face long waiting lists for non-elective surgery and other critical procedures. In the United Kingdom, many individuals choose to pay for medical treatment abroad to avoid long waiting lists even though the national health-care system, in spite of being overstretched, ensures free treatment to all its citizens. The third group includes individuals looking for affordable cosmetic procedures. Many of these individuals come from Australia, Europe and Japan, with a significant number again coming from the United States of America. For example, most health insurance in the United States of America covers critical care, not cosmetic care and beauty treatments. The increased demand for surgical procedures such as facelifts, hair transplants, dental treatment and liposuction, as well as non-surgical procedures such as botox and hair removal, and the relatively high cost of these procedures is driving many individuals to find more affordable alternatives abroad. The fourth and final group of medical travellers includes individuals seeking qualityassured, often specialized, care that is unavailable or in short supply in their own countries. A significant number comes from the Middle East. An agency in Saudi Arabia estimated that every year, more than 500,000 people from the Middle East travel seeking medical treatment for everything from open heart surgery to infertility treatment. Destinations range from neighbouring countries such as Bahrain, Jordan, 9 and Saudi Arabia to more distant countries like India, Malaysia, Thailand and the United States of America.10 This last group also includes an increasing number of medical travellers from developing and least developed countries seeking better health-care infrastructure at affordable prices in their own neighbourhood. A significant majority of the medical travellers to Jordan come from neighbouring countries with poor medical infrastructure facilities. Many people from Bangladesh and Nepal go to India for medical treatment. Medical travel from Indonesia to Malaysia, Singapore and Thailand is also increasing. Of interesting note is the report of Nigerians spending an estimated US$ 1 billion a year on health care outside of their country.11 Whereas ten years ago, most of this money was spent in Europe and America, it is now increasingly directed to developing countries with advanced facilities at reasonable prices.

US Department of Commerce, US Census Bureau News, 26 August 2004, accessed from <www.census.gov/PressRelease/www/releases/archives/income_wealth/002484.html>. 8 Becca Hutchinson, Medical tourism growing worldwide, U DAILY University of Delaware, 25 July 2005, accessed from <http://www.udel.edu/PR/UDaily/2005/mar/tourism072505.html >. 9 In 2003, Jordan received 126,000 patients and earned almost US $500 million. Prosenjit Datta and Gina S. Krishnan, The Health Travellers, BusinessWorld, 22 December 2003, accessed from <http://www.businessworldindia.com/issue/pharma.asp>. 10 In 2005, India attracted about 70,000 patients from the Middle East, whereas Bumrungrad Hospital in Bangkok alone treated 70,000 patients from the Middle East in 2005. Health care tourism in Thailand, Clearstate, 2007, accessed from <http://clearstate.com/admin/data/Thailand_health care_tourism.pdf 2007>. 11 Gupta Sen Amit, Medical Tourism and Public Health, Peoples Democracy, 9 May 2004, Vol. XXVIII No. 19.

Box 1: Medical travel destinations around the world German physicians, relying on their nation's reputation for quality and efficiency, and using the slogan "Health care made in Germany," are attracting wealthy patients from Eastern Europe and the Middle East. Likewise, private Swiss clinics are also trying to expand their already lucrative market. 12 In Eastern Europe, Lithuania is also offering medical services, including targeting overseas markets like the United States of America. South Africa draws many cosmetic surgery patients, especially from Europe. Many South African clinics offer packages that include personal assistants, visits with trained therapists, trips to top beauty salons, post-operative care in luxury hotels as well as safaris or other vacation incentives. Costa Rican surgeons offer a variety of cosmetic procedures, including tummy tucks and full dental restorations, all at bargain prices. For North American patients, Costa Rica is the chosen destination for inexpensive, high-quality medical care without a trans-Pacific flight. It is also a particular attraction for Westerners seeking plastic surgery. India draws on the problem of treatment delays to attract business from the fellow Commonwealth nations of Canada and the United Kingdom. It is rapidly expanding its medical travel market to include patients from other countries around the world attracted by its high-class facilities. By any standards, the country with the lead in medical travel has been Thailand. They have mastered a formula of low prices, luxury accommodation, quality care with Westerntrained doctors, and procedures that are not normally covered by insurance. Barbados offers infertility treatment and Malaysia promotes Lasik eye surgery. Argentina ranks high for plastic surgery, and Hungary draws large numbers of patients from Western Europe and the United States of America for high-quality cosmetic and dental procedures that cost half of what they would in these countries. Finally, Dubai - already known as a luxury vacation destination - is scheduled to open the Dubai Health Care City by 2010. Situated on the Red Sea, this clinic will be the largest international medical centre between Europe and South-East Asia. 1.3 Medical travel and trade Medical travel takes place within the overarching framework of international trade rules. The World health Organization (WHO) recognized the linkages with trade in the early 1990s following the success of Cuba. They commissioned a study to see whether the English speaking Caribbean Islands could become a significant health-care destination for travellers from Canada, the United Kingdom and the United States of America. The WHOs interest was simple; it realized that medical travel could help improve the medical economies in developing countries while also taking care of some of the supply problems that developed nations were facing.
12

In 1997, medical tourism brought Switzerland over 25,000 patients and US$ 340 million. Samuel Uretsky, The Thailand Tuck: a look at medical tourism today, MedHunters.com, 9 May 2005, accessed from <http://www.medhunters.com/articles/medicalTourism.html>.

The World Trade Organization (WTO), established in 1995, aims to reduce trade barriers, including in the field of health. The main WTO agreements13 related to health include the Agreements on Technical Barriers to Trade, the Agreement on Sanitary and Phytosanitary Measures, the Agreement on Trade-Related Intellectual Property Rights (TRIPS) and the General Agreement on Trade in Services (GATS). Of 12 service sectors included in GATS,14 at least five are directly related to health-care systems. The professional services under the business service sector deal with services of health professionals. The distribution service sector relates to services in pharmaceutical retailing. The education service sector involves the training and education of health professionals. The financial sector deals with health insurance and flows of foreign capital for investment in private hospitals. The health and social services sector includes hospital services, medical and dental services, diagnostic services and management of health service facilities. Medical travel is covered under mode 2 of GATS. Mode 2 is one of the four modes related to trade in health-care services worldwide (see Box 2, below). So far, medical travel is the most visible face of the increasing global trade in health-care services, but the other three modes are expected to increase in significance in the coming years.15 Box 2: The four main modes of international trade in health services Mode 1: Cross-border supply (CB): everything from shipment of laboratory samples, diagnosis and clinical consultation via traditional channels to telemedicine, teleconferencing, teleconsultation, tele-education, and subscription to journals and databases on the internet. This has been greatly facilitated through rapid expansion of information and communication technologies (ICT). Mode 2: Consumption abroad (CA): travelling abroad, including via health tours, to seek high-technology treatments or cheaper health services. Mode 3: Commercial presence (CP): foreign investment in hospital operation, medical and dental services and management of health care. Mode 4: Temporary movement of natural persons (NP): temporary emigration of health personnel-physicians, specialists, nurses, paramedics and other health professionals from one country to another.

13 14

Many regional trade agreements follow more or less the same principles as the WTO agreements. Business; Communication; Construction & Engineering; Distribution; Education; Environment; Financial; Health; Tourism and Travel; Recreation, Cultural & Sporting; Transport;and Others. 15 Prosenjit Datta and Gina S. Krishnan, WTO: how the medical trade will grow, BusinessWorld, 22 December 2003, accessed from <http://www.businessworldindia.com/issue/pharma.asp>.

Diagram of main modes of international trade in services:

Source: Adapted from Suwit Wibulpolprasert et al., International service trade and its implications for human resources for health: a case study of Thailand, Human Resources for Health, Vol. 2, No. 10, accessed from <http://www.human-resourceshealth.com/content/2/1/10>.

There are various kinds of barriers to trade in health services. The main barrier is the nonportability of health insurance under mode 2. Others include entry visas, work permits, professional and premises licenses, investment permits and insurance reimbursement. Commitment to trade agreements for services can reduce some or all of these barriers. A key element in GATS is that countries, although not obliged to do so, are encouraged to open sectors to trade. Although, a number of countries have already done so for health services, the impact of GATS in driving the privatization of health services has so far remained limited. However, this is expected to change. The WTO is increasing the sanctions for not offering to open sectors, by insisting that states must prove they are not using anti-competitive policies to protect a sector. This has the potential to contribute to the development of medical travel as there will be increased opportunities for investment abroad by health-care service providers, but at the same time it poses significant challenges for national health systems. 2. Medical Travel Industry in Asia Well-developed health-care systems and advances in technology have supported medical travel among Western countries for many years. However, medical travel in Asia is relatively new, mostly emerging in the aftermath of the Asian financial crisis in 1997. With the middle-class clientele in many countries affected by the economic downturn, private hospitals were faced with a significant drop in local business. Hospitals needed to be creative in identifying alternative sources of revenue. Their first steps into the international patient market were facilitated by their devalued currencies, providing an attractive combination of modern facilities and low prices. Thailands Bumrungrad Hospital was among the first in the region to focus on attracting foreign patients, enticing hospitals in other countries to follow suit. 7

Although primarily driven by the private sector, including hospitals and intermediary organizations such as specialized travel agencies utilizing competitive marketing initiatives, governments are increasingly contributing to the development of this industry in South-East and East Asia. For example, the Malaysian Government has exerted its leadership to facilitate and encourage industry development, with the formation of the National Committee for the Promotion of Health Tourism. The Government of Hong Kong, China is starting to consider the possibility of marketing its traditional Chinese medicine capabilities to the region. Concerted efforts have also been launched by government agencies in Singapore to market the world-class medical facilities available there. Figure 1: Estimated international patients treated, 2003 - 2005

Source: Adapted from information referenced throughout this paper. Note: It needs to be acknowledged at the outset that reliable figures on the number of medical travellers and the expenditure made by them are not available from official sources. Except in countries such as Singapore, information related to medical travel is not captured in a systematic manner. The only source of such figures in many countries is the media or promotional material produced by private providers. The reporting of medical travel figures is often distorted by use of different units and methods of calculation. For example, in many cases figures on medical travellers include expatriates who live in the country and in some cases each visit is counted as a new patient. In other cases, figures may be under-reported as they are subsumed in the figures for the general population. Therefore, the figures and projections used in this paper are only indicative, and are an effort to convey the general trends for an understanding of the policies required.

