TCE report by ruckdee march 2017

Healthcare Industry in

Thailand Overview and Corporate Strategy for Thai City Electric (TCE) March 2017

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CHAPTER HEALTHCARE SERVICE

OVERVIEW Thailand’s healthcare sector continues to grow rapidly despite the already precipitate growth over the past decade. The sector was valued at USD19 billion (THB670 billion) in 2015, a significant increase from the value of USD12.4 billion (THB439 billion) in 2010. Researches suggested that the figure is expected to reach USD28.5 billion (THB1,003 billion) in 2020. We have seen vertical and horizontal growth, with traditional players expanding their shares in the market, and new entrants introducing new range of services.

SPENDER PUBLIC SECTOR Thai government is the dominant spender in the healthcare market, approximately USD11.9 billion in 2015. There are three main public health insurance schemes in Thailand covering almost all Thai citizens. ⦁ The Civil Service Medical Benefit Scheme

The Civil Service Medical Benefit Scheme (CSMBS) is a fringe benefit for government employees and their dependents, amounting to 12.2% of the total government spending on public health insurance schemes.

The scheme is deemed to compensate for lower-than-market salaries.

The CSMBS is tax-financed and non-contributory in nature. Government employee’s parents, spouses and a maximum of three children with less than 20 years old are also covered with wide range of medical services.

⦁ The Social Health Insurance

The Social Health Insurance covers the other population that are neither CSMBS nor SHI beneficiaries, amounting to 77.8% of the population. The UCS was introduced in 2002 with the intent to increase coverage and quality of healthcare in Thailand.

The three main goals proposed was to increase the accessibility of care to the population, restructure health financing, and improve quality of care. The reform has a huge impact on the Thai healthcare system. The benefit and disadvantages of it is still in debate to date.

⦁ The Universal Coverage Scheme

The Universal Coverage Scheme protects 9-10 million private-sector employees on non-work related conditions. This scheme covers only the individual workers but not their dependents except the maternity benefit for the worker or worker’s spouse. The SHI scheme is funded by the mandatory tripartite payroll-tax, equally contributed by employers, employees and the government for non-work-related illness and injuries, maternity and cash allowances for disability, old age pension and death compensation.

Starting in 1991, the scheme had only the coverage for enterprises with more than 20 workers. Then it extended to cover entities with more than 10 employees and eventually one worker in April 2003.

PRIVATE SECTOR ⦁ Out of pocket pay

In 1996, out-of-pocket pay expenditure accounted for 39% of total expenditure on health, which stands at 4.2% of total GDP. A decade later, in 2006, out-ofpocket pay expenditure accounted for 20.8% of total expenditure on health, which increased to 4.9% of total GDP. There is a significant decrease in out-ofpocket pay expenditure on health, which in 2014 only accounts for 6.5% of total health expenditure.

⦁ Insurance

⦁ Tourism

The revenue accounts approximately for 10% of the Thai economy and is expected to grow up to 15% year-on-year. In 2015, medical tourism generated earnings of USD3 Billion in private hospitals alone.

Over the past decade, Thailand has been one of the key destinations for medical tourism in Southeast Asia with high quality at a lower price (Krungsri Research, 2016).

Thailand welcomes over two million medical tourists on yearly average.

Though, there are also countries that have seen similar significant decrease, for instance, out-of-pocket health expenditure in United Kingdom decreased from 72.8% of total health expenditure in 1995 to 57.7% in 2014. However, compared to other Asian countries, for instance, Singapore, seen less significant decrease in out-of-pocket health expenditure, which decreased from 96.9% in 1995 to 94.1% in 2014.

PROVIDER PUBLIC SECTOR Two-thirds of Thai hospitals are publicly owned in which the government provided funds through Ministry of Public Health (MoPH). They are considered the backbone of the Thai health system. The MoPH organizes a multilevel health system outside Bangkok encompassing webs of hospitals with 30, 60, 90 or 120 beds in districts, each providing for a population of about 50,000 people.

Public hospital by type: Military hospitals (Overseen by Ministry of Defense) Teaching hospitals (Overseen by Ministry of Education) Regional hospitals (Overseen by Ministry of Public Health) General hospitals (Overseen by Ministry of Public Health) Community hospitals (Overseen by Ministry of Public Health) Large (500+ beds) Medium (200-500 beds) Small (10-30 beds) Specialized hospitals Primary care centers Drug rehabilitation centers

PRIVATE SECTOR The remaining one-third of Thailand’s hospitals is in the private sector. The number of private hospitals have been rapidly rising since 1991, consistent with the economic growth. These hospitals included a specialized international department to take care of foreign patients. Investment in research and development in private hospitals will help these private sectors maintain their leading medical tourism destination. In 2015, there are 343 private hospitals that have been registered with the MoPH’s Medical Registration Division.

MEGATREND

⦁ Investment in infrastructure ⦁ Supply of Specialists ⦁ Aging Society ⦁ Growth of Tier Two cities ⦁ Medical Tourism ⦁ ASEAN Economic Community (AEC) ⦁ Digital Adoption impacting Thailand Healthcare Sector

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Investment in Infrastructure

During the past two years, the government has been pouring investment into improving soft and hard infrastructure. There are several ongoing projects which will change people’s way of living tremendously. This is for example, the government’s upgrading of high-speed internet at village level nation-wide which will result in people having more access to online services, increase in online activities and increased reliance on online services. The investment into logistic infrastructure such as railway, highway and road development. Problems still exist when it comes to rural or unpopulated areas where there are lack of basic healthcare and logistic infrastructure, leading to limited access to healthcare for some. While this might present a challenge, there is a room for private sector in providing at-home healthcare services.

Supply of Specialists

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The government’s initiative in the past decade has resulted in an increase in medicine schools and expansion of existing medicine schools. However, the quota of specialist allowed to pursue further study to become a specialist has not increased. The major reason is lack of resources. This has resulted in whirlwind increase of General Practitioner versus steady increase of specialists. Worth nothing is the decrease in sub-specialist. With lower demand in the market, and loose enforcement on the inspection of the practitioners, many of the GPs lack the incentive to pursue years of training and study.

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Aging Society

Implication to healthcare is positive. There will be an increase in demand for healthcare services, as well as wellness. This is largely because there is a possibility that the retirement age, if not officially increased, will be self-extended by the workers. Meaning that people are more cautious about their health in order to sustain their economic stability. On the government side, Ministry of Social Development and Human Security under the Department of Older Persons has issued The Aging Act B.E.2548 (2003), mandating the government to provide budget to protect, promote, and support elderly people for security and quality of life.

Growth of Tier Two cities

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Due to increase in economic activities, tourist spending, and foreign investment, Thailand has seen an improvement in decentralization. The country has become less Bangkok-centered. Tier two cities are cities which are relatively populated when compared to nearby provinces, equipped with higher income citizens and better education system. The provinces qualified as tier two cities are Chiang Mai, Khon Kaen, Surat Thani, Ubon Ratchathani, Nakhon Ratchasrima, Chonburi, and Songkhla.

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Medical Tourism

Earning from private medical tourism was estimated at USD3 billion in 2015, a 15% year-on-year increase. In the same year, the industry treated 2.81 million medical tourists, each of whom spent USD3,800-6,000 including medical care, transport, and inpatient accommodation. Top treatments are cosmetic surgery, dentistry, cardiovascular, orthopedics, cancer, reproductive, weight loss (LAP-BAND, gastric bypass), and diagnosis.

ASEAN Economic Community (AEC) Depending on each member’s policy, the AEC could enhance the mobility of medical personnel, giving advantages to English-speaking countries, intensifying the race to become the medical hub of Southeast Asia. The race is predominant among Thailand, Singapore and Malaysia. Despite Thailand’s protectionist policy against foreign medical personnel (requirement of passing Thai language test to become Thai certified medical personnel), the enforcement is still lacking, allowing foreign personnel to enter Thai market quite easily.

Digital Adoption

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The future of healthcare is shaped by various types of digital technology.

This includes for example Big Data and Artificial Intelligence (AI), Virtual Reality (VR), Augmented Reality (AR), Wearable devices, 3Dprinting, Robotics and Nanotechnology. Each technology has been incorporated into boosting new development in each area of medical practices, making it more efficient, precise, affordable, comprehensible and accommodative.

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CHAPTER HEALTHCARE SERVICE

Understanding the healthcare sector begins with understanding the provision of services as the core of the business. This chapter maps out the flow of the provision, and identifies the problems occurring throughout the process. The problems are mapped out through three lenses: medical personnel, medical facilities and provision of service.

The problems and recommendations are based on secondary research that has been adjusted with reality in the Thai healthcare industry and through interviews with key stakeholders from various backgrounds in the industry. These include doctors in the public and private sectors at both management and operational levels, and policymakers at the Ministry of Public Health.

Subsequently, the recommendations cover traditional business from operating a healthcare facility to some relatively modern services such as establishing an online marketplace and building an integrated information system for the sector.

Flow of Medical Service (Patient Care Process) The patient care process, beginning with patient registration and ending with patient discharge, is embedded with problems, and these can lead to a gap where a business may step in and take the opportunity to rectify them.

Illustrated above, the red highlighting shows the problem at a scale where a business opportunity exists.

Identifying the problem through the three lenses: Medical personnel, facilities and provision of service.

While Thailand has trained a sizeable number of doctors, the percentage of specialists and the overall quality of general practitioners has actually declined. The Thai healthcare industry lacks personnel qualified for holistic diagnosis.

In the private sector, this could be motivated by commercial reasons, as multiple diagnoses and treatments if in different departments might mean the hospital could charge the patient more. In the public sector, however, the problem stems from the shortage of qualified medical personnel, especially in non-tertiary public hospitals. The inability to holistically diagnose patients with multiple symptoms/illnesses at once means a sizeable part of Thai healthcare system is drained by the inefficient inter-department— even inter-hospital—patient transfers.

The worst-case scenario could lead to the worsening of the patient’s condition or even death.

Misdiagnosis could also result in legal consequences for the doctors involved. Misdiagnosis risk is particularly pronounced in hospitals in remote areas where the medical personnel shortage means it is difficult to get a timely second opinion. Medical consultation through messaging services such as LINE can only mitigate the cases where only visual diagnosis is needed, and applies only to liaison between doctors— lest it invite the risk of a lawsuit by the patient.

