Middle East & Africa- The upcoming medical tourism hub !
Medical tourism is on the rise across the world, driven by the increasing cost of health care services in many developed economies, coupled with falling costs for international travel. The global market was valued at $16.8bn in 2018 and at the time was expected to grow to $27.2bn by 2024. While disruptions to international travel triggered by the global spread of Covid-19 in early 2020 could delay this acceleration somewhat, the underlying fundamentals are robust. Patients are choosing to visit other countries for a broad array of both essential and elective medical procedures, with fertility tourism representing one of the fastest-growing segments, followed by dental care and cosmetic surgery. The choice to seek treatment overseas is motivated by a number of factors including reduced costs, shorter waiting times, greater quality and availability of care, and access to specialists. While the majority of these flows are regional – with, for example, US patients travelling to Mexico for dental and cosmetic treatment – there are other destinations, such as Thailand and South Korea, that attract medical tourists from all over the world.
Opportunities & Challenges
The growth of the industry presents both new challenges and opportunities for destination countries, according to the World Health Organisation. The medical practitioners and resources deployed for the treatment of foreign visitors may reduce provision to local populations. Nevertheless, medical travel can also benefit local communities through improved infrastructure and by incentivising medical professionals to remain in their country of origin, rather than travel overseas in search of employment.
For example, Thailand and Panama have developed services that were initially designed to serve foreign patients but resulted in new facilities for local use. In addition, medical travel presents a potential boon for the broader economy – not only stimulating the development of medical facilities, but also tourism, transport, retail and hospitality infrastructure. Reaping the benefits brought by this industry, however, requires that countries have the necessary regulations and incentives in place.
Africa boasts four main medical destinations, namely Morocco, Tunisia, South Africa and Egypt. The longest established and most significant of these are currently Morocco and Tunisia, which both receive around 500,000 medical tourists a year, the majority of whom come from countries in the same continent. Lower operational costs compared to Europe, coupled with good air connectivity with other African capital cities and a long-established reputation, have supported a rise in medical tourism to these states – particularly in the area of cosmetic surgery and dental services – and there has been a significant increase in the number of patients from the region in recent years. These markets are also helped by the fact that many Moroccans and Tunisians are fluent in Arabic and French, which is attractive to consumers from both the Francophone and Arab world.
The Tunisian market has benefitted in recent years from significant investment in capacity-building and medical facilities. While it has a long-established reputation as a site for thalassotherapy treatments, it has also increasingly established itself as a destination country for cosmetic surgery. To support the expansion of the industry, the Tunisian government announced a series of policies in March 2019. These incentives include tax exemptions on medical equipment and devices, a 50% tax break on investment related to medical institutions and health care infrastructure, and the abolition of value-added tax on medical treatment for foreign residents. Some service providers have also begun to offer all-inclusive cosmetic surgery packages to Tunisia, a move that streamlines the process for patients.
Singapore and Thailand are leading medical tourism destinations in Asia, but Malaysia has also been making significant inroads. There, the industry grew at compound annual growth rate of 17% between 2015 and 2018, driven in particular by increasing numbers of visitors from neighbouring Indonesia. Out of 1m medical tourists who visited Malaysia in 2017, 600,000 were from Indonesia. In order to support the continued expansion of the sector, the Malaysia Healthcare Travel Council, a state agency that promotes the development of medical tourism, launched the Malaysia Year of Healthcare Travel 2020 programme in late 2019. The Ministry of Finance committed RM25m ($5.9m) for 2020 to promote the country as a destination for oncology, cardiology and fertility treatment, with the objective of attracting 2m visitors by the end of the year.
While some emerging markets attract the majority of their health care visitors from neighbouring developing countries, others are attracting medical tourists from the developed world, notably the US. With an ageing population and rising medical costs, increasing numbers of US patients are seeking health care services in Mexico, Colombia and other places in Latin America. US medical tourists are attracted not only by the proximity of these markets but also the lower costs for treatment. Indeed, a survey by the US-based Medical Tourism Association reveals that 61% of respondents view the cost savings as the key motivator for seeking medical care abroad.
