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					  PROSPECTS FOR
 HEALTH TOURISM
                     EXPORTS
                        FOR THE
ENGLISH-SPEAKING
       CARIBBEAN

         Maggie Huff-Rousselle
            Carol S. Shepherd
             Robert Cushman
                   John Imrie
                 Stanley Lalta




            World Bank, Washington, D.C.

 Social Sectors Development Strategies, Inc.
                          September 1995
PROSPECTS FOR
HEALTH TOURISM
EXPORTS
FOR THE
ENGLISH-SPEAKING
CARIBBEAN

Maggie Huff-Rousselle
Carol S. Shepherd
Robert Cushman
John Imrie
Stanley Lalta




World Bank, Washington, D.C.

Social Sectors Development Strategies, Inc.
September 1995
                                                         Contents
CONTENTS ................................................................................................................................. iii

ACKNOWLEDGEMENTS ....................................................................................................... vii

ABBREVIATIONS ...................................................................................................................... ix

EXECUTIVE SUMMARY ......................................................................................................... xi


1 THE EXPORT MARKET FOR HEALTH TOURISM .........................................................1
  United States ..............................................................................................................................2
       Social and Private Insurance Coverage .............................................................................2
       Price and Price Sensitivity .................................................................................................2
       Supply in the Target Market ...............................................................................................3
       Patients ...............................................................................................................................3
  United Kingdom ........................................................................................................................3
       Social and Private Insurance Coverage .............................................................................4
       Price and Price Sensitivity .................................................................................................4
       Supply in the Target Market ...............................................................................................5
       Patients ...............................................................................................................................5
  Canada .......................................................................................................................................5
       Social and Private Insurance Coverage .............................................................................5
       Price and Price Sensitivity .................................................................................................6
       Supply in the Target Market ...............................................................................................6
       Patients ...............................................................................................................................7
  Europe ........................................................................................................................................7
       Market Composition ...........................................................................................................7
       Social and Private Insurance Coverage .............................................................................8
  Latin America ............................................................................................................................8
       Colombia ............................................................................................................................9
       Costa Rica...........................................................................................................................9
       Cuba..................................................................................................................................10
       Mexico ..............................................................................................................................10

2 CARIBBEAN MARKET CONDITIONS ..............................................................................13
  Profile of Existing Health Tourism within CARICOM .......................................................13
       Conventional Health Services: The Mount Hope Medical Science Complex ...................13
       Cosmetic Surgery: The Bougainvillea Clinic ...................................................................17
   Addiction Treatment .............................................................................................................21
   Spas .........................................................................................................................................21
       Retirement: The Montserrat Retirement Community .......................................................22
   Business Environment ...........................................................................................................25
       Policy, Regulatory, Institutional and Legislative Issues ..................................................25
                                                                                                                                                iii
PROSPECTS FOR HEALTH TOURISM EXPORTS FOR THE ENGLISH-SPEAKING CARIBBEAN

        Other Key Issues Relevant to Health Tourism..................................................................26
     Competitive Advantages and Relative Weaknesses ................................................................26
        Infrastructure ....................................................................................................................26
        Human Resources .............................................................................................................27

3 SERVICES WITH POTENTIAL FOR EXPORT FROM THE CARIBBEAN ................29
  Cosmetic and Eye Surgery .....................................................................................................29
       Global Trends and Emerging Opportunities. ...................................................................29
       Type and Range of Services ..............................................................................................30
       Potential Customers and Size of Marke ...........................................................................30
       Definition of Customer Requirements ..............................................................................30
       Main Competitors and Determinants of Competitivenes .................................................31
       Development Strategy Alternatives for Cosmetic Surgery ...............................................31
  Addiction Treatment ...............................................................................................................31
       Global Trends and Emerging Opportunities ....................................................................32
       Type and Range of Services ..............................................................................................32
       Potential Customers and Size of Market ..........................................................................32
       Definition of Customer Requirements ..............................................................................32
       Main Competitors and Determinants of Competitiveness ................................................33
       Development Strategy Alternatives for Addiction Treatment ...........................................33
  Spas ...........................................................................................................................................33
       Global Trends and Emerging Opportunities. ...................................................................33
       Type and Range of Services ..............................................................................................33
       Potential Customers and Size of Market ..........................................................................34
       Definition of Customer Requirements ..............................................................................34
       Main Competitors and Determinants of Competitiveness ................................................35
       Development Strategy Alternatives for Spas ....................................................................35
  Retirement Communities ........................................................................................................35
       Global Trends and Emerging Opportunities ....................................................................35
       Type and Range of Service ...............................................................................................36
       Potential Customers and Size of Market ..........................................................................36
       Definition of Customer Requirements .............................................................................36
       Main Competitors and Determinants of Competitiveness ................................................37
       Development Strategy Alternatives for Retirement Communities ....................................37
  Other Services..........................................................................................................................38
       Professional Health Training ...........................................................................................38
       Health Promotion Materials. ............................................................................................38
       Alternative Medicine.........................................................................................................39

4 POTENTIAL FOR HEALTH TOURISM AND ALTERNATIVE DEVELOPMENT
  STRATEGIES .........................................................................................................................41
  Can the Caribbean Compete? What will it Take? ..............................................................41
  Barriers and Costs of Entry ...................................................................................................41
  Development Strategy Alternatives for Health Tourism .....................................................41
  Linkages to Other Sectors ......................................................................................................41


iv
REFERENCES ........................................................................................................................43

ANNEXES ................................................................................................................................49
  Annex 1: European Demographic Trends ............................................................................49
  Annex 2: U.S. Population Projections. ...............................................................................50
  Annex 3: Plastic Surgery Procedures in the United States 1993 ........................................51
  Annex 4: Cosmetic Surgeries by Age Cohort .....................................................................52
  Annex 5: 1993 Cosmetic Surgeries by Age Cohorts. .........................................................52




                                                                                                                                        v
                          Acknowledgements
        This study was completed by a team of consultants working and residing in the West
Indies and each of the three target export markets: Canada, the United Kingdom, and the United
States. Robert Cushman, M.D., M.Sc., M.B.A., Vice President for Social Sectors Development
Strategies (SSDS), Inc. was responsible for assessing the Canadian market and the Mount Hope
Medical Complex in Trinidad. Carol Shepherd, M.Sc., M.Sc., Vice President for SSDS, Inc. was
responsible for assessing the US market, and John Imrie, M.A., M.Sc., was responsible for
assessing the UK market and, to a lesser extent, the European market. Stanley Lalta, M.Phil.,
M.Sc., Research Fellow at the Institute of Social and Economic Research (ISER) at the
University of the West Indies (UWI) at Mona, was responsible for assessing capacity and
evidence of demand in Jamaica. Carl Browne, M.P.H., Permanent Secretary for the Ministry of
Health (MOH) in St. Vincent, contributed to the assessment of capacity and evidence of demand
in the Eastern Caribbean. Maggie Huff-Rousselle, M.A., M.B.A., President of SSDS Inc., was
responsible for assessment of demand in the Caribbean generally and coordination of the study.

        All of the team members are grateful for contributions made by the many professionals
who were interviewed during the course of the study, ranging from health professionals and
others working and living in the Caribbean to the business and health professionals who were
contacted in Canada, Europe, the UK, and the US. Most documented sources for the study are
cited in the bibliography.




                                                                                                vii
                    Abbreviations
BVI        British Virgin Islands
CARICOM    Caribbean Community Secretariat
CAT Scan   Computer Assisted Tomography
CMO        Chief Medical Officer
CPC        Community Psychiatric Centers
DRG        Diagnostic Related Groups
EEC        European Economic Community
ER         Emergency Room
EU         Economic Union
FDA        Food and Drug Administration
GP         General Practitioner
HENT       Head, Ears, Nose and Throat
HPMU       Health Policy Management Unit
IDB        Inter American Development Bank
MDs        Doctors
MOH        Ministry of Health
MRI        Magnetic Resonance Imaging
NHS        National Health Service
NIHERST    National Institute for Higher Education Research, Science & Technology
NORC       Naturally Occurring Retirement Communities
OECS       Organisation of Eastern Caribbean States
OPD        Out Patient Department
PPO        Preferred Provider Organization
PRK        Photo Refractive Keratectomy
SWOT       Strengths, Weaknesses, Opportunities and Threats
UK         United Kingdom
US         United States
UWI        University of the West Indies




                                                                                    ix
                                                                                  Executive Summary




                          Executive Summary
       The study concentrates on the potential for, and the factors that mitigate against, the
development of health tourism exports from the English-speaking Caribbean. Health tourism is
broadly defined as people traveling from their place of residence for health reasons. In addition
to conventional health services, this definition encompasses cosmetic surgery, addiction
treatment, spas, retirement communities, and some alternative health services.

        Strengths and weaknesses within the region are considered along with challenges and
opportunities for growth. Three external markets are examined--Canada, the United Kingdom
(UK) and the Unites States (US). These three markets are key due to historical, political,
transportation, language, and communication links to the Caribbean region, as well as their
similar epidemiological profile to the nations of the English-speaking Caribbean. Latin America
and Western Europe were also briefly considered. Latin America is more likely to be a
competitor than an export market because of the ability of a number of countries to provide
services of good quality at low prices.

        Cosmetic surgery, addiction treatment, spas, retirement communities, and alternative
health services would not fall into the most cost effective health service categories for the
Caribbean region as defined in the World Bank’s 1993 Development Report: Investing in Health.
 However, their development by private sector interests need not further weaken public health
systems in the region, and it is possible that in some cases their development could directly and
indirectly strengthen public health systems over time. Native specialists might return if
specialties promised to be more lucrative. The development of specialized service centers in the
Caribbean could decrease the need for individual countries to invest in expensive technology,
which would be beneficial to the region. The development of new capacities within region can
benefit residents. For example, eye surgery would be useful for diabetes, glaucoma and
hypertension victims in the region.


The Export Markets -- Challenges and Opportunities

        The health sectors of US, the UK, and the Canadian markets operate very differently.
The US system is largely private sector and market driven, whereas the UK system is primarily a
public sector system. The Canadian system combines aspects of both models by creating a
monopsony where providers operate in the private sector but are controlled by government. The
following summarizes challenges and opportunities for export of health services to these
markets:

Challenges
   most medical care in target markets is covered by insurance which will not cover services
      provided abroad
   US Medicare and Canadian public health insurance are not effective for those living out of
      the country for more than six months out of a year
                                                                                                    xi
PROSPECTS FOR HEALTH TOURISM EXPORTS FOR THE ENGLISH-SPEAKING CARIBBEAN


       most health care functions on a referral basis with the MD acting as the gate keeper; MDs
          won't want to lose patients to Caribbean market
         malpractice insurance may be difficult for MDs to obtain or prohibitively expensive
         self-pay consumers are price sensitive and it could be difficult for the Caribbean to
          compete on price with providers in the target markets given additional costs of travel and
          lodging
         neighboring countries in Latin America can provide care at lower cost, as can countries in
          Eastern Europe and the Newly Independent States
         questions about quality of care in the Caribbean will exist in consumer's mind and will be
          difficult to overcome

Opportunities
   demographics in target markets (e.g., aging post war baby boomers who are concerned
     about physical appearance, (semi-) retirement, and relaxation) will mean marked increases
     in demand for cosmetic surgery, spas, and retirement communities
   the growing affluent class of baby boomers may be less price sensitive and more sensitive
     to other aspects of marketing mix (e.g., location, confidentiality)
   life styles in Europe and North America increase the demand for services such as spas,
     fitness centers, cosmetic work, or addiction treatment centers
   waiting time for procedures through National Health Service in UK, and to a lesser extent
     in Canada, encourage the search for outside health services
   a large portion of the US population is uninsured or underinsured
   private insurance does not cover selected treatments
   operations in region appeal to MDs from target markets who enjoy visiting the region; this
     could facilitate strategic alliances and capital investment
   life style health related problems in the target markets are similar to those in the
     Caribbean, and quality health and social marketing materials could be exported to these
     markets

        The US market is most apt to offer opportunities to the Caribbean because it has a large
uninsured and underinsured population, it has very high prices, and it is geographically close to
the Caribbean. Moreover, the US system is more fragmented and less controlled than health
sectors in other industrialized countries. As a result, the US market has multiple avenues of entry.

       The UK market is less likely to offer significant opportunities to the Caribbean. Cosmetic
surgery and addiction services will be possible exceptions. The UK market is small, with broad
coverage by the National Health System (NHS), and proximity to less expensive care in Eastern
and Southern Europe. Many UK residents see the Caribbean is an expensive and exclusive
vacation destination. The cost of travel is indeed high.

        The Canadian market, for reasons similar to those described in the UK, is less promising
for Caribbean export than the US. However, it will be more promising than the UK for
retirement and possibly spas.


xii
                                                                                              Executive Summary

       Initially, the study considered a full range of potential services for export to Canada, the
UK, and the US, from very sophisticated technologies, such as organ transplants, to very basic
services, such as retirement communities in need of very limited health services. The intention
was to narrow the scope to three or four services with potential. Cosmetic surgery (including
some eye surgeries), addiction treatment, spas, and retirement communities were selected
because the Caribbean has non price advantages for these services, and because these services are
generally funded through direct consumer payment rather than insurance.

        In general, consumers from the three target markets, particularly Canada and the UK,
have insurance that would cover most conventional care but would not cover services procured
abroad. Even for the growing number of US citizens that have no health insurance, there is little
evidence that they would be interested in obtaining conventional health services in the
Caribbean. When the full cost of the services is considered including the costs of travel, lodging,
and meals for both the patient and his/her companion-it is unlikely that the Caribbean could offer
significant cost advantages. West Indians who are living in the target markets may, however,
represent a niche market that can be enticed to obtain conventional care in the region, particularly
if they are part of the uninsured population living in the US. However, perceived quality-more so
than for any other service export-and price-to a lesser extent than quality-will be key
determinants of consumer choices.

Caribbean Market Conditions--Strengths and Weaknesses

        The English-speaking Caribbean is unlikely to be able to develop an export market for
most mainstream traditional health services in the short term due to weaknesses in domestic
health care-- inadequate technological capabilities and perceptions of poor quality care -- as well
as the absence of insurance coverage for out-of-country care in target markets and lack of referral
networks. As one Trinidadian resident said, "You would be fighting a rising tide. People are
leaving the region for quality health care." This comment is true throughout the region. Air
ambulance services to Miami and Puerto Rico are becoming an integral part of the health system
in Jamaica, and residents in the OECS1 countries regularly fly to Barbados, Guadeloupe,
Martinique or further abroad.

