Implications on ph from mode 2 c pachanee -6-oct2009

Implications on Public Health from Mode 2 Trade in Health Services: Empirical Evidence [A Case of Thailand] By Cha-aim Pachanee Ministry of Public Health, Thailand This paper is supported by the World Health Organizationand presented at the Workshop on the movement of patients across international borders - emerging challenges and opportunities for health care systems 24-25 February 2009, Kobe, Japan

Contents1. Introduction ............................................................................................................................................................................. 42. Framework of analysis ....................................................................................................................................................... 53. The Thai health systems and their implications from Mode 2 international trade in health services ....................................................................................................................................................................................... 7 3.1 Supply and Demand for Health Services ......................................................................................................... 7 3.1.1 Health facilities............................................................................................................................................. 7 3.1.2 Health workforce ........................................................................................................................................ 8 3.1.3 Demand and Access to healthcare services................................................................................ 10 3.1.4 Implications of Mode 2 trade in health services on access to services ........................ 15 3.2 Quality control ........................................................................................................................................................... 19 3.2.1 Quality control for medical services and facilities in Thailand ........................................ 19 3.2.2 Implications of Mode 2 trade in health services on quality of services ....................... 20 3.3 Overall implications ................................................................................................................................................ 214. Discussion and Recommendations ........................................................................................................................... 22Acknowledgement.................................................................................................................................................................... 24References .................................................................................................................................................................................... 25 2

List of TablesTable 1 Health facilities in the public sector, 2007 .................................................................................................... 7Table 2 Number and proportion of doctor loss in relation to newly graduated doctors, 1994 -2006 ................................................................................................................................................................. 10Table 3 Healthcare seeking behaviours of Thai population during 1991-2007 ..................................... 11Table 4 Projected demand for medical doctors by Thai patients .................................................................... 12Table 5 Number of foreign patients entering Thailand by country, 2001-2007 ..................................... 13Table 6 Demand for medical doctors by foreign patients ................................................................................... 14Table 7 Scenarios of international trade in health services and human resource development .... 17Table 8 Comparison of monthly salary in public and private health facilities ......................................... 19Table 9 Competitive Advantage of health facilities in Asian countries providing health care ........... services to foreign patients ................................................................................................................................ 20Table 10 Estimate of revenues from different products and services (million baht)........................... 22List of FiguresFigure 1 Model of trade in health services in Thailand, including related regulatory framework ... 6Figure 2 Geographical distribution of population : doctor, population : dentist, population : ............ pharmacist, population : nurse ratios, in 2004 ........................................................................................ 9Figure 3 Proportion of medical doctors working full-time in the private sector .................................... 18 3

1. IntroductionNowadays, we witness a large number of patients from the developed world obtaining medicalservices in world class hospitals in some developing countries and extending the visit with animpressive holiday. Comparing the costs of selected services between countries, the cost forheart bypass graft surgery in Thailand is three times less than what it would cost in the UnitedStates, or one cosmetic surgery in India is one tenth of the cost in the United States without longwait-listing (1). With this, we can clearly see one of the factors driving such an extensive ‘medicaltourism’ phenomenon - world class service at reasonably lower costs (2). In addition, goodquality services with warm hospitality and availability of alternative treatment area, the numberof foreign patients rapidly increases. Smith et al (2009) (1) estimated that there were around 4million foreign patients every year. Thailand attracted the highest number of patients in Asiawith a figure of more than 1 million each year since 2004 (1, 3, 4). The worldwide market formedical tourism is about USD20–40 billion, with predictions topping USD100 billion by 2012.Thailand, the present leading health services exporter in Asia, has the market at USD615 million(1).In Thailand, the business of private hospitals was on the rise during the period of economic boomin mid the 1990’s. The promotion of medical services to foreign patients started aggressivelyduring the economic crisis in 1997 when facilities in big private hospitals were not fully utilizedby Thai patients. These hospitals then shifted their target customers to foreigners and conductedextensive marketing campaigns. Since late the 1990’s, the growth in demand for medical servicesin Thailand among foreign patients, expansion of service specialties, and expansion of servicefacilities along with marketing campaigns rapidly increased.From the economic point of view, influx of foreign patients generates income, as indicated withthe amounts mentioned above. However, negative impacts particularly on the health system alsooccur in parallel. Although some constraint situations on the health system have been inexistence outside international trade in health services, the growth of international trade doestake part in aggravating the situation.Implications of Mode 2 international trade in health services in Thailand have been studiedsporadically and mostly focussed on a few specific issues or were included in studies onimplications of international trade liberalisation. For instances, Mongkolporn et al 2005 (5)studied the demand and supply of medical services for foreign patients, focusing on Japanesepatients, and implications on the health system and health workforce in Thailand, Pachanee and 4

Wibulpolprasert 2006 (6) projected the additional demand for medical doctors for foreignpatients in Thailand, Na Ranong et al 2008 (7) studied implication of the Thailand medical hubpolicy, Kanchanachitra et al (8) studied implications on health from free trade policy, andWibulpolprasert et al (9) studied implication of liberalisation of trade in services on the healthworkforce in Thailand.This paper presents a case of Thailand on the implications of Mode 2 international trade in healthservices on the health systems. As mentioned above, Thailand is a leading exporter of healthservices with the highest number of foreign patients in Asia, and possible implications arise.With the promotion of the medical hub policy supported by the government, export of healthservices will expand.2. Framework of analysisThe analysis was carried out by literature review and direct communication with relatedorganisations and informants. It covers implications in terms of opportunity and risk for access,price and quality of health services, and the health workforceMode 2 of trade in health services does not occur just in isolation. Instead it also stimulates, aswell as is influenced by, other modes of services particularly Mode 3 and Mode 4. Thecharacteristics of trade in health services in Thailand can be modeled as in Figure 2.The study analyses supply, demand and access for health services by Thai and non-Thai, howthese are affected in order to answer the following research questions: o What have been the implications on the access to health services? o What have been the implications on the prices of health services? o What have been the implications on health workforce? o What have been the implications on the quality of health services? 5

