In his Second Opinion column, Dr
Constantine Constantinides from healthcare Cybernetics gives his personal
take on the role of the various incentives that governments are using to
attract revenues from medical travel.
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
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
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
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
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 /
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
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!