        Consultant team members based in the English-speaking Caribbean analyzed the health
tourism market for evidence of existing demand and capacity within the region. Cosmetic surgery
is done either sporadically or as a cottage industry. Addiction treatment follows the same
pattern, although there is more demand from the internal market and therefore less capacity to
respond to foreign demand. Spas exist and have been expanding, largely through resorts that are
adding spa type facilities and services to the core resort activities, rather than through the
development of pure spas. Retirement communities are developing in an organic fashion, either
through the repatriation of citizens, as in Jamaica, or expatriates retiring to the smaller islands.
Other forms of health tourism, from alternative medicine, such as herbal treatments, to training
of health professionals, such as the off-shore medical schools, were also investigated.



1
 The Organisation of Eastern Caribbean States has nine members: Anguilla, Antigua, British Virgin Islands,
Dominica, Grenada, Montserrat, St. Kitts, St. Lucia, and St. Vincent.

                                                                                                             xiii
PROSPECTS FOR HEALTH TOURISM EXPORTS FOR THE ENGLISH-SPEAKING CARIBBEAN

       The following points summarize the internal strengths and weaknesses of the English-
speaking Caribbean’s ability to develop health services exports.

Weaknesses
  public health care systems are generally weak, and would provide poor back-up to other
    services, especially for retirement communities and other specialized facilities
  private sector health care is largely limited to individual and very small group practices
    providing ambulatory care and has minimal capacity to provide back-up to other services
    (with the exception of Jamaica which has several private hospitals)
  both public and private health sectors have limited capacity for sophisticated technologies
    because of limited plant and equipment investment (Mount Hope Medical Complex in
    Trinidad is an exception)
  resentment sometimes directed at visitors or resident expatriates, especially those who are
    affluent and want to be pampered
  growing personal security problems in many Caribbean countries will inhibit demand for
    health tourism, especially retirement communities
  shortage of specialist physicians
  need for work permits, and issues of opening up (licensing and expatriation of revenues)
    medical practice to foreigners
  lack of clarity in government requirements and incentives
  political palatability (public acceptability) of some health services (e.g., addiction
    treatment)

Strengths
    low labor costs in the health sector compared to industrialized countries
    reasonably good supply of qualified MDs
    climate and natural physical setting are appealing during periods of convalescence or for
      therapeutic treatments involving rest and relaxation
    established image as a vacation destination
    distance from Europe and North America allows patients to maintain confidentiality
      regarding treatment (e.g., cosmetic surgery or addiction treatments)
    regular major flights provide easy access to the region
    English language preferred by Canadian, UK, US and some European citizens

               The region has advantages for the development of health tourism. The
combination of climate, scenic beauty, and assurance of confidentiality make the Caribbean
appealing for both cosmetic surgery and addiction treatment. The climate and other natural assets
make it an appealing location for spas and retirement communities. The infrastructure within the
Caribbean in terms of international airports and communication services is quite adequate to
support development of these services.




xiv
                                                                                   Executive Summary

               However, governments have not yet developed a set of formal regulations
pertaining to health sector development which are readily available to interested investors. Much
of what can and does happen in terms of private sector development is a result of personal
contacts, variable interpretation of existing but out-moded laws and regulations, and the
perspectives of current officials on initiatives being considered.

The Way Forward

                Of the services discussed here, cosmetic surgery including some eye operations,
spas, retirement communities, and some alternative health services show potential for
development in the Caribbean. Addiction treatment seems less promising. Spas have short term
potential, as they can be built directly within the existing tourism infrastructure. Cosmetic
surgery and eye surgery initiatives that begin as a cottage industry can be further developed either
through strategic alliances in the target markets, horizontal integration with spas, or both. The
naturally occurring retirement communities in the Caribbean can be expanded through
appropriate marketing and further development of related services and supporting infrastructure.

                Retirement communities are perhaps the most promising initiative for the
Caribbean from a longer term economic perspective, although those islands with growing
security problems will find entry into this market very difficult. The target market should be
younger healthy retirees who are relatively affluent. Current retirement communities in the
English-speaking Caribbean represent a first wave of interest on the part of people who are
willing to take risks and experiment. Further research both with the existing retirees in the
Caribbean and in the target marketsis needed to understand what can and should be done to
encourage growth in the market.

               For more sophisticated types of health services such as cosmetic surgery and for
sizable retirement communities, it will require years of development before a quality reputation is
established and wide spread. Quality will be central to consumer demand both initially and in the
longer term.

               The following list summarizes the key elements of a development strategy.
Actions to create an enabling environment would be the responsibility of governments, however,
development of the health export subsector should rely on the initiative of private investors.

Public Sector Strategy:
   strengthen domestic health care systems (as back up to export services)
   develop transparent regulatory frameworks that define the parameters under which
      suppliers may operate, and which are comparable to those found in the target market.
   encourage foreign investment and ownership

Private Sector Strategy:
    focus on services not normally covered by insurance, particularly national insurance
    focus on quality over price, but price must compete with target markets
    target relatively price insensitive affluent market segment
    focus on baby boomers, especially young retirees and semi-retirees
                                                                                                  xv
PROSPECTS FOR HEALTH TOURISM EXPORTS FOR THE ENGLISH-SPEAKING CARIBBEAN


         build entrees to affluent niche markets; don’t compete for high volume, low cost markets
         promote quality, exclusivity, environment, and (where important) confidentiality
         start small as cottage industry (in cosmetic surgery, addiction treatment)
         develop horizontal integration (resorts with spas, spas with cosmetic treatment centers)
         seek out joint ventures for brand name recognition and links to target markets
         seek out linkages to referral networks in target markets




xvi
         1
                      The Export Market For Health
                      Tourism
        The health sectors of the US, the UK and Canadian markets operate very differently. The
US system is the most complex, most technologically sophisticated, most expensive and the least
equitable in the industrialized world. (See Table 1.) It is largely private sector and market
driven. For many years, any significant reform efforts have been blocked. The UK system, under
the National Health Service (NHS), is primarily a public sector system which has undergone
major reform initiatives during recent years. Providers have traditionally been employed directly
by the NHS, although recent reforms are modifying their role as employees. In the Canadian
system, providers operate in the private sector but are controlled by government. The provincial
health insurance plans have effectively created a monopsony2 for most health services within the
country. The Canadian system is the second most expensive in the world.

                                                    Table 1
                                         Comparative Health System Data

    Country                             United States            Canada          United Kingdom

    Population (mil)a                   252.7                    27.3                 57.6
    Life Expectancya                    76                       77                   75
    Infant Mortality Rates
      (per 1000 live births)a           9                        7                    7
    Health Care Expenditures
      as % of GDPb                      13.2%                    10.0%                6.6%
    Health Care Expenditures
      per Capita in US$b                $2868                    $1407                $1043
    a
        World Development Report 1993 (1991 data)
    b
        Organisation for Economic Cooperation and Development 1993 (1991 data)




        Differences among these three markets relevant to English-speaking Caribbean potential
service exporters include:
    sociological issues (e.g., tolerance for queuing in the UK vs. stereotypical US impatience);
    regulatory practices (e.g., speed of approval of new technologies by the US FDA); and

2
    Buyers' monopoly.

                                                                                                  1
PROSPECTS FOR HEALTH TOURISM EXPORTS FOR THE ENGLISH-SPEAKING CARIBBEAN


       financial structure (e.g., interest of private sector insurance companies versus governments
       in funding health services provided outside the country).
Despite differences in the structure of health care finance, services not normally covered by
insurance are the most promising areas in all three markets for prospective Caribbean exporters.

United States

        The US market is most apt to offer opportunities to the Caribbean for four reasons: 1) a
large uninsured and underinsured population, 2) high prices in the US, 3) absence of centralized
control, and 4) physical proximity to the Caribbean. The US system is more fragmented and less
controlled than health sectors in other industrialized countries. As a result, the US market has
multiple avenues of entry.

Social and Private Insurance Coverage

        The mix of payers is highly complex in the US. Medicaid, Medicare, and the Veterans
Administration pay for services for some elderly, poor, and veteran Americans. A majority of the
population is covered by private insurance plans where insurance companies pay for a significant
proportion of direct health care expenditures and individuals pay the balance. Other forms of
health coverage have recently developed to displace part of the traditional private insurance
market. Health maintenance organizations (HMOs) and preferred provider organizations (PPOs)
have been the fastest growing groups. There is also a large group of people who pay for services
themselves. About 40 million Americans are uninsured and an unknown number have insurance
that does not provide full coverage.

         Portability, or insurance coverage of health services provided in other geographic
locations, depends on the payer. Most insurance policies and HMO plans cover emergency health
services world wide. Non-emergency coverage is sometimes transferable from state to state
within the US. Coverage for non-emergency treatment outside of the US is rare. During
interviews, only one insurance company stated that it might be willing to consider coverage for
services provided outside of the US if the cost and quality of the service were comparable or
better, and particularly if there was a linkage with a reputable service provider within the US.

Price and Price Sensitivity

        The price of health care in the US is very high, although the industry is making attempts
to reduce costs. Fully insured patients tend to be minimally price sensitive. Those with high co-
payments or deductibles, however, are more price senstitive. Uninsured or underinsured patients
are very price sensitive. However, all patients are price sensitive for services that are not
normally covered by insurance. Such services include cosmetic surgery, excimer laser eye
surgery to correct myopia and many forms of addiction treatment.3

        For many of these services, the US population living close to the borders might consider
either Mexico or Canada. Canada has lower costs and a high quality reputation. There is ample
evidence of US consumers traveling to Canada for medical services, especially for those not yet
3
    Coverage for specific services varies between individual insurance policies.

2
                                                                                  Executive Summary

approved in the US such as excimer laser eye surgery. Canada’s high capacity utilization in
some areas decreases the potential flow of patients. Canadians living in the US in border areas
often travel back to Canada for health care services due to price differentials.

        Mexico offers much lower costs, although confidence in quality is not well established.
However, there is documentation of considerable cross border travel for medical and dental
services. According to a 1994 PAHO report on International Trade on Health Services, people
who cross the border for medical services are usually of Mexican descent with low or moderate
incomes who seek less expensive services and a provider with a similar culture and language.
US residents also travel to Mexico to purchase pharmaceuticals at approximately one third of
their cost in the US.

Supply in the Target Market

       There is excess capacity in US hospitals. The increase in competition for patients among
hospitals has resulted in lower prices being charged to insurance companies who have not,
however, passed the savings on to consumers.

         There is a well developed referral system which controls much of the patient flow from
primary care MDs to specialists in the US. The referral system is based on managed care
networks and personal relationships and reputations. Many MDs who train and practice in the US
feel that the system is the best in the world and will be reluctant to refer patients out of the
country. However, because some MDs are fearful of patient theft by the specialists to whom they
refer, there may be potential for patient referral to Caribbean MDs, who would be less likely to
be able to “steal” patients due to geographic distance. US MDs would have to be sure of the
quality of physicians to whom they send referrals. This assurance could develop if US MDs were
allowed to practice on a part-time basis in the Caribbean. One HMO in New England expressed
interest in developing referral linkages with Caribbean providers as a mechanism to differentiate
their services to consumers.

Patients

        Patients are generally satisfied with quality of US care, although they feel costs are too
high, particularly if they are self-paying. US consumers are very demanding compared with
consumers from Canada and the UK. They are comparatively litigious and expect a high degree
of involvement and consumer choice as well as high quality. They tend to shop more for health
services and are less likely to have a personal physician than consumers in Canada and the UK.

United Kingdom

       The UK market is less likely to offer significant opportunities to the Caribbean due
mainly to the smaller size of the total market and broad coverage by the National Health System
(NHS) which would not apply to care received in the Caribbean. Moreover, UK residents see the
Caribbean as exclusive and distant, and are near less expensive care in Eastern and Southern
Europe. Cosmetic surgery and addiction services could be exceptions.

        The NHS (National Health Service) was originally intended to provide complete health
care for all UK residents. The system has undergone numerous reforms and changes, with some
                                                                                                     3
PROSPECTS FOR HEALTH TOURISM EXPORTS FOR THE ENGLISH-SPEAKING CARIBBEAN

services being removed from the system. Comprehensive reforms began in 1990 with the NHS
and Care in the Community Act, which have catalysed development of a wide range of health
insurance schemes.

        There has always been a small private health care market operating in parallel to the
NHS, and many NHS hospitals have maintained and operated private patient wards. It is
estimated that this private market constitutes approximately 10 percent of the total activity within
hospitals, although this is likely to vary from facility to facility and from specialty to specialty.
Those facilities with national and international reputations as centers of excellence attract many
more private and overseas patients. About 65-75 percent of the patients attending the
Haematology Department at the Royal Free Hospital in London are either private patients or from
overseas. In recent years there has been growth in the private patient market, although the
countries of origin of patients have changed with improved specialist services in other countries
and increased costs in the UK. Until the mid-1980s, most private patients from outside the UK
were from the Middle East, South Asia and West Africa. Foreign patients are now mainly from
within the European Union (EU), primarily Germans.

Social and Private Insurance Coverage

        All residents, including temporary residents, are eligible for care under the NHS on
condition that they register with a General Practitioner (GP). Private care is also available,
although the private market for GP services is very small and largely confined to arrangements
between insurers or corporate interests and their clients or staff. GPs act as the gate keepers in
the system and GP referrals are required for almost all procedures, even those acquired from
private providers, such as independent specialists and hospitals. GPs are encouraged to hold
funds with which they “purchase” services on behalf of patients.

       Increasingly, some form of health insurance is offered by employers as a benefit to their
employees. Coverage can include not only inpatient, day care, and outpatient services, but also
GP care. Recent estimates provided by Norwich Union indicate that currently as much as 17.5
percent of total health care activity is for private patients.