Figure 1 Model of trade in health services in Thailand, including related regulatory frameworkForeign patients Worker Health Prof. Foreign Investors s Mode 1 Mode 2 Mode 4 Mode 3Border Immigration Act Foreign Business Act Local Investors Labour Act Health Premise Control Acts (Work Permit) Prof. Act Transfer of Capital • Health Facilities • Drug Act Service / • Insurance Act payment Practice • Local Admin. Private health services Mode 3 (Internal) Brain drain (External) SSS/ UC/ Foreign OOP / Mode 4 providers Private CSMBS Public health insurance services Mode 1,2 Local Patients Border Border Note: OOP = Out of pocket SSS = Social Security Scheme UC = Universal Coverage CSMBS = Civil Servant Medical Benefit Scheme 6

3. The Thai health systems and their implications from Mode 2 international trade in health servicesThailand, like many other countries, has a pluralistic health system. Ministry of Public Health isthe main national health agency and owns the majority of health resources and facilities, whileprivate health facilities are operated under supervision of the Medical Registration Division,Department of Health Service Support of Ministry of Public Health. Existing public healthfacilities provide good coverage throughout the country at all levels of care – primary, secondaryand tertiary levels. Medical services costs are paid through one of the health insurance schemes1.3.1 Supply and Demand for Health Services3.1.1 Health facilitiesTable 1 provides information on a number of public health facilities in the countries in 2007.These facilities are available throughout the country with full coverage. Health centres areoperated by health workers who are trained to provide primary care services to people ofcommunities covered by that health centre.Table 1 Health facilities in the public sector, 2007 Administrative Health Facility No. Coverage Level • Medical school hospitals 5 Bangkok Metropolis • General hospitals 26 • Specialized hospitals/institutions 14 • Public health centres/branches 68 / 77 All districts Regional level and • Medical school hospitals 6 Branches • Regional hospitals 25 • Specialized hospitals 47 Provincial level • General hospitals (under MoPH) 70 100% (75 provinces) • Military hospitals under the Ministry of Defense 59 • Hospital under the Royal Thai Police 1 796 districts and • Community hospitals (Mar, 2007) 730 91.7% 81 minor districts • Branch hospital 11Important health insurance schemes in Thailand are 1) Universal coverage of health insurance [UC], 2)Civil servant medical scheme [CSMBS], and 3) Social security scheme [SSS] 7

Administrative Health Facility No. Coverage Level • Municipal health centres (Oct, 2003) 214 7,255 sub-districts • Health centres (2006) 9,762 100% • Community health posts 311 74,435 villages • Community PHC centres (2003) - Rural 66,223 89.0% - Urban 3,108Source: Thailand Health Profile 2005-2007 (10)In the private sector, the number of private hospitals expanded rapidly from around 10 percentof total beds in the entire health system in 1985 to 23 percent in 1997, largely influenced by therapid double-digit economic growth in the early 1990’s. After the 1997 economic crisis, a numberof private hospitals were closed and many of them reduced their capacity. It was during this timewhen a number of big private hospitals started aggressive marketing to attract more foreignpatients who have higher affordability for medical costs.The proportion of private hospital beds was reduced to 21 percent in 2000. In 2006, there were344 private hospitals providing a total of 35,806 beds, of which 43 percent were in Bangkok.Besides, there were 16,547 private clinics (without inpatient bed) throughout the country (10).3.1.2 Health workforceInequitable distribution and insufficient number of health workforce remains a major problem inthe Thai health systems (11, 12). In 2006, there were 21,051 medical doctors, 4,187 dentists,7,940 pharmacists, 101,143 registered nurses and 12,882 technical nurses in the country (10).Out of 21,052 doctors, or 20.5 percent (4,309 doctors) are in the private sector; however thisdoes not cover those who work part-time after hours in the private sector while registered in thepublic sector. On average, the number of doctors per hospital in the private sector is higher thanthe number in public hospitals, while bed occupation in the private hospitals is lower. There isuneven distribution of the health personnel: population ratio between geographic regions. In2005, the doctor : population ratio in Bangkok was 1 : 867, eight times better than the ratio in theNortheast (1 : 7015) (10). Figure 1 illustrates population covered by each doctor, dentist,pharmacist and nurse in 2004. 8

