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					Socio-economic Impacts of Medical Tourism in Thailand

Lina Devi Sewlall Diploma in International Hotel and Tourism Management

HTMi Switzerland

Medical tourism can be defined as the act of travelling to another country in search of economical and specialised health care services and an acceptable quality of well being and recuperation (Deloitte 2008). Thailand is located in the heart of Southeast Asia and is a fabulous tourist destination due to its modern infrastructure, wonderful beaches, mountains, captivating culture and cheap prices ( 2009). In 2005 Yuasa described Thailand as an exotic destination where one may “Catch some sun, take in a few golden temples, and get a new hip” (Cohen 2008). Inbound medical tourism in Thailand has increased due to hotel standards, hospitals and the warm hospitality, which has struck many tourists. The combined treatment and vacation, often a less expensive package than an ordinary holiday package offered by some other countries, is the pulling factor for tourists. There are also the attractions of the famous spas of Thailand.

Social Impacts of Medical Tourism
According to Cornell University (2006) more than 1 million tourists received medical treatment in Thailand and this is expected to increase yearly due to low-cost health services and quality of care (Wolfe 2006, cited in IDS Health and Development Information Team 2008, p.2). Thus, the Thai government has been investing heavily to reach a high professional standard.

As a result these private hospitals are taking health professionals away from the public hospitals and rural areas, and this is known as the internal brain drain (Ibid). There is inequality between local people and foreigners as there are fewer professionals in public hospitals to provide good treatment. A 2007 article from the United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP) stated that the internal brain drain has been a major issue. Moreover, the external brain drain is affecting society. As a consequence of the growth of medical care for foreigners, Thai medical graduates from United States and United Kingdom are returning to Thailand to work in the private hospitals. This is a new development as in the last few decades they were not coming back at all, because of low wages in Thailand’s public hospitals. However, the government created a so-called ’30 baht scheme’ in order to provide the Thai population with the same standard of treatment as foreigners (Thaiwebsites 2008). Culture exchange will be another issue as many foreigners come to Thailand because of its culture relating to the traditional medical service. The Community Based Tourism has the goals of cross-cultural learning and respect for both hosts and guests. It has created a new social space for the Thai people to develop new skills and knowledge (The Thailand Community Based Tourism Institute 2008). Thai farming and fishing families who are dependent on earth, forest and water to survive occasionally had to compete against the tourism industry for access to land, sea and other resources occupied directly or indirectly by tourism projects (Ibid).

Economic Impacts of Medical Tourism
Medical tourism has created jobs for local people as well as contributing to the economy of Thailand (Cornell University 2007). In the year 2008, Thailand welcomed 1.2 million patients from more than 190 countries for numerous medical procedures, thus boosting the Thai economy. This revenue from medical tourism is recovering the losses that followed the tsunami disaster of 2004. According to Oxford Business Group (2009) the yearly generated revenue is more than 1 billion dollars and is expected to increase to 4.4 billion dollars by 2012. A medical tourist spends around US$362 compared to a normal traveller who spends US$144 (Cornell 2006). Medical tourism is generating a huge amount of foreign currency mainly from the United States and Japan. At the same time economic growth in transport, pharmaceuticals, hotels, food suppliers to hospitals and restaurants are growing (UNESCAP, EGM 2007). It is expected that the numbers of tourists and income generated by these industries will increase every year as more medical tourists are turning to Thailand’s high quality medical care. However according to a United Nations Environment Programme study (UNEP), there is a financial leakage of 70% as this money goes to foreign-owned tour operators, airlines, hotels and importers of drinks and foods (people and planet 2009).

To Critically Analyse the Impacts of Medical Tourism in Thailand by using Porter’s Five Forces.

Figure 1. Porter’s Five Forces, Porter, M. 1979 The model of the Five Competitive Forces was developed by Michael E. Porter in his book “Competitive Strategy (Figure 1): Techniques for analysing Industries and competitors” (Recklies 2001). It is an essential tool to determine the intensity of competition and therefore the profitability and attractiveness of an industry. The five competitive forces are described as follows: bargaining power of suppliers, bargaining power of customers, threat of new entrants, threat of substitutes and competitive rivalry within the industry (Ibid).

