Medical Tourism Destination Development

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By Maria K Todd, MHA PhD

CEO & Founder,
The Mercury Healthcare International group of companies

You may automatically assume that I am going to write about sending medical tourism visitors from one country to another less expensive country and steering them to the publicly funded hospitals and clinics. Let me clear that up for you from the start: That’s not what this article is about.

A little background.

  • Years ago, in Bangkok, I was at a meeting of the Ministry of Health and the Ministry of Finance. I was admonished directly with a stern “over the rim of the spectacles” look as I was “ordered” not to “cause brain drain” and incentivize Thai public health physicians “to cross the River of no return” to make money in the private health system for medical tourism.
  • A few years back in Turkey, I was taken to a teaching hospital in the greater Istanbul region where a public hospital associated with a medical school was shown to us as an alternative to the more pricey private hospitals in Istanbul to compete for medical tourism visitors.
  • In England, we’ve been hearing of foreign patients accessing the NHS public health trust hospitals and clinics at no cost by simply walking in and stating that they have a medical complaint and presenting for medical attention. The same could happen in Greece, because there really isn’t a well-developed revenue management system to produce and submit invoices for a system paid for on Ministry of Finance allocation funding.
  • Lately, I’ve been hearing of new hospital projects in the Caribbean where there is great need for local access to care, but the Chinese-investors bring the concrete and bulldozers, but don’t address management team and capacity development requirements as part of the package. Hence, brand new, beautiful, well-equipped hospitals lay dormant on islands all throughout the region. They raced all the way to the medical tourism strategy finish line without giving adequate consideration to the management of such a program – or any other program for that matter. Now they are “all dressed up for the dance” without having arranged for a dance partner or a band. That makes dancing solo in a ball gown with no music in the grand ballroom look rather silly – don’t you agree?

When I am in country on these medical tourism economic and destination development projects, I usually meet with several Ministries: Economic Development, Public Health, Tourism, Foreign Affairs, ICT, Urban & Regional Planning and Education. The reasons for this meeting are very specific and related to the strategies I develop for cross-ministerial goal setting, medical tourism public policy, benchmarking, process, standards for quality, safety and security, sustainable program funding, and jobs creation.

Capacity development for health and wellness tourism is not the same path as “pure” hospital management or hospitality administration. Equally important is the capacity development for the ministerial authorities who are politicians and concerned about public image and the risk of “appearing less informed than necessary” as they establish rules, procedures, conditions, public policies, standards, and budget allocations and financing. It is needed, but rarely addressed in medical tourism discussions – largely because the medical tourism programs across the world – except in a very few countries – progresses unchecked, unplanned and like the American westward expansion

In many countries where I’ve been invited to consult on medical tourism economic development, I’ve learned that there is no healthcare business administration university program to speak of. So, being one of very few individuals in the world with over 35 years in health tourism and professional hands-on experience in the healthcare administration, hospitality management, and travel planning worlds, I am often asked to develop a proposed framework curriculum for such a hybrid program.

It really isn’t an expensive project but it takes a working knowledge of the issues that many consultants in medical tourism simply don’t have. Yes, of course the others could patch one together at great expense because of the head count of different consultants. But I prefer to keep things simple: a flat fee consulting deliverable, completed in about 30 hours, without travel, and with all the planning and interviewing occurring via online meeting. I even write the TORs for them if they need me to do so. (I fear that if I elaborate further, that I’ll soon find my outline as the core of some new medical tourism certification being sold by some opportunist — ” for the low price of only $2500 as an add on offer at some future medical tourism conference”. If you want to know more, call or email me for additional information.)

When medical tourism comes to a destination, it requires extra skills in healthcare management. When these skills are able to be developed locally, the training and quality of management has the potential to be raised and community benefit enhanced.

As the saying goes, “a rising tide raises all boats”. Therefore, a proper healthcare business administration program (or even a certificate program through a university, college or vocational-technical school) or a hybrid health tourism administration degree or certificate program can benefit both the private medical tourism destination hospitals and the public health facilities that often run on heroics and very little cash and staffing. But it cannot happen without cash. So, to prevent the “over the rim of the spectacles” glare from the Ministers of Finance and Education, I come prepared with the proposed legislative draft for the tax increment financing approach.