In 2003, India, Malaysia, Singapore and Thailand attracted over 1.4 million medical travellers and earned over US$ 1 billion in treatment costs alone.16,17 In 2005, the number of international patients visiting these countries surpassed the 2.5 million mark (see figure 1). Governments in the region expect that medical travel will continue to boost economic growth with medical travel revenue in some countries growing in excess of 20 per cent per year.

Global Health Trade, Business World, 2003, accessed from <http://www.businessworldindia.com/dec2203/index.asp>. 17 Acharyulu and Krishna Reddy, Hospital logistics strategy for medical tourism, accessed from <http://www.ilsc2004.qut.edu.au/Post per cent20Conf/Conference per cent20Papers/ILSC per cent20101 per cent20Acharalu per cent20Medical_Touris.pdf>.

16

Thailand wants to attract two million foreign patients by 2010, up from 1.25 million in 2005; while the Philippines is hoping for 700,000 patients, up from 250,000 in 2006. 18 Indias medical travel business is growing at 30 per cent per year and is forecast to generate at least US$ 1 billion a year by 2012. 19 Singapore is targeting to attract one million20 foreign patients annually and push the GDP contribution from this sector above US$ 1.5 billion, while Malaysia expects medical travel receipts to be in the region of US$ 590 million in five years time.21 These projections indicate that the medical travel industry in Asia can surpass the US$ 4 billion mark by 2012.22 Table 1: Medical travel overview Country India Arriving from Middle East, United Kingdom, Canada, developing countries Indonesia, United States, Japan Indonesia, Malaysia, Middle East, United States United States, United Kingdom, Middle East, China, Japan Estimated earnings US$ 480 million (2005) Strengths Cardiac surgery, joint replacements, eye surgery23

Malaysia

US$ 40 million24 (2004) US$ 560 million26 (2004)

Cardiology, cardio-thoracic surgery, cosmetic surgery25 Liver transplants, joint replacements, cardiac surgery

Singapore

Thailand

US$ 1 billion (2006)

Cosmetic surgery, organ transplants, dental treatment, joint replacements

Source: Unless otherwise referenced, information referred to is referenced elsewhere in this paper.

Wee Sui Lee, Medical tourism boosts Asian hospital shares, The Bangkok Post, 23 June 2007. Some estimates are as high as US$ 2.2 billion. Medical tourism: Asias growth industry, Hotelmarketing.com, 10 April 2006, accessed from <http://www.hotelmarketing.com/index.php/content/article/060410_medical_tourism_asias_growth_industry/>. 20 Wee Sui Lee, Medical tourism boosts Asian hospital shares, The Bangkok Post, 23 June 2007. 21 Medical tourism: Asias growth industry, Hotelmarketing.com, 10 April 2006, accessed from <http://www.hotelmarketing.com/index.php/content/article/060410_medical_tourism_asias_growth_industry/>. 22 Wee Sui Lee, Medical tourism boosts Asian hospital shares, The Bangkok Post, 23 June 2007. 23 Rupa Chinai and Rahul Goswami, Are we ready for medical tourism?, The Hindu, 17 April 2005, accessed from <http://www.thehindu.com/thehindu/mag/2005/17/stories/2005041700060100.htm>. 24 SERI, Economic Briefing To the Penang State Government: Health Tourism in Penang, November 2004, Vol. 6, Iss. 11, http://www.seri.com.my/oldsite/EconBrief/EconBrief2004-11.PDF 25 Global Health Trade, Business World, 2003, accessed from <http://www.businessworldindia.com/dec2203/index.asp>. 26 Tiger Airways, A Trip to the Doctor, Tiger Tales Aug/Sept/Oct 2007.
19

18

An estimated 1.32 million27 medical travellers in 2006 came to Asia from all corners of the world, including Europe and the United States of America. However, the Middle East is increasingly becoming a key market for medical travel in Asia. In part due to the current global political climate, many individuals from the Middle East are choosing to travel to South-East Asia instead of Europe and the United States of America. At the same time, much of the medical travel in Asia takes place within the region. In particular, there is an increase in medical travel originating from developing countries such as Indonesia. 2.1 India India is a recent entrant into medical travel but is quickly catching up with the leaders. Recent estimates indicate that the number of foreign patients coming to India has been increasing by 30 per cent each year. In 2004, approximately half a million foreign patients travelled to India for medical care, whereas in 2002, the number was only 150,000.28 India has a number of health-care institutions which are of high standard. The major Indian health destinations include Bangalore, Chennai, Delhi, Mumbai and Thiruvantapuram. The south Indian city of Chennai has been declared India's Health Capital, and is estimated to receive 45 per cent of health travellers from abroad and 30-40 per cent of domestic health travellers.29 India is particularly well known for its low-cost advanced medical procedures, ranging from heart surgery, joint replacements and hip resurfacing to cataract operations, cosmetic surgery, dentistry and gallstone removal.30, Most estimates claim that treatment costs in India start at around a tenth of the price of comparable treatment and can go up to a sixteenth of the cost in Europe and the United States of America. Open-heart surgery could cost up to US$ 70,000 in the United Kingdom and up to US$ 150,000 in the United States of America; in Indias best hospitals it could cost between US$ 3,000 and US$ 10,000. Knee surgery (on both knees) costs US$ 7,700 in India; in the United Kingdom this costs more than twice as much. Dental, eye and cosmetic surgeries in Western countries cost three to four times as much as in India.31 In addition to the attraction of affordable advanced medical procedures, tourists from abroad also visit India for alternative treatments like Ayurveda, Yoga, and Kairali. The health travel focus has seen the state of Kerala participate in various trade shows and expos to showcase the advantages of this traditional form of medicine. The large Indian community living abroad makes up a significant part of the medical travel market in India. Wealthy expatriate Indians are becoming increasingly aware of India's high-quality and low-cost hospitals. It is becoming more attractive to combine regular visits to India and save time and money by undergoing non-emergency procedures such as eye operations, dental work, cosmetic surgery and knee surgery.
27

Medical tourism: Asias growth industry, Hotelmarketing.com, 10 April 2006, accessed from <http://www.hotelmarketing.com/index.php/content/article/060410_medical_tourism_asias_growth_industry/>. 28 Philip Stevens, Free trade for better health (London, International Policy Network, 2005), accessed from <http://www.fnfasia.org/efn/publications/Trade&health_web.pdf>. 29 Suzanne Macguire, India - The Emerging Global Health Destination, EzineArticles, 2007, accessed from <http://ezinearticles.com/?India-The-Emerging-Global-Health-Destination&id=687506>. 30 Are we ready for medical tourism?, The Hindu, 17 April 2005, accessed from <http://www.thehindu.com/thehindu/mag/2005/17/stories/2005041700060100.htm>. 31 Medical tourism in India, Medical Tourism Canada, 2004, accessed from <http://medicaltourism.ca/medicaltourism-india.html>.

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To some extent, the large Indian expatriate market overlaps with the Middle East and South Asian markets that make up the bulk of medical travellers to India.32 However, in recent years there has also been a steady increase in medical tourists from European counties, in particular the United Kingdom. At present, India is being promoted as a health-care destination in countries around the world. The Government of India has indicated its commitment to the goal of making India a world leader in the industry. Merging medical expertise and travel became government policy when the then finance minister Jaswant Singh, in the 2003-2004 budget, called for India to become a global health destination as one of the three principal objectives on health.33 As part of government commitment on this, the 2003-2004 budget offered several incentives to promote the medical travel industry. For example, in order to encourage private hospitals to either establish new or to expand existing medical facilities, it was proposed to make long-term capital more easily available to private hospitals with 100 beds or more. To ensure hospitals use the most advanced technology available, it was further proposed to increase the depreciation rate to allow old equipment to be replaced sooner. It was also proposed to reduce the customs duty on specified life saving equipment from 25 per cent to 5 per cent, and also exempt such equipment from additional customs duty.34 The Government, in partnership with private hospital groups, is also taking steps to address medical travel deterrents such as concerns regarding treatment and care standards, insurance coverage and general infrastructure. This has resulted in increased international accreditation of its hospitals. Insurance coverage for treatment in Indian hospitals is also increasing. For example, patients treated at some hospitals in India are insured by United States of America private health insurers Blue Cross and Blue Shield. The United Kingdom health insurer BUPA also insures the costs of treatment at some hospitals. India is also putting in place other policies to support medical travel. Indias National Health policy 2002, for example, says: To capitalize on the comparative cost advantage enjoyed by domestic health facilities in the secondary and tertiary sector, the policy will encourage the supply of services to patients of foreign origin on payment. The rendering of such services on payment in foreign exchange will be treated as deemed exports and will be made eligible for all fiscal incentives extended to export earnings. The formulation draws from recommendations that the corporate sector has been making in India and specifically from the Policy Framework for Reforms in Health Care, drafted by the Prime Ministers Advisory Council on Trade and Industry. 35 This indicates existence of multiministerial collaboration.