Figure 2 Geographical distribution of population : doctor, population : dentist, population : pharmacist, population : nurse ratios, in 2004 Source: Thailand Health Profile 2005-2007(10)Loss of medical doctors due to resignation is also an alarming problem of the public health sector(13). Part of the loss is due to shifting to the private system especially major private hospitals in 9

urban area as a result of expanding exportation of health services to foreign patients (11). In2005, a net loss of 667 doctors through resignation occurred, accounting for 56 percent newly-graduated doctors [Table 2]. This creates an insufficient number of medical doctors in someareas, particularly in the rural areas where the population are relied on medical services atpublic facilities.Table 2 Number and proportion of doctor loss in relation to newly graduated doctors, 1994 -2006 Number of doctors Year Increased Decreased (resignation) Net loss Net loss (No) (%) New Re- Total Civil State Total graduates appointed servants employees 1994 526 - 526 42 - 42 42 8.0 1995 576 - 576 260 - 260 260 45.1 1996 568 - 568 344 - 344 344 60.6 1997 579 30 609 336 - 336 306 52.8 1998 678 93 711 299 - 299 206 33.3 1999 830 57 887 204 - 204 147 17.7 2000 893 98 991 201 - 201 103 11.5 2001 883 82 952 193 83 276 194 22.0 2002 878 38 916 401 163 564 526 59.9 2003 1,013 39 1,052 287 508 795 756 74.6 2004 998 32 1,030 468 - 468 436 43.7 2005 741 37 778 663 - 663 626 84.5 2006 1,188 110 1,298 777 - 777 667 56.1Source: Thailand health profile 2005-2007 (page 273)3.1.3 Demand and Access to healthcare services3.1.3.1 Demand and access by Thai patientsAccording to health and welfare surveys conducted by the National Statistical Office since 1991to date, Thai people increasingly depend on health facility-based services. The proportion ofusing facility-based health services increased from 40.2 percent in 1970 to 78.5 percent in 2005as shown in Table 3 (14-21). The proportion of self-medication and traditional healing reducedsteadily. 10

Table 3 Healthcare seeking behaviours of Thai population during 1991-2007 Health care seeking 1991 1996 2001 2003 2004 2005 2006 2007 behaviours Not seeking health care 16.8 7.1 5.1 5.7 5.3 4.6 5.1 4.4 Traditional healing 5.3 3.4 2.4 2.8 2.0 1.5 1.5 1.4 Self-medication 37.8 37.2 25.8 22.5 20.9 20.5 25.0 25.4 Health Centre (public) 9.9 14.1 13.9 17.7 24.6 25.0 16.2 15.4 Public Hospital 12.9 11.4 34.6 32.3 30.2 31.0 30.0 26.4 Private Clinic / Hospital 17.5 26.9 17.7 22.5 22.7 22.5 26.4 25.3Sources: National Statistical Office. Reports of health and welfare survey, 1991, 1996, 2001, 2003, 2004, 2005, 2006, 2007The demand for health services and health personnel in Thailand is expanding, contributed bythe universal coverage of health insurance which has been implemented since 2001 of whichmore than 70 percent of the population are registered with the public facilities to utilise healthservices (6). Besides, the economic recovery enabled people to obtain private medical servicesand services not covered by the insurance. In 2003, two years after implementing the universalcoverage policy and a time of rapid economic recovery, outpatient visits increased to 3.62visits/capita/year (17). In addition, increases in specific health problems and diseases such aschronic diseases and diseases in elderly people also increased demand for specific types ofmedical services (5).A projection on demand of medical doctors by Thai patients shows that 1,815-2,083 additionaldoctors are required for 2009 and an increase to 1,891-2,175 doctors in 2015. 11

Table 4 Projected demand for medical doctors by Thai patients Total visits Number of additional Year Visits / capita / year Population (OP equiv.) medical doctors Required Outpatients Inpatients (million) that require MD Total In private (OP) (IP) (million) sector 1996 2.87(1) 0.066(1) - - - - (1) (1) 2001 2.84 0.076 62.0 198.65 - 208.07 - - (1) (1) 2003 3.62 0.086 63.3 247.50 -258.39 2,443 -2,795 1,002 - 1,146 (2) (2) 2005 3.87 0.092 64.5 270.18 -282.07 1,134 -1,315 465 – 539 (2) (2) 2007 4.29 0.099 65.7 302.10 - 315.15 1,596 -1,838 654 – 753 (2) (2) 2009 4.77 0.106 67.0 338.40 -352.65 1,815 - 2,083 744 – 854 (2) (2) 2011 5.16 0.113 68.2 371.17 -386.66 1,639 - 1,889 672 – 775 (2) (2) 2013 5.59 0.120 69.4 407.78 -424.55 1,830 - 2,105 750 – 863 (2) (2) 2015 6.03 0.127 70.7 445.59 -463.70 1,891 - 2,175 775 – 892 (1) Data from Health and Welfare Survey by National Statistical Office (2) Projecting rate of future increase in Outpatient (OP) and In-patient (IP) visits by using average rate in the previous three biennial periods giving equal weight to each period.Conditions for projection: 1. Population growth rate = 1 percent / year (National Statistical Office 2004) 2. 70 percent of OP and 100 percent IP require medical doctor services (Wibulpolprasert 2002) 3. One IP visit equivalent to the work load of 16-18 OP visits (Wibulpolprasert 2002) 4. One medical doctor services 18,000 - 20,000 OP equivalent visits / year (Wibulpolprasert 2002) 5. 41 percent of patients visit private hospitals/clinics3.1.3.2 Demand and access by foreign patientsTogether with high comparative advantages of good hospitality, quality of human resources, andthe lower cost with good quality of services (22), business of these private hospitals has beensuccessful. This is clearly seen by the number of more than 1 million foreign patients in Thailandsince 2004 with 20 percent increase between 2004 and 2007 (3, 4) as shown in Table 5. 12