In some cases, misdiagnosis arises from doctors being given inaccurate information by the patients. This is magnified by the absence of an integrated Personal Health Record (PHR) system among public hospitals. Misdiagnosis can also lead to delayed diagnosis, and to the correct treatment being delayed.

Thai public hospitals are so overwhelmed that those transfers would affect the quality of overall treatment.

For example, patient handover from the doctor to the post-anesthesia care unit (PACU) nurse does not have a recording standard. Communication between doctors and PACU nurses is typically one-way due to the former being overwhelmed, resulting in nurses having insufficient time to comprehend the case and ask questions. This gives rise to a lack of consistency regarding important information needed to take care of patients.

“Doctor’s incorrect diagnosis could lead to incorrect treatment or no treatment.”

1. Medical personnel

2. Facilities & Equipment Thailand does not have domestic manufacturers that produce sophisticated medical equipment. The indigenous medical equipment industry mostly provides simpler tools such as gloves and masks. In the private sector, hospitals make procurement decisions based on the best trade-off between quality and price.

Private sector procurement is generally conducted by sales agents approaching individual private hospitals or hospital groups and negotiating the procurement deal. In many cases, the domestic price of the equipment is sufficiently more expensive than that of a foreign supplier (particularly those in Mainland China) so that hospitals decide to import the equipment and pay for all regulatory procedures that result. The huge mismatch in price means hospitals are willing to undergo a 1–2 year process to get the Food and Drug Administration (FDA) and other relevant agencies to approve the import. In the public sector, this very pricing structure means the government lacks a reliable source to procure affordable medical equipment, sometimes leading to shortages or overuse of equipment in more remote hospitals.

A number of public hospitals are not designed in accordance with healthcare healing environment design (HHED). Complex designs bring about navigational problems, causing unnecessary lag time when it comes to the movement of patients, medical personnel, equipment and next of kin. Flaws in design mean some hospitals have accessibility problems as their emergency entrance or their emergency room ward is at the back of the hospital.

3. Provision of Service The lack of real income data enables more well-off people to claim healthcare benefits from the Universal Healthcare Scheme. There are 44 million Thais eligible for this coverage but there are only 7.3 million in poverty and 6.7 million living within 20% above the poverty line. This drains a limited budget that could otherwise be spent on improving service standards. Furthermore, the KPIs tie doctor performance to the number of cases, regardless of the severity of each case, hindering the quality of diagnosis and treatment.

The public sector also does not have an integrated patient information system. Thus, doctors have to use non-domiciled patients’ account in place of their real medical record, causing potential misdiagnosis.

Limited number of ambulances and lack of reliable public transport means most patients in rural areas need to use their own or their family’s vehicle to get to the hospital. Procuring an ambulance is seen as less of a priority when an authority plans a tight budget, whereas investing in the public transport system in rural areas is of doubtful commercial viability because of the low population density.

Public hospitals suffer from an inefficient flow of medical service, underlined by long waiting times, complex paperwork and a rigid patient transfer system, all of which hinder the overall quality of treatment. In the patient registration and triage control processes, overwhelmed personnel spend too much time before patients are put in the diagnosis queue in the relevant department. Patient at tertiary public hospitals have to contend with long queues due to overcrowding. It is not uncommon for a patient to wait for months to get specialist treatment. A similar situation applies to operation queues.

Transitioning from one process to another also involves over-duplication of paperwork because most hospitals are not equipped with an information system to synchronize documents and information among units and departments. Paperless technology also cannot be applied to documents with signatures as Thai law does not accept electronic signatures. To illustrate the hindrance in the paperwork, an empirical study showed that an electronic ID system shortened the registration process from 15 minutes to 3 minutes.

The process of transferring a patient between public hospitals is highly bureaucratic, wasting precious minutes and even hours that could be put to saving patients’ lives.

Usually a more junior doctor in a rural hospital needs to write a report and convince a more senior counterpart in the tertiary hospital that the patient warrants a transfer. From the interviews, there were instances when patients had not been moved to a more advanced public hospital nearby, but instead to a hospital geographically farther removed because the transferring and receiving doctors had better relations.

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Potential Commercial Opportunities Based on Megatrends and Existing Problems

Establishing a Marketplace between Patients and Doctors/Medical Facilities

The interviews and secondary research found that the Thai medical industry, both public and private, lacks a reliable marketplace for supply and demand. Many specialized physicians, particularly in the private sector, are constrained by the code of conduct forbidding them from advertising their expertise, and thus they struggle to find the means to convey their reputation to potential patients. The patients, on the other hand, largely rely on word-of-mouth or, in many instances, even Google searches to identify doctors that can provide the service they need. To a certain degree, the same goes for the demand and supply of medical facilities at international hospitals and wellness centers.

Establishing a marketplace—an “Airbnb” for the healthcare sector—could fill this gap without being contrary to professional medical charters. There are a few ways the platform could seek to monetize; for example, charging a small percentage from the case referred, or charging from the number of clicks by users on individual profiles.

Commercially, the business involves minimal hard asset investment and potentially is scalable internationally. Key considerations for such a business are medical confidentiality, the reliability of reviews that include areas of specialization, the number of cases and perhaps past patient reviews, and the number of truly reputable doctors/ facilities within the portal.

Some of the attractive healthcare segments in Thailand include cosmetic surgery and facilities such as international hospitals. Cosmetic surgery has been identified through interviews as the segment with a huge gap between the demand and the highly-varied levels of quality on the supply side. Market data have also been very convincing, showing that the sector has grown from THB 11 billion in 2010 to THB 30 billion last year and is expected to reach THB 100 billion by the end of the decade.

Considering the competition among international hospitals, the number of Thai hospitals that have obtained Joint Commission International (JCI) certification—vital to medical centers catering for international patients—has risen from 22 in 2013 to 52 in 2016. This signifies the heightened needs among hospitals to find a new source to tap into the medical tourist market. With growth of about 10% per annum in terms of medical tourist arrivals, the marketplace would be a good platform to match the demand with supply.

Internationally, the service is still in a very nascent stage, with most of the few existing players commencing as recently as 2 years ago. Being the pioneer in Thailand, a regional medical hub, could set the stage for players regarding future international expansion. There are some interesting and reflectable precedents in foreign markets. Mediroute provides connection between patients and appropriate doctors whilst also supplying additional details. The website also allows patients to compare treatment costs and organize their trip (for medical tourists). Hospitals and clinics are listed with information on their medical professionals’ experience, academic credentials, price, accreditation and testimonials/ reviews. The platform also allows patients to book accommodation and flights. Alibaba’s Alihealth also has E-Health services, including E-Pharmacy (prescription health and wellness care), Clinic (tele-diagnosis, family doctor, specialist), Barcode (barcode e-verification and health information system) and insurance.

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Setting Up Medical Facilities As of 2016, there were 18 private hospital groups listed on the Stock Exchange of Thailand (SET), two of which first listed that year. In the same year, they posted a combined revenue of THB 137 billion from combined assets of THB 211 billion, with an industry return on assets (ROA) averaging 0.71. The figures were a significant increase from 2014 when the combined revenue and combined assets were THB 113 billion and THB 173 billion, respectively.

In terms of market share, Bangkok Dusit Medical Services (BDMS) has been the dominant player in the market, consistently having more than 50% of the market, both in terms of total assets and revenue. They are distantly followed by Bumrungrad Hospital (BH), with Vibhavadi (VIBHA) being number three by total assets and Samitivej (SVH) third in terms of revenue. On both counts, the top three players held approximately 70% of the market share throughout 2014-2016.

Thanks to the huge growth in medical tourism, economic growth in the CLMV nations and Thailand edging toward an aging society, many private hospitals and wellness centers have been built or planned in recent years. Investment also comes from sources outside the industry, particularly major property developers. Within the industry, major private hospital groups continue to make vertical and horizontal expansions, consolidating their positions in the market. More major public hospitals are expected to follow the Siriraj Piyamaharajkarun model, intensifying competition within the private healthcare and medical tourism industries. Such initiatives are not only driven by business interests but also by the necessity to find surplus to compensate for their loss-making public health service. These developments constitute a high barrier to entry for new players, especially those with relatively small capital and no medical background.

Investing in larger medical facilities requires (on top of sizeable capital) many different sets of licenses and assessment procedures. Developers must make a sizeable investment, including in land acquisition and public consultation, prior to and during the license application and assessment process—a big investment risk for a new player without any background in the industry. Finding a specialized niche, and setting up a smaller, more focused medical facility could contain the investment cost. However, a segment with huge demand but small supply (i.e. specialization) does not necessarily present an attractive choice because doctors will hold huge leverage over a hospital, leaving the latter in a vulnerable position should the former decide to leave. Insights from interviews suggest a hospice care center—a facility specialized in taking care of and sustaining patients with a terminal illness—could be an investment option due to Thailand’s increasing elderly population and the primitiveness of such care, which is currently restricted to a small ward in most hospitals. However, perceptions and cultural taboos—the belief that hospice care patients are waiting to die—raises questions about the viability of such a business, despite its importance being demonstrated in western countries.

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Building an Integrated Healthcare IT Infrastructure

Many of the problems in the Thai public healthcare system could be tackled or smoothened by incorporating information technology (IT). This will involve setting up a centralized database to form the backbone of the system. There have been some attempts by the government to internally initiate some IT development in the public health system. Mostly, however, this has proved ineffectual as the government lacks the capability to design, construct, operate and maintain a sophisticated IT system. While the Ministry of Public Health is in the process of initiating a software program called JHCIS in an attempt to enable public hospitals to exchange patient and diagnostic information, there is a consensus among the interviewees that such a development could only be possible with participation from the private sector. Some of the resulting initiatives are: 1) an online “choose-and-book” appointment system; 2) an integrated Electronic Health Records (EHR) system between public hospitals; 3) a systematic patient referral structure that simplifies bureaucracy except for doctor-to-doctor communication.

An online “choose-and-book” appointment system will solve the problems in the registration process where the counter staff are overwhelmed with patients, and the latter suffer long waits before getting to see doctors. This is supported

by Thailand’s high mobile phone penetration rate of about 128%. With such a system, the non-emergency patients can view the free appointment slots of public medical centers and choose one that serves their need best, as opposed to having to come to the hospital themselves and then waiting for a half day to get diagnosed. The registrar will also have a simpler task, given the reduced walk-in traffic and the fact that pre-appointed patients will have already input virtually all their personal data in the online system beforehand.