Gupta Sen Amit, Medical Tourism and Public Health, Peoples Democracy, 9 May 2004, Vol. 28, No. 19. Ray Marcelo, India Fosters Growing Medical Tourism Sector, The Financial Times, 2 July 2003, accessed from <http://yaleglobal.yale.edu/display.article?id=2016>. 34 Ministry of Finance, Government of India. Beudget Speech: Union Budget 2003-2004, National Informatics Centre, accessed from <http://indiabudget.nic.in/ub2003-04/bs/speecha.htm>. 35 Gupta Sen Amit, Medical Tourism and Public Health, Peoples Democracy, 9 May 2004, Vol. 28, No. 19.
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Future projections for the medical travel industry in India vary but are without exception positive. Medical travel in India, which reached an estimated US$ 480 million in 2005, 36 provides ample opportunity for growth as the Indian health-care industry commands only a 1.2 per cent share of the US$ 40 billion global medical travel market.37 Projections show that Indias multi-billion dollar health-care industry38,39 could grow from anywhere between 1340 and 25 per cent in each of the next six years, boosted by medical travel. According to a study by McKinsey and the Confederation of Indian Industry, medical travel alone could become a US$ 1 billion industry in India by 2012.41 The report predicts that: By 2012, if medical tourism were to reach 25 per cent of revenues of private up-market players, up to Rs 10,000 crore will be added to the revenues of these players. 2.2 Singapore Singapore is well known for performing complex neurosurgical procedures and delivering cutting-edge medical treatment by the regions leading health specialists, including surgeries such as liver and heart transplants. Its reputation for high-quality medical facilities and well-trained doctors pulled in more than 370,000 international patients in 2005.42 In 2006, over 410,000 patients from 60 countries came to Singapore for medical treatment. That same year, an additional 56,000 had medical treatment while already visiting the country.43 Many patients come to Singapore from neighbouring countries, such as Indonesia and Malaysia. Patient numbers from China and the Middle East to Singapore are also seeing fast growth. Patients from developed countries such as the United States of America are increasingly choosing Singapore as their medical travel destination for its relatively affordable health-care services and clean cosmopolitan image.

Company Watch: Fortis Health care limited, IndusView, 2007 accessed from <www.theindusview.com/vol3Issue6/companywatch.html>. 37 Exact figures are not available, but some estimates state US$ 40 billion. UNESCAP, Development of Health Systems in the Context of Enhancing Economic Growth towards Achieving the Millennium Development Goals in Asia and the Pacific (Bangkok, United Nations, 2007).. 38 The overall potential of the Indias health care sector is also very promising. The industry is expected to grow to $40 billion in the next five years from the current (2007) size of about $30 billion. Company Watch: Fortis Healthcare Limited, IndusView, 2007, accessed from < http://www.theindusview.com/vol3Issue6/companywatch.html>. 39 The growth expected in the sector in the coming years will be from the domestic side as well as medical tourism. The economic growth is raising the income levels and purchasing power of people. Apart from that, medical insurance penetration will only move up to register 32 per cent during 2006-12 from the current levels of merely 4 per cent. 40 Medical tourism in India, Medical Tourism Canada, 2004, accessed from <http://medicaltourism.ca/medicaltourism-india.html>. 41 Some estimates are as high as US$ 2.2 billion 42 Tiger Airways, A Trip to the Doctor, Tiger Tales Aug/Sept/Oct 2007. 43 Have treatment will travel, Straits Times (Singapore), 8 August 2007, accessed from <.http://app.singaporemedicine.com/asp/new/new0201c.asp?id=5521>.

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Singapore is Asia's leading medical hub, with advanced research capabilities44 as well as nine hospitals and two medical centres that have obtained JCI accreditation.45 It is also the oldest destination for modern medical travel in the region. The upper-middle classes from neighbouring countries like Indonesia and Malaysia have been utilizing Singapores medical centres since the 1980s. Singapore was not as badly affected during the 1997 Asian financial crisis as its neighbours; domestic financing for health care remained largely intact. However, due to the significant impact of the financial crisis on Singapores major medical travel source countries, Indonesia and Malaysia, the number of foreign patients fell by more than a third between 1997 and 1998. As a result, Singapore was forced to tap into international markets farther from home. Government support for medical travel in Singapore can be considered exceptionally strong. Singapore Medicine, a multi-agency government initiative, launched by the Acting Minister of Health on 20 October 2003, leads and coordinates the medical travel drive. Singapore Medicine identified three key growth areas: heart, eye and cancer treatment. The initiative brings together the Economic Development Board, which promotes new investments in the health-care industry, the Singapore Tourism Board, which is in charge of marketing, strengthening service delivery, and developing overseas referral channels, and the International Enterprise Singapore, which promotes the growth and expansion of Singapores health-care players. Medical travel is perceived as a positive development in Singapore because its own population can benefit from the critical mass for specialization and sub-specialization, retention of medical and professional manpower as well as acquisition of new technology. Increased revenues and extension of benefits to the medical community are other benefits. Singapore sees medical travel as part of a larger economy/ecology.46 In response to the increased competition from India, Malaysia and Thailand, Singapore has increased its efforts, with agreements signed at the governmental level with some Middle Eastern countries, including Bahrain and the United Arab Emirates in 2003. In January 2007, Singapore's Government announced that it would further step up its efforts to draw more foreign patients from outside South-East Asia to strengthen its role as a top provider of quality health-care services in the region. Singapores Health Minister even announced in parliament recently that Singapore would give priority to hospitals when it came to buying land.47 The Singapore Government plans to invest US$ 974 million48 in medical research and has hired McKinsey & Co to consult on its Singapore Medicine project to increase progress towards its goal of attracting 1 million foreign patients by 2012.
Singapore is actively advancing the application of biomedical research in health care and extending its capabilities to clinical trials and health care delivery. Some of the world's leading biomedical companies are based in Singapore. 45 JCI set up its Asia Pacific office in Singapore in 2006. 46 Jason CH Yap, Sigapore and Medical Travel, presentation at the ESCAP EGM on Regional trends in trade in health services, and their impacts on health systems performance in the Asian and Pacific region, Bangkok, 9-10 October 2007. 47 Ki Nan Tsui, Patients of the East, The Nation, 16 July 2006 accessed from <http://www.nationmultimedia.com/2007/07/16/business/business_30040960.php>. 48 Ibid
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2.3

Philippines

The Philippines has been quick to recognize the opportunities of medical travel. Given its high-quality medical labour force and competitive cost of service, the Philippines is working toward becoming the next hub for medical travel in Asia through the launch of the Philippine Medical Tourism Program (PMTP) in 2004. As of the end of 2005, the Program had received tourists from China, Japan and the Republic of Korea in Asia, and France, Germany and the Netherlands in Europe, as well as the United States of America. The PMTP aims to strengthen the medical service market to increase its capacity to cater to international patients and to attract 700,000 medical travellers annually, 49 to achieve almost PHP 1 billion in revenues.50 The Program is also seen as a key strategy to address the exodus of medical professionals from the Philippines by creating job opportunities for medical professionals at home. Table 2: 2006 price comparison: The Philippines and the United States of America (US$)51 Treatment General medical check-up Coronary bypass surgery Kidney transplantation Lasik eye surgery Breast augmentation United States of America 5,000 50,000 150,000 3,000 5,000 Philippines 500 25,000 25,000 1,000 2,000

