I was recently interviewed by the Business Times for a feature story on medical tourism in Singapore.
Below are the questions and my responses:
In your opinion, are there any other reasons why Singapore is losing these patients?
My view is that there are 4 main reasons:
1. Unfavorable currency situation
2. High costs in Singapore not just for healthcare but for transport, accommodation etc
3. Too much variability in pricing and patients are concerned about unanticipated costs due to complications, overlooked charges etc
4. Other countries have stepped up, especially Malaysia and patients once having ‘tested’ other countries, have found that the quality difference is not as wide as the pricing differences would justify
How can the sector overcome/ counter this trend?
Singapore has to recognize that its cost structure will not change very much although it can be improved. What can be done is to ‘fix’ the unpredictability of pricing and provide bundled prices. Furthermore, Singapore needs to deliberately move up the value chain and focus on the highly complex, skills and infrastructure differentiated medical procedures which are more price inelastic. Finally, if we break down the healthcare value chain, we should be looking at what services can best be done in Singapore, and what other portions can be carried out in the patients’ home countries, thus enabling better optimization of the total bill size.
What do you think is the outlook for the sector in 2016?
I think the outlook will be guarded if the sector as a whole does not commit to transformation. It only takes one bad apple to spoil the whole barrel and hurt the entire country’s reputation. If Singapore’s regulators, private and public sector providers and insurers can work together to address the issues, Singapore can regain its position as the medical hub of Asia. This would be to me very beneficial to Singapore as I have written about before.
Also, do you think there will be more M&As happening going forward (there seems to be a trend to acquire overseas healthcare providers)?
The expectation is that there will be more acquisitions and mergers for 3 main reasons: There is a lot of money in the region seeking healthcare deals, providers are recognizing the benefits of consolidation and scale for pricing negotiations with suppliers, staffing optimization, spreading fixed costs over a larger base etc, and finally healthcare is breaking out of the ‘local mindset’ and becoming regional and global. Large providers like IHH are actively looking in core countries and new countries, while the smaller ones are appreciating the fastest way to scale up and be attractive to investors would be to have a multi-country footprint.
What kind of impact do you think these M&As will have on Singapore’s medical tourism scene going forward?
The Singapore-based providers may get larger and larger with more and more revenues coming from outside Singapore. The numbers of medical tourists may decline over time as focus shifts outside Singapore and Singapore doctors may be increasingly attracted to providing their services overseas. This creates great value for the providers and shareholders but not necessarily good for Singapore and Singaporeans. While the added tax revenue would benefit Singapore, Singapore could be hurt in three ways- skills and expertise migrating outside Singapore and thus being less available to benefit Singaporeans, management attention turning to where the revenues and opportunities are with less interest in Singapore, and finally the availability of good jobs in Singapore would diminish.
I think medical tourism (or medical travel which is to me the more accurate term) in Singapore still has tremendous opportunities for providers, but government, private providers and the public sector need to work together coherently. The current somewhat antagonistic stands taken are unhelpful and the ‘zero sum’ mindset can only damage Singapore’s interests in the longer term. Medical travel, done well, brings great benefits to Singapore and Singaporeans- patients benefit from greater expertise in country, doctors sharpen skills, good jobs are created and tax dollars generated are useful to government coffers. I only wish more would see things in this positive light…