An integrated EHR system will assist doctors in diagnosing patients, providing the physician with more accurate patient data. This will reduce the possibility of misdiagnosis and the associated legal risks. Patients, as the owners of their own medical records, will be able to see any medical test results without having to come to the hospital personally.

The system will also complement the online “choose-andbook” appointment system by allowing patients to select different hospitals with full confidence that the physician they are seeing will have an up-to-date medical record upon which the treatment will be based. The EHR system will also streamline the patient referral process by reducing the paperwork.

A systematic patient referral structure will coordinate the inter-hospital patient transfer process by digitalizing relevant information, reducing the time administration staff need to duplicate documents to be transported with the patient to the receiving hospital. The system will also identify the nearest receiving hospital with the necessary capability and free capacity. This system will reduce manual tasks to allow the doctors in the two hospitals to focus on discussing the case.

Such systems have been widely implemented in western Europe with different levels success.

The system implemented in England known as the National Programme for IT in the NHS (NPfIT) was one of the world’s largest healthcare IT projects that ended in failure. However, there were pronounced differences between the British National Health Service (NHS) and the Thai public healthcare system, all of which led to failure of the NPfIT in England and could potentially culminate in a successful outcome in Thailand. First, the UK NHS is composed of different local trusts that operate with a significant degree of autonomy, while the public health system in Thailand is highly centralized—making top-down decisions more implementable in Thailand. Secondly, in the UK, some trusts already had their own competent IT systems prior to the introduction of the NPfIT, leading to resistance among stakeholders in many areas. In contrast, Thailand’s healthcare IT systems among the public hospitals are virtually non-existent. Implementing an integrated healthcare IT system would bring some urgently needed improvements to Thai public health management.

The chance of this activity taking place mainly rests on convincing the government of the need to build such infrastructure. Given the precedents in other countries and the Thailand 4.0 vision, it is plausible that the initiative could take place in the future with support from one or more private infrastructure developers. The commercial benefits, however, depend on how centralized the authority would like the system to be. A single, nationwide system and database would generate a huge contract for the bid winner(s)—the NPfIT was initially budgeted at GBP 5 billion (approximately THB 250 billion). However, this would involve a very high barrier to entry with very few domestic bidders having the necessary capabilities.

Having more decentralized, regional hospital clusters would mean smaller maximum returns as it is unlikely that one particular bidder will manage to win the contracts for all clusters.

However, smaller firms will have a greater chance of being awarded some contracts. As a reference for potential commercial gains, the costs for setting the NPfIT are as follow:

Note: Healthcare IT infrastructure also impacts other dimensions of the healthcare industry.

The Medical Distribution chapter will disclose more on the status quo of IT development in the Thai healthcare industry and its applicability to the medical distribution segment.

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CHAPTER MEDICAL EQUIPMENT

The medical equipment sector, as one of the fundamental supports of the Healthcare sector, continues to grow in accordance with the growth of the overall sector. However, breaking down the sector, it is worth noting that the basic medical devices and the export of foreign companies have contributed to the growth. Thailand is still lagging when it comes to the production of equipment requiring the use of technology, either in production or integrated into the equipment itself. While this may seem problematic for the industry, it presents opportunities to new players. This is especially the case as the Thai government is turning its attention to address this problem, and t encouraging technology transfer and investment in healthcare technology.

The sector can be categorized in three different ways. The first is by separation by the level of body penetration as used

by Thai medical law. The second is by types of products, with 16 in total, which is the standard adopted by Global Medical Devices Nomenclature. The last way is to categorize by the objective and the usage of the devices, which is the one used in this report.

SECTOR TREND

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⌠The growth has only been in terms of value, not in terms of product types. The products produced in Thailand of worthwhile value are still limited to single-use devices, durable medical devices, and reagents and test kits.

The growth in the past 5 years has been 25.11% from THB 112 billion (USD 3 billion) in 2010 to THB 149 billion (USD 4 billion) in 2015. The market value has increased in all categories, with reagents and test kits showing the strongest growth of 40.21% during this period, while the market size for disposable items and durable medical equipment also reached a combined value of about THB 140 billion in 2015.

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Total market value of medical device in Thailand 2010-2015

⌠Thailand relies more on imported medical devices than local products, with 69% of the equipment in the market being imported and 31% coming from local production. The fact that local makers generally lack the capability to manufacture mid-tech and high-tech medical equipment, which usually requires sophisticated techniques and technologies to make, is the main reason why hospitals, both public and private, all over the country have to buy these devices from abroad, resulting in Thailand importing about THB 54 billion (USD 1.58 billion) in 2014. For some items, for example electro-medical apparatus, the import value was as high as USD 365 million in 2014 alone.

The Thai medical device market is dominated by imports, not only in terms of products used, but also the number of importers in comparison with the number of manufacturers. According to Thai Medical Device Technology Industry Association (THAIMED), there were 2,494 medical importers in 2015, accounting for 83% of all private companies involved in the market. They mostly import hi-tech medical tools and equipment, which usually are expensive, and some disposable items which Thai makers have no capability Proportion of medical devices using with Thailand (based on value)

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⌠There are only a few local players who are capable of making complicated medical equipment.

Most advanced cases found involved the production of X-ray equipment or elder-care robots, with generally limited capability of making complicated machinery.

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⌠Disposable items are one of the biggest segments within the sector. Thailand still relies heavily on imports for disposable items requiring technology. In 2014, 68% of all medical device products were disposable items such as surgical gloves, syringes, needles, contact lenses, wadding, gauze and bandages, while durable medical instruments, and reagents and test kits accounted for 28% and 6%, respectively. Of all the items mentioned, Thai manufacturers can only produce lowtech items, for example medical beds without motors, walking sticks and wheelchairs.

Almost all local makers are SMEs and about half of them produce disposable items. According to the Medical Devices Intelligence Unit, there are 496 medical device makers in Thailand; 96% of them are SMEs while the rest are large firms.

Three-quarters of them are Thai and the rest are international companies who use Thailand as one of their production bases. Unsurprisingly, almost half of all the manufacturers based in Thailand, whether Thai or foreign, produce disposable items, another 22% make durable instruments, while only about 9% make reagents and test kits or medical software.

Composition of medical device manufacturers based in Thailand, categorized by type of goods produced.

For reagents and test kits, Thailand has to rely heavily on imports since local producers do not have the technology to produce the reagents and test kits used for detecting most diseases. For those who do have the capability to produce hi-tech machines, the internal market for Thai production is very limited and government policies do not facilitate or incentivize them enough.

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⦁ Thailand is one of the leading importers of medical devices in the ASEAN countries, following only Singapore, (which has a special characteristic of being a middleman in this market, which inflates their import and export value) and Malaysia. Thailand’s import value was twice as high as that of the CLMV countries combined being valued at THB 56.7 billion in 2015 and a 67% increase from 2010. The import of both disposable items and medical instruments each grew by more than THB 10 billion over this period, while the import of reagents and test kits also expanded by 64%. This astonishing expansion was the main reason why there were more than 2,200 new medical device importers registered during this time by the Medical Device Control Division, a state agency under the Ministry of Public health.

Thailand medical device import value 2012 - 2015 Leading imported medical equipment in 2015 consisted of: (1) medical and dental equipment (2) needles, catheters and cannulae for medical use (3) X-ray equipment (4) bandages and wadding for medical use.

Electrical medical instruments such as electrical hospital beds and motorized wheelchairs are also largely imported due to the inability of local manufacturers to produce sufficiently high standard products to satisfy the quality standard demanded by both doctors and patients.

The USA, China, Japan and Germany are key suppliers of medical devices to Thailand, with about 60% of all medical devices imported coming from these countries. The USA is the main supplier for (1) medical and dental equipment and (2) needles, catheters and cannulae for medical use, providing 28% and 22.7%, respectively, of Thailand’s overall import in each category. Japan, on the other hand, is the primary source of X-ray equipment with an import share of 34%. China is the dominant player in disposable items and basic medical instruments, supplying nearly 40% of imported bandages and wadding for medical use and about 60% of imported spectacle lenses.

Thailand manufactures and exports few reagents and test kits, while relying heavily on imports of these. In 2015, Thailand imported THB 8.7 million reagents and test kits with 61% of all imports from the USA, Germany and South Korea. The distinct aspect of this market is that most players in the market are importers. With 3–4 big manufacturers having a combined market share of more than 80%, the market for reagents and test kit production is an oligopoly. However, the market is led by importing equipment from abroad.

2015 composition of export items by category (THB, Million & %)

In 2015, Thailand exported more than THB 92 billion of medical devices, most of them being disposable items and around 15% were durable medical instruments. Thailand is also a leading ASEAN exporter of spectacle lenses, surgical gloves and dressing packages. However, most of these products are exported by international companies with factories in Thailand who are sending the goods back to their home countries. For example, Cardinal Health 222 (Thailand) Co., Ltd. is an American firm, which established and has further invested in a factory in Rayong, Thailand since 1998, and the factory solely manufactures surgical gloves, with all of them exported back to the USA. Another example is a French company, Essilor (Thailand) Co., Ltd. that manufactures spectacle lenses and sends them back to France. A number of Japanese companies have also established factories in Thailand, such as Okamoto Rubber Products Co., Ltd. which produces condoms and ships some back to sell in Japan. The top three export destinations for medical devices made in Thailand are the USA, Japan and France. Thus, even though it seems that Thailand exports a vast amount of medical devices, most activity is by international firms exporting products back to their home country.

Factors driving growth in the medical devices market As has been illustrated earlier, The Thai medical devices market is expanding. It is expected to keep growing due to these 4 factors: (1) increasing government healthcare expenditure, (2) ageing society, (3) medical tourism and (4) urbanization.