Price and Price Sensitivity

         There is not a dramatic difference in the price of services purchased by GP fundholders,
those provided privately in NHS hospitals, and those offered by private hospitals. Consequently,
price of health services is not a critical issue for consumers. The main attraction of purchased
health care is the reduction or avoidance of waiting lists. For almost all procedures, inpatient,
day care and outpatient, and many diagnostic procedures, there is some waiting time. Waiting
lists for some procedures (e.g., inguinal hernia, hip replacement) can be up to two plus years;
cosmetic procedures, such as tattoo removal can be as long as 5-8 years. The size and length of
the waiting lists vary from region to region and have been a key target of the health care reforms
resulting in some improvement. A key feature of any services that are likely to be attractive to
UK customers will be access at a time convenient to the patient.




4
                                                                                   Executive Summary

Supply in the Target Market

        Many NHS and charity-run hospitals are now seeking to increase the proportion of the
private work that they undertake as it is an outside income generating activity and not subject to
the restrictions of the NHS's internal market.

       There are approximately 250 private/independent short stay hospitals in the UK, with an
average of 42 beds per facility. Occupancy rates in these hospitals vary, although in recent years
many have experienced declines to less than 50 percent due to increases in supply, leveling off in
the growth of the private insurance market, staffing problems, and an improvement in waiting
times within the NHS. New facilities continue to open, although the trend appears to be more
beds opening in the private wings of NHS hospitals rather than in entirely new private facilities.
Certain specialties, for example plastic surgery, tend to have a much larger private component
than others such as orthopedic or general surgery.

Patients

       The most likely purchasers of private health care in the UK are in the upper income
brackets. A significant proportion of these people have access to private health care coverage
through their employers and some have purchased coverage under a family scheme.

        Possible purchasers of services based in the English-speaking Caribbean are likely to be a
small subset of this group for two primary reasons. First, travel time and impressions of the
Caribbean can create barriers. The Caribbean is a 9+ hours flight from the UK and is marketed
as being an expensive and exclusive holiday world . This may attract one type of client, but it is
a major obstacle to the much larger market that is price and time sensitive. Most people are far
more likely to seek services closer to home, in the UK or Europe although the exact number
seeking services outside of the UK is not known. Second, cost is a barrier. Many people who
have purchased private health insurance have done so out of frustration with the waiting times in
the NHS. These people are unlikely to be willing to make additional purchases of health care
procedures independent of their insurance which does not usually cover care outside of the UK.
Due to the costs of travel and lodging, it is unlikely that the Caribbean could offer significant
price advantages over the UK.

Canada

         Canada has a "comprehensive" universal health care system and strong political
commitment to keep it so. For reasons similar to those described in the UK, the Canadian market
is less promising for Caribbean export than the US.

Social and Private Insurance Coverage

       Under the Canada Health Act, the 10 provinces administer the national health insurance
plan. Given the universality of coverage, there is almost no market differentiation for the same
services. In principal, all services are provided, although there is variation from province to
province and increasingly non-essential services are being delisted, i.e. rendered ineligible for
coverage.

                                                                                                     5
PROSPECTS FOR HEALTH TOURISM EXPORTS FOR THE ENGLISH-SPEAKING CARIBBEAN

        Although this has only recently become the case, portability of insurance for services
offered outside the country is highly restrictive. Provinces now only pay their local rate and only
for emergency services outside of the country. Canadian citizens out of the country for any
prolonged period of time are encouraged to purchase supplementary private coverage.

        There is a very small private market which runs parallel to the public systems in Canada.
A small percentage of affluent Canadians opt to go to US centers. Their motivation includes
immediate service for elective operative procedures, privacy and confidentiality, quality and
prestige at world renown centers, and the pampering at deluxe private hospitals.4 This market is
small and highly demanding in terms of quality, which would make this segment difficult for the
Caribbean to attract in the near term.

        The most important Canadian trend for the Caribbean will be a continuation of the
delisting of non-essential services, due to budget cuts, which means that the private delivery
system for these services will grow rapidly. Already some 30 percent of health care expenditures
in Canada are outside the public system, and, given fiscal pressures and delisting, the market is
expanding. The Caribbean is most apt to be able to compete in areas where privacy and
confidentiality and a respite or quiet convalescence can be marketed to an advantage.

Price and Price Sensitivity

       The weaker Canadian dollar combined with an already low cost structure make the cost of
services very reasonable in Canada relative to the US. Since Canadians do not pay for most
services at the point of delivery, it would be nearly impossible for the Caribbean to compete with
Canadian providers for services that are available through the national system.

        For those services not available under national health insurance, there will be consumer
price sensitivity. Given price levels, relative physical distance, and the cost of travel and lodging,
however, it will be difficult for the Caribbean to compete with the Canadian private sector in this
market.

Supply in the Target Market

        Although the payers in the health care system operate primarily through the 10
provincially administered plans, MDs are in private practice. There are few large health
organizations in Canada. MDs, not patients, are the primary determinant of the number and
range of health services consumed in Canada, and physicians' decisions are estimated to account
for some 75 percent of all health care costs. Obviously, with the exception of spas and retirement
communities, any health tourism initiatives from the Caribbean cannot ignore Canadian
physicians.
Physicians have well established referral patterns, resembling “old boys’ networks” within the
region, city or university setting where they were trained. Caribbean initiatives could be
threatening because of the possibility of losing patients, for oneself or for colleagues. Obviously
the loss would be financial, but concerns about care and responsibility (continuity and follow-up,
potential complications, and associated health matters) are also important. One potential option

4
    Waiting times for operative procedures vary according to the procedure, the facility, the surgeon, and the province.

6
                                                                                    Executive Summary

for the Caribbean is to look into joint ventures whereby Canadian physicians, on a rotational
basis, offer their clients a Caribbean alternative and bring their patients with them.

Patients

        Canadian patients are constrained in their mobility by both the payment system, which
does not cover foreign costs, and the strength of their relationships with their personal physicians
for both direct care and referrals. Most retirees will be concerned about losing Canadian health
insurance if they move outside the country.

        Within this already narrowed framework of the Canadian market, what can influence
Canadian patients to choose the Caribbean over the Canadian or other offshore markets?
Confidence is key. Patients look for quality in the program and the facility. Potential problems
in obtaining health services abroad include the time required when the service could be obtained
on an out-patient basis at home and the loss of social support through family and friends. These
potential disadvantages have to be marketed as advantages. The Caribbean can provide a few
days of vacation before a service and a restful, private convalescence in a tropical setting, with a
companion who has come along for the vacation. The Caribbean climate could be the greatest
attraction for Canadians, as the US has similar climates within its boundaries and the UK has
Southern Europe near by.

Europe

        Thorough analysis of the potential market in Western Europe for health services exports
from the English-speaking Caribbean would require a country by country analysis beyond the
scope of this study. Some general information regarding the overall market size in Western
Europe, some comments on possible barriers to the development of the market, and some
impressions from consultations with experts on trends and short to medium term developments
are offered here.

Market Composition

        There may be slightly more scope for the English-speaking Caribbean to attract customers
from other areas of Western Europe than from the UK. There is an historical tradition of
European people traveling to other European countries with a common language or culture
affinity for specialized health care services. Currently, many patients purchasing private sector
health services in the UK, Austria, Netherlands, and Belgium are from Germany, Switzerland,
Austria and Italy. Some Austrian and German residents travel to some former eastern bloc
countries (i.e.. Hungary and Poland) for health services-primarily, plastic surgery and health spas.

        Prices, availability, and confidence in the quality of the materials used and services
appear to be the main factors determining the choice to procure health services abroad. Services
purchased are either complex procedures that involve considerable high tech equipment, or are
services inexpensive by comparison to the price 'at home', in which case price incentives and
perceived value for money are the motivators. In both instances, it might be difficult for
Caribbean based providers to compete with Eastern European providers because of the additional
travel and accommodation costs, language barriers, and lack of access to the desired level of
technology.
                                                                                                       7
PROSPECTS FOR HEALTH TOURISM EXPORTS FOR THE ENGLISH-SPEAKING CARIBBEAN



         Southern Europeans (e.g., French, Spanish, Portuguese, Italians etc.) are less likely to
travel for any of the health related services considered in this research. This is partially a
reflection of fewer resources (re: cosmetic surgery and addiction treatment), of the proximity of
first rate services (spas), of the perception that spas constitute an inexpensive local holiday (esp.
among the French) and of cultural habits/traditions around retirement and care of the elderly.

        Within the EU in 1991, the population of persons over the age of 60 was just under 20
percent; by 2020 it is projected to be 28%. (See Annex 1.) For a range of social, cultural and
economic reasons, less than one third of this total receives any private pension in addition to their
state benefits, and only a very small proportion will have any private insurance that provides
coverage for health services. Given the current demand and supply of services, it is unlikely that
the English-speaking Caribbean will be able to attract a significant market share from Western
Europe.

Social and Private Insurance Coverage

        Both state and private health insurance schemes operate in all EU countries. The means
by which state health insurance services are provided and the methods of payment/subscription
vary in each country. In some countries such as the UK, all services are freely provided and free
at the point of purchase, others (i.e. France) provide a reimbursement of patient and doctor
scheme, and others (i.e. Germany) provide a means-test dependent mix of private and state
coverage (i.e. wealthier patients must buy private health insurance.

        Additional supplemental private schemes are available in all EU countries and have an
overall uptake ratio varying from a low of about 12 percent to upper limits (e.g. Germany) of 37
percent. Our limited research on Europe indicated that only German public insurance schemes
allow patients to obtain services outside of Germany. This applies only in the event that the
service obtained externally is the same price or less expensive than a comparable service
obtained in Germany. This ruling only applies within the EU and services must be obtained in
approved/recognized hospitals. At present almost one half of all non-UK private cardiothoracic
surgery patients treated in UK independent hospitals are German. Whether similar arrangements
for hospitals in the English-speaking Caribbean could be developed is unlikely in the medium
term (five years) as there is a strong commitment within the Social Affairs Directorate of the EC
to further developing a 'single-market in health care' provision within the EU as a next step.
Elsewhere within the EU, private health care insurance is fairly immature and underdeveloped
(e.g. Spain & Italy).

Latin America

        The market for health services varies significantly across Latin American countries. A
detailed analysis of the Latin American market is therefore, outside the scope of this study.
However, brief summaries of four markets are presented.




8
                                                                                                Executive Summary

        Several Latin America countries have well established health tourism industries. Citizens
from Latin American countries are more likely to travel to these neighboring countries rather
than the English-speaking Caribbean for a variety of reasons. Language is one obvious barrier
for potential consumers. However, the ability to provide good quality services at lower prices in
some Latin American countries would be the biggest deterrent to developing a market in the
English-speaking Caribbean.

        Accurate costs of health care are not readily available for most Latin American and
Caribbean countries. However, a comparison of USAID Cost of Living (COL) Allowances show
that the COL in most of the English-speaking Caribbean countries is 5% to 25% higher than in
the US while the COL in most Latin American countries is well below that found in the US.5
Higher costs of living generally mean higher costs for health care, and higher retirement costs.

Colombia

        The Colombian health services system consists of the public sector, social security, and
the private sector. The private sector operates on a fee-for-service basis, and has a growing
health insurance market, particularly prepaid medical plans

        Due to Colombia’s relatively low costs and high quality, private health services have been
highly attractive to markets in Panama, Costa Rica, Aruba, Curacao, Dominican Republic,
Venezuela, Peru, Brazil, and Ecuador. There is also a potential for a growing demand for
services among Colombian residents of the United States and in other Spanish-speaking
countries.

        Private health services in Colombia have comparative advantages over the Caribbean due
to the low costs of medical and paramedical personnel, the availability of high technology
equipment, and facilities which in some cases have good international reputations. Moreover,
modern hospital administrative systems and quality assurance programs are being developed to
make these services more attractive to the US market. These factors make Colombia attractive to
the foreign patient, and therefore an unlikely export market for the Caribbean.

Costa Rica

        Direct patient care is the major health service exported by Costa Rica. In addition to
plastic surgery, a full range of pediatric and adult services including high technology dependent
procedures such as open heart surgery are exported.

       Costa Rica’s target markets for the export of health services are the US, other Central
American countries, Puerto Rico, Barbados, and other Caribbean nations, Colombia, Venezuela,
Canada, and Spain. The number of patients from each country treated in Costa Rica was
unavailable.


5
  The cost of living or post allowance is a balancing factor designed to permit US government employees to spend
the same portion of their basic compensation for current living as they would in Washington DC without incurring a
reduction in their standard of living because of higher costs of goods and services at the post.

                                                                                                                     9
PROSPECTS FOR HEALTH TOURISM EXPORTS FOR THE ENGLISH-SPEAKING CARIBBEAN

        In Costa Rica, the Social Security System covers 85% of the population, owns almost the
entire health infrastructure, and contracts almost all nurses and physicians. Approximately 25%
of physicians also work as private consultants, and some also have offices in Miami. Access to
the latest technology is adequate.

       In 1992, approximately 300 Costa Rican patients sought health care services abroad
which were not provided by the Social Security Fund. These cases were referred to Colombia,
the US, Mexico, and Panama, and were for high technology services not offered by the
Caribbean.

Cuba

      The Cuban health system is a system that covers the entire population. Health care is
completely free and totally accessible to citizens.

        The Cuban government views health care and tourism as its two export sectors with the
greatest growth potential. To this end, Cuba has created a marketing agency SERVIMED, which
has its own health facilities. Exportable services are divided into those related to pathologies
such as cardiovascular surgery and those which are related to health promotion such as spas.
Cuba has also developed treatment for two diseases, pigmentary retinopathy and vitiligo, which
are considered untreatable by the rest of the world. The Cuban government has bilateral
agreements with the social security institutes of other Latin American countries, such as Ecuador,
                                                         with rates agreed to by both parties. (See
                                                         Table 2.)
                       Table 2
          HEALTH TOURISM IN CUBA                                 According to 1991 Data, the
           Patients by Country of Origin                 prices charged by SERVIMED in Cuba
             January to October 1992                     were US$10,000 for a coronary bypass.
                                                         US$3,300 for treatment of pigmentary
  Country           No. of Patients Percentage           retinopathy, US$3,500 for a cornea
                                                         transplant, and US$2,215 for weight loss
  Argentina               364              16.0%         treatment with hospitalization. In the area
  Ecuador                 293              12.9%         of outpatient visits, a basic medical
  Dominican Republic 260                   11.4%         check-up costs US$498, a cardiovascular
  Venezuela               194               8.5%         check-up US$313, an expanded
  Chile                   168               8.5%         executive check-up US$269, and a dental
  M              119               7.4%                  check-up US$66. According to
  Curacao exico           103               5.2%         SERVIMED, it had profits of
  Bolivia                  87               4.5%         US$4,000,000 in 1988.
  Spain                    81               3.8%
  Others                  415              18.2%         Mexico
  TOTAL                 2278             100.0%
                                                                 The National Health System of
                                                         Mexico is made up of both public and
                                                         private sectors, including The Mexican
Social Security Fund. The Mexican Social Security Fund has recently developed bilateral
agreements with several governments to provide services. In addition, the flow of patients
seeking care goes both ways across the US border. Approximately 50% of private dental patients
10
                                                                                Executive Summary

and 10% of private medical patients along the Mexican border are from the US. According to a
recent report by the Urban Institute, low and middle income Belizeans receive care in Mexico for
similar or lower prices than those in their own country representing between US$1,000,000 to
$2,000,000 in annual revenues for Mexico.