The PMTP includes four key areas: medical and surgical care; traditional and alternative health care; health and wellness;52 and international retirement health zones.53 As part of the PMTP, the Department of Health has also included medical travel in the 2006 investments priorities plan and also introduced the concept of international medical zones. These zones are selected areas developed into centres of professional health care. The PMTP is not only led by the Government, its current 27 partner hospital and clinics include government and private health facilities among its participants. Another key player in the PMTP is the National Kidney and Transplant Institute (NKTI), which attracts international patients from Australia, Canada, Israel, Micronesia, the United Kingdom,
The National Statistical Coordination Board in the Phillipines recorded almost 2 million tourist arrivals in the period january September 2005., bringing in almost 100 billion PhP. Although there is no data available on the number of medical travellers, these numbers do indicate the scale of the potential market for medical tourism. 50 Aurora Geotina Garcia and Camille Allessandra Besinga, Challenges and opportunities in the Philippine medical tourism industry, The SGV Review, June 2006, accessed from <http://www.ey.com/global/download.nsf/Philippines/Challenges_and_Opportunities_in_the_Philippine_Medical_Tour ism_Industry/$file/challenges_and_opportunities_in_the_philippine_medical_tourism_industry.pdf >. 51 Avigail M. Olarte, Health and the Philippines: And now hospitals as tourist spots, Philippines Center for Investigative Journalism, 12 September 2006, accessed from < http://www.pcij.org/i-report/2006/medicaltourism.html>. 52 Spa resorts, including the Philippines variant called hilot 53 For example, to accommodate the estimated 500,000 to 3 million Filipino Americans expected to retire in the Philippines between 2010 and 2020.
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and several Middle-Eastern states. The NKTI, which is ISO 9001 accredited, is best known for its transplant programme for the kidney, liver, pancreas, stem cells and bone marrow. In 2006, the hospitals gross revenue increased by 22 per cent. In parallel to catering to international patients, the NKTI also provides free health care to domestic patients. In 2006, the provision of free services exceeded the annual government subsidy of PhP 185 million for free health care.54 It is interesting to note that before 2005, NKTI had to use part of that subsidy to cover operational expenses. However, because of improved revenues, partly a result of its modest yet steady stream of foreign patients (109 in 2005, and 105 in 2004), the hospital was able to spend more on its indigent patients last year, and even put into the charity pot 20 centavos for every peso it received from the Government.55

2.4 Thailand Thailand was particularly hard hit by the financial crisis in 1997.56 To compensate for the significant drop in revenues caused by the economic crash,57 private hospitals started to explore the business of treating overseas patients. Since then certain private hospitals have had considerable success in tapping the international patient market with their affordable pricing of medical procedures. The number of international patients visiting Thailand has increased from 500,000 patients in 2001; to 630,000 patients in 2002; 1,103,095 patients in 2004; and an estimated 1.25 million in 2005.58 In 2006, thirty private hospitals in Thailand accommodated 1.4 million international patients; this generated a total turnover of an estimated US$ 1 billion. The number of medical tourists is estimated to increase to 2 million in 2007.59 The Thai Department of Export Promotion believes that the international accreditation of the Thai health-care industry and the advanced medical technology,60 competent healthcare professionals and the reasonable cost for medical services are the main factors attributable to the increase in the number of foreign patients visiting Thailand.

54

The Executive Directors Report 2006, Philippine National Kidney and Transplant Institute, 13 July 2007, accessed from <http://www.nkti.gov.ph/news&events/news_details.php?news_id=144>. 55 Avigail M. Olarte, Health and the Philippines: And now hospitals as tourist spots, Philippines Center for Investigative Journalism, 12 September 2006, accessed from < http://www.pcij.org/i-report/2006/medicaltourism.html>. 56 Health care expenditure per capita in Thailand has since increased from approximately Baht 3,648 in 1997 to Baht 5,029 in 2004. The increased expenditure is a consequence of the economic improvements in Thailand and the Thai government's focus on universal health care. 57 In 1999, for instance, Bumrungrad posted net losses of 1.06 billion baht (US$26.76 million). 58 Patcharee Lueng-uthai, Flourishing world-class medical service, The Nation, 24 May 2007, accessed from <http://www.bangkokhospital.com/App/NewsEventsDetail.aspx?NewsId=84&NewsCategory=1604377613&Language =en-US>. 59 Ki Nan Tsui, Patients of the East, The Nation, 16 July 2006 accessed from <http://www.nationmultimedia.com/2007/07/16/business/business_30040960.php>. 60 In terms of surgical expertise, Thailand is moving towards more advanced areas like orthopaedics and the Kingdom's expertise is no longer solely in cosmetic surgery.

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The international patients who visit Thailand for medical treatment are classified by the Thailand Department of Export Promotion, Ministry of Commerce, into three broad groups: Expatriate: comprising foreigners who work in Thailand and its neighbouring countries. These patients are generally treated for heart disease, blood-pressure, and respiratory conditions, as well as seeking plastic surgery; Direct fly-in: comprising foreigners who visit Thailand specifically to utilize the Thai health-care services. These patients generally use health-care services for heart disease, neurosurgery, eye care and kidney disease; Tourist: comprising foreigners who are tourists in Thailand and require Thai health-care services for amongst other things, common diseases and respiratory care.

An estimated 60 per cent of international patients visiting Thailand are expatriates, 30 per cent are direct fly-ins and 10 per cent are tourists. The Japanese still form the biggest chunk of medical travellers coming to Thailand, though the Americans, the British and individuals from the Middle East are now also coming in significant numbers. Figure 2: Medical travellers to Thailand by country of origin (2006)

15% Japan 11% 49% 8% 9% 8% USA South East Asia UK Middle East Other

Source: Data from Export Promotion Department, Government of Thailand as quoted in presentation by Dr. Tares Krassanairawiwong, Ministry of Public Health of Thailand at the Expert Group Meeting on Regional trends in trade in health services, and their impacts on health system performance in the Asian and Pacific region, 10 October 2007

In June 2004, the Thai Government published its health-care policy to develop and promote Thailand as the leading health-care provider in Asia by the year 2010. The government strategy sought to increase marketing and public relations to foreigners, improve management, and develop health-care products and services. The areas in Thailand which are being promoted as international health-care centres are Bangkok, , Chiang Mai, Koh Samui and Phuket.

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The Thai Ministry of Public Health is working closely with the Thai Ministry of Tourism to promote medical travel in Thailand. Moreover, Thailand and Malaysia are in the process of exploring joint-promotion of medical travel to beat competition from other countries.61 However, government initiatives are exceeded by efforts being made by the private hospitals in Thailand to attract medical travellers. Bangkok's Bumrungrad Hospital is the leader in the field and considered to be one of the frontrunners in medical travel worldwide, though a number of other hospital groups are also providing strong competition. Hospitals in Thailand offer a host of facilities such as assistance in interpretation from more than 10 languages, and assured quality through JCI accreditation. 2.5 Malaysia

Private health care in Malaysia had been on the rise since the 1980s. The 1997 Asian financial crisis caused a drop in domestic patients visiting private hospitals. As businesses faced the reality of the economic downturn, health benefits for employees were cut or even removed completely. The Malaysian currency dropped rapidly and overall purchasing power, including for health care, decreased. Some households could no longer afford expensive private medical insurance and reverted to public health care. In addition, the currency exchange rates at the time of the crisis caused the prices of imported medical supplies and equipment to rise. As clientele was also dropping, hospitals were unable to raise prices to compensate for increased operating costs and profit margins were badly affected.62 Private hospitals in Malaysia were forced to search for alternatives abroad. In developing the medical travel industry and medical tourism in Malaysia, much is owed to the concerted and synergistic efforts by the various parties involved in the nation's health tourism think tank the National Committee for the Promotion of Health Tourism, formed in 1998. This high-powered committee is chaired by the Director General of Health and the core team comprises the Ministry of Health; Ministry of Culture, Arts and Tourism; Tourism Malaysia; Ministry of International Trade and Industry; Malaysian External Trade Development Corporation (MATRADE); Association of Private Hospitals of Malaysia; and the Malaysian Association of Tour and Travel Agents. The committee is supported by various other stakeholders both from the health-care and travel industries. The committee has a two-pronged objective: to further raise the standards of care and of caregivers, which in turn will put Malaysia on the map as one of the most desirable healthcare destinations. Five subcommittees were formed to address the following key issues: identifying source countries to promote medical travel, and drawing up tax incentives, fee packaging, accreditation guidelines and advertising guidelines. Furthermore, the Government of Malaysia takes an important lead in the marketing of medical travel and tourism overseas through trade missions and other promotional activities. Road shows and marketing promotions have been organized and carried out by
61

Despite this, there has been criticism in the past that the Thai government's "support role" - promotion through various international trade fairs, for instance - has been limited. The private sector has always led the industry. 62 Chee Heng Leng, Medical Tourism in Malaysia: International Movement of Health care Consumers and the Commodification of Health care, Asia Research Institute Working Paper, No. 83, January 2007

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MATRADE and Tourism Malaysia, both of which are government bodies. In the period 2001-2002, MATRADE organized at least three specialized health-care missions to promote medical travel and tourism in Indonesia, Myanmar, Viet Nam and countries in the Middle East. In 2005, the schedule of promotional activities included various places in Cambodia, China, Indonesia, Viet Nam and countries in the Middle East.63 While Singapore and Thailand have several years head start, Malaysias hospitals are beginning to catch up. The number of foreign tourists seeking treatment in Malaysia generated about US$ 27 million in 2004. In 2005, the foreign patient market was estimated to be worth about MYR 154 million (US$ 1 = approximately MYR 3.6) and medical travel was expected to generate at least MYR 2 billion a year in national earnings by 2010.64 A 2006 market analysis estimated that the majority of foreign patients receiving medical treatment in Malaysia were from: Indonesia (72 per cent), Singapore (10 per cent), Japan (5 per cent) and West Asia (2 per cent).65 The significant price gap is Malaysia's main advantage. The Government is focusing on this advantage, in renewing its push for medical travel as part of a wider effort to reduce the country's over-reliance on manufacturing. To attract more foreigners to seek private medical care in Malaysia, a Health Travel Unit was established under the Ministry of Health to improve the quality of health services. In its further effort to promote medical travel and tourism, the Ministry of Health is cooperating with private hospitals, tour agencies and other relevant bodies to come out with packages to attract more travellers to Malaysia. Currently, there are 34 private hospitals involved in medical travel, targeting less-developed markets such as Bangladesh, Indonesia, and Viet Nam, as well as Middle Eastern countries. 66 Common treatments are in cardiology, cardio-thoracic surgery, radiotherapy and radiology. 3. Medical Travel Industry Analysis 3.1 Key players in the industry

