Healthy value for money in Thailand

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The flourishing health industry in Thailand attracts more and more foreign patients, a lot of them from GCC countries. The Phyathai Group of Hospitals, which runs three hospitals in Bangkok, and one in Sriracha, is one of the largest medical service providers in the country.

Interviewee:  Dr. Surapong Ambhanwong, Chief Medical and International Business Officer, Phyathai Group of Hospitals

Q: Thailand as a leading medical tourism destination for the Middle East. Could you give an overview on the sector and leading hospital groups in Thailand?

A: Phyathai Group of Hospitals is one of the top five healthcare providers in Thailand, along with Bumrungrad and Bangkok General Hospital.  If you look at the groups, Bangkok Hospital Medical Center, or BMC, will be the largest, I think the whole group consists of more than 30 hospitals throughout the country, and they are combined with the Bangkok General Group, Samitivej Hospital Group, Bangkok Nursing Home Group, Phyathai Group, and Paolo Hospital Group. This health conglomerate is the largest in South East Asia, next to Ramsay Group in Australia only. Other Thai hospital groups are Ramkhamhaeng Group, they run around 25 hospitals, and Kasemrad Group, which is now partnering with Bumrungrad Hospital. Together they have an alliance of eight hospitals. Another operator is Thonburi Group with around 16 hospitals. But as an individual brand, Phyathai is among the top five, in terms of reputation and long-term establishment and also in terms of annual revenue.

Q: Who owns Phyathai Group of Hospitals?

A: It is owned by Khun Vichai Thongtang and the Thongtang family. Health Network Company Limited used to be the major shareholder but it recently has merged into the BMC Group, and the name disappeared.

Q: This means the health sector is consolidating?

A: Yes, there are mergers and acquisitions going on. What remains is the brand name. We operate under the brand of Phyathai within the group, as well as Samitivej operates under its own brand name, for example. By compliance to the regulations of the stock market, the annual revenue is consolidated and reported for the group.  With this strategy, it makes our group become stronger to welcome ASIAN and AEC framework which will be finalized in 2015.

Q: Phyathai is one of the leading destinations for medical and health tourists. How many international patients are you treating per year?

A: Among Thailand’s top five hospitals treated International patients, the percentage of international patients ranges from 7 to 40 per cent of total patients in each private hospital.  The number varies each year.  At Phyathai Group of Hospitals, about 8 to 10 per cent of the patients are foreigners.

Q: From which countries are they coming from?

A: At Phyathai Group of Hospitals, if we take foreign patients by numbers, most foreigners come from Cambodia with 21 per cent, from Oman with 15 per cent, and Myanmar with 12 per cent. From the UAE, it is 6 per cent. Counted by revenue, patients from Oman are at the top with 23 per cent, followed by Myanmar with 17 per cent, Cambodia with 16 per cent, Bhutan with 10 per cent. The UAE counts for 5 per cent in revenue of foreign patients. From the GCC countries, we have also patients from Kuwait and Qatar. Let me put it that way: We have patients from countries, where the hospital service has not been satisfying for customers from the high socio-economic and well-educated class, so they look somewhere else for a better treatment, better quality and also value for money. It doesn’t matter to them if they pay a high or a low price, but the quality and the service they receive needs to match with the price they pay. How people care about their bodies, is also varying by their financial qualification.

Q: This makes the private health industry a lucrative business, doesn’t it?

A: Well, in the whole private hospital industry in Thailand, the margin is ranging from five to about 25 to 26 per cent at the top, individually it is different and varies.  Smaller private hospitals reach a margin of 5 to 7 per cent.   Phyathai Group’s margin is between 16 to 18 per cent.  As you can see, margins in other industries are comparatively higher

Q: But you would say the cost-benefit ratio of medical treatment for patients is better in Thailand than elsewhere?

A: First of all, the cost of living is lower than in the Western world, so the medical treatment is lower, accordingly.  In Thailand, cost-benefit ratio of medical treatment varies, it depends on where you utilize the service. Compared to government hospitals, we are more expensive, because we add more service, have more specialized doctors, more high-cost equipment, more high technology, more convenience such as no queuing, so value for the price they pay for services is relatively high.