                                                                                              11
    2
                 Caribbean Market Conditions
        Secondary and tertiary health services in the region are provided mainly by the public
sector. These delivery systems are generally weak. Perception of public sector service delivery is
poor. While most governments are actively engaged in a health policy reform process to correct
chronic systemic problems, these reforms are largely in the policy formulation stage and neither
implemented nor tested. Health sector assessments on the Caribbean region or individual
countries within the region have been conducted.6

        Most ambulatory care is provided by the private sector, usually by doctors (MDs) in
independent practices who occasionally share offices with one or two other MDs. In most
countries, only the poorest use the public system for ambulatory care. The public system is
generally over 90 percent subsidized through general revenues. Despite these large subsidies, the
expenditure on private sector services probably matches or exceeds that in the public sector when
one considers out-of-pocket purchases, private insurance, and off island care. There is a growing
market within the middle and upper classes for private sector health insurance. Many consumers
are interested in insurance primarily so that they will be covered for off island hospital care.

        Perceptions of quality for any bedded or sophisticated care are poor and will be difficult
to change. The Mount Hope (a.k.a. Eric Williams) Medical Science Complex in Trinidad
provides relatively sophisticated private services. Despite apparently well thought out marketing
plans, significant investment in plant and equipment, well qualified staff, and a series of
experiments with different approaches to matching services and markets, it has excess capacity
and is unable to cover even half of its operating costs. This is true despite its ability to
significantly underprice the North American market.

Profile of Existing Health Tourism within CARICOM

       This section of the study considers existing demand and capacity within the Caribbean for
services through a mini case study approach. These have been drawn from the English-speaking
Caribbean, as broadly defined, becaus the health tourism sector is undeveloped in many of the
countries under study.

Conventional Health Services: The Mount Hope Medical Science Complex

      The trials and tribulations of the Mount Hope (a.k.a. Eric Williams) Medical Science
Complex in attempting to develop a viable market for its services illustrate the difficulty of


6 Social Sectors Development Strategies (SSDS), Inc has conducted two assessments with a regional and sub-
regional scope. The IDB has also recently completed a health sector assessment of Trinidad and the World Bank has
recently completed an assessment of Jamaica's health sector. In the Eastern Caribbean, the Health Policy
Management Unit (HPMU) of the OECS has completed many reports on the health sectors of the nine OECS
member countries. The IDB is expecting to complete a report on the Caribbean health sector in 1996.
                                                                                                               13
 PROSPECTS FOR HEALTH TOURISM EXPORTS FOR THE ENGLISH-SPEAKING CARIBBEAN

 generating demand for conventional health services, including highly sophisticated services, from
 outside and within the region.

         LOCATION AND FACILITY: The Complex is located part way between the
 international airport in Trinidad and the capital of Port of Spain. The complex was completed in
 1986 and stood idle until 1990, when an Inter American Development Bank health sector project
 in Trinidad began. During the last few years, equipment has been added to the many buildings,
 and the complex is now functioning. The location is a disadvantage for health tourism.

        The hospital has 534 beds, including 110 maternity beds, 210 pediatric beds, and a 20 bed
 deluxe private ward. Only 100 of the 534 beds are open, and the occupancy rate for these beds is
 40 percent. There are 14 theaters. The outpatient department sees 100 cases a day, fewer than the
 major hospitals in the small islands, and the emergency room sees roughly 40 cases per day.

         SERVICES: Roughly 120 consultants operate out of Mount Hope, including a mix of
 salaried staff, staff paid sessional rates, and courtesy staff. Most MDs also have private offices
 and/or work with the government. The Complex offers a full range of outpatient diagnostic
 services, although only 2,000 procedures were done in 1994. More sophisticated services
 include: heart by-pass (60 conducted in 1994), catheter procedures, computer assisted
 tomography (CAT) scanning, magnetic resonance imaging (MRI), nuclear medicine, laprascope,
 oral/head, ears, nose and throat (HENT) surgery, eye surgery (including laser, no cataracts yet)
 neurosurgery, plastic and reconstructive surgery (not cosmetic), dialysis, ultrasound,
 mammography, and a full range of laboratory services (biochemical, histology, immunology, etc.).

            MARKET: Most patients come from within Trinidad, although various attempts have
                                                                          been made to change this. During
                                                                          1994, only 442 patients-roughly
                                                                          three percent of 13,000 patients-
          Table 3: Comparative Surgery Prices
                                                                          came from outside Trinidad. Most
                                                                          of these came from neighboring
                                                Mt. Hopeb        Bostonc
                                                                          Caribbean countries.
Cardiac By-Pass                                 US$14,000 $27,500
Coronary Angiographya                                818            3,325
                                                                                  PRICE: It "runs like a
Right & Left Heart Catheterization                 2,164            3,255
                                                                          private hospital" on a fee for
Right Heart Catheterization                          545            4,363
                                                                          service basis, although fee
Pulmonary Angiogram (one lung)                       655            1,535
                                                                          revenues only cover about 40
a
  In Boston each additional vessel is $1,700                              percent of recurrent costs.
b
  Prices do not include cost of transportation for patient or companion   Revenues are earned from patient
c
  Prices do not include physicians fees                                   fees, government paid referrals,
                                                                          and government subsidy. Prices
                                                                          are lower than comparative prices
   in the Canada, the UK and the US. (See Table 3.) However, these medical procedures tend to be
   covered by insurance in Canada, the US, or the UK that will not cover treatments outside the
   country.




 14
                        Exhibit 1
Mount Hope Advertising Run in Eastern Caribbean Newspapers




                                                             15
PROSPECTS FOR HEALTH TOURISM EXPORTS FOR THE ENGLISH-SPEAKING CARIBBEAN



        PROMOTION: The Complex has developed various tactics and strategies to attract
patients from outside Trinidad. Experiments ranging from strategic alliances in the potential
export markets to promotional details (such as having a phone number that spells HOPE) have
been tried. The Caribbean regional market has been approached. For example, large ads have
been run in local papers in the smaller countries of the Eastern Caribbean. These ads describe
the sophisticated technologies available at Mount Hope that would not be available in these
smaller countries. (See Exhibit on previous page.) The results, however, have not been very
positive.

         Since physician referral is key to much health service delivery, Mount Hope has tried to
attract consumers from export markets with a "Come meet your doctor at Mount Hope"
approach. The idea was that the plant and equipment could be provided at much lower rates in
Trinidad; however, the approach has not yet succeeded. Problems with MD licensing and
insurance (both patient and malpractice) create barriers, as do patients willingness to travel given
available services and prices in their countries of residence.

        More than one joint venture has been started. By-pass surgery was started as a joint
venture with Bristol University in the UK and local interests. A British surgeon brought
technology and technicians but not patients. The surgeon helped to train local staff, and now
only the surgeon and perfusionist come on tours every two months for 10 days. Mount Hope gets
half of the fees which are split 50:50. The motivation for the surgeon is that he doesn't get
enough operating room time in the UK. There is no discussion of bringing UK patients over.
Presumably most of them would be covered under the NHS and would therefore not be covered
outside of the UK.

       THE COMPETITION: Although Mount Hope is the only fee for service hospital in
Trinidad, the large St. Clair Clinic in downtown Port of Spain is owned and operated by a
number of MDs that are affiliated with Mount Hope, and this clinic does significant private
work. Barbados is starting to do by-pass operations and Jamaica does them occasionally.
However, the most serious local competition comes from Latin America.

        FUTURE BUSINESS PROSPECTS: Mount Hope continues to have problems
establishing itself as a financially viable health enterprise. Although its costs are low, especially
compared with the US, price is not the consumers primary consideration, particularly since most
of the procedures offered by Mount Hope are covered by their domestic insurance policies. For
those consumers who are price sensitive, the Latin American market offers cheaper alternatives.

        One recently initiated experiment may prove valuable. A Trinidadian Cardiologist based
in Fort Lauderdale has worked with Mount Hope to set up an alliance for cheaper offshore
angiograms. Malpractice insurance was an initial barrier, as Mount Hope was unable to obtain
the insurance independently at an affordable rate. However, the hospital with which the
Cardiologist is linked in Fort Lauderdale was able to extend its malpractice insurance to cover
procedures done under its auspices at Mount Hope. By the end of April, 1995, just after the
experiment started, five procedures had been completed and five more were booked.

        Licensing MDs has also been a problem, as licensing requirements vary from jurisdiction
to jurisdiction. As part of the Commonwealth, Caribbean countries are more in alignment with
16
                                                                         2 Caribbean Market Conditions

the British system and opening up of health trade arrangements through the European Economic
Community (EEC) may open up licensing. It has been more difficult for Mount Hope to open
practice to US doctors, but arrangements were made for the alliance with Fort Lauderdale.

        One of the ideas that Mount Hope has considered is to take advantage of the Food and
Drug Administration's (FDA) bureaucratic time lag by offering procedures not yet approved in
the US but proven safe elsewhere, e.g. excimer laser and certain drugs. However, given the short
window that the time lag offers and that most new procedures require capital investment and
time and effort to set up capacity and links with markets, most initiatives of this nature are likely
to be a poor business risk.

       The Complex also experimented with the idea of an offshore laboratory. Specimens
would be send in by plane and Mount Hope would provide results via fax at a much lower price.
However, discussions about this during meetings in the US revealed that the US has excess
capacity and US facilities were offering very low prices just to cover the overhead costs.

        The Chief Executive Officer (CEO) thinks that West Indians living in the US, particularly
those who don't have insurance coverage, might combine a return visit to the region with health
services if the price was lower than the US. This could be a promising niche market for Mount
Hope or other initiatives; particularly in the smaller islands where the reputation of the health
system is reasonable, natives who are living abroad (including in other island nations) often
return to use the public system which generally costs them almost nothing.

        Mount Hope has already expanded into teaching services. The first medical school class
will graduate this year. The CEO is considering expanding into other teaching services,
including the kind of training that is currently handled in the tertiary institutions below the
University of the West Indies (UWI), such as NIHERST in Trinidad. Given the popularity of
offshore medical schools in the Caribbean (almost every island has one), this may be a good
strategy. However, it could also simply spread regional demand more thinly and increase the
cost per student year at UWI and other tertiary educational institutions.

        The CEO felt that addiction treatment made sense from a demand perspective but, citing
recent public reaction against a planned center in Tobago, pointed out the political problems.
The Complex has not experimented with cosmetic surgery, although it has two plastic surgeons;
physical rehabilitation has also not been considered, although there is a good physiotherapy
department that works with cardiac and orthopedic patients.

Cosmetic Surgery: The Bougainvillea Clinic

        The Bougainvillea Clinic is an example of a cottage industry in a niche market catering to
an affluent market segment both within and outside the region.

        PLACE: The Bougainvillea Clinic, located on Tortola in the British Virgin Islands, was
established approximately 20 years ago. The facility, built on the remains of an early 17th
century Dutch fort, has a special charm. The clinic houses offices, operating rooms, and recovery
rooms. There are one and a half operating theaters, a full theater and a minor operating theater,
and four semi-private rooms with 2 beds in each room. Most of the cosmetic surgery cases come

                                                                                               17
PROSPECTS FOR HEALTH TOURISM EXPORTS FOR THE ENGLISH-SPEAKING CARIBBEAN

in pairs, either couples who decide to have something done together or women who come with a
friend.

        SERVICES: The Clinic conducts plastic, reconstructive, and general surgery. Nearly half
of the work is general surgery, from 10-15% is reconstructive surgery (including post
mastectomy, hand reconstruction, and post burn treatment), and from 35-40% is cosmetic plastic
surgery. (See list of services and prices in annexes.) Although this is roughly the proportional
mix of services delivered, revenues derived from cosmetic surgery are about double total
revenues for all other services combined.

       There is a full time plastic and reconstructive surgeon (and owner), an American plastic
and reconstructive surgeon who spends about 3 months a year in Tortola on an intermittent basis,
and a general surgeon who lives on the island but does not work full time at the Clinic. There are
two other local surgeons on Tortola, one of whom is the Chief Medical Officer.

        The Clinic has recently added a licensed aesthetician. She operates a separate business
housed in the same physical complex below the clinic. This service was added in response to
demand from existing clientele. Patients can have manicures, pedicures, and facials on site while
they are recuperating. The Clinic also plans to provide the services of a nutritionist in the future.

        The average stay for patients is three to six days, usually five days for cosmetic surgery.
In the US, patients would often go home the same day after this type of surgery, but the Clinic
keeps them and pampers them. With only five or six patients a week, they can provide very
personalized attention. The Clinic prefers that patients take from two to three weeks off of work,
and that they remain in Tortola at nearby accommodations while they recuperate, so that they can
come for check-ups regularly in the following weeks. The waiting time for appointments is
normally two to three months, although this can be negotiable.

        MARKET: For general surgery and some of the reconstructive surgery, most of the
patients are from either the BVI or the US Virgin Islands. For much of the reconstructive surgery
and most of the cosmetic plastic surgery, most patients come from outside the BVI. Although the
cosmetic market shifts from year to year, it is roughly 10 percent European, 40 percent US, and
50 percent other Caribbean, particularly the US Virgin Islands, St. Barts, and St. Martin,all
countries with a relatively affluent socioeconomic segment. Many patients are return clients, who
come for a new type of treatment, or people who have been referred by friends who had
previously come for treatment.

