The role of government incentives for health tourism and medical travel

“Alongside the newer destinations, such venerable US institutions as the Mayo Clinic and Cleveland Clinic are renewing their efforts to attract patients from abroad. Perhaps it is just a matter of time before the US-based (inbound) medical tourism Industry applies for a piece of the “stimulus package” pie. Perhaps as a precursor to this, we should note the recent award by the U.S. Department of Commerce. The Department awarded $500,000 as part of a three-year Cooperative Agreement to the (Illinois-based) University HealthSystem Consortium. The award is part of the US National Export Initiative, announced in June 2010 which aims to double medical care “exports” by 2015.” (see below)

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Incentives and investments for health tourism

By Dr. Constantine Constantinides from healthcare Cybernetics. 

In a recent press release, the Indian Ministry of Tourism announced that medical tourism will be included under the government financed Marketing Development Assistance Scheme. The Ministry of Tourism has sanctioned Rs.12,47,966.00 as Marketing Development Assistance to ten medical tourism service providers this year. The Indian Government (through various governmental organizations) is also subsidizing or funding medical tourism “expeditions” to Africa to attract African patients to Indian hospitals, targeting countries such as Kenya, Uganda and Nigeria.

This is just one of the medical tourism-related “incentive schemes” that has appeared as medical tourism has developed across the world..

Asia (including India, Thailand, Singapore, Malaysia, Korea) is leading this trend which is by no means a new one; it is a long established practice. “Incentives and subsidies” are amongst my pet hates (which includes import tariffs) because they distort the economy and the market and run counter to the spirit of “fair competition”.

But incentives and subsidies are (and are likely to remain) a fact of life in medical tourism.

As a destination, if you are prepared to look at this issue in a purely amoralistic context, why not exploit the concept yourself? If you still find the practice distasteful, sweeten the pill by reciting the adage “if you can’t beat them join them”!

My feeling is that if every medical tourism destination body plays the incentives and subsidies game, it will cease being “unfair competition” because just as with “bottom prices – top quality”, the floor and ceiling will be reached, and then we will all be on a level playing field.

Even the USA is at it…

Alongside the newer destinations, such venerable US institutions as the Mayo Clinic and Cleveland Clinic are renewing their efforts to attract patients from abroad. Perhaps it is just a matter of time before the US-based (inbound) medical tourism Industry applies for a piece of the “stimulus package” pie. Perhaps as a precursor to this, we should note the recent award by the U.S. Department of Commerce. The Department awarded $500,000 as part of a three-year Cooperative Agreement to the (Illinois-based) University HealthSystem Consortium. The award is part of the US National Export Initiative, announced in June 2010 which aims to double medical care “exports” by 2015.

It’s interesting that the project will focus on both “counting” and attracting foreign patients to the USA. According to the project head, “Our goal is first to define and measure medical exports coming to the U.S. and quantify their impact on our healthcare economy. Subsequently we will develop strategies to stimulate growth in the number of international patients choosing U.S. healthcare providers.”

And being Greek, based in Greece with some interest in developing Greece into a Health Tourism Destination, if you read on, you can read the “Greek Example”, with regards to Incentives for Investment and Development.

Are these “incentives schemes” in fact a euphemism for “dumping”? Of course they are.

Dumping refers to “predatory pricing” (such as selling goods or services abroad at a price below cost or real market price), the idea being to drive competitors out of the market, or create barriers to entry for potential new competitors.

“Shovel ready” projects

The sweetest sounding phrase to many American ears today is “economic stimulus spending” (purportedly to help stimulate the flagging economy by providing “incentives” in the form of subsidies, or even “no strings attached grants” to companies and for “projects”.

And the projects which are most likely to be selected under the “economic stimulus spending” scheme are those known as “shovel ready”. Shovel ready projects are those which are complete and ready for immediate implementation.

Implementation of these projects – and their deliverables – have a more immediate impact on the economy than money spent on a project on which a great deal of time must elapse for architecture, zoning, legal considerations or other such factors before it can be initiated / implemented.

The EU perspective

According to EU regulations, government-funded incentive schemes (e.g., subsidies and grants) are “nominally” illegal but, ironically, the EU is itself openly and unashamedly guilty of “subsidizing” production and projects and thus of “protectionism”.

And of course, we are seeing a plethora of “Projects” (many in my opinion, worthless) being subsidized by the individual governments of EU Member countries.

For many years, newly inducted countries into the EU prided themselves on their fantastic economic growth and development (but did not overly publicize the fact that this was fueled by EU subsidies and grants). Ireland’s current woes can perhaps be tracked back to its EU stimulated boom in construction and development.

And being Greek, based in Greece with some interest in developing Greece into a health tourism destination, let me provide an insight into a Greek example, with regards to incentives for investment and development.

A Greek example

Initiatives and actions aimed at creating enabling conditions and a favorable environment for investment and development are the responsibility of the government.

To its credit, the Greek government, through a “catch all” development law, does provide incentives for investment (including in health tourism-related projects), although the “strings attached” and bureaucratic hurdles and absurdities has led many to call them disincentives.

Many potential investors are holding off investment and development until the regulatory environment becomes clearer. They need to consider laws, rules and regulations issued by at least four separate ministries, those of Health, Tourism Development, Development and Environment.

These “regulators” determine where one can develop, what to develop and even how many months a year they will be obliged to operate (the pressure on investors is to establish facilities that will operate throughout the year – the seasonality factor).

What seems to be holding back those with medical tourism ideas and plans is the fact that a draft law on medical tourism which would define the rules and spell out the “incentives” is stagnating, whilst the Ministry of Health deals with other more pressing priorities.

A specific law already exists providing incentives for investment and development in spa tourism, both the conventional and contemporary variety. But although it has been in effect for a number of years, investors and developers do not seem to be overly enthusiastic about exploiting the “incentives”. The reason? Once again, due to bureaucracy, ambiguity and absurd regulatory conditions!

Source: http://www.imtj.com/articles/2010/role-of-government-incentives-for-health-tourism-30084/

One response

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