Table 5 Number of foreign patients entering Thailand by country, 2001-2007Country / Region 2001 2002 2003 2004 2005 2007Japan 118,170 131,684 162,909 247,238 185,616 233,389USA 49,253 58,402 85,292 118,771 192,238 136,248UK 36,778 41,599 74,856 95,941 108,156 110,286Taiwan /China 26,898 27,438 46,624 57,051 57,279 24,392Germany 19,057 18,923 37,055 40,180 42,798 41,313ASEAN NA NA 36,708 93,516 74,178 68,420India 20,310 23,752 35,528 NA NA 36,645Middle East NA 20,004 34,704 71,051 98,451 126,215Bangladesh 14,547 23,803 34,051 NA NA 32,313France 16,102 17,679 25,582 32,409 36,175 37,251Australia 14,265 16,479 24,228 35,092 40,161 42,668Scandinavia NA NA 19,851 20,990 22,921 NASouth Korea 14,419 14,877 19,588 31,303 26,571 26,259Canada NA NA 12,909 18,144 18,177 22,907Eastern Europe NA NA 8,634 6,728 6,120 NAOthers 220,367 234,460 315,018 204,219 302,834 435,503Total 550,161 630,000 973,532 1,103,095 1,249,984 1,373,087Source: Department of Export Promotion, Ministry of Commerce, Thailand.Note: 1. 1,373,807 patients were reported for 2006. However, only the figure by hospitals is available, the figure by countries therefore does not appear in the table. 2. NA = Not applicableThe data were collected annually by the Bureau of Service Business Promotion, Department ofExport Promotion, Ministry of Commerce2. The Bureau sent out a letter with questionnaire [seeAnnex 1 for questionnaire] to request private hospitals to provide the number of foreign patientsdisaggregated by nationality. However, only hospitals where the Bureau anticipated receivingforeign patients would receive such questionnaire. These included hospitals in major cities andtourist detinations of Bangkok, Chiangmai, Chonburi, Phuket, Chiangrai, Songkhla, Trad,Mookdaharn, Prachuabkirikhan, Khonkhaen, Udonthani and Surat Thani. Forty-nine hospitalsprovided the data in 2006, and the same hospitals with an additional one (total of 50 hospitals)provided data in 2007. Of this, three hospitals (Siriraj, Maharaj Nakorn Chiangmai, and2The information was obtained from personal communication [two telephone conversations] with theDirector of Bureau of Service Business Promotion, Department of Export Promotion, Ministry ofCommerce. 13

Srinakarin Khonkaen) are public hospitals with more than 1,000 beds (3,000 beds for SirirajHospital).The figures in Table 4 also included foreign patients who revisited. It is estimated that onepatient might have 3-4 visits each year. Since the data covered only about 50 private hospitals, itis very likely that the actual figures might be higher if taking into account number of foreignpatients in big public hospitals as well as other private hospitals. In addition, each hospital hasdifferent patient registration systems; the figures reported by these hospitals could be either thenumber of individual or re-visited patients. However, the Bureau of Service Business Promotionhas revealed that they have asked the hospitals to report the number of individuals from 2008(collected by the Bureau in 2009) onward.Foreign patients in this context cover expatriates (60 percent), foreign visitors with medicalpurpose (30 percent), and foreign tourists who become ill while travelling (10 percent) (5).With increases in the number of foreign patients, the projection by Pachanee andWibulpolprasert (2006) (6) found that in 2009 the percentage of additional medical doctorsrequired by foreign patients will be 6-8 percent of total doctors in the health system or 17-21percent of the private system. In 2015, the requirement will increase to 9-12 percent of thehealth system or 23-34 percent of the private system. However, Na Ranong et al 2008 (7) arguedthat this estimation might be low. The figures could be five times higher.Table 6 Demand for medical doctors by foreign patients Foreign patient visits (million) Additional medical doctors required by Total visits foreign patientsYear (OPD equiv.) Outpatients Inpatients require MD Total % of those % of those (OP) (IP) (million) required in the required by the private sector whole system (1)2001 0.61 0.030 1.22 - - - (1)2002 0.82 0.041 1.64 - - - (1)2003 1.26 0.063 2.53 109 - 131 11 4 (2)2005 1.76 - 1.82 0.088 - 0.091 3.52 - 3.64 83 - 111 18 - 21 7 (2)2007 2.45 - 2.62 0.122 - 0.131 4.90 - 5.25 115 - 160 18 - 21 7–8 (3)2009 3.18 - 3.53 0.159 - 0.176 6.37 - 7.06 123 - 181 17 - 21 6–8 (3)2011 4.14 - 4.75 0.207 - 0.237 8.89 - 9.50 159 - 244 24 - 31 9 – 11 (4)2013 5.01 - 5.96 0.250 - 0.298 10.03 - 11.92 145 - 242 19 - 28 7 – 10 (4)2015 6.06 - 7.48 0.303 - 0.373 12.13 - 14.95 176 - 303 23 - 34 9 – 12(1) Figure from the survey by Ministry of Commerce plus 30 percent of the under-surveyed. 14