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Ever-increasing government healthcare expenditure Since Thailand’s implementation of its universal coverage program in 2003, the government has become the biggest player and payer in the healthcare market, and is the dominant force driving growth in the healthcare industry. Since 2003, overall healthcare expenditure in Thailand has risen from about THB 200 billion to around THB 500 billion in 2014, and public spending has been playing a key role as private healthcare sector spending has not increased by much. The budget for the universal healthcare program also has more than trebled from about THB 30 billion in 2003 to almost THB 115 billion in 2015, which has helped to push healthcare expenditure per person from about THB 3,300 in 2003 to more than THB 7,300 in 2013. Healthcare expenditure per person is expected to keep rising as the economy expands, since the figure is still relatively low compared to that of more developed countries such as Malaysia, Singapore or South Korea.

⦁ Public spending is the main force driving up healthcare expenditure.

Thailand healthcare expenditure 1995-2014 (in THB million)

Universal coverage program budget 2003–2015 and Healthcare expenditure per person 1994–2013

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Ageing Society Thailand has been an aging society since 2005, as defined by a situation in which at least 10% of total population are 60 years old or older, and the aged population will reach 20% by 2021. Inevitably, Thailand will become a super aging society, in which at least 30% of the population is elderly people by 2035. The aged population in Thailand will rise quite drastically, from 9.6 million in 2013 to 20.5 million in 2040, more than doubling in about 25 years.

⦁ Thailand has already aged: Aged population statistics in Thailand

The Institute for Population and Social Research estimates that this trend will push up expenditure for healthcare services for seniors from 0.6% of GDP in 2010 to about 1.1% in 2022. According to The Economic Intelligence Center, the shift to a super aged society will help to force growth in the medical devices market to around 10% per year.

Medical tourism

It is worth noting that this trend will not drive demand for each type of medical devices equally. From experiences in the USA, Singapore and Japan, this ageing trend will drive demand for mid-tech to high-tech medical equipment, especially related to illness treatment in elderly people—a demand which Thai makers currently lack the capability to produce—and will push up the demand for disposable items far less.

The market for medical tourism is expanding globally, and is expected to reach USD 17 billion in 2016, with a growth rate of 17.5% per year, according to The Economic Intelligence Center (EIC). Thailand is also one of the top destinations for medical tourists worldwide, with 3.3 million seeking medical services in Thailand in 2015 alone. It is forecast that the number of foreign patients will increase 9% per year in the next couple years, and will have reached 4.2 million by 2018. These additional patients will be a prominent force elevating growth in the medical devices market to about 10% a year between 2016 and 2018.

Two kinds of patients from abroad are visiting Thailand for medical services: 1) those coming from the more developed countries seeking cheaper services and 2) affluent people from less developed countries seeking better healthcare. According to EIC, patients from Singapore, Switzerland, the Netherlands, New Zealand, Australia, Germany and France are prone to look abroad to purchase cheaper medical treatment, and these patients will help drive demand for hi-tech medical equipment since private hospitals wanting to attract this group have to offer them first-world medical standards. In addition, high-income patients from Myanmar, Bangladesh, India, Cambodia and even Kenya are likely to seek better treatments outside their home countries. When these countries, including those from the CLMV group, become more developed economically, which is certain to happen, there will be more people who can afford and will be willing to shop for better treatment abroad. This cohort will help generate more demand for low-tech to mid-tech medical devices since they do not seek high-price, first-class medical treatment. Fortunately for private hospitals, they are likely to be main beneficiaries of this trend.

⦁ Foreign patients will help elevate demand in medical devices.

The number of foreign patients 2011-2018 / Medical devices market growth

4

Factor 4: Urbanization In the past 3 decades, Thailand has largely become urbanized. The percentage of population who live in urban area has risen from 29% in 1990 to 36% in 2015, and the figure is expected to reach 38% in 2020. People who live in urban area usually earn more than those who live in rural areas (THB 16,409 per person compared to THB 9,546) and consequently they also have higher purchasing power. This increased purchasing power from people living in big cities outside Bangkok such as Chiangmai, Chonburi, Songkla, Surat Thani, Khon Kaen, Nakhon Ratchasrima and Udon Ratchatani is the main factor driving many private hospitals to open branch units in these cities.

Forecast of urban and rural population in Thailand 1990-2020

For example, the Bangkok Hospital Group has already opened new hospitals in Chiangmai, Phuket, Khon Kaen and Chonburi, while the Ramkhamhaeng Hospital Chain now have hospitals in Chiangmai, Khon Kaen, Udon Thani and Ubon Ratchatani. The growing number of private hospitals in these regional areas will be a strong force driving demand for medical devices in the years to come.

DEMAND VS. SUPPLY

for medical devices in Thailand Demand Normally hospitals and medical service providers are major end users of medical devices.

In 2013, there were 1,062 public hospitals, with 272 private hospitals and 18,802 clinics. A growing capability to treat people by the healthcare sector, as seen by the number of beds for general services—which have increased from about 134,000 beds in 2010 to 150,000 beds in 2014—suggests that the demand for medical devices will also keep expanding.

As shown earlier, most healthcare expenditure is in the public sector. The situation in the medical devices market is no different, with public hospitals being the largest buyers. Private hospitals also play a key role, as they usually demand high-tech medical devices, while clinics, even though great in number, usually have limited purchasing power.

Public hospital

Private hospital

Public hospitals are the biggest purchasers of medical devices of all kinds. Large medical school hospitals such as Ramathibodi, Chulalongkorn or Siriraj are potential targets since they are tertiary hospitals, meaning that they must have very advanced medical equipment and tools to treat patients sent in by the primary and secondary hospitals. Moreover, since this group of hospitals receives subsidies from the government, they have very high purchasing power and thus they should be primary targets for the sale of advanced medical devices. On the other hand, provincial public hospitals are top purchasers of basic medical instruments and disposable items because of the sheer volume of patients they have to treat. However, due to strict buying procedures instigated by the government, the sellers might not be able to charge a premium price for medical devices sold to these hospitals

Private hospitals have high purchasing power and demand for high-tech equipment. Even though there is a small number of private hospitals—only about a quarter of the public ones— each private hospital usually has high purchasing power since it can charge a premium price for its services both from both Thai and foreign patients and via insurance packages. Bumrungrad International Hospital, Bangkok Hospital or Samitivej Hospital are very good examples as they are the prime target for foreign medical tourists and some affluent Thais. They need to provide first-class medical services to their clients and thus, high-tech medical equipment is needed. However, as they do not receive as many patients as public hospitals, the demand for disposable items from these hospitals is far less.

These hospitals should be high on the potential buyers list for importers of innovative medical devices,

Even with the sheer numbers, clinics have low purchasing power. Because of their small size, each clinic often has a limited budget for medical devices. Most clinics usually have only a few basic medical instruments such as a blood pressure gauge or simple medical bed, and usually they have no tech-related medical equipment. Furthermore, as their doctors hardly ever undertake surgical operations within clinics, whether large or small, the usage of disposable items such as surgical gloves or bandages is also low. Fortunately, since most clinics try to keep the cost for medical devices down, they are likely to try new products.

All in all, we forecast that demand for medical devices in Thailand will continue to rise, with public hospital as the main purchaser of both high-tech equipment and disposable items and large private hospital groups as key buyers of advanced medical devices.

Supply There are 3 key markets for medical devices in Thailand: 1) disposable items, 2) durable medical instruments and 3) reagents and test kits. Each market has distinct characteristics in terms of the capacity of local makers, the number of players involved and the reliance on import, thus competition in each is also different.

For disposable items, local firms are the main suppliers, while importers provide some advanced goods.

Due to the fact that most disposables items do not require high-tech machinery and complicated techniques to make, Thai producers are capable of manufacturing most of them. Basic items made of rubber and plastic such as surgical gloves, syringes and catheters are the main items they can make resulting in local makers dominating the market, with some subsidiaries of international companies producing their goods mainly for export.

However, for some advanced items like bandages coated with pharmaceutical substances, which local makers lack the capacity to produce, importers play an important role. According to UN COMTRADE, for instance, medical dressings without any adhesive layer were imported to a value of almost USD 30 million in 2015 alone. Some key international players in this market are Medtronic, Terumo, Baxter, Cardinal Health and Nipro.

For durable instruments, local makers are the main suppliers of basic medical instruments, while mid-tech to high-tech instruments are supplied by importing international brands.

There are around 110 local firms who manufacture medical instruments. Most of them are capable of making simple medical instruments such as spectacles lenses, walking sticks, wheelchairs, pressure gauges and simple medical beds. However, very few are able to make complicated machinery. For example, there is only one Thai maker (Kongsak X-ray Medical Industry Company Limited) who produces X-ray machines. All other medical machines and tools, from replacement knees to titanium dental implants, and from CT scanners to balloon angioplasty and stents, have to be imported. Thus, there are more than 2,900 importers in the market.

State agencies such as NECTEC are also another maker of high-tech medical tools and machines, but they only make them to order and from scratch, which means that hospitals intending to buy the machine from NECTEC must wait years since NECTEC does not have them in stock ready to be sold. As of now, there are only public entities such as Thammasat University hospital (who bought a digital, body X-ray machine and dental scanner) or Chulalongkorn hospital, who ordered a mobile 3D scanner called MobiiScan, purchasing these machines from NECTEC.

The main reason why almost no Thai companies are capable of making complicated medical machines and tools is the lack of technology. Government policies are also to be blamed, as they do not have rules and plans that would help to transfer technologies, knowledge and know-how from international companies in cases where they have invested and established factories in Thailand. The BOI’s incentives should also be regarded as inadequate since the packages offered to investors are “fixed�, which means that all investors who would like to invest in the same industry get the same benefits, discouraging some who might want other types of benefits and forcing them to invest elsewhere. Additionally, the confidence of doctors in Thai products is also not very high as most doctors are more confident wit and accustomed to the products of international brands.

Last but not least, some Thai products required doctors to change their techniques and practices in order to use them; for example, one Thai maker built a prototype of a dental implant with a shape that was starkly different from those of international brands, requiring doctors to change all their techniques if they were to use them. With all these factors, it is very difficult to become a high-tech medical device makers in Thailand, especially for new entrants.