Q: When you compare Thailand, Malaysia, and Singapore in terms of medical tourism, what is your verdict?

A: In South East Asia, Thailand, Malaysia, and Singapore and the top three destinations for medical travel and tourism.  In terms of number of international patient treated, Thailand comes first with over 1,2 million foreigners treated each year against between 400,000 and 500,000 in Singapore and Malaysia, respectively, numbers that have been officially recorded.

Q: What are the additional or affiliated services you are providing for foreign patients (such as wellness treatment, catering, accommodation for family members, translation and visa services etc)?

A: As a highly specialized hospitals with high competency medical technological services, we include personalized care and services such as visa arrangement, pre-arrangement of accommodation reservation for relatives as requested (hotel, service apartment), complimentary airport transportation, personal interpreters in more than 20 languages , customized hospital food (Western, Italian, halal food and more).  In other words, we simply provide full service.

Q: There are bilateral government agreements with the GCC to ensure a steady flow of patients from there. Does your hospital benefit from such agreements and if yes, to what extent?

A: Several private hospitals in country have bilateral government agreements with the GCC, for example for the royal police or the royal army.  However, private hospitals also have bilateral agreements with reputable companies.  For Phyathai Group, we have agreements with authorities mainly in Oman and some in the UAE.

Q: Would your group be interested in setting up a hospital facility in the GCC or manage such a facility?

A: I have been looking into this continuously. For every country, we set our strategy to work with partners for at least one to two years on a contract basis before going further to invest or establish a business alliance. We assist in the fields of medical competency, hospital services, interiors, techniques, and work instructions. Currently we don’t have such a partnership, but in the past, we helped setting up a hospital in Muscat, Oman, for example.

Q: Would you say that there is still room for new hospital operators or health care providers in Thailand?

A: New hospital operations would be more feasible if they could cooperate with existing private hospitals and government authorities, which depends on mutual negotiation.

Q: But if someone from the GCC would think about investing into the private healthcare sector in Thailand, what would be your advice?

A: The cooperation between governments in investing into new hospitals are not recommended at the moment.  Rather, I suggest an initial cooperation as non-profit hospitals, then expand into other areas with profitable partners as a health product or medical equipment company.

Q: Are there government incentives for starting a healthcare business for foreign investors?

A: Of course, government incentives are available, but it depends on how such government incentives will be granted according to its benefit to the public.

Q: What is your approach to private-public partnerships in health care?

A: We do have this, we work together with public hospitals, their doctors can practice here and we give a certain quota of our beds to the public hospitals when they are full, for the premium patients. We also share human resources, and pharmaceuticals. This model has been popularized in Australia.

Q: How do you anticipate the further price development for private health care after medical fees for private consultations have been constantly rising over the last years?

A: The doctors’ charge complies to the regulation of the Medical Council of Thailand, they have certain ranges. Of course, someone may charge a little higher through a personal agreement.  High reputation doctors are exceptional, therefore, the value of such a doctor’s time will be naturally higher. The general costs are not rising a great deal more than inflation.

Q: Thailand has a rather pragmatic approach to produce generic drugs. What’s behind this?

A: Thailand has Government Pharmaceutical Organization (GPO)  producing generics that supply the government hospitals and partly the private hospitals.  Some generics are imported.  But Thailand does not much of research and development in new medical equipment, which would be a major investment opportunity not only in Thailand but also in Asean Economic Community.

Q: Medical equipment comes mostly from abroad?

A: Yes, this is also a field where we are falling short and are not competitive. It  is another opportunity for investors.

Q: What about patients’ rights if some medical mishap or mistake happens?

A: We all comply to the regulations. If a patient wants satisfaction, he can get it. Before a treatment, we give all the information to the patients, make them understand the steps, tell them the risks, all at international standards. If a real mistake happens, we have to give them compensation, of course. All the doctors have a malpractice insurance.  In the past ten years, there were no big lawsuits compared to the Western world.

