The Economic Analysis of Medical Tourism in Thailandopportunities, challenges and impacts

Abstract

Medical tourism experienced a rapid growth in Thailand, particularly after the 1997’s Asian financial crisis. Both, public authorities and private companies soon became aware of this segment’s potential, which explains why it received considerable attention in destination’s strategic plans, and attracted private investment. However, more destinations became Abstrainterested in attracting medical tourism, as it shifted from a minor niche, to a segment with huge capacity to generate value. Hence, there has been a remarkable increase in international competition in recent years. The development of medical tourism was followed by academic interest. However, the analyses are usually constrained due to two common problems: unclear conceptual definition and limited data availability. The first challenge of this PhD was to face this common limitation. Hence, the initial research focus was centered in clarifying the conceptual definition of medical tourism. After proving that available data in Thailand was not appropriate to perform a detail study, the second research task was to generate primary data that can be used throughout the analyses. Two sets of data were generated by the researcher: First, a series of in-depth interviews with the administrators of private providers in Thailand were planned and executed. Second, a questionnaire to medical tourists was designed, tested, and implemented. Once the data was generated, this dissertation proposes a holistic study of the medical tourism phenomenon in Thailand using diverse analytical methods to investigate demand, supply and competitiveness. The study is initiated by extending the comprehension of Thailand medical tourism demand. The questionnaire showed that reasonable price of treatments, and cost of living, were the main reasons to choose Thailand. The average length of stay, and expenditure were two times higher than for general tourists. Respondents felt that overall medical services in Thailand were worthwhile in terms of money and time; and the level of satisfaction and loyalty was high. A grey model was selected to forecast future demand, as it is the appropriate technique when there is a limited number of observations. A structural equation model (SEM) is applied to investigate the causal relationship between motivation, experiences, and future behavior intention of medical tourists. The results revealed that satisfaction had the highest total effect on behavior intention, while service experience was the main factor affecting overall satisfaction. The country motivation was the key factor affecting visitors’ perceived value. Whereas hospital motivation was the major factor that affected medical service experience. Finally, the study of supply and competitiveness analysis estimated that medical tourists were approximately ten percent of all foreign patients. The long experience in attending foreign patients, and appropriate medical and tourism endowments are the determinants that enhance Thailand’s competitiveness. The significant strengths of Thailand are hospital standards, tourism resources and local hospitality, and cost of treatments. However, its weaknesses are the absence of a clear image of treatments’ specialization, language limitations of medical personnel, and the lack of cooperation between related agencies. The benchmarking with major competitors in Asia showed that Thailand has an advantage in tourism endowment while other competitors have advantages in different aspects. Asian medical tourism has been presented as comprised by niche markets, where destinations position themselves differently. Hence, private providers focus more on domestic competition than on international competition. The policy recommendations to accommodate the potential future development of Thailand’s medical tourism are to increase the domestic production of medical personnel, and to coordinate the activities of the relevant public agencies in medical tourism. In addition, a comprehensive and precise database on medical tourism should be created to be able to extend the analyses presented in this research, and monitor the future evolution of this segment.