Reagent and test kit importers are the key suppliers, while the 4 biggest local makers produce more than 80% of the goods manufactured in Thailand. There are almost no Thai makers that can produce high-tech reagents and test kits. Consequently, global pharmaceutical companies such as Johnson & Johnson, Siemens, Abbots, Otsuka, Wako and Roche, who have R&D in both the diagnosis and treatment of diseases, are key players in this area. Since these companies do not have factories in Thailand, all their products have to be imported, amounting to more than THB 8.6 billion in 2015. The 4 biggest local firms, which focus solely on manufacturing basic reagents and test kits, namely, ABN Laboratory (Amnuary Pharma), GPO Thanyaburi Branch, I-Med Laboratory and Renak, account for more than 80% of all local production:

NEW MEDICAL TRENDS influencing the industry

⦁ Non-invasive treatment

Innovation in the medical devices industry has led to new kinds of tools capable of reaching human inner organs without incision. The best example of these tools is the surgical robots that have tiny long arms that can reach the inner abdomen and chest from a small hole in the patient’s body. Using standard treatment procedures, doctors have to cut a patients’ body wide open in order to reach a targeted organ, but with these non-invasive tools, patients can be treated with far less harm to the body—and these tools are also becoming more affordable. For example, FlexDex, an operational arm that replicates a surgeon’s hand movement, is as good as far more expensive surgical robots.

⦁ Wellness

With more and more elderly people, chronic diseases like diabetes and hypertension are becoming more common. These people would want products that can help them keep an eye on their health status such as blood pressure monitors and blood glucose monitors. These instruments would be in high demand, especially by affluent and highly health conscious, elderly people.

⦁ Artificial intelligence

Artificial intelligence is now making impacts in every industry, and healthcare is not an exception. Doctors in developed countries are now using AI to help them make the best treatment decision. The most notable example is IBM’s Watson. The machine can process and understand human languages, enabling it to read millions of medical research articles within weeks and keep up with the approximately 8,000 medical journals coming out every week worldwide. Big tech companies such as Dell, HP and Apple are also developing their own AI systems. The time when AI makes medical decisions for doctors and patients is conceivable.

⦁ 3D Printing

With new innovations in the realm of 3D printing, we can now print out almost any shapes using any materials. In healthcare, low-cost customized prosthetic parts can be printed, even including human organs like bones. We can already “bind chemicals to a ceramic power creating intricate ceramic scaffolds that promote the growth of the bone”. And when biological materials can be printed, the possibilities become unlimited. Skin, blood vessels, ear cartilage and heart valves can now be printed. The future time when organs such as the liver, heart and kidney can be printed is near.

⦁ Virtual Reality

Virtual reality technologies are now utilized in many hospitals around the world, helping patients to get a better hospitalization experience. A project called Farmoo used VR to help distract teenage cancer patients during chemotherapy treatments so that they can focus more on activities in VR rather than on the treatment itself. Another project called VisitU used VR to help hospitalized patients feel more at home by live streaming the patients’ home using a 360-degree camera. Furthermore, VR is also being employed in medical schools, where it is used to record surgical procedures from notable professors’ perspectives so that thousands of medical students can watch it instead of only the few who can really be in the room.

Recommended opportunities ⌠As a manufacturer of basic medical devices.

Since Thailand has a very low level of technological knowhow, becoming a hi-tech manufacturer would entail high investment cost in a questionable market (as the healthcare industry is used to operating using existing brands).

The focus therefore turns to being a manufacturer of basic medical devices. The advantages are that the demand for these products from local hospitals is high, and it does not require high-tech machinery and highly skilled labors to make them. Furthermore, as these items do not required too high a safety standard (unlike medical parts that have to be inserted into the human body or drugs), they can be integrated, with some adaptations, into the assembly line of an appliance factory. However, with a large number of local firms already in the market, competition is very high, ostensibly squeezing the profit margin.

Revenue from key producers in 2015 (THB, Million)

To put it into perspective, some of the key players include Transition Optical (Thailand) Co., Ltd., who make optical lenses, with a reported revenue at THB 4 billion in 2015. Another important optical lens maker is Thai Optical Group Public Company Limited who posted sales of THB 1.3 billion in the same year. Thai KK Industry Co., Ltd., a condom factory, generated THB 2.2 billion in 2015.

Meditop Co., Ltd. reaped THB 1.6 billion in 2015 from manufacturing and selling basic medical instruments used in hospitals. Another important player is Jack Jia Industry (Thai) who gleaned THB 567 million from predominantly making disposable items. It should also be noted that these players, apart from Jack Jia, have non-medical income sources that support their total revenue.

Revenue from key Thailand-based international producers in 2015 (THB, Million)

International firms with a manufacturing base in Thailand also have significant presence in the local equipment production sector. Significant parts of revenue however are derived from exports to their domicile or international markets. Hoya Lens Co., Ltd. and Essilor Manufacturing (Thailand) Co., Ltd., are leading optical lens manufacturers, with total revenue of THB 16.5 billion and THB 7.8 billion, respectively in 2015. Japanese Nipro (Thailand) Co., Ltd. is a dominant producer of blood tubing sets and rubber tubing, accumulating THB 6.5 billion in sales, mainly exporting back to their home country. Kawasumi Laboratories (Thailand) Co., Ltd. is another significant Japanese producer, making hemodialysis tools and heart surgery sets with annual sales of THB 2.4 billion in 2015.

Cardinal Health 222 Co., Ltd., a Canadian company, is a major firm manufacturing surgical gloves, totaling THB 6.3 billion in revenue in 2015. Taiwanese Emeral Nonwovens International Co., Ltd. is leading in the production of surgical clothing with overall sales of THB 1.2 billion in 2015. There are also a few large electronics part makers who produce parts for high-tech medical equipment.

The notable ones are Benchmark Electronics (Thailand) Plc., Ltd. and Yano Electronics (Thailand) Co., Ltd. whose revenue figures were THB 18 billion and THB 5.9 billion, respectively.

⦁ As importer of high-tech medical instruments With an import value in 2015 as high as THB 56.7 billion, the opportunity as an importer is certainly huge. The Government’s lack of support for innovation by Thai makers means that imported medical instruments will still be essential in the foreseeable future. Increasing public healthcare spending and medical tourism also imply that the demand for high-tech equipment will keep rising.

However, due to the lack of established distributing systems, those who want to be players in this market have to also invest in warehousing and logistical systems.

There are 2 important types of importers in Thailand’s medical devices market: 1) global medical instrument companies who own the technology and have a business unit focusing on importing their own products into Thailand and 2) firms that work solely on importing others’ products without developing their own technology. For the former, the leading companies are Siemens Limited Thailand, GE Medical Systems (Thailand) Co., Ltd and Phillips Electronics (Thailand) Co., Ltd. For the latter group, Medical Public Company Limited is a leading firm. However, since these companies import various kinds of products, their revenue figures do not accurately reflect the import value of medical devices.

⦁ As medical services providers

Mid-size and small-size hospitals often do not want to invest in some costly medical machines due to the lack of economies of scale. Consequently, they have to outsource any related treatment to medical services providers, as seen in the case of gravel treatment. The regulation in this market is close to nonexistent, which is excellent from a business perspective. In addition, the business model can be established as a side revenue stream of 5.2 above. The key success factors are finding a sizeable unmet demand and mapping out groups of hospitals that would need the services provided by similar devices.

4

CHAPTER Medical Distribution

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The structure of the Thai healthcare system shows that medical distribution serves as a backbone of the industry. In defining medical distribution, this study takes into account the distribution of services among the key stakeholders: the patients, the doctor and the medical facilities.

“

With this assumption, we look into four types of distribution businesses

Ambulance Service: The market has been growing.

In 2015, 19.1% of emergency patients came to hospitals using public ambulances (Kittipong Ponsen et al, 2016, p.iii), up from an estimate of 4.4% in 2012. In 2016, there were 1,496,553 calls for a public ambulance and 1,499,969 ambulance operations. These numbers had increased from 1,176,036 and 1,178,555, respectively, in 2012. However, not all private investors in this market are making a profit from this market trend. Since most Thai people are using the free service provided by the government, many private ambulance corporations are making a loss.

e-Health: e-Health development in Thailand is still

in the initializing phase. Currently, in Thailand, most of the e-health software or hardware developmental projects require the support of or cooperation from the government. Even though the current government has a plan to support the use of these technologies, the success levels of such projects and the future conditions of the market are unpredictable.

Medical Laboratory Service:

The markets of these businesses have been growing. The total annual revenue of all corporations operating medical laboratory services has grown from THB 4.8 billion in 2012 to THB 6.5 billion in 2015. The combined net profit from all companies has also increased from THB 213 million in 2012 to THB 308 million in 2015. The big players such as National Healthcare System Services (N-health) expect to double their profits within the next 3 years. Since there are already a number of providers in the market, fierce competition is predictable.

PATIENT TO FACILITY: An Ambulance Service Factor 1: Increasing number of people using ambulances Proportion of Thai emergency patients who use a public ambulance service

Statistics shows the demand for ambulance services has improved greatly over recent years. In 2015, 19.1% of emergency patients came to hospitals using public ambulance (Kittipong Ponsen et al, 2016, p.iii), up from an estimate of 4.4% in 2012. In 2016, there were 1,496,553 calls for a public ambulance and 1,499,969 ambulance operations. These numbers had increased from 1,176,036 and 1,178,555, respectively, in 2012.

Furthermore, the record shows that 98.6% of people who used the service had heard about the quality of the service and were satisfied with it—a positive indicator for more widespread use.

Number of 1669 calls 2012–2016

Even though the statistics mentioned here record only the demand for public ambulances, it is expected that the demand for private ambulances is also increasing. This trend can be seen from the increasing number of private companies investing in the service and the profit they have made, which is discussed in the next section.

Factor 2: Increasing number of elderly Another contributing factor is the increasing numbers of elderly and medical tourists in Thailand. The number of elderly has already been discussed in previous chapters, where it was noted that Thailand has been an aging society since 2005, because more than 10% of the population are aged 60 years or older. The percentage will increase to 20% in 2021 and 30% in 2035. This equates to an increase from 9.6 million aged people in 2013 to 20.5 million in 2040.

The statistics indicate that people who are older than 60 years used the ambulance service more than other generations. Furthermore, 95% of aging people in Thailand have at least one of the diseases that may lead to emergency incidents (diabetes, high blood pressure, heart disease, paralysis, stroke and falling—Kittipong Ponsen et al, 2016, p.65).

Factor 3: Increasing number of medical tourists In 2015, Thailand welcomed 3.3 million foreigners who came for medical services. The number will rise by 9% annually and reach 4.2 million before 2019.

