A presentation regarding Private Investment in Provider Facilities, by Stu Anolik, International Tax Practice Leaders with CBIZ MHM LLC. For more information, visit http://www.cbiz.com

1. Private Investment in Provider Facilities
June 6, 2012
Presented by
Stuart Anolik, Esq.
International Tax Practice Leader, CBIZ MHM, LLC

2. Circular 230 Notice
Any tax advice contained in this program is not intended to
be used and cannot be used for the purposes of avoiding
any penalties that may be imposed by the Internal Revenue
Code.
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3. Demand for Medical Services
• Primary driver of demand for medical services is from
the “baby boomer” generation. Baby boomers are
beginning to turn 65.
• According to the Institute of Medicine, by 2030, America
will need 3.5 million more health care workers for older
Americans, including 868,000 more RNs and 231,000
more licensed practical and vocational nurses.
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4. Demand for Medical Services
• In 2009, there were 288,471 hip replacements performed in
the U.S., and almost half of them were for patients under the
age of 65. Knee replacements in the same year totaled
621,029, with surgeries among the 45-64 year old group
nearly tripling since 1997.
• Many patients could opt for less invasive treatments – such as
using a cane, wearing a brace – but prefer the surgical
solution.
• Some knee and hip problems are related to obesity, but some
arise from increase in active lifestyles and ironically from
exercise that is meant to stave off weight gain.
• Roughly 1 in 8 baby boomers will be diagnosed with
Alzheimer’s.
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5. Facts About Medical Tourism
• In 2006, more than 500,000 Americans traveled abroad
to receive medical and dental work.
• Experts predict that this year medical tourism will grow to
be a $100 billion business with more than 780,000,000
patients traveling abroad to receive care from foreign
doctors, dentists, and hospitals.
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6. Puerto Rico
• Puerto Rico actively encourages development of medical
tourism facilities.
• On December 15, 2010, the Puerto Rico legislature
approved the Medical Tourism Act. Eligible medical
tourism businesses can qualify under each incentivized
activity for benefits.
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7. Comparison – India vs. US Hospital Care
Narayana Hrudayalaya Leading U.S. Hospitals
Hospital – Bangalore, (average)
India
Number of Hospital Beds 1,000 160
Heart Operations in 2010 6,272 4,128
Operation Costs (max) $5,000 $100,000
Mortality Rate After
1.4% 1.9%
Common Procedures
Earnings After Tax Profit 8% 6.9%
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8. Medical Tourism in Jordan
• Jordan is a destination for international travel for medical
services. It is also an attraction for spa and wellness
services, due to its proximity to the Dead Sea.
• Some reasons for its attractiveness are:
– No waiting periods
– English speaking staff and surgeons
– Potential cost savings on procedures, even for comparable
services offered in India, Singapore and Thailand.
– Jordan has also implemented its own national accreditation
association – Health Care Accreditation Council (HCAC)
• Some reduction in medical tourism to Jordan in 2011,
due to the “Arab Spring.”
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9. Private Equity Investment in Medical Facilities
in China
• From 2010 to 2011, the Chinese Ministry of Health
reported that the number of privately owned hospitals in
China increased by 1,144. The increase is likely due to
private investment in these facilities.
• Privately owned medical institutions make up around one
third of all medical providers in China, yet these privately
owned institutions provide only ten percent of all medical
services, implying a potential growth area for private
hospitals and clinics.
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10. Private Equity Investment in Medical Facilities
in China
• In prior years, most private investment in medical
companies in China has been in the pharmaceutical or
medical device area.
• In February 2012, Chinese Premier Wen Jiabao stated
that China will provide greater access to private
investors for investment in construction of new medical
institutions.
• Private equity managers advise that while the Chinese
government is encouraging private investment in
hospitals, the policies governing these investments must
be established by local governments. Until these
policies are developed, investors should be cautious. 10

11. Private Equity Investment in Medical Facilities
in China
• Other obstacles to investment:
– Yu Chunjian, a neurosurgeon who founded a private hospital in
China 8 years ago, said the tax burden is very heavy.
– Medical care involves high risk and investment in technology,
which is an additional burden for private hospitals.
– China has a limited supply of professional doctors. Under the
current system, doctors in the public hospitals who move to
private hospitals are not allowed to qualify for additional
professional titles. Doctors are therefore faced with choosing the
more lucrative salary offered by private hospitals or continued
eligibility for further professional certifications.
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12. Cayman Islands – Narayana Cayman University
Medical Center
• Project will be developed over 15 years, beginning in
August 2012.
• Will include a 150-bed hospital and medical school.
• Founder of the project has lobbied for legislation to
benefit operation of the facility, such as allowance for
non-Cayman trained doctors to practice medicine in the
Cayman Islands; exemption from future taxes; and a cap
on damage awards for medical malpractice.
• Founder believes that U.S. patients will travel to the
Caymans for medical procedures once U.S. physicians
begin working at the facility.
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13. Stem Cell Therapy
• Significant restriction on stem cell research and therapy in the
U.S.
• The American Medical Association estimates that in 2008
several thousand U.S. persons sought stem cell therapy
outside the U.S.
• Foreign clinics may be marketing therapies that have not
undergone clinical trials., which could put patients at risk and
jeopardize research in this area For example, China recently
discontinued all unapproved stem cell therapies and trials and
stopped accepting new applications for stem cell programs.
Beijing had been offering therapies with little or no proven
benefit.
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14. Medical Tourism Destinations for U.S. Persons
• Mexico
• Bahamas
• Jamaica
• Costa Rica
• Nicaragua
• Panama
• Colombia
• Despite favorable prices for medical services, nice
weather, and proximity to the U.S., these countries are
losing market share to countries like Jordan, Turkey, and
Croatia.
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15. Issues for the Future of Medical Tourism
• Transparency
• Certification
• Ethics
• Insurance
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16. QUESTIONS?
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17. CBIZ MHM, LLC Contact Information
Stuart Anolik
International Tax Practice Leader
 301.951.3636  sanolik@cbiz.com
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18. Thank You
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