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Reading Time: 6 minutes

The flourishing health industry in Thailand attracts more and more foreign patients, a lot of them from GCC countries. The Phyathai Group of Hospitals, which runs three hospitals in Bangkok, and one in Sriracha, is one of the largest medical service providers in the country.

Reading Time: 6 minutes

The flourishing health industry in Thailand attracts more and more foreign patients, a lot of them from GCC countries. The Phyathai Group of Hospitals, which runs three hospitals in Bangkok, and one in Sriracha, is one of the largest medical service providers in the country.

Interviewee:  Dr. Surapong Ambhanwong, Chief Medical and International Business Officer, Phyathai Group of Hospitals

Q: Thailand as a leading medical tourism destination for the Middle East. Could you give an overview on the sector and leading hospital groups in Thailand?

A: Phyathai Group of Hospitals is one of the top five healthcare providers in Thailand, along with Bumrungrad and Bangkok General Hospital.  If you look at the groups, Bangkok Hospital Medical Center, or BMC, will be the largest, I think the whole group consists of more than 30 hospitals throughout the country, and they are combined with the Bangkok General Group, Samitivej Hospital Group, Bangkok Nursing Home Group, Phyathai Group, and Paolo Hospital Group. This health conglomerate is the largest in South East Asia, next to Ramsay Group in Australia only. Other Thai hospital groups are Ramkhamhaeng Group, they run around 25 hospitals, and Kasemrad Group, which is now partnering with Bumrungrad Hospital. Together they have an alliance of eight hospitals. Another operator is Thonburi Group with around 16 hospitals. But as an individual brand, Phyathai is among the top five, in terms of reputation and long-term establishment and also in terms of annual revenue.

Q: Who owns Phyathai Group of Hospitals?

A: It is owned by Khun Vichai Thongtang and the Thongtang family. Health Network Company Limited used to be the major shareholder but it recently has merged into the BMC Group, and the name disappeared.

Q: This means the health sector is consolidating?

A: Yes, there are mergers and acquisitions going on. What remains is the brand name. We operate under the brand of Phyathai within the group, as well as Samitivej operates under its own brand name, for example. By compliance to the regulations of the stock market, the annual revenue is consolidated and reported for the group.  With this strategy, it makes our group become stronger to welcome ASIAN and AEC framework which will be finalized in 2015.

Q: Phyathai is one of the leading destinations for medical and health tourists. How many international patients are you treating per year?

A: Among Thailand’s top five hospitals treated International patients, the percentage of international patients ranges from 7 to 40 per cent of total patients in each private hospital.  The number varies each year.  At Phyathai Group of Hospitals, about 8 to 10 per cent of the patients are foreigners.

Q: From which countries are they coming from?

A: At Phyathai Group of Hospitals, if we take foreign patients by numbers, most foreigners come from Cambodia with 21 per cent, from Oman with 15 per cent, and Myanmar with 12 per cent. From the UAE, it is 6 per cent. Counted by revenue, patients from Oman are at the top with 23 per cent, followed by Myanmar with 17 per cent, Cambodia with 16 per cent, Bhutan with 10 per cent. The UAE counts for 5 per cent in revenue of foreign patients. From the GCC countries, we have also patients from Kuwait and Qatar. Let me put it that way: We have patients from countries, where the hospital service has not been satisfying for customers from the high socio-economic and well-educated class, so they look somewhere else for a better treatment, better quality and also value for money. It doesn’t matter to them if they pay a high or a low price, but the quality and the service they receive needs to match with the price they pay. How people care about their bodies, is also varying by their financial qualification.

Q: This makes the private health industry a lucrative business, doesn’t it?

A: Well, in the whole private hospital industry in Thailand, the margin is ranging from five to about 25 to 26 per cent at the top, individually it is different and varies.  Smaller private hospitals reach a margin of 5 to 7 per cent.   Phyathai Group’s margin is between 16 to 18 per cent.  As you can see, margins in other industries are comparatively higher

Q: But you would say the cost-benefit ratio of medical treatment for patients is better in Thailand than elsewhere?