Many medical tourists use ambulances for their trips. Therefore, as their numbers increase, so will the demand for ambulance services in Thailand as a significant portion of these tourists also tend to feature adventurous activities in their itineraries.

Consequently, apart from the crowded cities like Bangkok and Pathumthani, the popular tourist provinces such as Phuket, Phangnga, Rayong and Chiangmai also have many private companies running ambulance services.

DEMAND VS. SUPPLY

for ambulance services in Thailand Demand The demand for the public ambulance service in Thailand in 2015 is approximately 1,500,000 trips per year. It is expected that this number will rise in the future due to the increasing numbers of Thais using the service, as well as the increasing number of elderly and medical tourists. The number will also rise if we include private ambulance operations. Nevertheless, it is expected that the estimate above is low since the market for private ambulance services is small and unprofitable.

Supply

The Thai government has become the main provider of the ambulance service since the implementation of the Emergency Medicine Act, 2008 which led to the establishment of the National Institute for Emergency Medicine (NIEMS), whose duty is to guarantee a free ambulance service for all people in every area.

Currently, the main management strategy of NIEMS is to transfer the resources for the ambulance service to local government and link all of them together through an effective coordination center. The center will receive calls from people and direct the nearest local government to dispatch an ambulance to the incident. This strategy is based on the assumption that local government is the most suitable provider of the service because a local authority geographically covers a smaller area than a local hospital, and thus should be more steadfast in responding to incidents within its constituency. According to this strategy, the government succeeded in establishing the coordination centers with 80 “1669� call centers around the country.

For now, these call centers nearly meet the ideal standard that requires them to send a command to dispatch an ambulance within 2 minutes of receiving a call. However, the process of distributing resources to local governments is still in transition.

Nowadays, only 67% of all local administrations have established a section for providing ambulance services. Only 26% of all provinces have succeeded in creating the well-ordered coordination system among the local governments in their area.

67% of all administration have established the section for providing ambulance service

26% of all provinces have established well-ordered co-ordination systems within areas

While the Thai government is the main provider, the private sector is allowed to provide its own private ambulance service.

The only condition is that all ambulances must meet the standard specified by NIEMS. The government also encourages each emergency center (which is ideally supposed to be the local government) to convince private ambulances to join the 1669 system. By joining the public scheme, the private ambulances will receive call-outs from the 1669 call center and provide a free service to the patient in exchange for payment and some special supporting budget from the government.

Currently, the Thai healthcare system has 8,820 pickup ambulances, 7,059 van ambulances and 323 aircraft ambulances distributed across the country. Normally, these ambulances are divided into four types: advance life supported (ALS), immediate life support (ILS), basic life Support (BLS) and first responder (FR).

* Rommended opportunities * There are four business models that private investors could employ in the ambulance-service market: 1) joining the public scheme, 2) providing a private ambulance service, 3) providing a premium service and 4) selling ambulance-related products.

The first two options are easy to start but hard to make a sustained profit from. For the premium service, it is unlikely that a new entrant will be able to compete with the advanced hospitals that provide nationwide premium ambulance services and have their full medical resources to support their services. The last option requires deep research regarding the technical and medical demands of the practitioners working in ambulances.

Joining the public scheme

Joining the public scheme: According to the government plan, the private providers are able to join the NIEMS scheme by accepting the call-outs from the 1669 call centers and providing a free service to the patient in exchange for the payment from the government. Some private foundations such as Poh Teck Tung and Ruamkatanyu are doing so.

Given that the number of operations is approximately 1.5 million call-outs annually (1,489,969 in 2016) and most of the emergency patients are at the green level, the market will generate an annual revenue for THB 5.3 billion.

The operation of an ALS ambulance can only make a profit in the case of red level emergency patient and the profit is only THB 163 per call-out. The other forms of operations generate no profit at all. This does not yet take into account the fact that there are many fixed costs to maintain the service such as the cost for ambulance maintenance checks or emergency staff employment. Therefore, apart from the government ambulance service, there are only private foundations who are ready for this business. Mostly, the staff of these foundations are satisfied with such a small margin or just do it for charity.

However, this business is not promising for normal investors because it provides only a small margin.

Currently, the rate of government payment and the average cost of ambulance operations are as shown in the following tables.

Average cost per ambulance operation

It is also impossible for an investor to do this business on a large scale and provide ambulances in many areas and to expect accumulated profits because the 1669 call centers will allocate a call-out to the investor’s service only if the investor’s dispatching center is the closest to the incident. Thus, there is no guarantee that any specific emergency will pass through a specific provider, even though that provider has a better ambulance than others. Furthermore, the private foundations have already established a network of service that cover all areas. According to interviews, the competition among private foundations is very intense. In many cases, these foundations can informally recognize emergency incidents even faster than the 1669 call center.

Rate of government payment for public ambulance service

Providing private ambulance service Since they are unable to make a profit by joining the NIEMS system, many private investors have chosen to provide their own private ambulance service. For example, there are at least 35 private companies that are providing referral service with fees. Some of them are offering special services such as an ambulance for taking care of tourists or the elderly, standby ambulances for events, or ambulances for rental.

Many small and medium private hospitals also offer these services.

Such a business does not guarantee profit to the investor. An interviewee pointed out that many small and medium private hospitals continue providing a private ambulance service just because it is an indispensable part of the hospital business.

However, the service is a burden since it generates no profit.

Information from the Department of Business Development also showed that the market does not guarantee a profit for private investors since it generates various outcomes, as follow:

- In 2016: 3 corporations submitted financial reports. Their combined registered capital, revenue and net profit were THB 2.2 million, THB 888 thousand and THB -136 thousand, respectively.

- In 2015: 10 corporations submitted financial reports. Their combined registered capital, revenue and net profit were THB 8.8 million, THB 12.5 million and THB 1.3 million, respectively.

- In 2014: 4 corporations submitted financial reports. Their combined registered capital, revenue and net profit were THB 3.3 million, THB 1.1 million and THB 194 thousand, respectively.

Combined Financial Performance of Ambulance Service Firms (2014-2016)

All in all, the business is not promising since most emergency patients tended to opt for the public ambulance service, while the patients who expected a higher standard of service called for premium service from the high-end private hospitals.

Providing a premium service Many big hospitals are providing a premium service for highend customers. For example, the Bangkok Emergency Services of the Bangkok Hospital offers an ambulance equipped with technology called extracorporeal membrane oxygenation (ECMO) for dealing with cardiac and respiratory patients, as well as a the mobile CT and equipment for stroke diagnosis.

Furthermore, the center provides a motorcycle ambulance to reach emergency incidents in heavy traffic areas. The nurse on the motorcycle will provide first aid treatment before the ambulance arrives. The hospitals also have medical airplanes, helicopters and speed boats to operate as necessary.

There are also other domestic and international companies that offer an aircraft ambulance service for transporting patients within or between countries. Siam Air Care is an example of a domestic private company that provides this service.

Air Ambulance Thailand, Medical Wings, Asia Air Ambulance and Air Ambulance Aviation are international companies that offer international flights for referred patients from other countries to Thailand and vice versa.

In particularly, Bangkok Hospital is the first hospital in the world that succeeded in building a speedboat ambulance and obtained a certification from The Commission on Accreditation of Medical Transport Systems. The Bumrungrad International Hospital Emergency Center also offers a similar service. They provide premium ambulances and helicopters, and advertise their ability to pick up or take care of emergency patients from around Thailand and Asia.

Selling ambulance-related products The last approach for entering the market is to sell products that are necessary for the ambulance service, where the most direct form is to produce and sell ambulances to hospitals or private providers. Companies undertaking this are, for example, Carryboy and Rungjaroen Equipment and Truck Co. Ltd. There are also some businesses related to car manufacturing. For example, MTECH invented the method of using nano-technology to strengthen the structure of an ambulance and then sold the vehicles to hospitals or private companies.

Apart from selling ambulances, the private companies may choose to invest in medical equipment or the different types of technology used in the vehicles. There are two important trends in innovation regarding this. First, the technological companies are trying to adapt communication technologies for use in the ambulance, for example, the medical GPS system or telemedicine, etc. (see details in the e-health section).

The second trend of innovation is to find the way to minimize the medical equipment and fit it into an ambulance, for instance, in the aforementioned mobile CT scanning equipment in the Bangkok Hospital ambulances. The other successful example is the ambulances of Piyavate Hospital. With cooperation from the National Innovation Agency, the hospital succeeded in equipping their ambulances with medical equipment for the systematic treatment of heart disease patients. Companies responsible for producing this type of ambulance are able to export them to foreign countries. The attempts to minimize the medical equipment are not the only advanced or complex technologies being developed. There are also the attempts to minimize the basic medical equipment used in an ambulance, for example, the mobile IV pillar or Oxymoblie standers.

Doctor to Facility: From Doctor to Laboratory Factor 1: increasing concern on health preventions.

The increasing concern regarding health preventions has led to medical activities that require laboratory operations such as health checks. The overall number of laboratory operations has increased as a result of these activities. N-Health, an affiliated company of the Bangkok Dusit Medical Services (BDMS) responsible for their medical laboratory business, predicts that the trend in health prevention will increase the profit of all indirect medical services including laboratory services. Accordingly, N-Health plans to double its profits from this service twice within the next 3 years.

Factor 2: increasing government’s budget for medical prevention The National Health Security Office (NHSO) has currently launched polices to support and provided a budget to advocating medical prevention. As has already been discussed, since the health-prevention activities involve laboratory testing, government support will increase the number of laboratory operation. For example, in 2015, the NHSO set a budget for supporting people who have diabetes and high blood pressure to regularly receive medical check. As a result, the percentage of people with these diseases—being tested for HbA1C, for example— increased from 74% in 2011 to 80.8% in 2015 (Annual Report of National Health Security Office, 2015, p.57).

Percentage of Thai people with type 2 diabetes who get access to necessary lab tests since 2011 to 2015

Another example is that the NHSO has succeeded in convincing people who have HIV to receive regular VL tests to measure the quantity of virus in their blood. Thus, the number of blood tests for this purpose rose. In 2015, there were 171,823 people who joined this government scheme. This number was an increase of approximately 7% from the previous year (Annual Report of National Health Security Office, 2015, pp.60-61).