        PRICE: For the general surgery and some of the reconstructive surgery, most patients are
covered by insurance and prefer the Clinic to the local hospital, although the Clinic also does
some charity work for uninsured people who cannot be treated at the local hospital because of the
nature of the treatment, e.g. post burn treatments. For the much of the reconstructive surgery and
almost all of the cosmetic plastic surgery, patients are self-payers.

       The Clinic Manager believes that their prices are mid-range for comparable services in
the US. Presumably the cost of travel and an extended stay in Tortola would put the full costs
above the mid-range US prices. (See Table 4.)


18
                                                                       2 Caribbean Market Conditions




                                                    PROMOTION: Until very recently, the clinic
                  Table 4
                                                    has not been actively promoting its services.
    Comparative Cosmetic Surgery Prices
                                                    Most promotion has been word-of-mouth. It
               in US dollars
                                                    was, however, mentioned in an article in
                                                    Allure magazine last year, along with other
                        US                BVI
                                                    facilities offering similar services.
 Facelift                        $4,156
         $6,635
                                                    More recently, the Clinic has taken a decision
 Chin Augmentation      $1,221            $2,145
                                                    to actively promote services. According to
 Brow Lift              $2,164            $3,255
                                                    the manager, this is partly because they are
                                                    recognizing that competition has dramatically
increased. Initial promotional efforts have been modest. A full page, half an article and half an
ad, was recently run in Caribbean Week, and a woman based in St. Barts who makes
documentaries is developing a video for the clinic. It is not yet clear how the clinic will use the
video, i.e. whom they will show it to and when.

        The Clinic’s owner has run international clinical conferences in Tortola almost from the
beginning of the Clinic's establishment. While these conferences appear to be well organized,
well polished, and well attended affairs in terms of numbers and professional caliber of the
participants, it isn't clear that they would have any direct impact on demand for services at the
Bougainvillea Clinic. However, attending MDs from the target markets may provide an informal
referral source.

        COMPETITION: Obviously services offered in North America and Europe offer
competition. The manager seemed quite certain that confidentiality was the major appeal that the
Clinic had over comparable services in the external target markets.

       Puerto Rico also offers plastic surgery, although apparently not serving the same markets,
with the possible exception of clients from the US Virgin Islands. According to several other
sources, someone is establishing a cosmetic surgery clinic in Anguilla. There are surgeons
sprinkled throughout the region who do some plastic surgery, including a number based in
Barbados.

        FUTURE BUSINESS PROSPECTS: They plan to build the practice through short term
practitioners who would rotate through. There has been no problem in obtaining work permits in
the BVI.

        The manager sees the Caribbean market as offering the greatest potential and expects
most of the growth in demand to come from affluent residents on neighboring islands. She said
the UK market for cosmetic surgery was growing faster than the US market, but is satisfied
within the UK. She did not expect the increasing UK demand to be manifested in the Caribbean.


                                                                                             19
PROSPECTS FOR HEALTH TOURISM EXPORTS FOR THE ENGLISH-SPEAKING CARIBBEAN


          Exhibit 2: Bougainvillea Clinic Brochure




20
                                                                        2 Caribbean Market Conditions

          The climate and especially the possibility of maintaining confidentiality are the major
strengths of the Bougainvillea Clinic's marketing mix. The difficulty of establishing a reputation
for high quality is the largest inhibition to market growth both for the Bougainvillea and other
similar health enterprises in the Caribbean. Strong linkages to referral networks in the target
export market and/or linkages to a local spa/resort should provide the most effective marketing
tactics.

Addiction Treatment

       There are many addiction treatment centers throughout the Caribbean. Most appear to be
under-funded and experiencing demand beyond their capacity to respond. Therefore, they do not
have reputations for quality of a standard that would attract a foreign market.

        High quality residential rehabilitation targeted to the an affluent market niche offers
potential for the Caribbean, and there may be a case study experiment in this service in the near
future. Community Psychiatric Centers (CPC), the first investor owned company to offer
psychiatric and substance abuse treatment in the US, is planning to build a facility in Antigua.
CPC now owns 35 centers in the US and Puerto Rico and the largest private hospitals in the UK.
 They operate long term critical care hospitals and stand alone dialysis units, and they are able to
meet the pricing and service needs of the market segments from low-end to high-end.

       CPC currently operates a 100 bed facility in Puerto Rico which they are expanding by 30
beds. The center offers both inpatient and outpatient treatment for patients with psychiatric and
substance abuse diagnoses as well as patients with dual diagnoses. According to CPC, this
hospital has done very well. All employees are now Puerto Rican.

        CPC has purchased property in Antigua and obtained government permission to build a
34 bed hospital for US$4 million. CPC toured the Caribbean looking for appropriate sites. CPC
decided on Antigua after the government offered a package of financial incentives and agreed to
grant work permits and visas to expatriate workers as needed. The center will be marketed to
upscale patients and senior managers/executives similar to the Betty Ford Center. They plan to
use their other hospitals, treatment centers and referral networks to provide the executive patient
flow. The price will range from US$12,000 to $14,000 for a 28-day stay including medical detox
in the US. The price for comparable services in the U.S. would be $25,000 to $28,000.

        CPC is also investigating the possibility of opening a center in the British Virgin Islands
to capture the British market. However, CPC or others with similar plans may find that there is
difficulty in establishing such facilities in some Caribbean countries because of public protest;
this was apparently the fate of a similar venture in Tobago recently.

Spas

        There are seven spas in the CARICOM region that are promoted by Spa Finder, but only
one, Jackie's on the Reef in Jamaica, is considered a true spa destination by the President of Spa
Finder. (Spa Finder claims to make 70 percent of all spa bookings; this information seemed be
verified by our telephone survey of spas in the US who said that Spa Finder was their major
advertising link.)

                                                                                               21
PROSPECTS FOR HEALTH TOURISM EXPORTS FOR THE ENGLISH-SPEAKING CARIBBEAN




                                                                        The government of
                        Table 5
                                                                Jamaica is interested in Spa
                Comparative Per Day Prices
                                                                development and would like to
                                                                privatize Spas that are still
                                              Low High
                                                                under government control.
                                            Season Season
                                                                These include the Milk River
                                                                Bath Hotel and Spa, and the
  Jamaica        Jackie's on the Reef         $71     $100
                                                                Bath Fountain Hotel and Spa.
  St. Lucia      Le Sport                     $210 $280
                                                                Other Spas and mineral baths in
  Grenada        La Source                    $210 $280
                                                                Jamaica include SanSouci Hotel
  Jamaica        Ciboney                      $210 $325
                                                                and Spa, a successful resort/spa,
  St. Kitts      The Golden Lemon             $290 $400
                                                                Jackie's on the Reef, and four
  Florida Turnberry Isle              $145 $230
                                                                smaller establishments:
  Florida Doral Golf Resort & Spa     $356 $618
                                                                Rockfort Mineral Baths, Black
  Florida PGA National Resort & Spa $279 $312
                                                                River Spa, Salt River Springs,
  Florida Safety Harbor Spa           $135 $244
                                                                and Venus Springs. Despite
                                                                very competitive prices and
promotion through Spa Finder, Jackie's does not attract high demand according to the President
of Spa Finder. He commented on the location being a problem, and the increasing problems with
crime in Jamaica.

         Other Caribbean locations such as La Source, Le Sport and Jalousie Plantation in
Grenada and St. Lucia are resorts that have added Spa facilities, like SanSouci, and use these
facilities to enhance their market appeal. (See Table 5 for price comparisons.)

        Spas can be most readily integrated into the tourist sector. They could also, through
horizontal integration, build in simpler or more sophisticated cosmetic treatments, from chemical
facial peels to more sophisticated medical procedures. Alternatively, certain kinds of behavioral
problems, such as eating disorders, could be added to enhance the core services offered by Spas.

Retirement: The Montserrat Retirement Community

       Montserrat has an expatriate retirement community that is apparently close to 10% of the
population, and it provides an example of a wealthy self-selected niche market. We interviewed
a sample of people to see what had attracted them to the Caribbean and Montserrat specifically,
and what they did and didn't like about living there. Although they represent a much smaller
proportion of the total population, similar communities are developing in other small islands, and
we also interviewed some of the retirees in those communities.

        PLACE: The estimated total population of Montserrat has been shrinking and is now
down to 10,500. There are apparently 40,000 Montserratians abroad who send home
remittances. It does not have an international airport, and one can only arrive via small planes,
usually connecting from Antigua. There is no good natural harbor, although cruise ships are
visiting the island. In other words, it is relatively tranquil and off the well-beaten path for

22
                                                                                   2 Caribbean Market Conditions

Caribbean travelers. In fact, this has been a major attraction for those who have retired to
Montserrat.7

         MARKET: Roughly 45 percent of the retirees come from Canada, 45 percent from the
northern US states where the climate is harsh, and 10 percent from Britain or a few other
countries. Their reasons for coming to Montserrat include: climate, physical beautiful, isolated
and not very developed, and friendly native population. Some wanted to settle in a relatively
undiscovered tropical island. They wanted relief from the changing social structure, rising crime
rates, stress, and climate of their own countries. Most of the retirees are wealthy, but relatively
self sufficient and resourceful. There very few services available to retirees on Montserrat. Since
the labor force is not well trained in Montserrat, retirees often do things themselves, from laying
floor tiles to repairing external lighting systems. For those unable to fend for themselves, the aura
of being on an undiscovered tropical island could wear thin when one was unable to find
tomatoes or even eggs in the stores. Since Hurricane Hugo, some conditions have improved:
electrical black outs are rare, and the telephones work very well. The availability of water, as
compared to neighboring Antigua, was an important factor for many who chose Montserrat, and
the existence of a golf course was apparently very important to many.

        The residency of retirees on the island has created unskilled and semi-skilled service jobs,
such as for maids, gardeners, and construction workers. This is important in a small country
where nearly 70 percent of those employed are employed by the government. Personal
consumption and charitable donations also contribute to the economy. In addition, a small
number of people have come to retire and then-either because they are bored or because they
need additional financial resources-have set up small businesses. Although this group is less
typical, they have a higher profile because of their involvement in the business sector. The Cable
TV station, for example, is owned by an expatriate.It is unclear how much of the business sector
is owned by foreigners

       PROMOTION: Initially, development of what is now a retirement community was
encouraged by a foreign developer who bought a large tract of land in the 1950s. This was
wasteland that had been exhausted from years of cultivating cotton. He parceled up various areas
and advertised in publications such as Forbes and The Wall Street Journal. These lots and the
homes that were subsequently built on them were initially second homes, built with a possible
view to eventual retirement. Clearly, this is a trend now in an initial stage in other islands.

        Although land was cheap, it has become relatively expensive over the past 15 years.
(Increased land prices may be a concern for native residents with this kind of development.)
Most real estate marketing is currently managed by resident foreigners. At least one of these
local agents charges a 10 percent real estate fee, and the government apparently has no rules on
fees.

        The retirement community in Montserrat has also made some attempts to promote itself
to local citizens. Members of the retirement community can apparently be fairly generous both


8
 The recent volcanic activity and the severe hurricane season have forced many in the retirement community to leave
the island, at least temporarily.

                                                                                                            23
PROSPECTS FOR HEALTH TOURISM EXPORTS FOR THE ENGLISH-SPEAKING CARIBBEAN

through financial contributions to various causes and with their volunteer services, although
much of the community socializes only with itself. "In Our Midst" is a Montserratian television
interview program which began with a focus on the retirement community and the intention of
explaining the expatriate community to the local community. It has now become a more general
interview program hosted by an American retiree. However, its original intentions were good
and may have helped to create better relations between the native population and the more
affluent immigrants that have arrived more recently.

         FUTURE BUSINESS PROSPECTS: The largest deterrent for development of
retirement communities in the Caribbean is the state of the existing health systems. Health issues
were cited as the primary reason for leaving their Caribbean retirement homes by interviewed
retirees. Retirees must rely on the health systems in their native countries, because local health
systems are inadequate. Thus, maintaining health insurance to pay for services is important. For
Americans, Medicare and Medicaid are not effective if they are not resident in the US. Canadians
lose their insurance coverage if they are out of the country for more than six months, although
some have apparently found ways to finesse this issue. A lack of medical coverage is not a
problem for those from the UK if they retire to a dependent territory, such as Montserrat. A
retiree from Ireland who came for roughly six months in the winter said she and her husband had
every possible kind of medical coverage, but she was also the woman who said, "It's a nice place
to live and a nice place to die, but a helluva place to be sick."

        Being far away from family is also a deterrent for development, although this is most true
for those who cannot travel back to visit family easily themselves, for reasons of health or
finances. Some have no close relatives in their native countries.

        The third constraint which was not mentioned readily but certainly exists, is a financial
constraint. Since in general people need more than average financial security to retire to the
Caribbean, a change in financial status or an increase in costs in the Caribbean can mean that
they return to their native country. Portugal and Spain, where the cost of living is lower than an
equivalent standard would be in the Caribbean, are very popular retirement locales for those from
the UK. The relatively higher cost of living in the Caribbean will limit the target market to those
who are more affluent.

        The uncertainty and lack of transparency concerning work permits, Alien-Landholding
Acts, and visas create serious disincentives to potential investors and buyers in the retirement
market. The issuance of work permits to foreigners is a volatile political issue in many countries
which governments often prefer to avoid by turning a blind eye to those expatriates working
without a permit. However, there is no guarantee that this unwritten policy will continue. This is
only one of many issues which creates barriers to foreign investment. According to the Chief
Medical Officer (CMO) in St. Lucia, the Government of St. Lucia has received five applications
for nursing homes during the past eight years, some of them requesting permission for homes as
large as 200-350 beds. Although he was not sure what happened to these applications when they
went to Cabinet, he said that some of the applications stated that St. Lucia's health administration
should have nothing to do with the facilities, e.g. establishing or monitoring standards, etc. This
CMO felt that retirement communities would drive up the price of real estate for local residents
and cause increased competition for scarce health resources. However, he also said that if the
retirement communities were willing to invest in the health sector, particularly the hospital, both
they and native residents could benefit. He commented on the need to make it clear to visiting
24
                                                                         2 Caribbean Market Conditions

expatriates or those who plan to become long term residents what the country could offer in
terms of care for them.

