Top hospitals gear up for cut-throat competition

Steep cuts in prices of medical services are a big strategy.

Kenneth Mays, senior director of hospital marketing and business development at Bumrungrad Hospital, said his hospital introduced a programme last July and would aggressively pursue its Healthy Living Club this year. The club, which already numbers thousands of members, offers discounts of 15 per cent on medicine, medical supplies, lab tests and X-rays and 30 per cent on room rates.

Mays believes that in hard economic times, people may decide to delay treatment or seek less-costly alternatives closer to home, while foreign patients in particular will continue to demand treatment of high value and quality but at a lower cost.

"Although the total cost of the treatments here is not expensive, foreigners still have to buy plane tickets, so financial concerns may prevent them from coming for medical treatment here," said Mays. "There are many factors beyond our control, such as medical travellers' perceptions of Thailand and how international patients respond to the slowdown."

Meanwhile, Bangkok Dusit Medical Services (BGH) has cut room and medicine charges and other fees from December 20 to March 31.

Kitipan Visudharom, director of Bangkok Heart Hospital, which is part of the BGH Network, said for government and state-enterprise officials, member hospitals had slashed standard room rates from Bt5,900 a night to Bt100, excluding doctor and nursing fees, medicine and specialised medical procedures. It has reduced medicine, medical supplies and other service fees 30 per cent.

It also cut room rates in half for regular patients, while medicine, medical supplies and service fees have been cut 20 per cent.

Somsiri Sakolsatayadorn, director of Samitivej Sukhumvit Hospital, said the Samitivej Hospital Group would cut room rates 30 per cent in the first half of the year, to celebrate its 30th anniversary. If the strategy works, the promotion will be continued in the second half.

Group managing director and CEO Raymond Chong said Samitivej Sukhumvit Hospital would reach out to clients more this year in a bid to maintain business growth.

"The hospital industry this year will be tougher than in 2008, due to the poor economic environment. Too, I can't deny that the airport closures have affected the hospital business. So we have to prepare ourselves to cope with the situation," he said.

Thirty-eight per cent of Samitivej Sukhumvit Hospital's patients are foreigners, ones travelling here for services and resident expats alike, he said.

Chong said although those factors had not affected last year's operating results, as there was not a drop in patient numbers, the hospital should act to maintain those numbers.

The hospital's revenue and net profit in the first 11 months of last year rose 18 per cent and 80 per cent, respectively.

"Our revenue and net profit in 2008 were very good, because we made more aggressive plans to attract patients. Moreover, we raised our specialisation in minimally invasive surgery as one of Samitivej's strengths. We're also good at controlling operating costs for a higher net profit," he said.

Samitivej's outpatient and inpatient numbers in the first 11 months of the year rose 7 per cent and 12 per cent year on year, respectively.

Research by Tisco Securities indicates the number of foreign patients in Thailand will drop 10 per cent this year. That would be in line with a 5-10-per-cent drop in the number of tourist arrivals to Thailand, to 12.97 million, due mainly to bad publicity surrounding the airport closures.

The number of local patients will not increase enough to offset that decline, as the growth rate for locals in premium hospitals is low or nearly flat, due to high medical costs, Tisco said. The broker has revised growth of foreign patients in BGH and Bumrungrad both this year and next downwards to minus 10 per cent, with zero growth for local inpatients and outpatients.

This is the first of a two-part series. Part two will cover large hospitals' investment plans.