Medical travel operators can be divided into two groups. First, there are medical centres such as hospitals and clinics. Medical centres that actively attract international patients are not involved only in the medical procedure itself, but are, in many cases, also responsible for all patient logistics from arrival to departure. Often the hospitals involvement already starts before arrival with the processing of the visa requirements and only ends after departure with patient follow up. Figure 3 shows an example of a hospital supply chain for an international patient. The second group consists of medical travel facilitators who function like agents and associated service providers. These are often smaller companies with just a few people on their payroll and most of them have spread their risk by dealing with hospitals and clinics
Ibid. The Malaysian government was quoted in the Malaysian Economic News (13 April 2005) that health care tourism is expected to bring in annual revenue of RM2.2 billion to Malaysia in 2010. HMIs FY2007 net profit up 90% to S$10.7 million, Health Management International, 24 August 2007, accessed from <http://www.hmi.com.sg/articles/2007/Media_Release_FY2007_Results_24082007.pdf>. 65 U.S. Commercial Service, Malaysia: Medical Device Industry, 2006, accessed from <http://commercecan.ic.gc.ca/scdt/bizmap/interface2.nsf/vDownload/ISA_5040/$file/X_3887275.DOC>. 66 Asian markets overview, Europasia Business Convention, accessed from <http://europasia2007.com/download.php?797b703cd287fc089d273796968d610c>.
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in a number of different countries. Those medical travel agents which are dealing exclusively with hospitals of only one country or region are exposed to the same risks as the hospitals with which they work. Figure 3: Hospital supply chain for an international patient

Source: Adapted from Acharyulu and Krishna Reddy, Hospital logistics strategy for medical tourism, accessed from <http://www.ilsc2004.qut.edu.au/Post per cent20Conf/Conference per cent20Papers/ILSC per cent20101 per cent20Acharalu per cent20Medical_Touris.pdf>.

These facilitators offer global health-care options that will enable international patients, primarily from Europe and the United States of America, to access international health care at a fraction of the cost of domestic care. By selling a type of medical value travel, they focus particularly on the self-insured patient. Some companies charge clients a flat rate commission or a percentage of the total cost of care. Others do not directly charge customers, but are paid by the hospitals to which their clients travel for care. The companies typically provide experienced nurse case managers to assist patients with pre- and post-travel medical issues. They also help provide resources for follow-up care upon the patient's return. Medical travel packages can include all costs associated with medical care, air and ground transportation, hotel accommodation, provision of a cell phone in the destination country for ease of communication, practical assistance from a local company representative at the health-care facility, travel arrangements for a companion, stays in nearby resorts during the post-operative recovery period and side trips to tourist destinations. Most medical travel facilitators are relatively new companies. Services include all hospital and travel arrangements, including medical intake by registered nurses and doctors. The approach typically includes a single lump sum payment per patient. There is no mark up on hospital fees, airfare, or any other expenses. These facilitators work with hospitals that 19

are either JCI or ISO accredited or otherwise affiliated with recognized medical institutes such as Harvard and Johns Hopkins. Other companies specialize in providing a complete service for accessing affordable international medical care, including managing the medical scheduling process, and arranging all travel, ticketing, and coordination with destination managers. This company states that it only works with medical providers that are JCI certified. Some other companies help uninsured and underinsured consumers obtain more affordable dental care, medical specialty care, surgery and diagnostic testing, including in India, Singapore and Thailand. Some companies link uninsured and self-insured Americans to affordable and quality health care in India, by partnering with India's leading hospitals Apollo, Escorts and Wockhardt that provide easy access to care, at a fraction of the costs in the United States of America. The cost of the medical procedure quoted to patients is all-inclusive. It includes transportation, case management, the cost of the procedure itself, medicines, hospitalization and all costs associated with onsite follow-up care. The companies are able to provide tourism services as part of a complete package at extra cost, by entering into referral agreements with hospitals, and promoting the business of these hospitals in North America by identifying, qualifying and referring patients to the Indian facility. 3.2 Key drivers for the industry Increased costs One on the main drivers is demographic change. By 2015, the health of the vast baby boom generation, including 220 million people in Australia, Canada, Europe, New Zealand and the United States of America alone, will begin its slow but inevitable decline. However, many developed countries with high standards of health care are already struggling to maintain their standards under the increased strain of an ageing and more demanding population. This could lead to increased consumer costs through rationing and queuing, as is now the case in Canada and the United Kingdom. Limited medical insurance coverage As demand for health care increases, the cost of medical insurance also increases. This leads to an increasing number of people who are uninsured and underinsured, like those in the United States of America. Health insurance coverage in many countries often excludes dental care and caps other high-cost procedures. In addition, elective surgery, such as increasingly popular cosmetic procedures,67 is often not covered by insurance. The overall increase in cost of health-care provision in many developed countries represents an expanding market for inexpensive, high-quality medical care. Affordable and quality alternatives In the Asian and Pacific region, countries like India, Malaysia, Philippines, Singapore and Thailand are increasingly able to meet the demand for quality-assured medical care
67

Population ageing combined with technological advances in cosmetic surgery procedures, fuelled by an increased sensitivity to public perception, have significantly increased demand for cosmetic surgery among both women and men. US studies report that nearly 12 million cosmetic surgery procedures were performed in 2004 alone, Cosmetic, A Board Plastic Certified Surgeon, accessed from <http://www.aboardcertifiedplasticsurgeonresource.com/cosmetic/index.html>.

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through first-class facilities and highly trained medical specialists, including in tertiary hospital care. Many of these medical professionals have been trained at world class institutions abroad. These hospitals offer highly-qualified and board-certified physicians, top tier nursing staff and medical technicians, and highly personalized care. This translates into high success rates for complicated surgery procedures and high patient satisfaction rates.68 Furthermore, medical care provision in these countries comes at a significantly lower cost. Basic costs, including wage levels and hospital operation costs, are much lower compared to the United Kingdom and the United States of America, thereby significantly reducing the costs of procedures. Though costs vary considerably across countries and across institutions, a heart valve replacement that would cost US$ 160,000 in the United States of America may cost as little as US$ 10,000 in India, with airfare and a short vacation included. A metal free dental bridge costing US$ 5,500 would cost as little as US$ 500 in India or Thailand. A knee replacement can be performed in Thailand at one fifth the cost incurred in developed countries and Lasik eye surgery costing US$ 3,700 in the United States of America is available in many countries in Asia for around US$ 730.69 Table 3: Indicative cost of surgical procedures (US$) Procedure Gastric bypass Heart bypass Heart valve replacement Hip replacement Knee replacement Mastectomy Spinal fusion United States 48,000 122,000 159,000 44,000 41,000 24,000 63,000 India 11,000 10,000 9,500 9,000 8,500 7,500 5,500 Thailand 15,000 12,000 10,500 12,000 10,000 9,000 7,000 Singapore 15,000 20,000 13,000 12,000 13,000 12,400 9,000

Source: Medical Travel Singapore, 2007 Edition, Parkway Group Health care.

Accreditation and assurance The standards of medical facilities all over the world are becoming increasingly transparent to the consumer through internationally recognized accreditation and certification schemes, such as JCI and ISO, as well as through international partnerships. Partnerships and managerial oversight from world-renowned medical providers like the Mayo and Cleveland Clinics, and Harvard Medical School, and partnerships with globally recognized insurance carriers contribute significantly to consumer trust. To gain consumer and industry facilitator confidence, and compete in the global health-care market, medical institutions are increasingly seeking such accreditation and partnership.

68

Escorts Heart Institute and Research Centre in Delhi claim to perform nearly 15,000 heart operations per year with of death rate of 0.8 per cent and infection rates of 0.3 per cent - comparable with the best in the world. The Guardian, 1 February 2005, accessed from <www.guardian.co.uk/>. 69 Becca Hutchinson, Medical tourism growing worldwide, U DAILY University of Delaware, 25 July 2005, accessed from <http://www.udel.edu/PR/UDaily/2005/mar/tourism072505.html >.