(2) Estimation with the assumption of increase at the rate of 18-20 percent per year(3) Estimation with the assumption of increase at the rate of 14-16 percent per year(4) Estimation with the assumption of increase at the rate of 10-12 percent per yearConditions for projection: 1. IP visit is equal to 5 percent of OP visits and 20 times of OP workload 2. Every patient requires a medical doctor 3. One medical doctor provides services to 10,000 – 12,000 OPD visits / year (Wibulpolprasert 2002)3.1.4 Implications of Mode 2 trade in health services on access to servicesImplications on access to medical services involve equity of access, price and health workforce.This section analyses opportunities and risks of access (including prices) and health workforceseparately.3.1.4.1 Implications on access and price of services • OpportunitiesMode 2 trade in health services helps increase revenue from a high number of foreign patientswith higher prices of medical services. Using the revenue to reinvest in the health system topromote its reform, particularly in the area of human resource management for health, cancreate better access to health services (23). Na Ranong et al 2008 (7) noted that increasingdemand for medical services could raise prices of services, hence an increase in revenue.However, this could as well create a barrier of access to services among Thai patients who cannotafford high prices. The same authors conducted a survey on price changes of caesarean section,appendicitis operation, hernia operation, gall bladder operation and knee joint replacementoperation four hospitals that provide medical services to foreign patients and found that theprices increased every year [the survey covered a period of 2003-2008). Some hospital chargedforeign patients higher prices and the author noted that this would be a good measure to preventincreasing prices for the case of Thai patients and encourage more access to services.Besides, with the increased demand, service providers also increase supplies of servicespecialties that can, at the same time, benefit Thai patients. • RisksThe creation of two-tier system with the better quality services reserved for foreign clients witha higher ability to pay could lead to a decrease in quality and an increase in price for the poor ifthe lower tier is not properly subsidised (8, 23, 24). 15

As mentioned above, increasing demand for medical services from foreign patients could raisethe prices of services. Consequently, only wealthy Thai patients will be able to afford medicalservices from private facilities. Coupled with the implementation of the universal coverage ofhealth care, most Thai patients will rely on public facilities. However, equity of access might bedisturbed since the number of health professionals is limited and unevenly distributedthroughout the country. The magnitude of the problem is more significant than one wouldperceive. In the private sector, resources needed for providing services to one foreign patientmay be equivalent to what is needed for 4-5 Thai patients (25). High competition among privatehospitals themselves to attract foreign patients such as establishing of specialised centresimposes these hospitals to provide high financial incentive to specialists in the public sectors towork for them. Therefore the ratio of health personnel to population may worsen (23). In thedental sector, Kanchanachitra et al (2004) (8) has estimated that, in Phuket, around 5 percent oftourists would come to use the local dental services. The annual income figure of foreignersvisiting the province stood at 1,453,426 Baht which indicates that there would be more than72,000 foreign patients alone. The maximum capacity of the dental service in Phuket was for,however, 60,840 patients.3.1.4.2 Implications of Mode 2 trade in health services on health workforce • OpportunitiesIn Thailand, the increase in demand from the influx of foreign patients would lead to moreemployment for health care personnel and higher earnings in the private sector as well as anincrease of medical expertise in the highly demanding areas of services. The increase in plasticsurgeons and ophthalmologists, for instance, implies that Thailand has the capacity to offerservices well in those areas. It could thus generate more foreign exchange earnings as well asmore job opportunities in linkage industries such as tourism with food, insurance and hotelindustries. • RisksThe increased demand from the influx of foreign patients and the attractive financial incentive tosupply those demands within the private sector could lead to an exacerbation of healthpersonnel shortages. It was estimated that, in 2005, Thailand still need 1,134 - 1,315 moredoctors to meet the country’s health needs and it would take many years to fulfil this shortage.However, this problem would be particularly severe in the public sector and rural areas due to 16

the internal brain drain phenomenon as health workers are tempted to move the private sectorwhere they can earn more. By one estimate, if there were 100,000 more patients seeking medicaltreatment in Thailand, it could lead to an internal brain drain of between 240 to 700 doctors (26).From the study of Wibulpolprasert et al (2002) (9), several scenarios were predicted dependingon the extent of health system reform and the success of trade in health services (Table 7). Thehigh growth of the health service sector (i.e. scenario 1 and 3 where the sector is highlysuccessful) and the poor level of reform (i.e. scenario 3 and 4 where the problem of shortage ofhealth personnel in the rural area and the public sector persist) would lead to the worst problemin term of the number and the maldistribution of the health workforce.Table 7 Scenarios of international trade in health services and human resource development The success of health The success of International trade in health services system reform High Low High 1 2 Low 3 4Note: Wibulpolprasert et al. (2002)The proportion of medical doctors working full-time in the private sector since 1998 is around20 percent [Figure 3]. In Thailand it is legal for health personnel in the public sector to work inprivate health facilities after hours. Medical specialists are in high demand in the private sectors.Employment of these specialists is mostly on a part-time basis as most of them are registered asfull-time staff in the public sector. In 2006, 12,736 medical doctors throughout the countryworked part-time after hours at the private sector, while 1,313 dentists and 7,708 nurses did,accounted for 60.5, 31.4 and 7.3 percent of medical doctors, dentists and nurses in the publichealth sector, respectively. 17

