Check-up for investments into health care

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Chatree Duangnet
Chatree Duangnet, Vice President Bangkok Dusit Medical Services

The Bangkok Hospital Group is the largest private provider of medical services in Southeast Asia. It also caters to the majority of medical tourists coming to Thailand. While the core health market in the country is dominated by large medical service groups, investment opportunities arise in related services such as medical equipment and pharmaceuticals.

Interviewee:  Chatree Duangnet, Vice President Bangkok Dusit Medical Services Public Co. Ltd.

With 29 hospitals in the group and 5,000 private room beds, the Bangkok Dusit Medical Services Public Company Limited is the largest private hospital operator in Thailand in terms of patient services revenue and market capitalisation with approximately 56.8 billion baht in assets as of the end of 2011. The group includes the brands Bangkok Hospital, Phyathai Hospital, Samitivej Hospital, BNH, Royal International, and Paolo Group. Inside Investor spoke to the group’s Vice President Chatree Duangnet about the current challenges in the health industry market in Thailand and opportunities for investors who are interested to join that sector. The group is listed at the Stock Exchange of Thailand, and the majority of its foreign patients originates from the GCC.

Q: Bangkok Hospital was the first private medical institution in the country. Could you give an overview on the history of the institution and where it stands now?

A: The hospital started around 41 years ago at this location [Soi Soonvijai, New Petchburi Road, Bangkok] with private funding and bank loans following the British model of private hospitals, this was before I joined. They started with a 100 bed facility and later built four hospitals here, and it was a rather difficult start as the public and political opinion was critical about private healthcare at that time. There were limitations at the beginning, and it took a couple of years until the concept took off. Today, the group is the largest privately listed medical service provider throughout Southeast Asia, we have 29 hospitals, two of them in Cambodia. We employ 17,000 staff with 6,000 doctors, among them 2,000 full-time doctors.

Q: Who are the main shareholders of your owner Bangkok Dusit Medical Services?

A: There are three private investors, Wichai Thongtang, Prasert Prasarttong-Osoth, and Satit Viddayakorn plus their families, who together are holding 34.7 per cent. Other shareholders include Bangkok Airways, Viriyah Insurance, the State Street Bank and Trust Company for London, other individuals, and a free float of around 40 per cent.

Q: Currently, there is a consolidation process going on in the private healthcare sector in Thailand. One example was the purchase of a major stake in Bumrungrad Hospital by Bangkok Hospital last year. What is your prediction for the entire sector in terms of consolidation?

A: Actually the sentiment in the market is “bigger is safer”, this means that most hospital already have or will join a group, especially the general hospitals. For medical providers without a backing in a large group, the competition is strong.

Q: This means that new starters will have a hard time to establish themselves. What is your stance on the current investment climate for private hospitals in Thailand? What factors are driving the market?

A: Investment into healthcare is promoted by the Thai government, but, however, if somebody comes here and wants to start a hospital business, he should not come freehand, but look to join a settled brand, work together with local personnel and doctors, and, most of all, don’t be hostile or try a takeover. The best strategy is to look for local partners and play the investor’s role as a backup, by providing the funds, know-how, and training. There must be the right chemistry for such an investment.

Q: What are the opportunities for foreign businesses interested in investing into the private health care sector in Thailand?

A: I would say the opportunities are more in niche segments of the industry rather than in general health care services. For example, there is a strong demand for medical high-tech equipment, also for research and development, robot technology, or nanotechnology. I also see opportunities in areas such as holistic medicine and the like. These are the special sectors outsiders should look into. Other chances are in the fields of medical IT systems and software, or for laboratories, and pharmaceuticals in development and production.

Q: What would be the financing options for foreign health care providers to set up business in Thailand? Are there government incentives for this specific sector?

A: Financing is possible for foreign investors, and the banks are open to that. There is also support from the Board of Investment depending on the projects applied for.

Q: How many international patients are treated per year by the hospitals of your group, from which countries are they coming from? What is the ratio between national and foreign patients you are treating in your hospitals? How many are from the GCC?

A: For the whole group, we have about 30 to 35 per cent foreign patients, of them eight per cent expats living in Thailand. The rest are Thai patients. Among the fly-in patients, the number one source market is the GCC, followed by Southeast Asia, Northern Africa, and Bangladesh. Expats are mainly from Japan, France, and UK. We have around one million international patient visits per year, out of the 1.5 million health tourist coming to Thailand, which has a market share of 38 per cent in the global health tourism industry. 160,000 international patients were treated in our hospitals last year, they mainly come for heart, cancer, and bone treatment, and the foreign outpatients seek check-ups, dental, and eye care. Among the GCC countries, we have many patients coming from the UAE, Oman, Qatar, and Kuwait. They formerly went to Europe for treatment, but nowadays they come to Thailand.