Domestic factors within destination markets also play an important role. Mexico, for example, has a robust and growing pharmaceutical and medical equipment industry, which has been supported by a digitisation drive under successive government administrations. The simplification of administrative procedures across all sectors of the country has seen the cost of administrative pressures decrease from around 4.3% of GDP in 2012 to 2.7% in 2017, according to data from the OECD.
Trends in the US are also relevant to Colombia. In the US, even patients who are insured find the outof-pocket cost of some operations and procedures extremely high, according to medical tourism broker Trip4Care. For example, the cost of double knee surgery costs around $40,000 in the US, while the cost of the procedure, combined with a week-long all-inclusive trip for a couple to Colombia, would cost around $26,000. Colombia’s major hospitals that attract medical tourism are in the capital Bogotá, which specialises in cardiology, and the second-largest city, Medellín, which focuses on laser eye surgery, cosmetic treatment and dentistry.
Internationally, the UAE is one of the top destinations for health care travellers. Medical tourism sales in the MENA country increased by 5.5% in 2018 to reach Dh12.1bn ($3.3bn), according to the Dubai Chamber of Commerce and Industry. This growth has been supported by a combination of government policies, including infrastructure investment in advanced facilities, privatisation and a range of initiatives specifically intended to boost medical tourism. This has helped to increase capacity; the number of hospitals rose from 107 in 2013 to 154 in 2018, according to data from market research firm Euromonitor International and Fitch Solutions, the research arm of international credit ratings agency Fitch.
Policy initiatives centred on the expansion of the segment have been spearheaded by the UAE’s two largest emirates, Dubai and Abu Dhabi. In the former, medical tourism has become a key pillar of the emirate’s tourism strategy. In April 2014 the Dubai Health Authority founded the Health Tourism Council to promote the development of the industry. This was followed in April 2016 by the establishment of the region’s first health tourism portal, Dubai Health Experience, which enables visitors to book their full medical holiday online. In addition to cosmetic surgery, dentistry and fertility treatment, the emirate’s medical tourism industry has developed a specialisation in orthopaedic surgery, ophthalmology and dermatological treatments. The emirate attracted 337,011 health tourists in 2018 and hoped to increase this to 500,000 per year by 2021.
According to Faisal Belhoul, chairman of the Dubai-based, health and education-focused private equity firm Ithmar Capital Partners, policies aimed at attracting medical tourists are having a positive impact in a number of areas. For example, the number of highly skilled physicians needed to respond to demand for quality services has driven the government to modernise licensing rules. In May 2019 the federal-level Ministry of Health and Prevention launched an e-licensing services for private medical facilities and pharmaceutical companies.
Also in early 2019 the Dubai Healthcare City Authority announced a special licence that allows foreign physicians, dentists and other practitioners to work in up to three clinical facilities within a designated area. Physicians will be able to work for two years once they obtain an acceptance letter and sign a contract with a clinic. They will also be able to sponsor their families. “Dubai and the UAE offer a number of advantages in medical tourism, such as security, air connectivity and hospitality infrastructure,” Belhoul told OBG. “Apart from developing medical institutions that are internationally recognised, the regulatory framework is also shifting as the government seeks to improve talent mobility.”
Abu Dhabi is also developing its medical tourism industry, with an emphasis on improving the quality of services for visiting patients and achieving the best clinical outcomes. In order to support this effort, the Department of Health (DoH) launched its Jawda quality index in September 2014. The system allows patients to provide detailed assessment of the performance of medical service providers. Sheikh Abdulla bin Mohammed Al Hamed, chairman of the DoH, told OBG that upgrading overall standards, while reducing the variation of quality within the emirate, is set to position it as a leading international centre of medical tourism. In another move aimed at developing the segment, the DoH and Department of Culture and Tourism – Abu Dhabi launched an e-portal in December 2018 that allows visitors to access information on all available health care facilities in the emirate.
International partnerships are key to the development of the industry. In October 2019 the UAE’s national airline Etihad Airways signed a deal with Cleveland Clinic Abu Dhabi to promote the emirate as a medical tourism destination. Under the deal, the carrier will offer specific medical travel packages to key source markets globally, for treatment at the medical facility. The following month the Minnesota-based Mayo Clinic announced a deal with Abu Dhabi Health Services Company to open a 741-bed hospital in the emirate orientated focused on serving medical tourists from the region.