Figure 3 Proportion of medical doctors working full-time in the private sector 1998 1999 2000 2001 2002 2003 2004 2005 2006Source: Bureau of Policy and Strategy, Ministry of Public Health 2007The study by Kanchanachitra et al (2004) (8) has shown that there was a direct link between thegrowth of the private health service sector and the number of doctors leaving the public sector.The rate of newly graduated doctors leaving the public sector had continuously gone up during1994-1997 while the private sector enjoyed substantial growth from the period of economyprosperity. This figure went down during the economic crisis between 1997-1999 but started toclimb again and reached the rate of 59.9% in 2002 and was the highest in 2005 at 84.5% asshown in Table 2 above (10).The private sector also provides 8-11 times higher financial incentive to attract health personnelfrom the public sector [Table 8]. Although the Ministry of Public Health has increased financialincentives for medical doctors working in the public sector, the amount is still less than whatthey would get from the private sector, especially for specialists.After the launch of universal health coverage (UC), there have been more health needs for healthpersonnel in rural areas because the increase in utilisation rate of health centres and communityhospitals. As a result, those rural areas would continue to suffer the most if the problem ofinternal brain-drain is not sufficiently addressed. In 2005, the doctor : population ratio in the 18

poorest North-eastern region was 1:7,015, almost ten times of the proportion in the capital cityof Bangkok, 1:867.With the mentioned health workforce problem, the government has implemented both demandand supply side interventions including financial and non-financial incentives to increaseretention of health personnel in the public sector (6).Table 8 Comparison of monthly salary in public and private health facilities Cadre MOPH State enterprise Private Private (Non-profit) (profit) Medical doctor 8180 - 27980 15090 – 62080 100,000* 50,000 – 300,000 Dentist 8260 – 19840 17990 – 52990 80,000* 27,000 - 150,000 Pharmacist 7197 – 17083 7640 – 49910 18000 – 55000 18399 – 31229 Nurses 5255 – 19680 7640 – 21620 9000 – 20000 14281 – 27720 Medical 6680 – 19005 7640 – 35960 5300 – 25000 14281 – 29381 technician Radiologist 7880 – 17880 4880 – 35960 5000 – 20000 10417 – 29160 Admin 5200 – 15540 6810 – 46950 5500 – 25000 5326 – 20963 Others 4200 – 14040 4880 - 21620 5000 – 15000 5310 – 27000 Note: These Note: * average salary range covers salary and other benefitsSource: Pannarunothai S. et al 1999. (27)3.2 Quality control3.2.1 Quality control for medical services and facilities in ThailandFor public facilities, the government has invested a large amount of budget to establish goodfacilities nationwide since the early 1980s. They are well maintained and new investmentscontinue. For private facilities, the Medical Facility Act 1999 requires the licensed private 19

hospitals to meet certain standards on the premises and the number of health professionals.However, these are minimal standards.In 1998, the Institute of Hospital Quality Improvement and Accreditation was established as anagency to provide accreditation to hospitals that meet all the required standards. In 2007, 227hospitals received this accreditation (28). Of which, 200 were public hospitals while 27 wereprivate hospitals. Although it is not mandatory to receive accreditation but those that areaccredited will have better social acceptance.A report in the McKinsey Quarterly (29) on mapping the market for medical travel reveals that40 percent of medical travelers would see the world’s most advanced technologies and 32percent would seek better-quality care than they could find in their home countries. Comparingwith other countries, health facilities in Thailand have high competitive advantages which areone of the main factors influencing the influx of foreign patients [Table 9].Table 9 Competitive Advantage of health facilities in Asian countries providing health care services to foreign patientsCompetitive Advantage Thai Singapore India Malaysia Hong KongService & Hospitality ***** ** * * **Hi-technological Hardware ** **** ** * **HR Quality **** **** ** ** ***International Accredited Hospital ** ** - * *Pre-emptive Move ** *** * * *Synergy/Strategic Partner * ** * * *Accessibility/Market Channel ** *** * ** **Reasonable Cost **** * **** *** *Source: modified from Private Hospital Association and Business Council of Thailand, 2004 (22)3.2.2 Implications of Mode 2 trade in health services on quality of services • OpportunitiesTrade liberalisation increases competition which in turn reduces costs within the market. Healthservices trade offers countries the opportunity to enhance their health systems through trading 20

health technology in areas where countries have comparative advantages. Developing countriesmight improve their infrastructure; upgrade medical knowledge and technological capacity inorder to attract foreign patients.The influx of foreigners would lead to an increase demand for high quality services which in turnlead to a more efficient and high quality health service providers, although the improvementwould occur mainly in the private sector (8, 23, 24).From the opinion survey carried out by Searsiriwattana et al (2006) (24), the general opinion ofthe private sector, who agreed with the liberalisation, said that the opportunity to learn fromdeveloped countries, i.e. USA, was immense and the technological advance gained from suchcountry would benefit the quality of service. The liberalisation of health services through thisFTA would certainly open up any barrier which was impeding the transfer of knowledge. • RisksFrom the opinion survey on Thai-US FTA by Searsiriwattana et al (2006) (24), the professionalbodies and the public health government agencies (both central and local), who the majoritydisagreed with liberalisation, stated that they did not want the ‘commercialisation’ of healthservices as it would demean the cause and purpose of health care (which has been portrayed asnoble by the Thai community). This could lead to a drop in the ethical standard of health carepersonnel, and in turn, the quality of care. They were also concerned about the two-tier servicewhich would stress too much on giving care to the richer foreigner.The two-tier system can lead to an overall increase in price for the lower tier if resources areinappropriately allocated (8, 24, 30). At the same time, it could lead to a drop in quality for thelower tier (30).3.3 Overall implications • OpportunitiesOne of the main advantages is income generation. The increase in revenues from foreign patientscan provide financial benefits from economies of scale that would help to improve the healthservice sector as a whole (23, 31). Thailand has more than one million foreign patients each yearwhich attracts around USD615 million annually (32). The Department of Export Promotionestimated an income of USD1,028 million and USD1,170 million would be gained from foreign 21