Q: What are the incentives and general advantages for foreign patients when they look for treatment in Thailand? 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: We are offering full packages for patients. The hospital’s Bangkok Referral Center assists in arranging a medical stay with all the necessary services, including check for insurance coverage and communication with the health insurance company, if applicable.

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?

A: Yes, there are agreements with several public institutions from the region which send us their patients.

Q: Could you give an overview of the activities of Bangkok Hospital in the GCC region? Are you looking for new partnerships or investors? How is the Royal Bangkok Hospital in Abu Dhabi doing?

A: We are trying hard to set up a base in the UAE. We have entered a joint-venture with a GCC partner to launch this hospital facility in Abu Dhabi. But it moves forward very slowly. However, we chose Abu Dhabi over Dubai. We are working on our presence there.

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

A: The pricing will certainly go up, as we haven’t increased our prices since six years. We are prepared for that. However, the overall markets prices won’t rise more than the inflation rate. In terms of pricing for medical services in the region, Singapore has the highest rates, followed by Thailand, Malaysia, and India. So Thailand isn’t the cheapest destination for medical tourists, but people come to us because of their personal preference, rather than to Malaysia, for example. The quality of healthcare in Thailand is very high, and even though we are a developing country, the standards are the same as in developed countries. In terms of salaries for doctors, there is a competition race between private and public hospitals going on. While specialists from public hospitals generally move to private hospitals in the early stage of their career, they are called back by the public hospitals later for an attractive salary. There is a kind of reverse brain drain from private to public happening, and the government is very clever in this respect. Salaries for specialists have reached international standards now, this is why Thai doctors working abroad are continuously returning back home.

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

A: This is ok. I would extend it to private public professional partnerships, or PPPP,  a collaboration where the government works together with the private health care sector in special medical fields where the private sector has more expertise than the public hospitals and vice versa.

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Reading Time: 5 minutes

Chatree Duangnet, Vice President Bangkok Dusit Medical Services

The Bangkok Hospital Group is the largest private provider of medical services in Southeast Asia. It also caters to the majority of medical tourists coming to Thailand. While the core health market in the country is dominated by large medical service groups, investment opportunities arise in related services such as medical equipment and pharmaceuticals.

Reading Time: 5 minutes

Chatree Duangnet
Chatree Duangnet, Vice President Bangkok Dusit Medical Services

The Bangkok Hospital Group is the largest private provider of medical services in Southeast Asia. It also caters to the majority of medical tourists coming to Thailand. While the core health market in the country is dominated by large medical service groups, investment opportunities arise in related services such as medical equipment and pharmaceuticals.

Interviewee:  Chatree Duangnet, Vice President Bangkok Dusit Medical Services Public Co. Ltd.

With 29 hospitals in the group and 5,000 private room beds, the Bangkok Dusit Medical Services Public Company Limited is the largest private hospital operator in Thailand in terms of patient services revenue and market capitalisation with approximately 56.8 billion baht in assets as of the end of 2011. The group includes the brands Bangkok Hospital, Phyathai Hospital, Samitivej Hospital, BNH, Royal International, and Paolo Group. Inside Investor spoke to the group’s Vice President Chatree Duangnet about the current challenges in the health industry market in Thailand and opportunities for investors who are interested to join that sector. The group is listed at the Stock Exchange of Thailand, and the majority of its foreign patients originates from the GCC.

Q: Bangkok Hospital was the first private medical institution in the country. Could you give an overview on the history of the institution and where it stands now?

A: The hospital started around 41 years ago at this location [Soi Soonvijai, New Petchburi Road, Bangkok] with private funding and bank loans following the British model of private hospitals, this was before I joined. They started with a 100 bed facility and later built four hospitals here, and it was a rather difficult start as the public and political opinion was critical about private healthcare at that time. There were limitations at the beginning, and it took a couple of years until the concept took off. Today, the group is the largest privately listed medical service provider throughout Southeast Asia, we have 29 hospitals, two of them in Cambodia. We employ 17,000 staff with 6,000 doctors, among them 2,000 full-time doctors.

Q: Who are the main shareholders of your owner Bangkok Dusit Medical Services?