Meanwhile, in Morocco liberalisation of the economy is opening up the health care sector to private investors, with international firms collaborating to build medical facilities. In January 2018 Elsan, a private France-based health operator, opened a 136-bed facility in the Bouskoura municipality of Casablanca called Clinique Ville Verte, that is expected to cater particularly to foreign visitors.
Medical tourism does not only affect destination countries, it also has an impact on economies where affluent patients and medical professionals move to seek treatments and career opportunities. Myanmar is a prime example in this regard. The country’s health care system historically lagged behind its neighbours because of a lack of investment in public services. As a result. Myanmar’s health infrastructure has long been defined by a serious shortage of medical equipment and antiquated technology. This led more affluent residents to travel overseas to Thailand and Singapore for medical treatment. However, in recent years the government has implemented major reforms to overhaul the Myanmar business environment and upgrade the health care system.
With investor-friendly regulations in place, private companies have recognised the value of capturing a segment of the medical tourist market and convincing those patients to seek help within the country. In 2015 Yangon-listed First Myanmar Investments, led by tycoon Serge Pun, formed the $400m joint venture Pun Hlaing Siloam Hospital (PHSH) with Indonesian conglomerate Lippo Group, which also runs many hospitals across the Indonesian archipelago. PHSH is now operating various health care establishments in Myanmar’s commercial capital Yangon and second-largest city Mandalay. In October 2018 PHSH bought a majority stake in Taunggyi Hospital in southern Shan State for $4.9m with the intention of turning it into an advanced facility offering an array of services to patients who would otherwise go overseas. Having a greater number of clinics and hospitals operating in line with international standards should help to increase Myanmar patient’s trust in the domestic health care system, which in turn should lead to a decrease in outbound medical tourism. Challenges remain, however, in terms of attracting foreign medical personnel, not least because the authorities have yet to effectively streamline procedures for non-Myanmar practitioners to work in the country.
Kuwait is also making efforts to reduce outbound medical tourism and associated capital outflows. The government has built a range of medical facilities in recent years, more than doubling the number of hospitals in the country. In July 2018 the authorities opened the $1.2bn Jahra Medical City, while in November 2018 the Jaber Al Ahmed Al Sabah Hospital opened its doors. The country also introduced an insurance programme to allow retirees and their spouses to use private hospitals for primary and secondary care, a move intended to ease pressure on public facilities. Nevertheless, bottlenecks to the ongoing development of the sector remain, notably investment must currently be made in the name of a Kuwaiti doctor, and it takes around a year to become certified in the country. Dr Ali Zadah, CEO of Kuwait Medical International, told OBG that these two regulations need to be reformed before foreign practitioners will enter the market and international businesses will invest. Meanwhile, Megan Taylor, senior trade advisor at the UK Embassy in Kuwait, told OBG that health care policies need to be supported by education reform. According to Taylor, the country has yet to develop the necessary educational system to support the development of a skilled workforce of health care professionals.
“Kuwait needs partners to help with knowledge transfer and capacity-building,” Taylor told OBG. “It may also be beneficial to fund the training of foreigners in areas such as nursing, because there is not sufficient interest in these jobs among locals.”
New Medical Cities
Governments across emerging markets are increasingly seeking to develop medical industry clusters – where hospitals, clinics and health care companies can be combined with visitor infrastructure. Established in 2002, Dubai Healthcare City is a free zone that hosts over 120 medical facilities, many established through partnerships with international firms. Similarly, the $40m Marrakech Healthcare City, which opened in December 2012, not only provides medical services, but also apartments and hotel rooms for rehabilitation and recovery, as well as family accommodation. Work is under way on the development of a similar health care cluster located on the east coat of Tunisia, which is set to include hospitals, medical colleges, nursing homes and clinics. In combining tourism services and medical infrastructure in one place, these new medical cities have an important role to play in increasing the visibility of developing economies as emerging health care destinations, particularly from source markets located further afield, along with attracting greater international investment.