patients in 2006 and 2007, respectively. It is estimated that 850,000 cases of dental care couldbring in THB19.6 billion in 2004 which could rise to THB39.8 billion in 2008 (8), and the revenuefrom foreign consumption of spa, Thai massage and health tourism could be as high as THB17billion in 2008 (24).Table 10 Estimate of revenues from different products and services (million baht) Types of business 2004 2005 2006 2007 2008 Total Curative 19,635 23,100 27,433 32,898 39,833 142,899 Health promotion 4,996 6,754 9,185 12,492 16,989 50,416 Health products 1,500 2,000 3,000 4,000 7,000 17,500 Total 26,131 31,854 39,618 49,390 63,822 210,815Note: adapted from Kanchanachitra et al, (2004)The most common areas of health care service requested by foreigners are acute care, physicalcheckups, dentistry, long-term care, and health promotion. These are very promising areas forforeign exchange earnings if Thailand makes the commitment to international trade in healthservices.In an FTA context, there is a potential for cooperation with other nations in order to allowexchange of knowledge and reduce trade barrier, e.g. cooperation on Hospital Accreditationbetween Thai and India (24). • RisksOther several impacts are likely to happen. For example, an influx of foreign patients could leadto the danger of importing infectious disease such as HIV/AIDS, and in a bilateral FTA context, itis possible that the other country may set certain conditions which may be detrimental to theThai health system, and the extent of patent protection to apply to diagnostic, curative andsurgical techniques which would prevent Thailand from gaining access to new knowledge thatcould benefit the Thai health system.4 Discussion and RecommendationsMode 2 trade in health services in Thailand has occurred and was initiated by the private sectoritself. It has occurred outside the multilateral and regional trade agreements. Thailand is 22

recognised as a leading exporter of medical services to foreign patients due to its high capacityand good marketing strategies.Although the increase in demand of health services among foreign patients generates income forthe country, negative implications also occur and take part in elevating existing problems in theThai health systems such as inequitable distribution of health workforce and widening of thetwo-tiered health services. However, the implications have not been systematically measuredand monitored.The review for this paper found that the main methods used for analysing the implications ofMode 2 trade in health services in Thailand are mainly by review of existing literature, modelling,surveys, focus group discussion, and direct communication with experts in trade in healthservices, communication with service providers and interview with service providers.In order to take benefit from the increasing demand of health services from foreign patients,there have been several recommendations, for example, the Thai government should find ameasure to collect a reasonable medical service tax from foreign patients who seek medicalservices in Thailand (7). Although this tax revenue could be used as compensation for the publicsector in providing medical service to Thai patients and providing quality training of healthpersonnel, collecting tax from patients might reduce their interest to seek medical services inThailand.The policy coherence and collaboration among health and non-health sectors should beestablished. The private sector should collaborate with the public sector (such as the Ministry ofPublic Health) in surveillance and monitoring implications of Mode 2 trade in health services onthe health systems and taking part in addressing and preventing negative implications.As the magnitude of impacts from Mode 2 international trade in health services is still not clearand has not been systematically measure, good systems or methods for measuring the impactsshould be developed. In addition, Thailand could learn from experience of other countries thatpromote Mode 2 trade in health services on how impacts on the health systems are prevented,measured and addressed. 23

AcknowledgementThe author would like to acknowledge and thank the World Health Organization (Department ofEthics, Trade, Human Right and Health Law) for providing support to this study. Mr. JiraboonTosanguan (International Health Policy Programme, Thailand) is thanked for his assistance withinformation gathering and part of literature review for the earlier draft, and a big thank goes toMs. Pen Suwannarat (International Health Policy Programme, Thailand) for her assistance withediting. The author thanks the Director of the Service Business Division, Department of ExportPromotion, Ministry of Commerce, for providing information on the number of foreign patientsand how the data were collected. All other sources of information are acknowledged with thanks.Finally, special thanks go to Dr. Viroj Tangcharoensathien, Director of International Health PolicyProgramme Thailand, and Dr. Suwit Wibulpolprasert from Ministry of Public Health Thailand forsupporting this work. 24

References1. Smith R, chanda R, Tangcharoensathien V. Trade in health-related services. Lancet. 2009;73(9663):593-601.2. Bookman M. Medical tourism in developing countries. New York: Palgrave MacMillan; 2007.3. Department of Export Promotion MoC. Number of foreign patients entering Thailand by country, 2001-2005. Nonthaburi: Ministry of Commerce; 2005.4. Department of Export Promotion. Number of foreign patients entering Thailand by country, 2007. data. Nonthaburi, Thailand: Ministry of Commerce; 2009.5. Mongkolporn V, Akleephan C, Kanchanachitra C, Tangcharoensathien V. Demand and supply of medical services for foreign patients: Study of impacts on the health system and human resources for health in Thailand. Research report. Bangkok: International Health Policy Programme, Ministry of Public Health; 2005.6. Pachanee C, Wibulpolprasert S. Incoherent policies on Universal Coverage of Health Insurance and Promotion of International Trade in Health Services in Thailand. Health Policy and Plan. 2006:310-8.7. Na Ranong A, Na Ranong V, Jindarak S. Thailand as the medical hub development strategies, a research report submitted to the National Economic and Social Council. Research report. Bangkok: National Institute of Development Administration; 2008 August 2008.8. Kanchanachitra C, Supakankunti S, Petrakart P, Limpananont J, Sethsirote B. Implications on health from free trade policy. National Health Assembly. Bangkok, Thailand; 2004.9. Wibulpolprasert S, Hempisut P, Pitayarangsarit S. Implications of liberalization of trade in services on the development of human resources in health. Nonthaburi, Thailand: Ministry of Public Health; 2002.10. Wibulpolprasert S. Thailand Health Profile 2005-2007. Nonthaburi, Thailand: Ministry of Public Health; 2007.11. Wibulpolprasert S, Pachanee C. Addressing the internal brain drain of medical doctors in Thailand: The story and lesson learned. Global Social Policy. 2008;8(1):13-5.12. Kanchanachitra C, Wibulpolprasert S, Thammarangsi T, editors. Gender and physician mobility in Thailand. Boston: Global Equity Initiative Harvard University; 2008.13. Wibulpolprasert S, editor. Thailand Health Profile 2005-2007. Nonthaburi, Thailand: Bureau of Policy and Strategy, Ministry of Public Health; 2008.14. National Statistical Office. Report of Health and Welfare Survey 1991. Bangkok: National Statistical Office; 1991. 25