Our approach involves the creation of a bill that authorizes a local government to charge a fee on certain medical providers for the purposes of creating a funding mechanism. One of our consultants who has extensive background in healthcare policy and finance in the USA set this up for a number of government hospitals. Rather than set the program up at a statewide level, he refined the proposed program to be administered at the local or regional level.

His approach provides flexibility to deal with cases in which there may be several eligible clinics, rehab centers, dialysis clinics, or private hospitals within a local jurisdiction and the tax can be assessed on receipts from medical tourism visitors. Local governments will have greater flexibility to construct the fee assessment in such a way that all agencies or hospitals benefit – like through capacity development, PPP operation or something else that the community needs relevant to its healthcare services delivery.

Let’s face facts: If a medical tourism visitor has selected a preferred destination, a modest, transparent, medical tourism fee assessment isn’t going to be a deterrent. But if the destination receives 50,000 medical tourism visitors to its private hospitals, clinics and hotels each year, even a $25 fee generates over a million dollars per year to be used for special projects, education and other medical tourism destination enhancements that can benefit local citizens without requiring additional funding contributions from the National Finance budget.

If the public health systems begin receiving medical tourism visitors, such a program could also offset the problem of unreimbursed costs of the public health systems like the NHS trusts or the Εθνικό Σύστημα Υγείας (ESY) in Greece. It can also provide financial support for emergency medical services and ambulance expenditures, new equipment and technology, or to pay outstanding salaries and other expenses that have been in arrears in some jurisdictions.

In one program that our consultant developed in the USA, the local government would obtain a federal health funding match For example, the local government would assess a fee on the provider of 50 cents. The state obtained a federal match of 50 cents, the program would be funded a dollar for earmarked public education and other sustainable programs. Naturally, there’s more detail but each program takes a little creativity to craft the exact process, so it isn’t appropriate to elaborate further here. More than anything else for this approach to work in medical, dental, rehab or dialysis tourism, the destination needs critical mass of visitors, and it must be tied to actual medical tourism visitors, not just expatriates with foreign passports.

Of all the corporate medical tourism clients we have at Mercury Health Travel, I don’t foresee any objection by any self-insured employer saving at least $15,000 per case begrudging a sustainable public health support assessment of $50 per case, or less. I don’t foresee a private self-pay medical tourism visitor objecting to a fee in that range either. But the money and local community benefit adds up — if the volume is there.

Reasons to support approach

  1. The bill has the potential to bring a substantial increase in public health or education revenue to non-government owned or operated hospitals and home health care agencies at no or little cost to the state or local government entities.
  2. The bill does not compel any local government to set up the refinancing mechanism, it provides enabling language for communities for whom such a mechanism would benefit community health centers and public hospitals for the community’s residents.
  3. The bill provides flexibility to local governments to set up the fee structure so that all public health and education providers would end up with a net gain in revenue. Specifically, the bill allows various cost and revenue categories to be exempted from the calculation of the fee and would give local governments the option to determine how the fee would be calculated.
  4. The assessment proposal may or may not have to be voted on in an election since it does not tax the local residents.

Potential opposition:

  1. In some jurisdictions, there may be more than one public hospital or education institution. The funding approach is most lucrative with a significant volume of medical tourism visitors. In jurisdictions just getting started or largely disorganized and unsupported by government ministries, there may not be enough money generated to make the assessment worthwhile.
  2. There’s a start up cost and the money for local administrative costs has to come from some seed funding by the government. However, there is the possibility that the government could fund it as an advance against future revenues and pay itself back for the administrative expenses. However, it is unlikely that the provisions of the bill would result in substantial costs for local governments – even better if it is centralized across several medical tourism jurisdictions.

About the Author

Dr. Maria Todd is a leading international authority in medical tourism marketing strategy and tactics. For more than 35 years, she has been educating and advocating for the success of her clients as they launch and grow their medical tourism businesses. She does this through private coaching and consulting engagements, authoring numerous commercially published books on the business of medical tourism, and sharing articles and insights as a leading authority on the business of medical tourism. She generously underwrites open access to the Center for Health Tourism Strategy without cost or obligation as a free educational resource for the benefit of the medical tourism industry.

Bring your toughest marketing and business growth challenges to her. Learn more about what she does here on our website and begin the conversation with a complimentary 15-minute chat by phone or by Skype. If you are ready to begin working with a consultant, use that courtesy appointment to explain your situation and your goals and objectives to her. From there, she’ll tell you if she can help you and what you should do next to turn your dreams for your business into reality.

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