A: There are three private investors, Wichai Thongtang, Prasert Prasarttong-Osoth, and Satit Viddayakorn plus their families, who together are holding 34.7 per cent. Other shareholders include Bangkok Airways, Viriyah Insurance, the State Street Bank and Trust Company for London, other individuals, and a free float of around 40 per cent.

Q: Currently, there is a consolidation process going on in the private healthcare sector in Thailand. One example was the purchase of a major stake in Bumrungrad Hospital by Bangkok Hospital last year. What is your prediction for the entire sector in terms of consolidation?

A: Actually the sentiment in the market is “bigger is safer”, this means that most hospital already have or will join a group, especially the general hospitals. For medical providers without a backing in a large group, the competition is strong.

Q: This means that new starters will have a hard time to establish themselves. What is your stance on the current investment climate for private hospitals in Thailand? What factors are driving the market?

A: Investment into healthcare is promoted by the Thai government, but, however, if somebody comes here and wants to start a hospital business, he should not come freehand, but look to join a settled brand, work together with local personnel and doctors, and, most of all, don’t be hostile or try a takeover. The best strategy is to look for local partners and play the investor’s role as a backup, by providing the funds, know-how, and training. There must be the right chemistry for such an investment.

Q: What are the opportunities for foreign businesses interested in investing into the private health care sector in Thailand?

A: I would say the opportunities are more in niche segments of the industry rather than in general health care services. For example, there is a strong demand for medical high-tech equipment, also for research and development, robot technology, or nanotechnology. I also see opportunities in areas such as holistic medicine and the like. These are the special sectors outsiders should look into. Other chances are in the fields of medical IT systems and software, or for laboratories, and pharmaceuticals in development and production.

Q: What would be the financing options for foreign health care providers to set up business in Thailand? Are there government incentives for this specific sector?

A: Financing is possible for foreign investors, and the banks are open to that. There is also support from the Board of Investment depending on the projects applied for.

Q: How many international patients are treated per year by the hospitals of your group, from which countries are they coming from? What is the ratio between national and foreign patients you are treating in your hospitals? How many are from the GCC?

A: For the whole group, we have about 30 to 35 per cent foreign patients, of them eight per cent expats living in Thailand. The rest are Thai patients. Among the fly-in patients, the number one source market is the GCC, followed by Southeast Asia, Northern Africa, and Bangladesh. Expats are mainly from Japan, France, and UK. We have around one million international patient visits per year, out of the 1.5 million health tourist coming to Thailand, which has a market share of 38 per cent in the global health tourism industry. 160,000 international patients were treated in our hospitals last year, they mainly come for heart, cancer, and bone treatment, and the foreign outpatients seek check-ups, dental, and eye care. Among the GCC countries, we have many patients coming from the UAE, Oman, Qatar, and Kuwait. They formerly went to Europe for treatment, but nowadays they come to Thailand.

Q: What are the incentives and general advantages for foreign patients when they look for treatment in Thailand? 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: We are offering full packages for patients. The hospital’s Bangkok Referral Center assists in arranging a medical stay with all the necessary services, including check for insurance coverage and communication with the health insurance company, if applicable.

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?

A: Yes, there are agreements with several public institutions from the region which send us their patients.

Q: Could you give an overview of the activities of Bangkok Hospital in the GCC region? Are you looking for new partnerships or investors? How is the Royal Bangkok Hospital in Abu Dhabi doing?

A: We are trying hard to set up a base in the UAE. We have entered a joint-venture with a GCC partner to launch this hospital facility in Abu Dhabi. But it moves forward very slowly. However, we chose Abu Dhabi over Dubai. We are working on our presence there.

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

A: The pricing will certainly go up, as we haven’t increased our prices since six years. We are prepared for that. However, the overall markets prices won’t rise more than the inflation rate. In terms of pricing for medical services in the region, Singapore has the highest rates, followed by Thailand, Malaysia, and India. So Thailand isn’t the cheapest destination for medical tourists, but people come to us because of their personal preference, rather than to Malaysia, for example. The quality of healthcare in Thailand is very high, and even though we are a developing country, the standards are the same as in developed countries. In terms of salaries for doctors, there is a competition race between private and public hospitals going on. While specialists from public hospitals generally move to private hospitals in the early stage of their career, they are called back by the public hospitals later for an attractive salary. There is a kind of reverse brain drain from private to public happening, and the government is very clever in this respect. Salaries for specialists have reached international standards now, this is why Thai doctors working abroad are continuously returning back home.

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

A: This is ok. I would extend it to private public professional partnerships, or PPPP,  a collaboration where the government works together with the private health care sector in special medical fields where the private sector has more expertise than the public hospitals and vice versa.

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