Business Beyond the Reef

Travel for health reasons has a long history, going back to pilgrimages in the mists of antiquity. And the medical tourism trade is thriving as never before. It is huge in S.E. Asia with Thailand’s hospitals leading the way, big in Europe, and even tiny Hawaii is in on the business. When I worked in Vienna, it was commonplace for expats and Austrians to drive across the border to get procedures done for cheap in Hungary. My dentist even suggested it as an alternative to her high Austrian prices!

But the price may have gotten just a bit too high in Singapore. The island city has been a focus of medical travel in S.E. Asia and has excellent facilities and personnel that attract customers from throughout the region. I had a sports medicine doctor whose clientele came from many of the surrounding countries. And a cardiologist who boasted cabinet ministers from several other countries among his clients.

Dr. Susan Lim is a leading surgeon in Singapore and has been a pioneer in Asia doing liver transplants. She also seems to be a pioneer in medical billing according to a report from Bloomberg, issuing a bill that was tough for even the royal family of Brunei to swallow. Dr. Lim treated a member of the royal family for cancer in 2007 and in July 2007 sent a bill to Brunei for a cool US$20 million! The patient, unfortunately, died the following month and Brunei asked the Government of Singapore to see if the bill could be whittled down just a bit. Dr. Lim agreed and issued a new bill for a little less than US$10 million. Dr. Lim has even found a forensic accountant who says her charges are reasonable, according to the Straits Times. Only $5,247 an hour. There is a court case proceeding in Singapore about the charges, but the damage has been done and Singapore’s position as a medical tourism destination may have been hurt.

Travel for medicinal purposes, but beware the bill.

Generally speaking, billing for medical tourism goes in the other direction. The whole reason a patient goes to another country for treatment is usually either (1) to find treatments not available at home, or (2) to pay less than at home. According to Deloitte, you can get a heart bypass for $10,000 in India, $20,000 in Thailand or $23,000 in Singapore. Healthcare Beyond Boundaries quotes the same bypass for $7,000 in India. That’s compared to $56,000 in the United States! You could get a pacemaker for only $3,500 and visit the Taj Mahal in the same trip.

Still working my way through Commerce’s new report on U.S. services trade. If you were with me yesterday, you have a sense of what services America buys and the services that we successfully export. What might surprise you is that the United States has a trade surplus for services with almost any country you can think of. Our biggest surplus is with Canada, but we also sell more than we buy with Japan, Ireland, Brazil, the United Kingdom, Mexico and even the current bogeyman of trade, China.

Who do we buy and sell services with?

Who do we have a deficit with? India is not too surprising, given all those computer services we buy from them. But our biggest deficit of all? Bermuda! Who knew that Bermuda was a major trading partner? But most of the re-insurance that our insurance companies buy from overseas comes from Bermuda companies. Who knew? Other big re-insurers include Switzerland, Caribbean nations, Ireland, Germany and the United Kingdom.

China has a big appetite for U.S. services.

The Commerce report highlights China, presumably because so many people are either bashing the Chinese over the value of the yuan, or complaining about Chinese trade barriers. There are indeed barriers that apply to services, but our service exporters seem to be finding ways to deal with them. Despite the thousands of American travelers streaming to Xian, Beijing and other Chinese sights, China spends even more coming to Disneyworld, Broadway and Vegas. Educational services are huge winners for us in China, both for U.S. institutions opening up Chinese campuses and for those that attract Chinese students to the United States. Licensing, financial services and even construction services are big winners in the Chinese market. About the only services for which we have run a deficit with China are freight and port fees, computer services and R&D – and these are dwarfed by our surpluses.

It's not just call centers ...

Bermuda aside, our largest services deficit is with India. No surprises here, that deficit is due to all the computer services we buy from India. Not just computer help lines, but software engineering on a huge scale. The image software I use, purchased from a U.S. company, has an engineering staff that looks totally Indian. India is also selling us management consulting services and R&D services. That doesn’t mean that we can’t sell services in India. They spend plenty on travel to the United States and for the software licenses on the programs they need to develop new software.

Is this why he's going to India?

I’m not sure either India or President Obama will like what they hear at the executive summit in Mumbai later this week. The organizers, the U.S.-India Business Council, proposes a five part plan to improve business between India and the United States.  Obama speaks to them Saturday.  I hope he stops to listen, too, but politicians normally don’t do much of that.

The executive summit includes leaders from some 200 U.S. companies and Indian counterparts, and is part of USIBC’s advocacy programs aimed at the U.S. and Indian governments.  The USIBC website has far more detail, but let’s take a broad brush of their main themes:

Defense: India is looking to spend up to $45 billion in the coming five years on military procurements.  American exporters will get a sizable piece of the action, but Washington needs to make sure our own export restrictions don’t get in the way.  While many of us raise questions about the morality of this business, India is going to upgrade its military from somewhere.  Unless we can talk everybody out of the arms trade, we might as well get our share.  USIBC argues for better sharing of military technology between the United States and India.

Education: USIBC is pushing India to complete legislation that would promote greater cooperation between U.S. and Indian universities. Maybe they include this, but I would add that U.S. universities (and other schools) need to be able to set up campuses in India.  And we have to make sure that it is relatively painless for Indians to get visas to study in the United States.  India is already a major customer for U.S. exports of educational services.

Agriculture: American know-how on water and crop management needs to become widespread in India.  Interestingly, USIBC considers its campaign to allow more foreign retailers into India as an agricultural issue.  They say that the lack of modern retailing is hindering movement of farm products from the field to the consumer, exacerbating nutrition problems in India’s cities and keeping too many farm villages at the subsistence level.

Infrastructure: India says it needs $1.5 trillion in infrastructure investments by 2017.  USIBC says it can’t be done without easing access to India by foreign banks, insurance companies and other financial institutions and tools.  Getting such access will also require reciprocity by allowing Indian banks into the U.S. market.  This could have interesting implications for bringing Indian micro-lending practices to cities like Detroit or Cleveland.  Not a bad idea.

Free Trade Agreement: My readers know I love this one, and I won’t repeat all my pro-FTA arguments here.  Wonder how much of this President Obama will listen to?

And is it simply coincidence that the president will visit India during the International Clown Festival?  Perhaps he can take in one of the clowning workshops in Mumbai.  American politicians of both parties know a lot about this.