Modernisation at ASEAN hospitals is a key threat.
Private healthcare providers need booster shots from the government in order to help them cope with the dwindling number of medical tourists.
Experts and industry players noted that Singapore's hospitals are up against stiff competition from their counterparts in the ASEAN. As more Southeast Asian hospitals modernise, the city-state is slowly losing its appeal as a medical tourism hub.
For instance, Indonesian healthcare providers are aggressively investing in new facilities and equipment, said Dr. Beng Teck Liang, Executive Director & Chief Executive Officer,Singapore Medical Group. This trend is among the culprits behind the sharp drop in Indonesian medical tourist arrivals, and has exacerbated the impact of the weak Indonesian rupiah.
“It's a given. In markets like Indonesia and Vietnam, we're going to see a progressive improvement in the healthcare sector, which will result in fewer patients heading to Singapore,” Beng said.
Beng noted that the hospital has seen declining numbers of medical tourists in the past couple of years, particularly those from Indonesia. While demand from Vietnamese patients remains strong, Beng believes that the trend of declining arrivals is not likely to be resolved in the near future.
"Indonesian healthcare providers are aggressively investing in new facilities and equipment. I think they are successful in encouraging patients to stay local, particularly now with the use of universal healthcare," he said.
Beng noted that the private hospitals need to cope with a massive shift in the profile of international patients. He highlights that in the early 1990s, Indonesian patients went to Singapore for even the most basic medical procedures; now, they only head to Singapore for extremely complex cases. As a result, earnings from medical tourism has dropped by as much as 40% in some cases. Beng stressed that private hospitals need more government support in order to stay ahead of their aggressive regional competitors.
"We've actually had many conversations with people like the Singapore Tourism Board (STB) as to how they can help us, but I think their hands are tied as well. We want to have a dialogue with the Ministry of Health, but so far this has proven to be more challenging to have those conversations," he said.
Beng noted that the Singapore Tourism Board has done its level best to help private healthcare players, but the regulator cannot do much about the competition that private providers face from public hospitals. Overseas patients are also crucial to the earnings of public hospitals, and Beng reckons that it is unlikely that government-owned players will stop accepting foreign patients in order to give way to private providers.
“There comes the dilemma. We do want to kick-start something; STB has encouraged the private sector to band together to grow medical tourism ourselves with some of their support. But our view is, what’s the point? We’re going to grow private sector medical tourism, but who’s going to benefit? So we really want to have that conversation with the government to understand exactly what’s going on from their viewpoint,” he said.
Another problem is the huge capacity from the public sector which is about to enter the market. Public hospitals have expanded aggressively and hired plenty of foreign doctors, which will further put a strain on private operators. “With this extra capacity, at some point in time, I think the government is going to realise that the only way to sustain some of these hospitals is again to open up medical tourism. So again our question is: Why are we investing to build? We think in the next three or five years, the government is going to come back and say, let’s all get together and promote Singapore medicine together.”
Lawrence Patrick, Chief Executive Officer of Johns Hopkins Singapore Medical Group, concurred with this sentiment. “I think the dilemma here is that for a number of years the government told the private sector: If you build it, they will come and we will partner. But now, in a couple of years, they’re not going to need that capacity in the private sector and we’re going to see consolidations again,” he said.
Internalisation is key
Patrick noted that internalisation is a key growth pillar for private healthcare providers in this era of declining medical tourism arrivals. Consolidation will also be a key theme for players as this revenue source dries up.
“While we can’t bring the patients here, we can go abroad and get those patients into the system. And then there’s this notion that we all get better together so I think as a result of weakening medical tourism, we are going to see more consolidations here, such as more public-private partnerships,” he said.
Although expanding to overseas market is key to growth, Patrick cautioned that the continued internalisation of private players might have a negative effect on the local medical tourism sector. “We can continue to go to these overseas markets in order to compete, but what will that do to our operations here in the long-term?” he asked. He added that Johns Hopkins no longer expects medical tourist arrivals to return to previous levels, and the group is rolling out a contingency plan to keep earnings robust.
Beng, meanwhile, shared that Singapore Medical Group has established the most advanced eye facility in Jakarta in partnership with Ciputra Group, known as the Ciputra SMG Eye Clinic. It opened in October last year.
“As a group, we have taken the forward-looking approach. While we still be able to cultivate overseas medical tourism visits to Singapore, the new way for organisations is to really reach out to these emerging countries,” he said, adding that the group is also looking to expand in Vietnam.
"The private sector will always find ways to survive, and we are surviving. We’ll always find ways and means of getting to the market," Beng stressed.
While the threat from emerging Asian economies is very real, Beng said that Singapore still has an edge in terms of more advanced software and staff.
“The positive note is that there is rising demand from countries like Vietnam, which is doing really well from an economic standpoint. The facilities there are still fairly rudimentary, and because wealth levels are increasing, they’re seeking better healthcare,” he noted.
Patrick, however, is a lot less sanguine on Singapore’s prospects. “I don’t see the sector bouncing back. Currency fluctuation is one reason, but I think low oil prices is a bigger drag,” he said, adding that the decline in commodity prices has impacted demand from wealthy Middle Eastern patients. “Until they start to rebound, the patients won’t be coming back,” he stated.
Singapore’s medical tourism prospects were among the topics discussed at the recently-concluded Healthcare Asia Forum, which was held in Singapore on May 12. The event gathered about 40 top practitioners and was supported by Ortho Clinical Diagnostics and Avigilon. PwC served as the event’s thought leader.
The forum is part of Healthcare Asia Magazine’s five-city roadshow. It has also been held in Manila, Kuala Lumpur and Jakarta. The last leg will be held in Bangkok on May 26.
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