Business Environment

Policy, Regulatory, Institutional and Legislative Issues

        Reliable information on government policies and regulations pertaining to the export of
health care services is not readily available in most countries. This represents a significant barrier
to foreign investment. There is not a set of formal regulations, developed and readily available to
interested investors, on health sector development. Much of what can and does happen in terms
of private sector development is as a result of personal contacts, interpretation of existing but
outmoded laws and regulations, and the perspectives of current officials on the initiative that is
being considered. A first step for Caribbean governments must be to develop a body of
legislation and regulations which are clear, readily available, and easily interpreted.

         Governments interested in exporting health services will need to adopt regulations and
institutional licensing procedures that will ensure the quality of care. Adequate standards of
operations for institutions providing health services are demanded by potential consumers. At
present there are few regulations governing standards for medical care, quality assurance and
control procedures, clinical practice, and facilities operations. When these standards do not meet
international guidelines, they become barriers to attracting foreign demand. To alleviate this
problem, several clinics in Colombia, have adopted operating policies and procedures and quality
assurance guidelines in force in the US. PAHO has introduced a voluntary program of hospital
accreditation in the region of the Americas over the last several years although it is unclear what
impact this initiative has had on the English-speaking Caribbean.

        As described in the case study on Mount Hope, licensing of professionals can also create
barriers. Professional practices (medical, dental, nursing) are regulated by Boards and Councils.
The process of professional registration varies from one country to the next within the region.
Although there are on-going efforts, unification of such requirements may be difficult to achieve
because of the ability of more developed countries to establish and enforce higher standards.

        Policies regarding the licensing and approval of new technologies, treatments, and drugs
will need to be developed preferably on a regional basis to ensure that patients receive quality
care. Medical Malpractice is yet another issue demonstrated by the case study on Mount Hope.
Medical Malpractice insurance is not readily available at affordable prices in the English-
speaking Caribbean. Plans to market services to the litigious US market will require that this
issue be addressed at the regional level by Caribbean governments.

        Taxes can be another form of deterrent for capital investments from abroad. Potential
investors will need to purchase property as is the case with retirement communities and/or import
high technology medical equipment such as an excimer laser. Many Caribbean countries have
some form of alien land holding license that will add roughly 10 percent to the cost of land and
any purchased buildings. Real estate fees can run as high as 10 percent (e.g. Montserrat) and
there is often a government sales tax that can be 10 percent at the time of sale (e.g. St. Lucia),
and tariffs are levied on medical equipment, spare parts, supplies, and motor vehicles. Jamaica
has recently removed limits on direct foreign investment, removed price controls, deregulated the
                                                                                                25
PROSPECTS FOR HEALTH TOURISM EXPORTS FOR THE ENGLISH-SPEAKING CARIBBEAN

foreign currency market, and has decreased tariffs on imports in an attempt to facilitate trade,
although clearance through customs continues to be problematic. Governments will need to
examine their policies on tariffs, alien land holding, and customs procedures to determine how
they can best facilitate private and foreign investment in health.

        Labor laws can be problematic for expatriates. The difficulty of obtaining work permits
and the uncertainty of renewal makes many foreigners leery of investments. The type and
number of foreign personnel needed will depend upon the services offered, the local supply of
skilled workers, and the individual investors. Potential foreign developers will be willing to
invest only if they have some control over the investment either personally or through the
selection of key managers and personnel. Regulations on emigration and visa requirements will
also need to be examined particularly with regard to retirement communities.

Other Key Issues Relevant to Health Tourism

        In addition to the formal constraints of laws and regulatory issues, there are a number of
other constraints which can be far more vague and ambiguous and potentially more difficult. The
legal and regulatory constraints are subject to both interpretation and obscure exceptions, and in
small countries the appropriate personal contacts can allow business people to by-pass what
would otherwise seem to be an insurmountable hurdle or hurdles. This statement is not meant to
imply corruption within the local system, although this can be the case. It is just as likely that the
laws and regulations are arcane and complex, and only some local experts know how to
maneuver around them. Others, foreign investors included, can be stopped by apparent hurdles.
Whether the laws and regulations are clear or not, the local bureaucracy can move very slowly
and uncertainly. Whether someone is applying for a permit to work or to build a nursing home,
the time elapsed between application and approval can literally take years and the intervening
period is one of uncertainty and (usually) waning interest for an investor.

        There are other cultural barriers. Xenophobia, reversal of stereotypical racial
discrimination or resentment toward affluent foreigners, and a distaste for service jobs where the
customer expects to be pampered and waited on are all potential deterrents to the development of
some of the services described here. Some can be implicitly supported by government policies.
For example, in Montserrat, the number of years of residency required to become a citizen has
risen from three to five, and more recently to 10. Social divisions between foreigners and
nationals are most apt to be caused by a lack of common interests and understanding on both
sides; stereotypes and lack of communication will only deepen divisions.

Competitive Advantages and Relative Weaknesses

Infrastructure

        ADVANTAGES: Telecommunications systems in the region continue to develop, and
they are generally available and reliable. Long distance phone calls and faxes are available
virtually everywhere. Electronic mail access is becoming increasingly common, and access to
the Internet is available on the more developed islands. However, the cost of international
communication is high.


26
                                                                        2 Caribbean Market Conditions

        With the exception of the time it takes to travel--half a day from most North American
cities on the east coast and a full day from the UK--transportation links between the region and
the target markets are good. International airports are found on all but a few of the smaller, less
developed islands. For some types of health tourism the quieter pace of life that comes with less
development is appealing.

        Electricity and water are readily available, although there are more likely to be power
outages and water shortages than would be the case in industrialized countries. Public water
supply is generally safe and dependable, especially in areas where health services would be
delivered, although there are exceptions (e.g. Guyana).

        RELATIVE WEAKNESSES: The physical facilities for bedded and ambulatory care in
the public sector are generally in poor condition, and sometimes in an extreme state of disrepair.
Equipment is also often old and in poor repair. Much equipment has been donated and the lack
of uniformity between types of equipment and diverse origins of manufacture make operation
and maintenance difficult and spare or replacement parts sometimes impossible to obtain. The
availability of high technology equipment is extremely limited, although there are examples of
very new modern equipment with no staff trained to operate it.

        The physical facilities for most private sector ambulatory care are generally in better
condition but often very rudimentary because independent physicians are unwilling to invest in
plant and equipment. In addition to the exception of the Mount Hope Complex, some of the
larger or more developed islands do have more sophisticated plant and equipment for small
group practices or laboratories. Almost all equipment must be imported and therefore can
represent a major investment of foreign exchange.

        The deficiencies in the physical infrastructure in both the public and private sectors
creates substantial barriers to the export of health services. Potential exports are limited by the
lack of sophisticated high technology back-up treatment. The target market is also limited to
healthy individuals such as cosmetic surgery patients and the young retirees. Potential services
such as rehabilitation would be inadvisable for many patients because they would require
medical services that are not readily available.

Human Resources

       The human resources within the health sector are well developed at the upper levels, e.g.
physicians and nurses, although there are distribution problems and shortages (sometimes severe)
among classes of allied health workers and specialists. As a group, health workers themselves
have been an export commodity and, given that they have generally been trained in the region, an
example of a Caribbean subsidy to the target export markets. However, this trend has largely
been within the nursing profession, most notably Jamaican nurses, and it has now abated if not
stopped because of bed closures and layoffs in many US hospitals.

        Just as the industrialized world has a growing supply of MDs that has already exceeded
demand in some countries (e.g. the Netherlands), the supply of MDs in the Caribbean has been
increasing over the past two decades. However, as much as 50 percent of these MDs may be
non-nationals who come from outside the region. While many countries still suffer shortages in
particular specialties from time to time, shortages have become less common. Shortages do
                                                                                               27
PROSPECTS FOR HEALTH TOURISM EXPORTS FOR THE ENGLISH-SPEAKING CARIBBEAN

persist in the public sector, primarily because MDs who practice in both sectorsand this
includes most MDsdevote little attention to their public sector responsibilities.8 Shortages of
specialized skills can be common in both sectors, and the types of skills needed for cosmetic
surgery or addiction treatment may well not be readily available in the region, particularly the
skills of MDs who would be considered top class in the target export markets.

        While wages can vary sharply from island to island, salaries, benefits and associated costs
for physicians would probably be approximately one-third of the costs associated with
professional peers in North America but more than those found in Latin American countries
which make it difficult for the English speaking Caribbean to compete on price alone.
Productivity for MDs and nurses should be very good, provided that they are responding to
private sector incentives.

       Educational levels are good for both MDs and nurses. Most MDs have trained at the
University of the West Indies which has a solid reputation, and both MDs and nurses have
generally been able to qualify to practice in the target markets with a minimum of effort.

        Other health professionals, such a pharmacists and allied health workers, often do not
have qualifications that would be considered a close approximation of qualifications in
industrialized countries. There has also been a decline in their numbers as a result of low salaries
and poor working conditions which both encourage emigration and discourage entry into these
professions.




9
 Most physicians are hired by the Ministries of Health (MOH) to work full time within the public sector, but because
of low salary levels, they are contractually allowed to have private practices.

28
    3
                Services With Potential for
                Export from the Caribbean
         The health care service delivery systems in the three target markets were analyzed to
ascertain both the medical and business feasibility of exporting services from the English-
speaking Caribbean. The analysis included transportation requirements; patient requirements
(e.g perception of quality); economic and non-economic factors contributing to the consumer’s
decision to travel to obtain health care (e.g. price sensitivity, time costs, privacy, confidentiality,
language, referral, loyalty to institution/provider, insurance, and safety risk); Caribbean capacity
(e.g. labor, infrastructure, access to technology and medical back-up); and culture.

       The following services were identified as having the most immediate potential for the
Caribbean.

Cosmetic and Eye Surgery

        Certain kinds of eye surgery have been included in the discussion of cosmetic surgery.
Although new surgical techniques used on eyes are not strictly speaking "cosmetic", consumer
interest in them is partially cosmetic (i.e. glasses are no longer necessary) and insurance does not
normally cover them.

Global Trends and Emerging Opportunities

       Demand for cosmetic surgery is increasing due to changes in consumer demand,
demographics, new technologies, and more promotional activity. There is also expanding
demand for less radical forms of cosmetic treatment, ranging from facial injections to chemical
peels.

        A number of technological developments make cosmetic surgery more appealing. New
materials and techniques are being used. The endoscopic brow, face and mask lifts are
operations through a four-millimeter telescope and are revolutionary in that they leave no scars
on the face itself. Liposuction or liposculpture techniques have changed radically, allowing more
precision and artistry in the process and less pain. Thousands of individual hair grafts can be
done in one session using new techniques: previously hair restoration would take up to 40
surgeries.

        As new techniques evolve various forms of advertising are more common, encouraging
the market to expand more rapidly. Articles and advertisements in magazines are common.
Although physicians recommend that patients should be referred from a doctor only, this is one
type of health service where self-referral is common, and recommendations may come from
                                                                                                      29
PROSPECTS FOR HEALTH TOURISM EXPORTS FOR THE ENGLISH-SPEAKING CARIBBEAN

friends or even the yellow pages and magazine ads. Therefore, advertising is apt to be more
effective than would be the case for conventional health services. Advertising is targeted to the
upper middle class, conscious of health and physical appearance.

Type and Range of Services

        The type of plastic surgeries for which there is demand range from the new Photo
Refractive Keratectomy (PRK) procedure for the short sighted to penis enlargements, with facial
procedures being by far the most common and roughly 90 percent of all cosmetic plastic surgery.
 Prices can range from $150 for teeth whitening to $4,000 for a "tummy tuck." Appropriate
specialists are required and some capital investment in equipment, but there is no technological
reason that the full range of services could not be provided in the Caribbean. Some of these new
techniques improve the potential for the Caribbean to export the service because avoidance of
direct sunlight would not be a concern after surgery9 if the surgery is within the hair line;
equipment is often compact and portable; given the sophistication of the equipment, training can
be very brief; and, the procedures are done on an outpatient basis. While there is potential for a
market niche in plastic surgery in the Caribbean, eye surgery seems less likely to attract a foreign
market.

Potential Customers and Size of Marke

       Cosmetic Surgery rates are increasing in the target markets. In 1994 there were over one
million procedures done in the US, and during the five years from 1988 through 1992, face lifts
increased 178 percent and eyelid surgery increased by 95 percent. While cosmetic surgery is
growing rapidly in Canada, the Canadian Society of Plastic Surgeons estimates that rates are only
half what they are in the US. Forty percent of all procedures are for 35 to 50 year olds. The
proportion of men seeking cosmetic surgery has also been increasing. In the US, roughly 20
percent of plastic surgery is now for men, and in the UK it is 35 percent (the UK statistics may be
influenced by foreign demand).

        The potential market for the new eye surgery technologiesin the process of approval
within the US and already available in Canadais very large. Up to 25 percent of the general
population has myopia or astigmatism, both of which can be treated with the new technologies
more quickly and with less pain and a more rapid recovery. The New England Eye Center
estimated that the immediate market for PRK, upon approval by the FDA, will be 1.4 million and
the US market is expected to grow as the procedure becomes more well-known. Approximately
20,000 people have undergone the treatment (40,000 procedures) in Canada since it was
approved there.

Definition of Customer Requirements

        Since cosmetic surgery is a very personal issue, there will be very high quality
expectations. In the UK there are 1,000 enquiries for every 10 consultations, ultimately resulting
in one surgery. Trust in the provider's quality is key.

10
 With conventional surgery, it is important to avoid sunlight during the period after surgery because the scars will be
more visible if exposed to sunlight before being fully healed.

30
                                               3   Services With Potential For Export From The Caribbean



        Since these are all self-pay services, most consumers will be price sensitive. Unlike most
medical procedures there is significant self-referral and shopping for price and amenities.
However, high end consumers will be primarily concerned about quality, along with other
attributes of the service, and less concerned about price. These other attributes include the
promise of privacy and confidentiality the second most important criteria for the high end of the
market and the third for the low end. Some consumers will also be interested in a period of
convalescence when they can be pampered and let the temporary disfigurement of bruises and
other evidence of the surgery heal while far from their normal professional and social milieu.

