Sunday, March 23, 2008

Exporting health services: Bumrungrad

While I lived in Thailand in the 1980s I always appreciated the possibility of cheap local dental and health care. It was easy to find well-qualified, English-speaking dentists and doctors – an incidental bonus was that the nurses who looked after you were often extremely attractive. The cost of these services was a fraction (about ½ as I recall) of the cost of the services in Australia. It would be an even smaller fraction of the cost of services in the US.

One of the large hospitals I visited occasionally for check-ups was Bumrungrad on Soi Nana, Sukumwit Road in Bangkok. It is now Bumrungrad International Hospital and has a website advertising services to both locals and foreigners. In fact it instructs foreigners in every aspect of their planned visit to receive health services in Thailand.

Business Week now has a feature article on Bumrungrad. 65,000 Americans visited the hospital last year compared to about 10,000 in 2001. The hospital earned $41 million US in profits last year on revenues of $618 million US. 55% of the hospital’s revenues came from foreign patients.

Many of the US customers came from the pool of 47 million Americans without health insurance. Despite this Bumrungrad has signed an agreement 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.

Bumrungrad faces capacity constraints and will increase its capacity by 20% to 2012. Its rival Bangkok Dusit Medical Services is less capacity constrained and, although it doesn't get as many Americans, it attracts more international patients overall, with 649,000 checking in last year.

With low transport costs the range of developing country service exports will expand and will put a welcome cap on service costs in developed countries.

Meanwhile Gregory Mankiw looks at the lighter side of exporting childcare services.

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