A: First of all, the cost of living is lower than in the Western world, so the medical treatment is lower, accordingly.  In Thailand, cost-benefit ratio of medical treatment varies, it depends on where you utilize the service. Compared to government hospitals, we are more expensive, because we add more service, have more specialized doctors, more high-cost equipment, more high technology, more convenience such as no queuing, so value for the price they pay for services is relatively high.

Q: When you compare Thailand, Malaysia, and Singapore in terms of medical tourism, what is your verdict?

A: In South East Asia, Thailand, Malaysia, and Singapore and the top three destinations for medical travel and tourism.  In terms of number of international patient treated, Thailand comes first with over 1,2 million foreigners treated each year against between 400,000 and 500,000 in Singapore and Malaysia, respectively, numbers that have been officially recorded.

Q: What are the additional or affiliated services you are providing for foreign patients (such as wellness treatment, catering, accommodation for family members, translation and visa services etc)?

A: As a highly specialized hospitals with high competency medical technological services, we include personalized care and services such as visa arrangement, pre-arrangement of accommodation reservation for relatives as requested (hotel, service apartment), complimentary airport transportation, personal interpreters in more than 20 languages , customized hospital food (Western, Italian, halal food and more).  In other words, we simply provide full service.

Q: There are bilateral government agreements with the GCC to ensure a steady flow of patients from there. Does your hospital benefit from such agreements and if yes, to what extent?

A: Several private hospitals in country have bilateral government agreements with the GCC, for example for the royal police or the royal army.  However, private hospitals also have bilateral agreements with reputable companies.  For Phyathai Group, we have agreements with authorities mainly in Oman and some in the UAE.

Q: Would your group be interested in setting up a hospital facility in the GCC or manage such a facility?

A: I have been looking into this continuously. For every country, we set our strategy to work with partners for at least one to two years on a contract basis before going further to invest or establish a business alliance. We assist in the fields of medical competency, hospital services, interiors, techniques, and work instructions. Currently we don’t have such a partnership, but in the past, we helped setting up a hospital in Muscat, Oman, for example.

Q: Would you say that there is still room for new hospital operators or health care providers in Thailand?

A: New hospital operations would be more feasible if they could cooperate with existing private hospitals and government authorities, which depends on mutual negotiation.

Q: But if someone from the GCC would think about investing into the private healthcare sector in Thailand, what would be your advice?

A: The cooperation between governments in investing into new hospitals are not recommended at the moment.  Rather, I suggest an initial cooperation as non-profit hospitals, then expand into other areas with profitable partners as a health product or medical equipment company.

Q: Are there government incentives for starting a healthcare business for foreign investors?

A: Of course, government incentives are available, but it depends on how such government incentives will be granted according to its benefit to the public.

Q: What is your approach to private-public partnerships in health care?

A: We do have this, we work together with public hospitals, their doctors can practice here and we give a certain quota of our beds to the public hospitals when they are full, for the premium patients. We also share human resources, and pharmaceuticals. This model has been popularized in Australia.

Q: How do you anticipate the further price development for private health care after medical fees for private consultations have been constantly rising over the last years?

A: The doctors’ charge complies to the regulation of the Medical Council of Thailand, they have certain ranges. Of course, someone may charge a little higher through a personal agreement.  High reputation doctors are exceptional, therefore, the value of such a doctor’s time will be naturally higher. The general costs are not rising a great deal more than inflation.

Q: Thailand has a rather pragmatic approach to produce generic drugs. What’s behind this?

A: Thailand has Government Pharmaceutical Organization (GPO)  producing generics that supply the government hospitals and partly the private hospitals.  Some generics are imported.  But Thailand does not much of research and development in new medical equipment, which would be a major investment opportunity not only in Thailand but also in Asean Economic Community.

Q: Medical equipment comes mostly from abroad?

A: Yes, this is also a field where we are falling short and are not competitive. It  is another opportunity for investors.

Q: What about patients’ rights if some medical mishap or mistake happens?

A: We all comply to the regulations. If a patient wants satisfaction, he can get it. Before a treatment, we give all the information to the patients, make them understand the steps, tell them the risks, all at international standards. If a real mistake happens, we have to give them compensation, of course. All the doctors have a malpractice insurance.  In the past ten years, there were no big lawsuits compared to the Western world.

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