The hospital in Bangkok is attracting a growing number of American patients seeking high-quality care for a fraction of the cost at home
Curtis Schroeder, the American who runs Bumrungrad Hospital, the top medical center in Bangkok, decided a few years ago to try marketing the hospital to insurance companies in the U.S. "We came up with the concept that Americans would want a health-care product that would take advantage of lower prices" in Thailand, he says.
The response was pretty underwhelming. "We couldn't get anyone to return our phone calls," he says. "We were looking at a lot of closed doors." And those executives who did speak to Schroeder and his team told them that selling Thailand as a medical destination to employers and employees in the U.S. was impossible. "They said Americans will never go overseas," Schroeder says.
More and more Americans are checking into his hospital, though. Last year, 65,000 Americans went to Bumrungrad for in-patient or outpatient treatment, up from just 10,000 in 2001. And of those 65,000, about half of them were U.S. residents who flew across the Pacific to Thailand for medical care. (The others were American expatriates living in Thailand or other parts of Southeast Asia.) Many of the patients from the U.S. were uninsured, taking advantage of medical costs in Bangkok that are just a fraction of those in American hospitals.
"A Symptom of the Problem"
The Thai hospital has been a beneficiary of the crisis in health care in the U.S., where some 47 million Americans are without health insurance and health-care inflation is becoming a bigger concern for companies. "We are not positioning ourselves to be the solution to America's health-care problems," says Schroeder. "To some degree, we are a symptom of the problem. We are a very glaring example that there is something wrong. Otherwise [the American patients] wouldn't be coming. They're not coming because they like Thai food; they're coming because they have no other choice."
Schroeder is expecting the numbers to keep growing: Last month, Bumrungrad announced an alliance with Blue Cross & Blue Shield of South Carolina, with the American insurer agreeing to cover expenses for members who travel from the U.S. to the Thai hospital (BusinessWeek.com, 3/13/08). Bumrungrad has recently arranged for executives from other insurers and their corporate clients to take what the hospital calls "familiarization trips" to visit the Bangkok facility.
Other hospitals, including some in Singapore and India, have also teamed up with the South Carolina insurer, which is betting that some members with high-deductible plans in the U.S. would be willing to travel abroad rather than having to pay thousands of dollars out of pocket for operations in American hospitals. "We are working with groups to consider a global health-care option that would provide more of a financial incentive for employees to travel abroad for care," explains David Boucher, assistant vice-president of health-care services at Blue Cross & Blue Shield of South Carolina.
A Boon to the Bottom Line
And more insurers will be getting in on the act, predicts Ruben Toral, the chief executive officer of Mednet Asia, a consulting firm that has advised Bumrungrad and other Asian hospitals. "Health care won't be too much different from manufacturing," says Toral. "It's going to start to move to lower-cost areas. In the next five to 10 years, we will look a flattening of the health-care world and will see insurers allow policyholders to select and choose medical options from a worldwide base of providers."
Medical tourism has helped Bumrungrad's bottom line. Revenue from foreign patients rose 14% last year, and non-Thais now account for 55% of Bumrungrad's business. In a Mar. 7 report, Phillip Securities analyst Rutsada Tweesaengsakulthai calls Bumrungrad "Thailand's leading private hospital" and predicts that revenue will grow 11.5% this year, to $618 million, with profits (after stripping out exception earnings from a sale in 2007 of a medical software subsidiary to Microsoft (MSFT) rising 12%, to $41 million.
The big problem, though, is that Bumrungrad is now too popular. It has a 70% occupancy rate for in-patients and outpatients, much lower than its bigger rival, Bangkok Dusit Medical Services. Bankgok Dusit doesn't get as many Americans but it attracts more international patients overall, with 649,000 checking in last year. Bumrungrad "is restricted by its tight capacity," wrote KGI Securities analyst Rakpong Chaisuparakul in a Feb. 20 report. That's one reason Bumrungrad's stock price has sagged, down about 15% for the year and trading near its 52-week low.
Bumrungrad has just started an expansion plan that should boost its capacity by 20% by 2012. Schroeder expects Americans to continue traveling to the hospital. "Medical inflation [in the U.S.] continues to outpace normal inflation and I don't see that reversing," he says.