Bargaining Power of Suppliers
Most of the hospitals operate through their online website and through agencies in Thailand as well as in their targeted destinations. Most of the hospitals employ doctors who are highly qualified, especially those who have studied in the United Kingdom or United States and have JCI accreditation to attract their customers (Cornell University 2007). The Government has joined hands with the private hospitals to run an aggressive campaign. Health tourism agents compete among themselves to provide the best price packages to their customers. The main targeted destinations for the medical care in Thailand are Bangkok, Chiang Mai, Phuket and Samui (Travel Thailand 2009). However the major suppliers are found in Bangkok, where the famous Bumrungrad hospital is located, and in Phuket. Bumrungrad hospital mostly does its advertising through its official website and it has direct contact with first-class hotels and resorts (Cornell University 2007). As a result, even if there is competition among suppliers, inbound medical tourism is increasing at an alarming rate in Thailand. Hence the country is being promoted through word of mouth as there are many tourists coming. On the other hand, a reversal of the ‘brain drain’ is encouraged. Furthermore, Thai farming and fishing families will still have to compete against the tourism industry.

Bargaining Power of Buyers
In today’s world many U.S tourists and European countries are seeking medical care in Thailand due to the fact that there is no waiting list and they have quick

access to good services, which is cost effective (Cornell University 2006). Medical travellers have many options to choose their destination through different channels and to gather information about hospitals and their medical packages through different media. Easy access to the Internet has allowed customers to have sufficient knowledge about medical tourism. In the U.S medical care is not always adequately covered by medical insurance, hence American citizens often prefer to look for a better market to treat them. The famous Thai spas, with their exotic characteristics, have for some decades been a main reason for tourists to visit Thailand (Ibid). Hence the economy of the country is growing in relation to the growth in medical tourism. However the financial leakage is still to be considered (people and planet 2009) and recently McDonald’s, Au Bon Pain and Starbucks have been associated with the Bumrungrad hospital, promoting their type of food in a health care centre Thaiwebsites 2008). This could also cause some customers to question

whether the hospital is there to treat people or if it is just running a business.

Threat of New Entrants
According to Cornell University in 2007 Thailand is known as the Pride of Asia. However, its main competitor is India. India is also known for providing low cost medical treatment, high quality medical care, low waiting time for critical treatments and fluent English speaking staff. India is a threat for Thailand as India is famous for surgeries and cardiac bypasses. Thailand is known for being an exotic destination, so could be affected by this.

Customers would prefer to go to India for surgeries and cardiac bypass at a slightly lower price than Thailand, and after major surgery it is difficult to take advantage of the country’s leisure facilities. Hence the economy of Thailand could suffer.

Threat of Substitutes and Competitive Rivalry within the Industry
In medical tourism there is no room for the threat of substitutes. Traditional “grandmother’s recipes” are still used to treat some sicknesses, but they are not as famous or widespread as modern medical care. Another reason would be that cardiac surgery and hip replacement cannot be cured using traditional medicine from one’s ancestors. Thailand’s spa and spa products will not be able to replace medical practices. All hospitals in Thailand work in cooperation with the government to boost the industry as well as helping private hospitals to attract more customers (Cornell University 2007). So there is no competitive rivalry within the industry. Externally India still stays the main competitive rival within the industry.

From the analysis of Porter’s five forces it can be concluded that though Thailand is succeeding in medical tourism there are still some factors to be considered if the industry is to achieve sustainable success.

The suppliers are satisfying the customers’ needs. However, Thailand needs to look for ways to stay as the top destination for medical tourism in Asia. Thailand is reputed to be a prime medical tourist destination worldwide as it has multilingual staff in their hospitals. Though there are minor negative aspects to medical tourism in Thailand, the country has competitive advantages over other countries and has good prospects for further medical developments.

The growth of medical tourism in Thailand is clearly beneficial to the economy of the country. However, measures need to be taken to ensure that the health system for the population for the population of Thailand does not suffer. Better career opportunities for medical personnel within Thailand’s domestic health organisations should be available. Further studies should look closely at the growth of medical tourism in Asia as a whole, particularly comparing that of Thailand with that of India.

Cornell University. 2006. Travel and Hospitality Industry Set To Tap Into Asia’s US$4 Billion Medical Tourism Market. [Online] Available at: [Accessed November 1 2009].

Cornell University. 2007. Thailand Gears Up to be Asia’s Hub in Medical Tourism, Spa & Wellness. [Online] Available at: [Accessed October 18 2009].

Cohen, E. 2008. Explorations in Thai Tourism. [online book] United Kingdom: Emerald group Publishing Limited. Available from: +sun,+take+in+a+few+golden+temples,+and+get+a+new+hip&hl=en&cd=1#v= onepage&q=Catch%20some%20sun%2C%20take%20in%20a%20few%20gol den%20temples%2C%20and%20get%20a%20new%20hip&f=false December 02 2009]. [Accesed

Deloitte. 2008. Medical tourism consumers in search of value. [Online] Available at: 1).pdf [Accessed October 27 2009].






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IDS Health and Development Information Team. 2008. Medical tourism. [Online] Available at: [Accessed

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