Hospitals' investment for foreign patients slows

The chains saw declining business in 2009 due to the global economic crisis, the airport shutdown and type-A (H1N1) influenza.

According to Tourism and Sports Minister Chumpol Silapa-archa, the number of foreign tourists coming to Thailand for a mixture of medical care and tourism this year fell 7-8 per cent from 1.3 million in 2008. But he said the ministry expected the outlook for medical tourism in Thailand next year to improve in line with the global economic recovery. The ministry is seeking approval for a visa fee waiver for medical tourists until the end of 2010 to help the industry.

Hospitals have been active in investing in buildings and personnel to accommodate more foreign patients in the past years. Now they are more cautious, and none are spending extravagantly given the uncertain outlook. None of the executives from Bangkok Dusit Medical Services (BDMS), Phya Thai Hospital or Samitivej Hospital are committed to big investments in the coming year.

However, Vibhavadi General Hospital is investing to expand capacity. Chaisit Kupwiwat, deputy managing director, said the hospital was going ahead with its plan to construct a nine-storey building adjacent to the existing hospital on Vibhavadi-Rangsit Road, with work expected to be completed in 2010. The construction cost is Bt300 million, of which Bt200 million will be spent next year.

After the building is completed, Vibhavadi will be able to serve 3,000 outpatients per day, up from the current 1,100.

Chaisit said Vibharam Hospital, Vibahvadi's subsidiary in which it holds a 50-per-cent stake, was in talksw with two smaller hospitals in the northern part of Bangkok to acquire major shareholdings and provide operating service. This is in line with the company's policy to create a business network in this area.

John Lee Kho-shun, executive vice president of BDMS, said the company would allocate 4-5 per cent of its revenue in 2010 for investment, which is the normal rate to sustain revenue growth of 5 per cent.

BDMS expects its revenue in 2009 to be around Bt20 billion. It estimates the revenue in 2010 to grow at a single-digit rate. Capital expenditure in the upcoming year will be around Bt1 billion. The investment amount in 2010 is a slight increase from this year, when BDMS allocated only 2-3 per cent of its revenue.

BDMS operates the Bangkok Hospital Group, BNH Hospital, the Samitivej Hospitals and the Royal International Hospital.

Most of the investment budget in 2010 will go to the construction of a medium-sized hospital in Hua Hin in Prachauap Khiri Khan province. The hospital is expected to open in the first half of 2011.

Besides the construction of the hospital in Hua Hin, BDMS will spend to replace old medical equipment.

BDMS has another plan to invest in the healthcare business, which will be finalised within the next few months. Lee did not disclose the investment details, as he wants to wait for a clearer picture.

Regarding investment in the Middle East, Lee said BDMS might construct a second hospital in Abu Dhabi, but the plan would not come off next year as originally planned due to the global economic slump.

Thana Thiramanus, head of marketing and support at Phya Thai Hospital, said it had earlier planned to expand the existing hospitals in 2010 so as to increase capacity to serve both inpatients and outpatients, but it had to revise the investment plan after the fourth quarter's performance was not so good.

Thana said the company had planned to invest about Bt500 million in 2010 but those plans were now on hold.

Phya Thai operates three hospitals in Bangkok under the Phya Thai and Phya Thai Sriracha brands.

He said Phya Thai Hospital had seen a decline in patient numbers since September. Although total numbers in the fourth quarter of 2009 were still above the same period last year, they were below the hospital's expectation.

While expansion is put on hold, Phya Thai still plans to purchase new medical equipment, with a budget of around Bt100-Bt200 million.

Raymond Chong, managing director and chief executive of Samitivej Hospital, said the hospital planned to allocate 5 per cent of its revenue for investment in 2010, of which 50 per cent would be spent to upgrade its IT system and renovate part of the existing building.

The hospital has no plans for major investment in 2010.

Thailand has been recognised as a medical hub as it has many professional physicians and other health workers, while the medical service fees are much lower than those in Singapore, Malaysia, European countries and the US. Of 12 million foreign tourists coming to Thailand in 2008, 1.3 million entered the Kingdom for medical tourism. Most were from Middle Eastern countries.

"The global economy is recovering but BDMS is not confident whether it is sustainable. The factor we're concerned about is tourist numbers and foreigners who come to Thailand for medical tourism, which are not as good as in the past two to three years. Foreigners are still cautious about spending money for healthcare. So, we have an optimistic view for the global economy but have to spend carefully, Lee said.