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Access to information and ICT The media buzz surrounding medical travel combined with the greater availability of information and use of ICT also significantly contributes to the increase in medical travel. The internet has played a key role in increasing access to information on services and costs worldwide. A wide range of websites are available that facilitate a variety of services ranging from selection of hospitals to making travel arrangements and booking allinclusive medical travel packages. Through the internet, patients in other countries are able to learn about the many available options, compare costs and can easily contact providers in developing countries for detailed information. The ability to research hospital accreditation and doctors credentials, to review patient testimonials and communicate directly with service providers and medical specialists has further contributed to the ability of individuals to make informed choices. Email communication and electronic processing of bookings has also significantly reduced the run up time for a medical procedure abroad. In one example from Thailand, it is even possible to apply for visa extensions via a teleconference system, instead of going to the Immigration Bureau. Telemedicine is an ICT application that has facilitated medical travel - enabling patient pre-screening and follow-up consultations for medical tourists. The Apollo and Wockhardt hospital groups in India are leaders in the field of telemedicine, using the technology both domestically and for international patients. This significantly increases the access to care, including for some of the most underserved populations like patients in closed prison settings. The electronic delivery of health services is expected to increase simply because it allows the provision of services without investing very heavily in infrastructure. Niche medical services The provision of niche medical services is another important driver of medical travel. International patients in need of specialized treatment are more likely to visit a destination that is well known for that specialty. Countries such as Singapore, which cannot compete on costs alone, 70 position themselves as providers of high-quality care such as heart surgery and eye procedures, to wealthy patients from Asian countries who would have otherwise headed to reputable medical institutions in countries like the United States of America. Some hospitals in Singapore also focus on complex cases such as separation of conjoined twins in order to give them an edge and a sound reputation. Thailand has established a niche for itself for cosmetic surgery and dental procedures. The Philippines is best known for its renal care and transplants, with patients travelling from all over the world for kidney transplants. Some Indian hospitals specialize in hip resurfacing technology, which is a less invasive procedure compared to total hip replacement, with a quicker rehabilitation time. Other Indian hospitals can offer patients advanced treatments that are routinely performed in India, but not yet approved in the United States of America, such as robot assisted joint replacement.

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Singapore is increasingly able to compete on costs with its neighbours.

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Geopolitical events Wider political issues can influence where medical travellers will choose to seek out health care. For example, in recent years, medical travel to the United States of America has seen a significant shift to destinations in Asia. Prior to the incidents of 11 September 2001 (9/11), the United States of America was a preferred destination for many patients from Middle Eastern countries. However, the difficulty in obtaining visas after that date has meant that a large part of this business has been diverted to other countries. Jordan has quickly positioned itself to receive much of the Middle Eastern patient load. The number of patients from the Middle East to Hong Kong, China, India, Malaysia, Singapore and Thailand and has also increased. Easily available halal food and conveniences for practicing Muslims makes Malaysia a particularly attractive destination for Muslims, including those from the Middle East. Industry linkages Increased cooperation between the different actors in medical travel is leading to greater flows of international patients. Hospitals are increasingly working with medical travel facilitators and traditional travel agencies to tap the international patient market, and link patients with competitive air fares and affordable vacation packages in exotic destinations. Such partnerships allow all players to focus on their core business, which, in the end, benefits the patient as well as the business interests of those involved. 3.3 Opportunities for health systems

Economic gain Medical travel contributes to the growth of health economies. It is a major source for foreign exchange and stimulates economic growth in other sectors as well, including tourism, transport, pharmaceuticals, hotels, food suppliers to hospitals and restaurants. The tourism market is particularly lucrative, as tourism is an integral part of service industries in many economies and an important source of foreign exchange. The labourintensive nature of the tourism industry makes it an excellent generator of employment. Reducing external brain drain The international service trade has greatly affected the health-care systems in developing countries. The last four decades were characterized by massive emigration of physicians from developing countries, such as Thailand and India, to developed countries, such as the United States of America, in response to increasing demand and higher wages. In this way, Thailand lost about 1,500 physicians, 20 per cent of its total number, in the period 1965-1975.71 Anecdotal evidence from countries such as India and Thailand now indicates that large numbers of medical graduates, who acquired specialized medical degrees in developed countries, are finding it lucrative and more satisfying to return to their own countries.
71

Suwit Wibulpolprasert et al, International service trade and its implications for human resources for health: a case study of Thailand, Human Resources for Health, 2004, Vol. 2, No. 10, accessed from <http://www.human-resourceshealth.com/content/2/1/10>.

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Modern hospitals that make significant investment in facilities and staff, in part to compete for international patients, now also provide the benefits and working conditions to satisfy the aspirations of medical professionals who would otherwise move outside the country. A good example is Bumrumgrad Hospital in Thailand; the majority of its 600 Thai health professionals has overseas training and certification, mainly in the United States of America, but preferred to return to work in Thailand.72 In India, increasing numbers of medical graduates trained abroad are also returning to practise in modern hospitals serving as medical tourism centres.73 It should be noted that Thai medical professionals are still travelling abroad for work. Except this time they are often travelling on behalf of their Thai employer to take up residency at the joint ventures medical centres that Thai private hospitals are increasingly investing in. Improved medical infrastructure Medical travel and the competition on the global health market promote technological advances and improved medical infrastructure. To attract international patients, hospitals must invest in high-quality facilities, cutting-edge technology and human resources. This necessity sets a higher standard for health care than many public hospitals are now measured against, and could drive public hospitals to invest in their own medical infrastructure and possibly revitalize weak health-care systems. International accreditation is sought by health-care providers involved in medical travel, as well as demanded by patients and medical travel facilitators. In a number of countries, this has lead to increased emphasis on consistent good quality that may create pressure on other private health-care providers and public facilities to emulate them, at least in part. The medical travel centres in developing countries not only provide options for patients from developed countries, but also for medical professionals and patients from within the country and from neighbouring countries. Such centres provide stimulus for professional development, training and professional tenure within reach of the domestic population in terms of physical accessibility, and lesser costs compared to similar treatment in developed countries. 3.4 Challenges for health systems

Technocentric approach to health care Some researchers fear that medical travel would lead to what is known as a technocentric approach to health care. This is seen as a western concept, and something which would increase cost of health-care delivery to the general public.74

72

Skeldon Ron, Working paper on Globalization, Skilled migration and Skilled Migration: Brain Drains in context, issued by the Development Research Centre on Migration, Globalisation and Poverty, Sussex, November 2005. 73 Migration News India: Remittances, High Tech, Migration News, accessed from <http://migration.ucdavis.edu>. 74 Rupa Chinai and Rahul Goswami, Are we ready for medical tourism?, The Hindu, 17 April 2005, accessed from <http://www.thehindu.com/thehindu/mag/2005/17/stories/2005041700060100.htm>.

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A generic problem with medical travel is that it reinforces the medicalized view of health care. By promoting the notion that medical services can be bought off the shelf from the lowest priced provider anywhere in the globe, it is perceived to take away the pressure from Governments to provide comprehensive health care to all of their citizens.75 The matter is further complicated by the competitive pressures brought on by private hospitals on the resource stricken public health systems. Investments in upgrading public health systems to keep up with the competitive pressures can translate into higher costs and thus limited accessibility for the general public. The development of traditional medicine systems through the promotion of holistic health packages to international patients have the potential to balance out the increasing technocratic approach to medicine in many developing countries. Internal brain drain An increase in the number of private hospitals, due to rapid economic growth or an investment in medical travel, can create an increase in demand for more doctors, which in turn can lead to internal brain drain from public health systems to private hospitals. As private hospitals expand to absorb the increasing number of medical travellers, they will need more medical and other professionals. In many cases, the top specialists in corporate hospitals are senior doctors drawn from the public sector. This has been observed in many countries where private and public hospitals coexist. For example, in Thailand, during the period 1988-1993, 21 rural district hospitals had to function without a single full-time physician due to internal brain drain.76 This trend was reversed immediately after the 1997 Asian financial crisis, when many doctors who had left the public sector returned to public hospitals because private hospitals had lost their middle class clientele. Presently, this trend has once again reversed. Another important trend is the urbanization of health care. As part of the brain drain, more and more health professionals are being drawn to large urban centres, and within them, to the large corporate-run specialty institutions. The urban concentration of health care providers is a well-known fact; 59 per cent of Indias practitioners (73 per cent being allopathic77) are located in cities, and especially metropolitan ones. In Thailand, in 2006, around 35 per cent of the countrys medical doctors were based in Bangkok.78 Regulatory system Medical procedures performed under medical travel carry some risks that local procedures do not. With surgery conducted as part of medical travel, a follow-up may be a
At the same time this approach is grounded in market theory. Besides its drawbacks there are also benefits, including competitive prices and demand-driven availability. 76 Suwit Wibulpolprasert et al, International service trade and its implications for human resources for health: a case study of Thailand in Human Resources for Health, 2004, Vol. 2, No. 10, accessed from <http://www.humanresources-health.com/content/2/1/10>. The link between brain drain and medical travel presents a paradox. On the one hand medical tourism prevents external brain drain by creating lucrative employment for medical professionals who otherwise would have sought employment abroad. On the other hand it can stimulate internal brain drain, whereby public hospitals can become understaffed. In both cases, it appears that those who are unable to afford expensive treatment lose out in the end. 77 The treatment of disease using conventional medical therapies, as opposed to the use of alternative medical or nonconventional therapies 78 Bumrungrad Hospital Public Company Limited, Annual Report 2006.
75