DEMAND VS. SUPPLY

for ambulance services in Thailand Demand Medical laboratories can be roughly divided into two types: laboratories for specimen tests and the specialized or advanced laboratories for developing medical knowledge such as laboratories for biomedical research or DNA testing.

The revenue structure of private hospitals in Thailand

Normally, the demand for specimen test laboratories is always high since lab-test results are the sources of information necessary for the prevention, diagnoses and treatment processes. Since the lab-test results are indispensable for healthcare service, the operational number of medical laboratories is always high and generates a significant profit for hospitals. Generally, the revenue from medical laboratory operations accounts for 13.7% of the overall revenue of private hospitals in Thailand.

However, demand for advanced laboratories is low since their activities are about long-term medical developments or highly specialized tests which are irrelevant to most practitioners and patients.

Supply

Medical laboratories for human specimen tests The medical laboratories doing human specimen tests have been established either as a unit operating within hospitals or as a standalone laboratory. Presently, both public and private organizations are operating these types of laboratories. In public laboratories, nowadays, all public hospitals and medical clinics are equipped with medical laboratories. The NHSO’s policy requires all public primary care units to have medical laboratories, which are able to analyze fingerstick blood glucose, glucose and protein in urine, pregnancy tests and hematocrit and rectal swabs.

Furthermore, the NHSO stipulates that secondary-care hospitals must have a radiology laboratory and medical laboratory, which are able to conduct all the tests that are required for today’s standard job applications. There are 1,623 basic laboratories in primary-care hospitals, 769 radiology laboratories and 920 medical laboratories in the secondary-care hospitals.

The more comprehensive medical laboratories are located in the super tertiary-care hospitals such as Siriraj and Chulalongkorn Hospitals, or operate as standalone laboratories such as the laboratories of the Department of Medical Science or the National Healthcare System.

In private laboratories, the pattern of distribution is similar to that of the public hospitals. Many medical clinics or small hospitals own laboratories with the same basic capacity as the public primary-care hospitals. The medium private hospitals are usually equipped with medical laboratories and radiology laboratories, capable of carrying out the same function as the public secondary-care hospitals. Lastly, the more advanced laboratories are located in the advanced private hospitals or belong to certain companies.

The National Healthcare System is an example of a standalone laboratory run by a private company and providing comprehensive testing services (biochemistry, immunochemistry, serology/immunology. coagulogram, hematology, blood bank and microscopy/ fluid analysis). The Professional Laboratory Management Corp. Co, Ltd is an example of a company that provides medium price service and has a large client base from around the country. In 2016, there were 252 corporations registered with the Department of Business Development as providers of medical laboratory services.

Until now, the Thai government has had no rules restricting private companies from investing in medical laboratories. Therefore, public hospitals are free to send their samples to private laboratories, and private hospitals can send their samples to public laboratories. The public regulations are not based on financial or investment regulations, but rather on the practices of collecting and packing specimens as well as the condition of the laboratories.

Advanced or specialized laboratories At present, there are only few publicly run, advanced laboratories in Thailand such as the Advanced Molecular Detection Laboratory (AMD lab) or the EBOLA laboratories of the Department of Medical Science. Another example is the laboratory for Biomedical Technology Research run with cooperation between Biotech, NSTDA and Chiang Mai University. Mostly, Thai medical units have to send some specimens to specialized laboratories abroad for certain specialized tests, such as DNA testing or tests for some highly complex diseases. Examples of advanced laboratories are development laboratories such as those involved in drug development or biomedical research.

* Rommended opportunities * There are three possible business models for investors interested in medical laboratories to consider: 1) operating medical laboratories, 2) operating specialized or advanced laboratories and 3) providing a courier service. The second option is impossible without support from the government. While the first and third businesses are profitable, the fierce competition in the market could be an obstacle for new entrants to make profits.

Operating medical laboratories

Investing in the medical laboratories undertaking specimen tests is the first possible business model. Due to the trend in healthcare prevention, it is expected that the market will continue to grow. The income from lab services in private hospitals in 2016 was 13.7%.

Total annual revenue of all corporations since 2012 to 2015

To illustrate the growth, the total annual revenue of all corporations operating medical laboratories grew from THB 4.8 billion in 2012 to THB 6.5 billion in 2015. The net profit from all companies also increased from THB 213 million in 2012 to THB 308 million in 2015.

Furthermore, as already discussed, the National Healthcare System Services saw their profits increase from THB 107 million in 2012 to THB 222 million, in 2015. The asset turnover ratio in 2015 was 18.38%. The company expects profit growth of 35% per annum for the medicine and medical laboratories over the next 5 years.

Another reason why medical testing is an interesting business is the fact that the cost of establishing new laboratories is low. Most business costs are embedded in the initial step, when the laboratory has to purchase the medical equipment necessary for the tests. After that, the laboratory only has chemical expenses and some disposable products to keep the business going. To reduce setup costs, many medical equipment companies are even ready to provide free equipment to new laboratories in order to lock in chemical sales afterward.

Net profit of National Healthcare Sysytem Co., Ltd. since 2012 to 2015

Even though the market is growing, it should be noted that not all investors are going to make a profit from this business model because the new entrants are going to face fierce competition from the current providers. Since Thailand already has an adequate number of medical laboratories for specimen testing, it will be difficult for the new entrants to find new area to occupy. Furthermore, most of the medical units have already established a relationship with some laboratories. It is not easy for customers in this market to change service providers when they have already found a reliable one because accredited laboratory results and reliable service are the most important factors that the clients consider.

For example, currently, the Phyathai Hospital is still choosing to send their specimens to Siriraj Medical Laboratories (SML) even though they can use the service from N-Health that is an affiliated company of BDMS (which also owns Phyathai Hospital), because they trust the service from SML and do not want to change their provider.

Operating specialized or advanced medical laboratories Another possible choice is to operate specialized or advanced laboratories that are still lacking in Thailand. At present, Thai medical units have to send some specimens to specialized laboratories abroad for certain specialized tests, such as DNA testing or testing for some highly complex diseases. Examples of advanced laboratories include development laboratories for drug development or biomedical research.

Nevertheless, it is almost impossible to invest in this business in Thailand without supporting policies being provided by the government because these laboratories lack a domestic client base.

They are usually conducting tests on some special diseases or analyses that rarely occur. To survive, these laboratories require subsidies or government promises to continue purchasing their services from startup until they are able to establish their reputation and find clients from other countries in the long-run. This may be the reason why the few advanced laboratories in Thailand nowadays are run by public organizations such as the Advanced Molecular Detection Laboratory (AMD lab) or the EBOLA laboratories of the Department of Medical Science.

Furthermore, it should be noted that some specialized or advanced laboratories require experts or specialists to operate them and such expertise is rare. According to interviews, the few muchin-demand specialists tend to spend their energy in deep, inspiring academic research, not in routine testing in the laboratory. The pathology laboratory is an example that could easily find clients in Thailand, but perhaps there will not be sufficient specialist doctors to certify the laboratory results. medical laboratories over the next 5 years.

Providing a courier service The last possible business model is a courier service. Normally, this service deals with the process of carrying human specimen from medical units to the laboratories. Nowadays, there are many courier companies responsible for this activity. The key companies in the market are N-Health TNT, DKSH, DHL, Transpeed and FEDEX. The main responsibility of these companies is to guarantee the quality of the courier process, such as having accurate and clear labels on the courier packages, vibration control, temperature control and on-time delivery. The standards regulating this process are written in the manual of the Department of Medical Science (The Collection and Transportation of Specimens, 2015) and of the Medical Technology Council (The Medical Technology Council, 2012).

However, there are two problems investors ought to be aware of. First, the cost for preventing or compensating errors in the courier process is high. For example one error is excessive vibration of the samples may damage or make them unacceptable for laboratory testing. Normally, the compensation for these errors is very high because hospitals or patients will not charge the courier company only for the damaged samples but also for the time wasted or even the loss of the medical opportunity due to the delay in repeating the testing results.

In order to prevent such errors, the courier companies have to spend a large amount of their budget on staff training. Some firms regularly bring in their staff from around the country to attend training courses.

This business generates high profits, especially regarding international courier services. For example, the companies can charge a client more than THB 10,000 for sending tissue samples to laboratories outside the country. Nevertheless, the company is responsible for only the cost of the packaging and transportation. Other costs such as collecting and packaging samples are the responsibility of the hospitals where the samples are collected.

The second concern is that it is unlikely that the hospitals are going to purchase a service from a new provider when they already have established a good relationship with an existing courier. As in the case for medical laboratory services, the most important factors that the clients consider when they are choosing the provider are not the price, but the quality and reliability of the service. Furthermore, many small medical units may have no incentive to use the service from private companies due to their limited budget. They may prefer local transportation options because they are cheaper. Furthermore, in many cases, it is also more reasonable and effective to send the patients to the bigger hospitals and let these hospitals do the testing on site.

IT to Support Service Distribution AMONG KEY STAKEHOLDERS: Doctor to Doctor, Doctor to medical personnel and Doctor to patient E-health involves the concept of using information and communication technologies to support or improve healthcare service flow.

Currently, the use of e-health technologies in Thailand is still primitive. Apart from success in developing some levels of e-infrastructure, projects involving hardware and software development in Thailand have not achieved good results. For example, there is only approximately 25% coverage by projects using telemedicine and only 50% of public healthcare units use technology to support information exchange activities and only 25% support e-health learning. More seriously, only 25% of current practitioners have already learned how to use online technology.

DEMAND VS. SUPPLY

for e-Health in Thailand Demand As discussed in Chapter two, the status quo infrastructure is limited to the corporate level in the private sector and some major public hospitals, none of which are interconnected.

However, the demand for hardware is high because the hardware for medical activities in most Thai hospitals is under-developed. Public hospital information indicates that hardware devices in all public medical units have been used for 3–5 years. Even though they are not yet outdated, they require maintenance. Furthermore, the central server and hardware that are used by government, which is supposed to be the coordination center for all hospitals, are all too old to function effectively. Until now, the government has had no plan or budget to improve them (Ministry of Public Health, 2016, pp.12-13).

The software situation is similar to that of hardware. The Thai healthcare system has a high demand for the development of technology for basic functions such as data clouding, appointment and referral, telemedicine and health-monitoring. There are only a few advanced public or hi-end private hospitals that have already implemented such software. The detail of this demand will be discussed in the next section.