        For eye surgery, confidentiality will not be important. Quality and price will remain most
important, and it would be more difficult for an export market to attract consumers because of
the need to make two visits, one for each eye. Potential consumers will tend to be extremely
conservative when making a decision on a high technology related to their vision, and they will
be less price sensitive. Despite these obvious deterrents, some practitioners in both the US and
the Caribbean were enthusiastic about this possibility.

Main Competitors and Determinants of Competitivenes

        Competition begins at the level of professional experts in the target markets. With the
growing surplus of MDs in the developed world, MDs will naturally move to lucrative specialties
and more price competition should develop in those specialties. Outside of the target markets,
plastic surgery is already available at much lower prices in Latin America and Eastern Europe.

        For eye surgery, the main competition will again be the ophthalmology profession in the
target markets. This market will be even more competitive, as the per eye cost for PRK in
Canada is US$1,400 and the cost of transport and hotel accommodations to travel outside of the
country would make it very difficult for a foreign provider to offer prices that were sufficiently
lower to make the service more appealing to patients that have high confidence in their local
providers.

Development Strategy Alternatives for Cosmetic Surgery

        Strategic alliances both within and outside the Caribbean will be essential. A link with a
brand name establishment in target markets could both provide referrals and help to establish a
credible reputation for quality. The potential for referrals within the region, both English and
non-English-speaking, is also very good as evidenced by the experience of the Bougainvillea
Clinic. Alliances with spas in the Caribbean could also result in self-referrals from the market
segment of visitors who are particularly concerned with physical appearance. Simpler forms of
cosmetic treatment, such as facial peels, could be integrated into resort/spa facilities and
expanded over time into higher technology services as consumer confidence and demand is built.

Addiction Treatment

        This section of the report considers demand for treatments related to conventional
definitions of addiction or substance abuse. However, other kinds of behavioral problems such
as eating disorders, smoking, etc. may offer more promising service strategies for the Caribbean.

                                                                                                 31
PROSPECTS FOR HEALTH TOURISM EXPORTS FOR THE ENGLISH-SPEAKING CARIBBEAN



Global Trends and Emerging Opportunities

       There is unfortunately no shortage of patients requiring and seeking addiction treatment.
From 15 to 20 percent of the US workforce is estimated to be addicted to drugs, alcohol, or both.
Only four or five percent of these seek help, and 50 percent relapse following the program.
Addiction has been a growing problem in all of the target markets.

        Funding in the target markets has been a major problem. There is a mix of public and
private funding in all three potential export markets, with private funding consisting both of
insurance and out-of-pocket payments. The result of the funding and patient behavior in
response to the funding is an over capacity in the private sectors of the target markets, under
capacity in the public sector, and inadequate service provision given the needs of the population.

        Patients tend to delay starting treatment programs and to either terminate early or are
loathe to continue beyond one program contact. Patient follow-up and continued contact is
considered an integral part of the treatment for most approaches.

       There is an enormous market, but minimal access outside the target markets because of
funding constraints, excess capacity in the private sector in the target markets, need for follow-
up, and mode of treatment issues.

Type and Range of Services

        Treatments range from detoxification (the most sophisticated from a technological
perspective) to non-residential rehabilitation. Detoxification would not be an appropriate service
for the Caribbean because patients should not be transported initially and because of the potential
for medical complications during acute detoxification. Non-residential rehabilitation is now
considered cheaper and more effective by many experts in the field. A large part of treatment is
getting patients to admit to their illness and to discover the underlying psychiatric reasons for
substance abuse. As Dr. Beaubrun, a West Indian expert in Trinidad, said, "It's best to treat in
their own backyard, to treat the family too."

       However, residential rehabilitation of from 4 to 6 weeks is still commonly offered and
considered more effective by some because it removes the patient from the environment where
behavior was practiced and immerses him/her in the program.

Potential Customers and Size of Market

        Only general data were available on the size of the population demanding services in the
target markets. The population actually seeking care in the US would roughly range form two to
three million. In Ontario, Canada's most populous province, the caseload doubled to 60,000 from
1980 through 1990 and the number of addiction programs rose from 130 to 217.

Definition of Customer Requirements

       Privacy, anonymity and confidentiality are critical requirements. Given the nature of the
problem, particularly for drug abusers, patients want to know that what they say and what is
32
                                                3   Services With Potential For Export From The Caribbean

written is confidential and that their privacy will be protected. The quality of the service,
reputation and staff expertise, and the cost will also be important. Medical support in case of
secondary problems and links to family and friends for social support will be important to many
patients, although many have lost their families by the time they opt for treatment.

Main Competitors and Determinants of Competitiveness

        The main competitors are the addiction treatment centers in the target markets.
Particularly since there is excess capacity in the private sector of those markets, it would be
difficult to break into the referral networks without a strategic alliance. The gatekeeper aspects
of referral for addiction services may be even more powerful than for other services, since most
patients have to be convinced that they have a problem that should be acknowledged and treated.

Development Strategy Alternatives for Addiction Treatment

        There is a limited niche for the Caribbean to operate residential rehabilitation services for
addiction treatment. Lower costs, because of the lower labor costs, and confidentiality would be
the key attributes to provide and promote. The strategies followed would be similar to those used
to tap into the market for cosmetic surgery, except in the case of addiction treatment low costs
will be part of the competitive strategy and the general market for residential rehabilitation may
be shrinking rather than expanding because of apparent shifts in the mode of treatment. For this
market a strategic alliance with a referral network in the target markets will be essential.

Spas

Global Trends and Emerging Opportunities

        With the possible exception of Canada, demand for spas is growing in the target markets.
 As with cosmetic surgery, articles and advertising on spas are common in many magazines
targeted to an affluent upper middle class interested in travel, fitness, and/or finding relief from
stressful life styles in the urban "over developed" world.

Type and Range of Services

        Spas, because they are not only closely linked to main stream tourism but part of it, are
one of the most promising health tourism services for the Caribbean.

        The definition of what constitutes a spa is changing from the traditional European spa.
"Forget the stereotype of the typical spa-goer little old ladies who are so tired of counting money
they luxuriate at a spa for a couple of weeks. Today’s spas feature state of the art fitness centers,
nutritional experts, well-trained massage therapists, and aerobics classes. They appeal to a
younger, hipper crowd who've grown up enjoying the benefits of staying in shape." This shifting
definition allows the Caribbean to add a spa twist to existing resort facilities or to build more
traditional spas around existing natural resources such as hot mineral baths.




                                                                                                  33
PROSPECTS FOR HEALTH TOURISM EXPORTS FOR THE ENGLISH-SPEAKING CARIBBEAN

Potential Customers and Size of Market

        The demand for spas is growing in the US and the UK. The current demand in the US for
true destination spas is approximately 1,000,000 visits per year according to SPA-Finders.11
Demand increases to approximately 2,000,000 visits per year if an afternoon visit to a spa is
included and to five million visits if all customers who go to a resort with a health club are
included. Demand for spa visits has been growing by 5 to 10 percent per year for the last five to
six years with an average growth of eight percent according to SPA-Finders. The Canadian
market for spa visits is not well developed so demand is limited. The UK market for spas is one
again growing after being hit hard by the recession and new taxes on entertainment perks.

        There is also a large and growing market for spas offering medical wellness programs
geared toward the business executives. The Europeans routinely pay for this type of treatment.
In the US, some large companies are sending executives to spas to alleviate the effects of stress,
smoking, and obesity and Mutual of Omaha Insurance Company is once again underwriting a
program designed by Dean Ornish which, research has shown, reverses cardiac disease.12 There
is considerable potential to market spas featuring the Ornish program to the millions of
individual patients suffering from coronary artery disease or with significant risk factors for
coronary artery disease as well as employers and insurance companies in the target markets.

        Specialty spas offering treatment for sports injuries/rehabilitation, behavioral changes
(e.g. eating disorders, smoking cessation, alcohol and drug abuse), executive cardiac
fitness/stress relaxation, and wellness programs in retirement populations are other potential
service exports.

Definition of Customer Requirements

        The most important customer requirement for a Caribbean spa will be service. The vast
majority of customers go to a spa to be pampered and waited on. Spa goers typically have very
high expectations although this depends somewhat on the market, e.g. spa's specializing in
ecotourism and adventure tend to have a slightly less demanding clientele than those found at
luxury spas. The traditional market tends toward affluence so it is not typically price sensitive.
However, as the market continues to change, perceived value for money will increasingly be a
factor.

        Travel agents and executives at SPA-Finders believed that the level of service quality that
exists currently in the Caribbean would not be adequate to meet the needs of the spa market.
They felt that the customers’ desire to be pampered and waited on would not, in general, be
satisfied. The facility has to be luxurious, safe, and provide a hassle free experience.




11
  Destination spas are defined as those whose patrons choose their destination because of the spa rather than the
location.

12
  Dean Ornish is a well known expert on nutrition and fitness in relation to coronary artery disease. The results of a
new study announced September 19, 1995, show that this program reverses some types of coronary artery disease.

34
                                                3   Services With Potential For Export From The Caribbean

Main Competitors and Determinants of Competitiveness

         The main competitors for spas in the Caribbean will be located in the US, specifically
Florida, Latin America, the UK, and Europe. The traditional European spas offer low cost local
vacations to potential customers in the UK and Europe. The physical proximity of these facilities
to the target markets will make them very difficult competitors, especially for the large market
share that is interested only in a short stay.

Development Strategy Alternatives for Spas

        Spas may offer the best possibility of horizontal integration within the health tourism
sector. A spa with a solid reputation in fitness and simple cosmetic treatments such as mud baths
and facials could, for example, decide to add chemical facial peals . Over time, the spa could
move beyond these dermatological services to plastic surgery and liposculpture, gradually
building health-related technological capabilities as it gained a solid reputation in the more basic
technologies. On the other hand, a spa that focused on relaxation therapies and stress reduction
techniques might decide to move into counseling in smoking cessation, weight control, etc. and
find demand among its clientele for more sophisticated addiction treatments. For minimal
business risk, capacity could be gradually built in these more sophisticated technologies as
demand for them grows through existing clientele.

       Alternative therapies reflexology, hydro therapy, herbal treatments, etc. are promising
because they are not clearly aligned with modern health systems and tend to market themselves
separately along with hotel services. Le Sport, had given the Chief Medical Officer a book to
read before they started to operate: this involvement of a local authority may be a useful strategy
to diminish potential resistance to an unfamiliar service claiming health benefits.

Retirement Communities

         The most promising target market for retirement communities in the Caribbean is
Americans, and to a lesser extent Canadians and Europeans who are affluent, aged 45-60,
vacation in the Caribbean, and have or are currently making decisions to purchase a
vacation/retirement home. While a significant proportion of the young elderly in the UK hope to
own retirement homes in warmer climates, they often prefer to retire to southern Europe because
of its proximity to home, and more familiar culture.

Global Trends and Emerging Opportunities

        The retirement industry is only just beginning to respond to the changing market in the
U.S. As the US baby boomers reach retirement, the population will be one which has been
exposed to a lifetime of health promotion and fitness principles. Low fat and low sodium diets,
exercise, preventive screening, inoculations, and medical technology that replaces defective parts
translate into a healthier more mobile population than that seen in the current more physically
incapacitated retirement market. The industry needs to develop wellness and health promotion
programs such as spas offering services designed to meet the needs of late middle age and young
retirees. This is a new and emerging market that has considerable potential because it is not yet
well developed in the target markets.

                                                                                                  35
PROSPECTS FOR HEALTH TOURISM EXPORTS FOR THE ENGLISH-SPEAKING CARIBBEAN

Type and Range of Service

        The most popular housing options identified for the future in the US market are
congregate housing, housing developments restricted to retirees, cooperatives, and naturally
occurring retirement communities.13 The type and range of services for which there will be a
demand in the Caribbean will be more limited than those offered in the US. The frail elderly will
not have access to adequate medical back-up because of deficiencies the public and private
sectors and should therefore, not be targeted.

         Retirement communities are relatively new developments in the UK, where people have
traditionally gone from their own homes into family homes, nursing homes, or residential care
facilities. Several retirement developments are being built currently in the UK and Portugal.

         The range of services offered in potential Caribbean retirement communities should focus
on wellness programs. Services might include spas, exercise facilities, golf courses, medical
clinics, restaurants, group dining rooms, catering of meals, and social activities. The menu of
services and activities might be similar to those found in a resort.

Potential Customers and Size of Market

        The demand for retirement communities will continue to grow as the population ages.
The potential market for retirement housing is huge in all three target markets, although the
subset interested in the Caribbean will be much smaller.

        In the US, 6,000 people turn 65 every day, over two million in a year. In 1990 21 percent
of the population (i.e. 53 million people) were 55 or older. By the year 2000 that number is
projected to increase to 59 million; and by 2020 to 93 million people, or 32 percent of the
population. Similar statistics pertain to Canada, UK, and Europe. (See annexes.)

Definition of Customer Requirements

        The traditional customer requirements are changing in response to market changes. The
most important customer requirements for a Caribbean retirement community will be quiet
peaceful surroundings, security, access to health care, cultural resources, and activities. Location
is important. Waterfront, mountains, golf courses, and even marshes or sweeping panoramic
views are very appealing because they imply exclusivity and tranquillity. However, location
alone is not enough. The facility will also need an expansive array of services that allow
residents to age in place. Retirees want access to good medical care. Most persons 65+ have at
least one chronic condition and many have multiple conditions. The most frequently occurring
chronic conditions in the 65+ population are: arthritis, 48/100; hypertension, 36/100; heart
disease, 32/100; orthopedic impairments, 19/100; and diabetes, 11/100. Caribbean countries
wishing to encourage development of retirement communities will need significant investment in
the social infrastructure. Since the epidemiology of the aging population in the target markets is


13
  Congregate care housing is organized around services such as skilled nursing care, physical therapy, meals, and
supervision as needed.

36
                                                 3   Services With Potential For Export From The Caribbean

identical to that of the Caribbean, investments in social infrastructure will benefit local
populations.

Main Competitors and Determinants of Competitiveness

        For citizens in the UK, the main competition will be from retirement communities in
Spain, Portugal, France, and the Channel Islands. The attraction of Caribbean retirement
communities for residents in the UK will be minimal because of costs, access to medical care,
and distance, although returning West Indians will be an exception.