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problem and complications, 79 side effects and post-operative care become the responsibility of the patients home country. Should serious complications arise, patients might not be covered by insurance due to lack of insurance portability or might not be able to seek compensation via malpractice lawsuits. New insurance products that protect the patient in the event of medical malpractice occurring overseas are available but with higher cost implications. Some of the destination countries do not have strong malpractice laws, so the patient has little recourse to local courts or medical boards in case surgery or a procedure go wrong. Other medical travel destinations do provide some form of legal remedies for medical malpractice. However, this legal avenue is often unappealing to the medical traveller who plans to spend only a short time in the country. Advocates of medical travel advise prospective travellers to evaluate the unlikely legal challenges against the benefits of such a trip before undergoing any surgery abroad. Quality issues also continue to be raised in regard to local regulation covering medical treatment, including facility management and human resources. While many hospitals indicate that their specialists have been trained in Western nations, there is less assurance that training is maintained according to current standards and that nursing and other staff are equally qualified. The importance of this issue may loose its significance as more and more accreditations are given to the medical service providers by renowned agencies, organizations and institutes. Health equity and ethics There are increasing ethical issues with greater degrees of medical travel. The prioritization of international patients over domestic patients when public health care is often not able to support the needs of domestic patients has raised serious concerns. Some critics point to the creation of a two-tier system for health-care delivery that increases inequalities in health-care access between private and public systems; sophisticated hospitals with the latest technology cater to the rich and the foreign tourists, while underfunded public health systems are left to cater to the poor who cannot afford access to these new hospitals. Related to the issue of the stratification of health-care systems, there exists the fear that subsidies to motivate private sector hospitals to get involved in medical travel will increase at the cost of spending on public health. In some countries in the region, the corporate private sector has already received considerable subsidies in the form of land purchase and reduced import duties for medical equipment. Some critics fear that the medical travel boom will only further legitimize their demands and put pressure on the Government to subsidize them even more. The already scarce resources available for health then go into subsidizing the corporate sector. This can have serious consequences for health equity and the cost of services, and raises a very fundamental question: should developing countries subsidize the health care of developed countries? For example, in countries where both private and public hospitals are involved in government-promoted medical travel, critics fear that in light of expected revenue increases hospitals, both public and private, are shifting their attention, and most of their beds, to foreign patients. This highlights the need to consider implications of medical travel on public health systems
79

There is evidence that travel soon after surgery can increase the risk of complications, as can vacation activities

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and how the issues facing these entities could be effectively addressed to ensure comprehensive contributions from health systems to development. Another example relates to organ transplants. Critics feel that programmes that encourage foreigners to have transplant operations may not only mean that local residents who need the same organs could be pushed down the waiting list; some of them say it could also lead to an organ-selling spree among the desperately poor. On a broader ethical issue, even if the care is excellent, the question should sometimes be posed whether the procedures are actually medically necessary or are only undertaken to boost revenue. Pressure to maximize profits, in a competitive market where it is necessary to keep costs low, could have a dangerous effect on the quality of care and the image of the service provider. Dependence on foreign clients It is important to maintain a balanced portfolio of domestic and international patients to avoid the excessive reliance on revenue from international patients. Such revenue is less stable than that generated from domestic patients. Hospitals with mainly local patients face a lower business risk since their local clientele needs their services in uncertain times as well as in good times. While the income from elective procedures might shrink in a period of economic hardship, hospital survival is less likely threatened than that of a hospital which depends heavily on unpredictable foreign tourists and conducive environments for travel. However, the diversification in the composition of the clientele that includes patients from many different countries could compensate in, to some degree, minimizing the risk associated with dependency. Domestic political changes and unrest, natural disasters like a tsunami or an earthquake, possible alterations of economic policies due to a change in leadership, as well as epidemics, such as SARS and avian influenza, can potentially affect the number of medical travellers and investors. Servicing bank loans and other financial commitments can become very difficult indeed if patients suddenly do not want to visit a country any more. Despite this, many big hospitals and hospital groups aim to grow at up to 30 per cent per year and this is only possible if they further increase their share of foreign patients. The local market is just not growing fast enough to enable such medical institutions to maintain a balanced portfolio, and the hospitals have little choice but to increase their intake of international patients. However, as the dependency grows, so does the risk, especially in the current competitive market with many suitable alternatives for medical travellers. Many hospital groups have expanded into other less-familiar parts of Asia due to intense regional competition for foreign patients. On the other hand, such a situation can be one of the drivers in inducing Mode 3: Commercial Presence as the means to international trade in health services and facilitate regional expansion. 3.5 Regional expansion The medical travel industry in the ESCAP region is primarily centred on India, Malaysia, the Philippines, Singapore and Thailand, but is increasingly expanding to other parts of the region. Stakeholders in these countries are establishing linkages with the health-care

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systems in other ESCAP member countries as well as in other regions, in particular the Middle East. As these networks of health-care providers expand, they create an international market of health-care services. The synergy created by corporations expanding and integrating across national borders, in turn, encourages the further expansion of the medical travel market. One of the important reasons for health-care corporations to acquire facilities in different countries is to use these facilities to refer and cross-refer patients: a hospital in Indonesia or Viet Nam may refer patients to another hospital in Singapore, where both hospitals are owned by the same corporate entity.80 Given these developments, it is possible to look to other more advanced forms of regional integration to glean some lessons. The mobility of patients within the European Union is quite significant and the steps taken to manage them may provide valuable lessons to countries in the Asian and Pacific region, as they promote medical travel and protect access to health services to their own citizens. The European Union experience In the case of the European Union, increased interconnection raised many health policy issues, including quality and access in cross-border care; information requirements for patients, health professionals and policy-makers; scope for cooperation on health matters; and how to reconcile national policies with the obligations of the internal market of the European Union. A 2000-2001 survey by the European Commission among the then fifteen Member States showed that only Belgium and France registered considerable cross-border provision. Some 14,000 persons had been treated under the E11281 scheme in Belgium, for around 169 million, and some 436,000 using both E11182 and E112 in France, for around 297 million. At the opposite end of the scale, Spain reported treating foreign patients for less than 21 million, Sweden for less than 10 million and the United Kingdom for less than 9 million.83 As is currently happening in the Asian and Pacific region, cross-border cooperation on health in the European Union was initially developed by local players, in order to respond to patient demand.84 Cooperation was very much a bottom-up process that had significant limitations, including language differences, remuneration of doctors, availability of professionals, compatibility of medical protocols, continuity of care, medical liability and nosocomial infections, 85 to name but a few. At the macro level, challenges included historical and legal developments of social models, organization and financing of health
80 81

Ibid. The E112 scheme relates to travelling for health care in Europe when the treatment required is not available in the country of origin but can be accessed in another Member State subject to pre-authorization 82 If ill in another EU country, as an EU resident one is entitled to either free, or reduced-cost, emergency treatment. The European Health Insurance Card can be used to get treatment. This card used to be called the E111 card. 83 Luigi Bertinato et al., Policy Brief: Cross Border Health Care in Europe, December 2005 [electronic version], accessed on 02 October 2007 from <http://www.euro.who.int/Document/E87922.pdf>. 84 European Observatory on Health Systems and Policies, Patient mobility in the European Union, Learning from experience, 2006. 85 Infections which are a result of treatment in a hospital or a health-care service unit, but secondary to the patient's original condition.

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insurance, legislation in the field of public health, and national and European regulations. Also, because of the limited institutionalization of cross-border cooperation at that time, cooperation relied very much on the personal initiatives of individuals, such as doctors, managers and administrators. The European Union has taken significant steps in addressing the limitations to crossborder health care. The basic strategy is to provide two things: legal certainty and support for cooperation between national health systems. The Commissions overall objective is to provide a clear framework addressing the issues raised by the Court of Justice rulings86 enabling patients and those who pay for, provide and regulate health services to have clear and usable options to take advantage of cross-border health services where appropriate. This reflects the Commissions commitment to more effective means of ensuring citizens existing rights of access to health care across Europe. It also aims to facilitate cooperation between health systems, while respecting the primary responsibilities of the Member States for their health-care systems and supporting them in working toward the core objectives of accessibility, quality and financial sustainability. The European Union now allows for coverage of pre-authorized treatment received in any other European Union Member State. Until recently, many European citizens requiring health care outside their home country had to pay for it out of their pocket and claim reimbursement from their holiday insurance policies. However, there have been a number of judgments of the European Court of Justice, which have recognized the principle of free movement of people including that for seeking health care. The courts, though, did accept certain barriers to movement and considered that access to hospital services could be subject to pre-authorization taking into account the need for Member States to guarantee a stable, balanced and accessible supply of health services to their nationals. The court did not accept any need for pre-authorization for out-patient treatment. As a consequence, a number of measures have been introduced for providing access to health care to migrant workers and their families such as social security coordination to facilitate transfers of funds to cover expenditures incurred on cross border provision of care. The improved regulatory framework has lead to several good initiatives to facilitate medical travel within the European Union. For example, in recent years, the health-care systems of both the Netherlands and the United Kingdom have been experiencing severe shortages of some treatments. Addressing waiting lists became a political priority in both countries and the use of health-care providers across the border was identified as a possible solution. In the search for extra capacity, Belgian health care appeared as an obvious choice. In contrast with its two neighbours, Belgium has a more plentiful supply of health care and the financing system means that providers are eager to deliver more care including to foreign patients. Health-care purchasers from the Netherlands and the United Kingdom have therefore started to establish direct contracts with Belgian hospitals.

86

In 2003 health ministers and other stakeholders invited the Commission to explore how legal certainty could be improved following the Court of Justice jurisprudence concerning the right of patients to benefit from medical treatment in another Member State.

