Amazing Foreign Investment Opportunities for Health Tourism Destination Development

Many destinations we know for general tourism offer some amazing foreign investment opportunities for health tourism sector development.

As one of the more senior health tourism planning and program development consultants in the industry, I am often called upon by investors considering health tourism projects. Often they contact me directly, but sometimes they call through GLG and other consulting platforms through which I provide advisory services.  What I encounter most frequently is that they really don’t know what to ask or what to make of foreign investment opportunities for health tourism destination development. So in this article, I will share a few pointers that should be considered by any investors considering health tourism projects when reading pitch summaries and business plans for local or foreign investment opportunities for health tourism destination development.

First, consider the destination for health tourism appropriateness

Percieved Safety

Few medical travelers will feel comfortable when offered destinations that are in the midst of political upheavals and uprisings, or pose a danger to personal security, are known for gender and lifestyle issues, or present inescapable cultural extremes. Health travelers will already feel vulnerable because they may have a condition that prevents them to be situationally aware and adaptive. They may suffer impaired mobility, hearing, vision, be weak, in pain, and ambulate with difficulty. Look for destinations where urban planners have implemented CPTED principles of design and planning in the built enivironment at the destination. If the environment of the project is in an undeveloped or blighted area, look for business plans that mention CPTED principles (by name or by description) as a part of the plan for the built environment.

Sustainability

Many consumers now find green, sustainable products appealing. Therefore, whether it is for trendy or healthful reasons, projects that demonstrate sustainable practices to conserve water, offer clean air, reduce carbon footprint or feature sustainable building design and building materials will attract this market persona.  You can’t plop down a multi-million dollar sustainable hospital or clinic building in the midst of a highly polluted community and expect anyone to take your claim of sustainability more seriously than someone putting lipstick on a pig to make it pretty.

Building and Project Sites

Blighted and/or undeveloped destinations or land parcels with health tourism potential can be converted to health tourism sites under many land grants offered to developers by municipalities and governments.  They will often establish special economic zones (SEZs) that offer investors tax incentives, duty free import of building materials, furniture, fixtures and equipment (FFE). SEZs have been implemented using a variety of institutional structures across the world ranging from fully public (government operator, government developer, government regulator) to ‘fully’ private (private operator, private developer, public regulator). In many cases, public sector operators and developers act as quasi-government agencies in that they have a pseudo-corporate institutional structure and have budgetary autonomy. SEZs are often developed under a public-private partnership arrangement, in which the public sector provides some level of support (provision of off-site infrastructure, equity investment, soft loans, bond issues, etc.) to enable a private sector developer to obtain a reasonable rate of return on the project (typically 10-20% depending on risk levels).

Any health tourism project should also be the community’s mutual interest to attracting foreign investment dollars to an area that, during construction and also when in full operation, will provide skilled and unskilled labor jobs,  construction jobs, satellite spending on food, hotel, beverage, souveniers, taxes from retail sales, landing fees at the airport, and other similar expenditures related to the visitors’ health tourism experiences.  The project will also benefit the community through advanced health services, variety of health services and the introduction of missing health services that could also be of service to locals and citizens from cities far enough away to require overnight accommodation.  That being said, if the project is “off limits” and/or otherwise economically or legally off limits ( sometimes this is an issue in “Free Trade Zones”, the public may actually be angered by the project and retailiate with inhospitable treatment of foreigners, which would plummet the attractiveness of the destination overall as a seemingly “unfriendly” or “unwelcoming” place.

Attractive projects may hold the land in a multi-decade, special lease arrangement where vertical development, managed by someone knowledgeable about health tourism and acting as cluster organizer and operator. This is different from appointing someone knowledgeable about healthcare, or tourism alone. The integration of the two is more than the sum of its individual parts.