        The main competition for Americans, and to a lesser extent Canadians, will be retirement
communities in the Southeastern United States, specifically Florida, Mexico, and Costa Rica.
Developments in Latin American can target middle income retirees as well as the more affluent
due to lower costs while the US market offers a broad range of pricing options. Florida, the
traditional haven, for Canadians and Americans, is now much less popular because of crime,
unfavorable exchange rates, the elimination of medical care coverage by Canadian provincial
insurance plans, and expensive health care.

        The occupancy rates for congregate care retirement communities and congregate housing
in the US increased to 94 percent in 1993. According to the 1994 national survey on the State of
Seniors Housing, 48 percent of the respondents are developing new projects which will increase
competition with potential developments in the Caribbean.

Development Strategy Alternatives for Retirement Communities

         Of the four services discussed, retirement communities are considered the most promising
initiative for the Caribbean from an economic perspective, although those islands with growing
security problems will find entry into this market very difficult. The target market should be
younger healthy retirees aged 45-60 who are relatively affluent. Since the most likely candidates
will be visitors, especially returning visitors including West Indians who have taken up residence
abroad, promotional activities should focus on this group. Their initial entry into the market is
apt to be through the purchase of a condominium or second home. This is exactly the type of
consumer that the Prime Minister of Barbados had in mind when he discussed Barbados strategy
to attract affluent retirees during his presentation at the Conference on Prospects for Services
Exports in the Caribbean held in Jamaica in May.

         Because many young, healthy retirees from more affluent social segments will have skills
and a willingness to contribute to local society, this particular business venture may have other
beneficial spin-offs assuming that retirees are encouraged to integrate with the local society. If
they are Caucasians who have chosen to live in a country that is predominantly populated by
people of African origin, they are unlikely to have racial prejudices. If they have come because
of the climate and physical beauty of the country, they should respect and want to protect its
environment. In other words, as compared to average tourists or as compared with other business
initiatives, developing retirement communities as a new sector could have positive rather than
damaging impacts on local society and the physical environment.

        Initially, the costs of establishing retirement communities will be through investment in
real estate land and construction and investment funds will come from both local and foreign
                                                                                                   37
PROSPECTS FOR HEALTH TOURISM EXPORTS FOR THE ENGLISH-SPEAKING CARIBBEAN

construction firms and the retirees themselves. In fact, the retirees will bear most of the capital
investment costs themselves. Ancillary services, from golf courses to private clinics, can
gradually be built up over time around the residential areas where retirees have settled.

        However, based on the current evidence of retirement communities in the Caribbean, it is
clear that we are seeing only a first wave of interest, people who are willing to take risks and
experiment. In order to understand what can and should be done to encourage growth in the
market, beyond this first wave of retirees, many of who are rugged individuals compared with the
retiree market at large, it is necessary to do further research both with the existing retirees in the
Caribbean and in the target markets.

Other Services

Professional Health Training

        There is good potential for both long and short term "off shore" professional health
training in the Caribbean. Offshore medical schools have been established on many of the
smaller islands in the Eastern Caribbean. They tend to operate quite separately from the local
health services, although they do make economic and other contributions to the host countries,
and they might be prevailed upon to make greater contributions to health service delivery.
Shorter courses or conferences on health topics are also commonly offered with the majority of
the audience coming from one or all three of the target markets.

        Building demand and capacity in this service delivery area requires linkages with both the
tourism and education sectors as well as strategic alliances in the target markets. The tourism
sector is important because of the infrastructure requirements, from conference facilities to the
holiday amenities that will be key attributes in making training packages appealing to the target
market. The educational sector is important because of its capacity to deliver and give validity to
training activities. Strategic alliances in the target markets will provide promotional channels for
training packages, provide academic or professional accreditation that is transferable, create
opportunities to develop networks and referral systems, and may justify a tax deduction for
participants in their country of residence. These will be key attributes for marketing off shore
training packages.

Health Promotion Materials

        Through linkages between the health and entertainment sectors, the Caribbean may be
able to capitalize on being a region that suffers from the "diseases of affluence. "In general the
major health problems in the Caribbean are life style related. If not prevented or properly
managed, these life style health problems require the most expensive types of health care
delivery. They are best prevented or managed through health promotion or social marketing.
They are also common health problems in the target markets.

       The existence of a well developed arts and entertainment community and the rapid spread
of a mass media network that is starved for local programming, presents an untapped natural
resource for the development of a powerful and persuasive health promotion and social
marketing effort in the region. The arts community is already skilled at social commentary, and
some health related materials (e.g. Calypso and Reggae lyrics about AIDS) have developed
38
                                               3   Services With Potential For Export From The Caribbean

naturally from within the community. If such material were deliberately developed to deal with
health themes, it could be both useful for the region and marketable beyond the region. This
topic is treated in more depth in a report and companion video produced by SSDS for the
Canadian International Development Association (CIDA) in 1992.

Alternative Medicine

        The market and range of services and products that can be categorized as "alternative
medicine" has been developing rapidly during recent years. The types of services and products
range from "natural cleansing" as advertised on the Black Entertainment channel via cable TV on
Sunday mornings in the Caribbean to rejuvenation therapy using the blood cells of black sheep.
Services and products range from common sense and wholesome home remedies to the bizarre
and possibly dangerous.

        Various forms of alternative medicine have existed for centuries in the Caribbean. Others
have evolved recently largely in response to these market trends. Services and products will
continue to evolve organically, but it is difficult to suggest strategies to usefully and ethically
expand the market in a more systematic fashion, partly because the market is so diffuse and
partly because it is very difficult to monitor and evaluate the actual therapeutical value or
potential hazards of the various forms of alternative medicine.




                                                                                                 39
   4
               Potential for Health Tourism and
               Alternative Development Strategies
Can the Caribbean Compete? What will it Take?

        The Caribbean cannot compete on price alone for any of the services considered here.
Eastern Europe will offer cheaper services to the UK and European markets, and Latin America will
offer cheaper services to the North American market. While the quality of some services in Eastern
Europe and Latin America may be poor, some of these countries e.g. Mexico, Costa Rica,
Colombia, Venezuela and Brazil are gaining a reputation for low price and good quality. Addiction
treatment services would also be less expensive in these markets. Spas can be operated at lower
cost, and retirement living would be less expensive.

         The Caribbean needs to compete for the high-end, less price sensitive niche market. The
quality of the services must therefore be very high. Quality will be more critical for health tourism
than other service sectors because poor quality will affect mental and physical well-being and
appearance. The Caribbean's natural advantages climate, physical beauty will be valuable assets for
all of the services researched. However, all services will be in small niche markets and some will
function as cottage industries.

Barriers and Costs of Entry

        Some barriers to market entry were discussed briefly under the previous section on the
Caribbean business environment. These will be analyzed in more depth in the general report on
service sector exports from the Caribbean. For medical facilities e.g. cosmetic surgery or addiction
treatment centers permission will normally be required from the Ministries of Health. While there
may be no specific legal or other formal requirements that would prevent such permission from
being granted, legal and regulatory constraints are subject to both interpretation and obscure
exceptions which may create barriers or delays to development. Moreover, there may be informal
barriers (e.g. public perception of addiction treatment centers, monopolistic behavior of a few
powerful MDs with private sector investments, etc.) which prevent or delay entry to the extent that
investors lose interest in a planned undertaking.

Development Strategy Alternatives for Health Tourism

        A general list of key strategies for all of the suggested services is included in the executive
summary. This list calls for a focus on services which would not normally be covered by health
insurance and are provided primarily in the private sector. Alliance partnerships with the target
markets will be critical for more medically oriented enterprises such as cosmetic surgery and
addiction treatment in order to develop referral networks. For all suggested services, marketing
                                                                                                          41
PROSPECTS FOR HEALTH TOURISM EXPORTS FOR THE ENGLISH-SPEAKING CARIBBEAN

strategies should be targeted to a high-end niche market. Both alliance partnerships and the
marketing strategies suggest that regional collaboration will be beneficial; through regional
collaboration centers of excellence could be established for some of the more medically oriented
services that would be beneficial for both the local population and visitors or resident expatriates.
Such a strategy could in the long run provide private sector initiatives that replace or strengthen
some aspects of the public system.

Linkages to Other Sectors

       As mentioned above, most of the services discussed here are linked to mainstream tourism.
Spas are integrated into mainstream tourism and, by extension, both cosmetic services and possibly
some addiction services (i.e. eating disorders and smoking cessation) could be linked with tourism.
A developed tourism sector could both attract and benefit from the presence of retirees.

       For some retirees and visitors, there could be an interest in financial and professional
services, from investment strategies to tax planning.

        Of the other services that were mentioned briefly, off-shore training would require linkages
to the education sector and the development of health promotion and social marketing materials
would involve the entertainment sector.




42
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PROSPECTS FOR HEALTH TOURISM EXPORTS FOR THE ENGLISH-SPEAKING CARIBBEAN

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                                                                                              References



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                                                                                                 45
PROSPECTS FOR HEALTH TOURISM EXPORTS FOR THE ENGLISH-SPEAKING CARIBBEAN



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46
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                                                                                                47
PROSPECTS FOR HEALTH TOURISM EXPORTS FOR THE ENGLISH-SPEAKING CARIBBEAN

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48
             ANNEXES
Annex 1: European Demographic Trends

Country      Population 60+ (in 000s) 1991   2020

Austria            1,573             20.5    28.5
Belgium            2,060             20.8    28.9
Denmark            1,047             20.4    29.3
Finland            931               18.7    29.7
France             10,993            19.4    26.5
Germany            16,376            20.6    29.6
Greece             2,062             20.5    29.0
Ireland            539               15.5    21.9
Italy              12,008            20.8    30.1
Luxembourg         75                19.3    30.3
Netherlands        2,642             17.6    29.2
Portugal           1,917             18.5    25.6
Spain              7,493             19.0    26.0
Sweden             1,949             22.8    28.9
United Kingdom     11,897            20.7    26.6

E. U.Total         73,562      (Mean)19.7    28.00




                                                     49
PROSPECTS FOR HEALTH TOURISM EXPORTS FOR THE ENGLISH-SPEAKING CARIBBEAN



Annex 2: U.S. Population ProjectionsError! Reference source not found.


POPULATION PROJECTIONS (millions) (Bold represents Baby Boomers)

AGE             1990                  2020                2050
              M       F            M       F            M      F
00-04        9.6     9.2          11.0 10.4            12.5 11.9
05-09        9.2     8.8          10.9 10.3            12.5 11.9
10-14        8.7     8.3          10.8 10.3            12.7 12.1
15-19        9.2     8.7          10.9 10.3            12.8 12.2
20-24        9.7     9.4          10.7 10.4            12.3 12.1
25-29       10.7 10.6             10.8 10.8            11.9 12.0
30-34       10.9 11.0             10.6 10.8            11.9 12.2
35-39        9.8 10.0             10.2 10.4            11.7 12.1
40-44        8.7     8.9           9.4     9.8         11.2 11.7
45-49        6.7     7.0           9.1     9.5         10.6 11.2
50-54        5.5     5.8           9.6 10.0            10.5 11.1
55-59        5.0     5.5          10.4 10.9            10.6 11.3
60-64        4.9     5.7          10.0 10.7            10.1 10.7
65-69        4.5     5.6           8.4     9.2          9.2    9.8
70-74        3.4     4.6           6.6     7.4          7.9    8.3
75-79        2.4     3.7           4.4     5.2          6.9    7.3
80-84        1.4     2.6           2.5     3.4          5.4    6.4
85-89        0.6     1.4           1.2     2.2          5.1    3.5
90...        0.2     0.8           0.8     2.2          2.9    6.1




50
                                                                                                 Annexes



Annex 3: Plastic Surgery Procedures in the United States 1993

PROCEDURE                       ASPRSa        AAFPRSb          TOTAL    % INC 88-93      PRICE

Breasts
Breast Augmentation              32607          --          32607                       $2,754
Breast Lift                      7963           --           7963                       $3,063
Breast Reduction Men             4997           --           4997                     $2,325

Face
Cheek Implants                   1741         6840        8581                 $1,895
Chemical Peel                   19049        92460     111509                  $1,634
Chin Augmentation                4115        26700      30815                  $1,221
Chin Reduction                    --           4350       4350                 $2,077
Collagen Injection              41623        46050      87673                 $266/cc
Cosmetic Lip Surgery              --           7260       7260
Dermabrasion                    13457        26370      39827        71%       $1,551
Facelift                                40077       58530      98607     178%
$4,156
Facial Liposuction                --          46290         46290       120%
Fat Injections                   7865         12930         20795                       $ 663
Forehead Lifts                  13501         12833         26334       118%           $2,164
Midface Implant                   --           4230          4230
Scar Revision                     --          47100         47100       56%

Ears
Otoplasty                        6371         16200         22571       62%            $1,551

Eyelids
Blepharoplasty                          59461          73710       133171      90%
$2,625

Hair
Hair Transplant                  1955         13741         15696       95%            $3,081
Retin-A Treatment               23520           --          23520

Nose
Nose-Reshaping                  50175        231720        281895       133%           $2,997

Other
Buttock Lift                      291           291                                    $3,084
Liposuction                     47212         47212                                    $1,622
Thigh Lift                       1023          1023                                    $3,090
Tummy Tuck                      16810         16810                                    $3,618
Other Aesthetic                  1098          1098
ASPRSa American Society of Plastic and Reconstructive Surgeons
AAFPRSb American Academy of Facial Plastic and Reconstructive Surgery
                                                                                                  51
PROSPECTS FOR HEALTH TOURISM EXPORTS FOR THE ENGLISH-SPEAKING CARIBBEAN



Annex 4: Cosmetic Surgeries by Age Cohort

Cosmetic Surgeries by Age

AGE            % TOTAL             TOTAL
00-18              05%              44,796
19-34              26%             232,937
35-50              41%             367,323
51-64              22%             197,100
65+                06%              53,755



Annex 5: 1993 Cosmetic Surgeries by Age CohortsError! Reference source not found.

U.S. Population in 1990 by Cosmetic Surgery Age Cohorts

AGE          TOTAL      FEMALE          MALE

00-18      67,401,297   32,847,486    34,553,811
19-34      65,907,174   32,793,398    33,113,776
35-50      51,597,314   26,131,220    25,466,094
51-64      32,608,813   17,084,183    15,524,630
65+        31,195,275   18,681,207    12,514,068

TOTAL 248,709,873 127,537,494        121,172,379




52

				
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