15. National Statistical Office. Report of Health and Welfare Survey 1996. Bangkok: National Statistical Office; 1996.16. National Statistical Office. Report of Health and Welfare Survey 2001. Bangkok: National Statistical Office; 2001.17. National Statistical Office. Report of Health and Welfare Survey 2003. Bangkok: National Statistical Office; 2003.18. National Statistical Office. Report of Health and Welfare Survey 2004. Bangkok: National Statistical Office; 2004.19. National Statistical Office. Report of Health and Welfare Survey 2005. Bangkok: National Statistical Office; 2005.20. National Statistical Office. Report of Health and Welfare Survey 2006. Bangkok: National Statistical Office; 2006.21. National Statistical Office. Report of the Health and Welfare Survey 2007. Bangkok: National Statistical Office; 2007.22. Private Hospital Association and Business Council of Thailand. Competitive Advantage of private health facilities in Southeast Asia. Bangkok: Private Hospital Association and Business Council of Thailand,; 2004.23. Janjaroen W, Supakankunti S. International trade in health services in the mellennium: the case of Thailand In: Vieira C, editor. Trade in health services: Global, regional and country perspective. Washington DC: WHO PAHO; 2002.24. Searsiriwattana S, Kanacharoen I, Ratana-amorn P, Singhakaew S, Gungwarnlert R, Unnakitti S, et al. The impact of medical services from free trade agreement between Thailand and the United States of America. Bangkok: The Secretariat of the Senate; 2006.25. Wibulpolprasert S, Pachanee C, Pitayarangsarit S, Hempisut P. International service trade and its implications for human resources for health: a case study of Thailand. Human Resources for Health. 2004 29 June 2004.26. Arunanondchai J, Fink C. Trade in Health Services in the ASEAN Region, World Bank Working Paper No. 4147. 2007.27. Pannarunothai S, Tharathep C, Thamthataree J, Leesmidt V. Management of public and private hospitals: a financial and business opportunities for the autonomous hospitals. Nonthaburi, Thailand: Health Systems Research Institute; 1999.28. Institute of Hospital Quality Improvement and Accreditation. List of accredited hospitals. 2005 [cited; Available from: http://www.ha.or.th29. Ehrbeck T, Guevara C, Mango PD. Mapping the market for medical travel. The McKinsey Quarterly. 2008 May 2008.30. Janjaroen W. Preliminary study on implication of liberalisation trade in health services on Thai society and health system. Bangkok: College of Public Health, Chulalongkorn University; 1999. 26

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Appendix 1 Number of Foreign Patient Report FormName of Hospital _______________________________________________________Name of Informant _____________________________ Position________________Phone_____________________________ Fax ___________________________Please report the number of foreign patients using services in the hospital during January –December 2007 by country Country Number of foreign patients RemarkNorth America- USA- CanadaEurope- UK- Germany- France- Sweden- Other (please specify)East Europe- Russia- Other (please specify)East Asia- Japan- China- South Korea 28

Country Number of foreign patients Remark- Taiwan- Other (please specify)Oceania- Australia- New Zealand- Other (please specify)Middle East- United Arab Emirate- Oman- Kuwait- Bahrain- Qatar- Yemen- Other (please specify)South Asia- Bangladesh- India- Pakistan- Sri Lanka- Maldives- Other (please specify)ASEAN- Cambodia- Myanmar- Vietnam- Indonesia 29

Country Number of foreign patients Remark- Philippines- Other (please specify)Other country (Please specify) TotalNote: Please sum up the number of foreign patients who revisitProportion of foreign patients who reside in Thailand ________%Proportion of foreign patients who do not reside in Thailand ______________%Number of foreign patients using services in 2006 ______________Number of foreign patients using services in 2007 _____________ Change from 2006 increase _________% Decrease_________%Estimated change of foreign patients who will utilize services in 2008 Increase _________% Decrease_________%Please answer the following questions1. Factors that discourage foreign patients to utilize health services at the hospital (Please ) Exchange rate Political situation Unstable Thai economy Language skill of health personnel 30

Other (Please specify)__________________________________________________________________________________________________________________________________________________________________________________________________________________2. Which months do foreign patients visit the hospital the most? (Please rank 1- 4 in 4 = the most, 1= the least) January - March April - June July - September October - DecemberWhich factor is most likely encouraging foreign patients to use services during the monthsranked 4th above? ____________________________________________________________________________________________________________________________________________ Service Business Promotion Section 2, Bureau of Service Business Promotion, Department of Export Promotion 31

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