In these projects, expect to find a requirement for a Master Plan that will involve the preparation of a Socioeconomic Impact Assessment (SEIA) and an Environmental Impact Assessment (EIA) to be prepared as a part of the Master Plan and site plan.  Assume an expense of at least $350,000 USD to cover the costs of the consultants required to produce these, together with travel and subsistence costs at international business class airfares and business standard hotel accommodation to get them there.  Expect to find projected costs and budget (financial and time) allocation in the business plan to allow for official legal translations of documents,  and special subject matter expert review.  Also assume that these will take upwards of six months to produce deliverable ready for presentation to the government or land owners.  The government authorities may have resources to help with these costs if they believe that your project with further their millennium development and other economic development goals for the destination.

This raises another issue, that of corruption. In some locations, you may encounter some sticky political and other commercial challenges when you don’t own the property title, with title insurance, in a nation that could seize all your assets and declare your lease invalid one day. There may also be culturally acceptable bribes that must be paid. If this is the reality of the destination, you will need to get over any philosophical or cultural repulsion associated with this, plan for it, allocate funding for it, and move forward.  Otherwise, if you can’t, you’ll need to find another investment project.

Supportive regulations

Health tourism projects that are not supported in laws and regulations will face significant challenges. If policy is developed without regulations to enforce the policies, the policies are regarded as  “paper tigers.” In essence the project will suffer competitive challenges as rogue market entrants do whatever they want, however they want, with reckless disregard for health tourism destination brand integrity, reputation, quality, safety, and promise.  In this sense, both the destination and all its health tourism stakeholders will collectively suffer the effects of one or more rogue suppliers that disregard the established policies, standards, and essentials to integrate into a destination cluster.  If these standards and policies are not developed early on, rate the risk of this investment opportunity as one that has a high risk for failure to thrive. Ideally, a health tourism framework law should be developed. This requires the services of a specialized subject matter expert or team of experts, and the costs for this expert advise to draft these regulations in a way that covers all the touchpoints of such a project to run in the hundreds of thousands of dollars, depending on the breadth and scope of the health tourism development potential at the destination.  Pay particular attention to all of the “arms and legs of the spider”, including, but not limited to hospitals, clinics, clinical trials, diagnostic centers, travel dialysis, checkup programs, spa, hydrotherapy and thermal springs, addiction recovery, rehabilitation, senior living / second home expatriate enclaves, medical refugees that are paid by government-to-government health sourcing programs, cosmetic surgery, anti-aging and lifestyle resorts.

If there is a public health or tourism law in existence that addresses water quality, safety, sanitation, accreditation and licensure of facilities, advertising regulations, physician and nurse privileging and credentials and licensure, hotel safety and security, etc., then those laws must also be integrated into the health tourism legislation or regulatory requirements. Also consider that dispute resolution and litigation matters must be addressed for consumer complaints, alleged safety and pricing violations, fraud and misrepresentation, and forum conveniens jurisdictional issues must have a way to be settled on international transactions. Educational laws and recognized degree and certification programs may also come to the forefront as capacity to manage the health tourism project are developed.  The curriculum for such a program of study may not yet exist. A sustainable program will include capacity development at the government level and at the management and operations level.  Health informatics and medical records laws must also be taken into consideration, as well as the legality of telehealth and telemedicine for communications and medical records exchanges with patients, referring physicians, between clinics and insurers, and between facilitators and health facilities to prepare for arrival and to support discharge and continuity of care once the patient returns back home.

Planning and Strategy

Imitation may be flattering, but ineffective

So many medical and health tourism projects are imitations of something someone did elsewhere. Most of them are failures by most B-school standards. Yes, they may be up and running as a hospital or clinic with excess capacity to sell but that alone is not a medical tourism or health tourism “product”.  When investors vet an investment opportunity, they should look for a unique deliverable or combination of destination, healthcare services and local value chain raw elements that have been combined into a product for a unqiue consumer likely to buy the project.  Otherwise, it is just a concept.

