Domestic Economy

Int’l Medical Services: Challenges and Prospects

Int’l Medical Services:  Challenges and ProspectsInt’l Medical Services:  Challenges and Prospects

A growing trend in the healthcare sector is the flow of patients from one country to another in search of quality services at lower costs. The phenomenon is commonly termed “medical tourism”, though it can be misleading as the trip is arguably taken in pursuit of medical treatment rather than leisure.

It is estimated that approximately 11 million cross-border patients worldwide spend an average of $3,500-$5,000 per visit, making up for a global market of about $38.5 billion to $55 billion. Iran is estimated to have received about 50,000 foreign patients per year over the past years.

While sanctions imposed by the West against Iran over its nuclear energy program have prevented many foreign investors from approaching the country’s healthcare sector, market analysts believe Iran has the potential and infrastructure required to turn into a regional hub for providing quality healthcare.

The Financial Tribune interviewed a foreign expert whose firm offers consultancy services to international investors in the healthcare sector, including medical and financial services (insurance) companies. The expert, who did not wish to be named, traveled to Iran for the first time at the end of 2014 with the aim of exploring the capacities of the medical sector and assessing the market potential.

 To begin with, could you elaborate on your line of work?

Established in 2002, our consultancy firm has so far carried out projects in 45 countries. We help our international clients, a majority of whom are based in the US and Europe, to target new markets. We assess the new market’s potential and help them find concrete ways to enter the market, often through acquisition of a local company.

  How do you see Iran’s healthcare and medical services compared with other countries in the region?

Iran is far more developed than other countries in the region. Before I came to Iran, I knew that there were many famous Iranian doctors all over the world but I had no idea about the high level of medical expertise inside Iran.

Comparing Iran with Turkey, where I carried out a project nearly 10 years ago, I would say Iran is slightly better in terms of medical expertise than Turkey was then. But Iran falls behind Turkey in terms of service mentality and commercial development, which is partly because of the current sanctions against Iran. I think after the sanctions are removed, Iran can follow a more aggressive commercialization strategy.

I also believe the situation is changing as a result of the nuclear negotiations between Iran and the world powers. As an advisor to international investors, a year ago I could not even mention Iran as a potentially suitable market to my clients, whereas now I’m able to make formal recommendations to a global investment firm to consider Iran as a viable option for investment. Even though the client is unlikely to consider my recommendation at the moment, they will probably reconsider if and when the sanctions are lifted.

  What do you think Iran can do to prepare for attracting foreign investment in the medical sector in the post-sanctions era?

I think it would be less likely that foreign investors show interest in dealing with state-owned enterprises or companies affiliated with the government, because of the complex bureaucratic procedure which is part and parcel of such enterprises in almost every country.

As for private Iranian companies, the main issue is transparency. Everywhere in the world, companies prepare annual reports which present a clear overview of their management, shareholders, investors, etc.

  Tell us about the challenges facing Iran’s international medical services sector?

There is a market in Iran for providing international medical services. Many patients from Iraq, Azerbaijan, Turkmenistan, Afghanistan, Oman, Kuwait, etc. wish to come to Iran for medical treatment. One problem with the market though is that it is very fragmented and run the same way as cottage industries.

The presence of many individual and small-scale intermediaries negatively affects the foreign visitors’ impression of Iran. The few big players in the market are also unfamiliar with the international standards of providing healthcare services. They need to learn from the experiences of successful countries, such as India and Turkey in Asia and Germany and France in Europe, to avoid making mistakes they initially did.

Of course, Iran’s Ministry of Health and Medical Education is taking measures to enhance supervision on the quality of services provided and more efforts are needed to minimize the number of intermediaries.  

Also, efforts should be made to increase the number of group inflows of foreign patients through negotiating with the ministries of health in the regional countries. This would call for clearly defining the benchmark prices and processes for medical services and improving the way foreign patient wards are organized in hospitals.

  What is your estimate of the size of Iran’s foreign medical services market?

Estimating the market size is extremely difficult because of a large number of individual patients traveling to Iran. But my guess is that the number of foreign patients traveling to Iran is above 50,000 per year.

Meanwhile, inflow of foreign patient groups, sponsored by their respective government’s health ministries, currently comprises only about 5% of the market in Iran. Increasing the group businesses can double the market size.

  In what ways Iran’s economy can benefit from providing healthcare services to foreigners?

Iranian hospitals have sufficient capacity and medical expertise to accommodate a larger number of patients. Some large hospitals also have special international patient departments, many of which are vacant. Increasing the inflow of foreign patients would help them make efficient use of the available resources and increase profitability. Having more foreigners seeking medical services in the country would also help improve the service mentality in general.

I also believe providing healthcare services to the citizens of other countries would give Iran an opportunity to develop overall economic and trade relations with the respective countries.

  How do you see the future prospect of Iran’s international patients care sector?

If Iran manages to create more international-level medical care facilities such as Razavi hospital in Mashhad (which in my opinion is one of the best hospitals in the Middle East) and improve hospitality services in international patient departments, it could succeed in becoming the healthcare hub of the region.

This is particularly significant considering that Iran is faced with tough competition in achieving this position and could lose the market to stronger rivals. Iraq, which is currently a major receiver of Iran’s healthcare services, will not remain so forever and will eventually become self-sufficient in healthcare services.

Aggressive commercialization and marketing strategies by some countries such as India and Thailand, have led to falling reputation of these countries among regional countries. The governments of some Persian Gulf countries are even considering whether to stop sending patients to Thailand as the country’s medical services have become too commercialized. One opportunity for Iran under these circumstances is to market its services professionally, with focus on its medical expertise.