Supply

Ideally, government is supposed to be the main advocate for the e-health development because national level infrastructure development is required. Furthermore, the government will help to guarantee that the hardware and software used in all medical units are compatible with one another. However, during the last two decades, the Thai government has faced a series of failures in attempting to promote e-health.

According to the interviews, people in the medical field generally lack the knowledge to surf the trends in technologies and have no idea on how to systematically apply them into the medical system. This does not yet take into account of the fact that e-technology is always changing with the extremely rapid speed. Approximately, the e-technologies are changing and doubling in capacity every two years. One interviewee provided the example that a decade ago, the government had anno to supporting e-health. However, without systematic knowledge, the project ended up with only the purchase of some computer equipment. Furthermore, before the government approved the project regarding software development for sending X-ray films between hospitals, the technology for this activity changed, rendering the project unnecessary.

It should be noted that in 2017, the Department of Public Health announced the national strategy, ‘ICT for Better Health’, to perfect e-health infrastructure in Thailand and to improve all the necessary hardware and software for e-health technologies. With an increased budget, the government plans to improve the basic infrastructure of the e-health system around the country, to produce the programs that are necessary for the telemedicine system, monitoring system and cloud computing and to prepare all medical practitioners in their use. Until now, the government has connected around 2,000 healthcare units using satellite (IPSTAR). The Ministry of Public Health also developed the JHCIS program—software that allows public hospitals to exchange patient and diagnosis information.

Findings from the interviews, however, indicate concerns that the project may end up without systematic improvement as in the past due to the problems already mentioned.

Since the government has failed to provide a leading technology role in the past, all private hospitals and many big public hospitals have developed technology to meet their own demands. For example, the public medical schools such as at Siriraj and Chulalongkorn Hospitals implemented the technology for long-distance learning to connect medical teachers with practitioners or students who are staying far away. Public hospitals in accident-prone areas such as Khon Kaen and Ubon Ratchathani have developed their own telemedicine technology and implemented it into ambulances, so the practitioners can closely monitor and provide necessary recommendations for emergency-patient treatment.

The developments of advanced e-health technologies in Thailand are mainly driven by big private hospitals such as Bumrungrad Hospital and Bangkok Hospital. For example, Bangkok Hospital network provides a 24/7 teleradiology service, a robot doctor to monitor patients’ conditions, multidisciplinary treatment through telecommunication technology and a telecare clinic. Bumrungrad Hospital also uses telemedicine to consult on and exchange medical knowledge with 10 advanced hospitals in other countries.

Furthermore, Bumrungrad staff also use the IBM Watson technology for Oncology, which can process large amounts of medical data from around the world, and provide doctors with the information and analyses that are relevant to specific cases.

* Rommended opportunities * There are three interesting e-health business models for private investors interested in this market: 1) software for hospital and patient management, 2s Software for data clouding and large dataset analysis and 3) telemedicine.

Software for hospital and patient management The software for patient management focuses on facilitating the flow of patients within or between medical units. Examples are software for appointment making and patient referral.

The objective of software in this category is to help reduce the time and resources used for hospital management activities, thus increasing the efficiency of medical service flow.

Many big public hospitals such as Siriraj and Ramathibodi Hospitals have already implemented this platform, as well as private counterparts like Bumrungrad and Bangkok Hospitals.

Even though Thai patients and medical staff have no culture of using this channel because they are used to making a phone appointment or going directly to a hospital, the growing smart phone penetration rate and increasing Internet literacy in rural Thailand are expected to transform this culture in the near future.

The Thai government has attempted to create referral software called “Thai-refer�.

This software provides the chatting channels between the referring and referee hospitals. It also provides channels for information transfer and ambulance tracking. According to the pilot hospitals using this software, they can refer 92.5% of patients within 30 minutes (the normal rate was 68.4%). However, this program is still in the development phase.

Even though there is big room for improvement, it is very difficult for outside investors to engage in this business mainly because of the fragmented connections among hospitals that lead to difficulty in getting the hospitals to adopt a centralized software. In addition, most hospitals have neither the incentive nor the financial means to change their current e-platforms by themselves. However, as discussed in an earlier chapter, private investors with sufficient capability and ability to influence and liaise with the government could make top-down development materialize.

Hospital management software refers to software that helps to facilitate all backdoor activities within the medical units. For example, in foreign countries, hospitals use pharmacy applications to regulate the processes of issuing drug prescriptions, medicine dispensing and drug inventory management.

Some hospitals also use the software to record activities and resources in their hospitals, for input into cost-benefit analysis, or for matching human specimens and laboratory results.

Software for data clouding and big data analysis The use of data clouding and large dataset analysis has been gradually adopted in the Healthcare sector. Most data mining is used for medical diagnoses. While this development will help fill the health data gap, the challenge will be the ownership of an individual’s health information. In the USA, this problem has created unnecessary cost in the overall system now estimated at USD 25–35 billion each year.

Many big public hospitals such as Siriraj and Ramathibodi Hospitals have already implemented this platform, as well as private counterparts like Bumrungrad and Bangkok Hospitals.

The Public Health Department has attempted to step into this area by requesting all public medical facilities send some personal health data to the Department. Access to this information is restricted for personal data privacy reasons and only basic data is provided that does not include information from private hospitals.

Another example from a private company is the SuvanabhumiRath Platform. This company is developing the smartcard, called IDENtification and the central platform for the use of card. The software and technology allow patients to store their medical records on the card and carry them to other hospitals using fingerprint technology to identify the owner of the record.

Even though there is much room for improvement in this area, the implementation and the adoption of the technology require government support to create the complete picture in which all hospital provide support regarding information input. A concrete development in this arena will require top-down action from the policymaking level. The developer must have the ability to influence top-down decision makers.

Coping with the large datasets involved in healthcare service is a more advanced form of the use of information technology. Roughly, this idea refers to the use of software to analyze the vast array of data that has been collected. The IBM Watson software purchased by Bumrungrad Hospital is a very famous example of software that can review medical papers and information and use this to suggest diagnostic issues to practitioners. Another example is the Microsoft technology which processes large datasets and predicts a patient’s length of stay in a hospital. Apart from the software used in hospitals, there are many smartphone applications that could access large datasets from around the world and then, together with personal information, provide healthcare recommendations to the user. This is a promising business trend as some suggest that the next frontier in healthcare will be data-driven healthcare. However, the development of such software requires highly advanced knowledge.

The use of the Blockchain platform for medical records is also another option being widely discussed globally. Without a central node for storage information, Blockchain is a database that allows all medical units to get access to the information, while each patient holds the authority to control where the information can travel to.

Telemedicine The last important business trend regarding e-health is the use of communication technology to create services called telemedicine. The idea of telemedicine is to connect the patient to the practitioner without both having to be at the same location.

The most basic form of telemedicine happens in the cases of healthcare services which require no physical attachments such as mental health consultations or health-check reports. Recently, there have been attempts to employ this technology for services that normally require physical contact.

For example, Bangkok Hospital connects patients who are at the hospital with the specialists from other areas by using tele-technologies. The specialists are able to check the patient’s body through the help of practitioners who are in the same room as the patient. Furthermore, Bangkok Hospital has also opened a telecare clinic in Minburi. This clinic is providing a physical therapy service and the patients there obtain advice from specialist doctors from Bangkok Hospital via telemedicine.

The Healthcare Department also has an idea to connect patients in a primary care hospital with specialist doctors in higher-level hospitals through using this technology. However, this idea is still in the process of discussion since many doctors in the big hospitals are concerned that this technology will increase their workload. Furthermore, they are also afraid of problems caused by medical errors.

One interesting idea regarding telemedicine servicing is the use of telemedicine in ambulances, so the hospital could monitor a patient’s condition and provide all necessary treatment advice before the patient arrives at the hospital. Nowadays, public tele-ambulances are used for emergency patients who are in a critical condition. The idea of using tele-ambulances in general cases is still in dispute since many people doubt their cost-effectiveness.

One successful case in Thailand was reported in Ubon Ratchtani. The ambulances in this area are equipped with tele-technology for monitoring BP, oxygen saturation, pulse and EKG. According to the research, the estimated cost of this technology per emergency patient is only EUR 15.11. However, it could lead to a significant increase in the survival rate of the patient (Medetel, 2011, pp.79–82).

Apart from providing telemedicine servicing, another business model is to produce devices that support telemedicine activities. The telemedicine devices can be divided into three general types. The first type involves communication devices. For example, the Ericson Company has succeeded in developing the broadband technology to use telemedicine in smartphones. Many telecommunication companies such as Huawei are also advertising their HD technology for these activities.

HUAWEI Telemedicine Cart

Apart from providing telemedicine servicing, another business model is to produce devices that support telemedicine activities. The telemedicine devices can be divided into three general types. The first type involves communication devices. For example, the Ericson Company has succeeded in developing the broadband technology to use telemedicine in smartphones. Many telecommunication companies such as Huawei are also advertising their HD technology for these activities.

Second, there are many projects trying to develop devices for tele-physical checks. For example, the Telecardiology technology allows practitioners to detect heart pulse rate and lung soundness of patients in different places. The Telepathology software can display the images appearing in microscopes in real time. Intel and General Electric have developed devices to use with a patient’s secure digital card slot. This device allows doctors to check the blood pressure, sugar level, heart pulse rate and asthma condition of patients who are far away. An example of this type of innovation in Thailand is Meds-Pearl, which is a capsule that patients eat. The capsule can capture pictures for gastroenterology and these can then be sent to the medical practitioners in hospitals.

Telepathology

The last type of telemedicine devices involves monitoring the health of patients. These devices have been developed due to the fact that normally, there are many diseases, such as a stroke and heart attack, which cannot be predicted with certainty. Regular health checks also generate cost in terms of time and money. Thus suitable devices will help to detect the health condition of patients without requiring a hospital visit. Furthermore, the alarm system in the device will help to contact an emergency unit or provide some immediate recommendations to the patients. For example, NECTEC has developed e-nose technology used for detecting abnormalities in the odor of vomit. The government is also developing the Maternal and Perinatal Electronic Patient Record System Network. This technology will be used for monitoring the health of pregnant women.

Healthcare Industry in Thailand

Overview and Corporate Strategy for Thai City Electric (TCE) March 2017