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Another initiative is the Euregio Meuse-Rhine, covering parts of Belgium, Germany, and the Netherlands where, since 2000, patients from the three countries can receive predefined treatments across borders. This process was initiated by health insurers and health providers from the three countries and in a second stage received support from public authorities of the involved countries. However, it is apparent that these procedures do not always work as efficiently as they should, both for patients and care providers. In some cases, particularly when it concerns travellers, providers do not accept the forms and demand the patient should pay out of pocket. For example, Spanish health-care providers obtain no tangible benefit from completing the paperwork associated with the European Health Insurance Card, previously the E111, as the foreign reimbursements remain at the national level. As a consequence, some providers ask patients to pay out-of-pocket and they must then reclaim from their travel insurance policy. In addition to the complications involved in assessing how medical care abroad is covered, medical travellers in the European Union also face the uncertainty related to patients rights and liability issues. Although most European Union members adhere to a common set of principles on patients rights, further work is needed to address liability for problems arising in the course of cross-border health care. Existing insurance mechanisms that cover cross-border health care in the European Union could provide a platform for resolving this.87 Despite the challenges that remain, significant progress has been made in the area of developing standards in quality of care and access to reliable aftercare for medical travellers. Several projects have developed shared protocols. For example, hospitals in the Netherlands are seeking to ease transfers of patients from Belgium, while reducing the risk of transmission of antibiotic-resistant bacteria, and a set of guidelines have been developed for the delivery of shared emergency care between Belgium and France. Other projects seek to cooperate in the development of common approaches to quality assurance, such as that within the Danish Free Choice project, in which patients can request treatment with certain facilities abroad, requiring those facilities to participate in a system of evaluation and accreditation. The scope for sharing laboratory facilities using remote access has led to the development of common quality assurance protocols for laboratory diagnosis involving the Teaching Hospital Centre in Nice, France, the Cancer Research Centre in Genoa, Italy. One lesson to emerge from these initiatives is the importance of involving health professionals in cooperation projects. The information needs of the referring providers are similar to those of patients. They need to play an active and positive role in cross-border cooperation. When domestic providers feel they are insufficiently involved, they can obstruct arrangements for cross-border care. Also, domestic providers may complain about unfair competition when prices charged for care abroad are lower than those at home. In some cases, this arises because Governments explicitly use the potential to send

87

Luigi Bertinato et al., Policy Brief: Cross Border Health Care in Europe, December 2005 [electronic version], accessed on 02 October 2007 from <http://www.euro.who.int/Document/E87922.pdf>.

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patients abroad as a means of challenging domestic providers that are perceived as inefficient. Another key issue for providers is continuity of care. While some minor disorders can be managed as a single episode of care, many, especially where they involve an aggravation of a pre-existing condition, require communication with the individuals general health care provider. This means that medical records must be accessible and understandable by different providers, there must be access to prescribed pharmaceuticals, and arrangements must be in place for follow-up assessments and rehabilitation. This requires effective systems for data management. Providers treating foreign patients must be reimbursed appropriately, considering any extra workload and costs. Furthermore, there is a consistent demand from providers involved in cross-border contracts for more legal certainty about what they are allowed to do, which procedures they should use, what prices they can charge, and what happens when things go wrong. An interesting phenomenon to emerge in the European Union is the use of specialized brokers, not by patients, but by health-care providers. These can have different functions; in general they are actors familiar with the system in the providing country and function as a kind of system translator. This can help to ease negotiations, clarifying tariff-setting systems, and managing invoices. The involvement of such brokers seems especially useful when the health-care systems involved are very different. Medical travel within the broader context of regional integration requires active management of the processes involved. The Commission is taking the lead in coordinating medical travel within the European Union and actively seeks inputs from Member States, the European Parliament and other health sector stakeholders, including patients, health professionals, health-care purchasers, such as social security institutions, and providers, in addition to regional and national health authorities. While it is clear that there is considerable portability and coordination of social security within the European Union, issues such as liability, patient rights and proper management of data remain. 4. Conclusions and Recommendations

These recommendations have been adopted at the expert group meeting on regional trends in trade in health services in the Asian and Pacific region held in Bangkok from 9-11 October, 2007. Medical travel is a comparatively recent phenomenon which is being seen in a group of countries which vary widely in economic development, but also in terms of development of their health systems. It is difficult to draw firm conclusions on the benefits and drawbacks of medical travel in different countries not only because of their widely differing socio-economic situation, but also because of the absence of sound data and analysis. Therefore, the following recommendations are to be taken in the context of factors mentioned above.

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I.

Addressing the gap in data

In conducting analysis for generating evidence for policy, one of the pre-requisites is a national framework for data collection and collation, including a focus on clear definitions for comparability of units, modes of submission, and ensuring avoidance of double counting. National frameworks of this nature should be harmonized by intercountry agreements to enable cross-country comparisons. National collection/collation frameworks should include: Channels of flow of patients; Services availed; Number of patients, visits to the country, episodes of care; Expenditure: medical services and other trip expenses, including by accompanying persons.

Multisectoral and inter-country collaboration is essential in order to increase awareness of medical travel based on correct and transparent information, to facilitate information sharing and to develop good practice guidelines on information use. II. Analysis

The data collected and collated should feed into research and analysis on the impact on various sectors, and should include the development of indicators to measure (comparable) impact on public health delivery. The results of this analysis should be used for formulating sound evidence-based policy. III. Managing the impact on public health systems

Despite the lack of good quality data to conduct rigorous analysis, anecdotal data have provided adequate evidence of the impacts on how health systems function. 1. In some countries with low public expenditure on health, promotion of medical travel through indirect subsidies and tax exemptions has been criticized. Therefore, it should be ensured that (public) investments in medical travel benefit the public health system through mitigating policies which ensure a trickle down effect and limit the cost to the public health system. 2. Medical travel has been seen as contributing to an internal brain drain of professionals from the public to the private sector, though it has also been perceived as contributing to limiting the outward migration of health professionals by providing employment within the country. Therefore, policies for managing the mobility of medical professionals, both internal and external, are essential. These 32

could be implemented through training and monetary incentives, as well as nonmonetary incentives, such as career development, Research and Development, specialization and medical professionals from the public sector working part time in the private sector. 3. There is a need to strengthen ethics and professionalism among medical practitioners and other stakeholders in order to promote transparency and clarity in medical practice and management of information. This could be done through training on ethics and creating effective mechanisms for enforcement and through ensuring that health care is not driven by profit motives alone. Regional cooperation through country-level agreements on a common code of ethics could also be useful. 4. Sentinel events, that may occur as an effect of medical travel in the receiving countries, need to be observed; these include: Escalating costs in the health-care system; Irrational use of diagnostic technologies and techno-centric approaches to health care which may also contribute to the escalation of costs; Low staffing in public sector health care due to migration to the private sector, which services medical travellers.

IV.

Managing the process of medical travel 1. Medical travel is ongoing and the development of a national level evidence-based policy on it within the overall framework of health system performance, human resource availability, and ethical recruitment and health policy objectives is essential for it to be managed for the benefit of all concerned. 2. Capacity building in the health sector, including on trade issues, would enable effective and informed participation of the health sector in crucial trade policy negotiations, and commitments on health-related issues could be made taking into account a public health perspective. 3. Balanced policies and regulations can be used in order to manage patient flows in a manner that is beneficial to sending and receiving countries. Examples of enabling policies which have been implemented by countries in the region include liberalizing visa requirements for medical travel, tax benefits for development of the industry and agreements to allow greater mobility of professionals. Memorandums of Understanding between sending and receiving countries have also been useful in regulating flows and ensuring delivery of good quality treatment. 4. Mutual recognition agreements for medical professionals at the inter-country level, including through national and international accreditation systems, could also play 33

a role in smoother movement of professionals which would ensure that good quality of care is maintained. 5. Implementation of policies and practices on consumer protection is also essential in order to manage the process of medical travel, especially with a focus on crossborder compensation and liability issues, and issues related to portability of health insurance. Measures to protect consumers could be encapsulated in an International Patients Bill of Rights as is currently under discussion in certain forums.

V.

Areas for regional cooperation

In summary, areas for regional cooperation which have been covered above concern policies both to mitigate the negative impact as well as to manage the process of medical travel. These include: Inter-country agreements on data collection and collation frameworks to enable cross country comparisons; Regional cooperation through country-level agreements on a common code of ethics for medical professionals and providers; Memorandums of Understanding between sending and receiving countries to regulate flows and ensure delivery of good quality treatment; Mutual recognition agreements for medical professionals at the inter-country level, including through national and international accreditation systems, to contribute to the smoother movement of professionals; Implementation of policies and practices on consumer protection as an essential way of managing the process of medical travel.

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Medical travel, which refers to the international phenomenon of individuals travelling, often great distances, to access health-care services that are otherwise not available due to high costs, long waiting lists or limited health-care capacity in the country of origin, has been increasing in the Asian and Pacific region. Increased ease in travelling abroad, availability of information to consumers worldwide and joint ventures in the private sector providing health services have all contributed to increased consumption of health care abroad. This report explores the key trends and drivers of such movement as well as opportunities and threats presented by medical travel. It also looks at ways that Governments in the region are supporting this movement, and also analyses potential impacts on delivery of public health.

United Nations Economic and Social Commission for Asia and the Pacific United Nations Building Rajadamnern Nok Avenue Bangkok 10200, Thailand Email: escap-healthdev@unescap.org