Far more than heads in beds

Careful consideration should be given to product design, comparative analysis of what is available in other near markets, and also markets further away that offer significant price arbitrage, or other competitive risks. This is not limited to the healthcare component, but also to the accommodation and hospitality elements as well.  Depending on the target market, you may have a superb clinical offer, but the hotel inventory may be inappropriate for a health tourism recovery patient, a long-stay guest, or someone who requires special diet, special linens, a non-comedogenic or neutropenic environment. All those fresh flower arrangements are totally wrong for a cancer treatment patient or a stem cell patient. Carpeted floors present risks and challenges to patients with wheelchairs, walkers, canes, crutches, and the carpets harbor bateria. A clinic seeking to attract morbidly obese patients for weight loss surgery must have a hotel partner that has furniture strong enough to withstand the 300 lb or heavier patient and his or her travel companion who may be slightly less or equally as heavy.  A hotel partner offering accommodation to a breast surgery patient must have a recliner in the room so that the patient can sleep in a chair, since sleeping in a bed the first few days is unlikely. These considerations will require special insight that may have to be purchased from a knowledgable consultant that can perform an assessment, write up a mission report, and include recommendations to correct for or gap fill deficiencies, depending on the type of medical tourism services to be offered.

Logistics and Marketing Communications

The addressable market must be sized, and referral sources evaluated to determine how potential consumers will become aware of the product, understand its value, brand promise, and manage expectations.  Further analysis must be made to determine what, if any, logistics coordination will be required, from where, for how long they will remain in the area, what other local value chain partners must be included into the mix for the health tourism experience, and how these elements can be packaged up into something innovative, unique and valuable.

A marketing communications strategy must be developed that includes brand amplification as a destination, not just a single clinic or supplier. This must include idiomatic translation to target languages, website development, geolocation, idiomatic keyword selection, and more.  A relevant and targeted social media presence and marketing strategy will be required. There may be more than Facebook and Twitter. In some source markets other social media platforms take priority. In some source markets social media is censored. A workaround strategy is necessary to overcome these challenges.  This also requires the support of the local, regional and national tourism promotion boards, chambers of commerce, and national tourism offices with support from the Ministry of Tourism. For an individual commercial stakeholder to take this on without such support has proven to be an overall failure. Few media outlets other than special interest bloggers will feature an individual stakeholder offering as interesting without being able to wrap around the entire destination into a bundled package that appeals to a wide variety of viewers or readers.

Information systems

A health tourism information system capable of managing a health tourism cluster infrastructure is essentially unheard of.  While software developers have written programs for health facilities including revenue management and electronic medical records or application for mobile health and electronic telehealth platforms, they are applicable to one stakeholder or integrated health delivery system under one proprietary brand. Once the government asks you to integrate the public health suppliers, you will face another challenge. Most public health institutions outside the USA are funded by budget allocation, and not reimbursed on a line item basis for consumables, bed days, and individual services, so their revenue management system and ability to produce itemized bills for reimbursement doesn’t exist. They will lack the capacity and staffing to operate such a system. That’s not to say it is impossible, but it will have to be outsourced to perhaps the health tourism cluster where the talent can be hired to service not one, but all health tourism stakeholders, prepare bills, and submit claims to insurers, if the insurer market is ultimately identified as a potential customer (an assumption of fact not always in evidence).  A travel agency program will likely be unable to run the cluster but several aspects of the travel agency platform ( GDS, hotel and destination management reservations , etc.) will be helpful to have as well as a sophisticated customer relationship management (CRM) system, a referral source tracking system, cluser management accounting, supply chain management, and more.  To date, I am aware of only one software developer that has given this consideration to the extent required, but there is no compelling reason for that developer to build and test the product without a specific client under contract to develop the platform. Moreover,  without the specific client and a cluster upon which to test the platform, it would only be able to perform “simulations” that could vary greatly from real life application.

I hope that this article has given you some of the high-level considerations that must be risk-analyzed before jumping into a foreign investment opportunities for health tourism. If you are an investor and would like to be kept abreast of interesting projects I encounter along my travels, drop me a line. While I don’t “hunt for cash” for stakeholders or become involved in brokering loans and investments, I have been known to help with matchmaking and introductions to worthy projects. I would never share your identity or contact information without your express written consent.  Likewise, I am also always available to be engaged as an unbiased, impartial sounding board or analyst on the viability of an opportunity in health tourism, or to help you build a strategy for your project, or to approach the various government agencies with an explanation and overview of what it takes to develop a health tourism destination and national or regional health tourism product strategy.