2. Care providers: Technology, tourism, and overseas expansion

2. Care providers: Technology, tourism, and overseas expansionIn recent years, Australia’s education sector has had enormous economic success by leveraging public-sector capacity to serve export markets. Education is now one of Australia’s largest exports, contributing 4.5 percent of the country’s GDP in 2013. We believe that there are opportunities for the healthcare sector to follow education’s lead. In fact, we see three clear parallels between the way education has leveraged public-sector capacity and opportunities in Australia’s healthcare industry.

A. Distance and remote learning, and technology, telehealth, and telemedicine services

Advances in technology have made distance and remote learning a viable and popular way to study. The number of distance or remote students enrolled at Australian universities has risen quickly in the last five years from 211,000 in 2009 to 302,000 in 2013. This has brought more students to universities without necessarily requiring the institutions to make further investment in physical facilities and infrastructure.

In the same way, Australia has been a successful adopter of technologies such as telemedicine and telehealth, and its capabilities in this area have grown rapidly. The country’s private healthcare industry successfully provides telemedicine to Australia’s remotest areas, such as the Northern Territory, where geographic isolation and sparse populations make accessing face-to-face medical care difficult.

In addition, Australia’s major telecom, Telstra, has continued to invest in its telehealth services. The company already offers a number of these services and is set to partner with governments across jurisdictions. Telstra has also made acquisitions and partnered with domestic and overseas companies such as Medgate, Fred IT, HealthConnex, HealthEngine, and Verdi to build its telehealth capabilities.

Case study: Increasing our healthcare trade with China

Australian healthcare providers have a tremendous opportunity for revenue growth through trade with China. Australia’s largest trading partner is also quickly becoming one of the world’s biggest healthcare markets. This is fueled by a number of factors, including the growth of China’s GDP, the rise of its middle class, and the increasing demand for better access to quality healthcare among its population. Like Australia, China has a rapidly ageing population — projections indicate about 480 million citizens older than 60 by 2050 — and it also faces similar challenges on the rise of chronic diseases such as diabetes.

There are other factors that make China an attractive destination for healthcare investment. The country offers low operating costs to business, and its IP protection laws, once very weak, are starting to improve. The Chinese government encourages innovation and R&D and is keen to provide better access to quality healthcare given its importance to the Chinese people.

The Chinese government is also supportive of foreign investment in hospitals. Public funding will be needed to raise the quality of care for the poorest hundreds of millions in the population, so private players are stepping in to fill the gap at the “top of the pyramid” for the 400 million affluent and middle-class citizens. Private health insurance is on the rise, and many now pay out of pocket, so “consumer-driven healthcare” is already a reality. Although many Chinese firms can access land through government relationships, they often lack the capability and credibility to run a successful hospital or clinic — and thousands of such facilities are needed to cater to the latent demand. The situation presents an opportunity for Australia to develop commercial trading arms for selected public hospitals in the Chinese market. These trading arms could then provide revenue to ensure that the hospitals continue to deliver a high standard of care to Australian citizens back home. In addition, there are broader opportunities in education, research, chronic disease management, primary care, elder care, and pharma life sciences.

On top of having extensive experience in telemedicine, Australia is also home to a large number of foreign-trained doctors. Care providers could leverage these doctors’ understanding of their home country’s culture and their language skills to help deliver telemedicine and telediagnostics to offshore destinations. Australia is uniquely positioned given its time zone to provide night reads for the United States, Europe, the Middle East, and Africa. In fact, this is happening in teleradiology, with Australia providing night reads for the U. S. and European Union markets.

However, a number of factors stand in the way of telemedicine becoming a viable source of export revenue at present. These include practitioner reimbursement and licensure laws, and concerns around legal liability, quality of care, and patient safety. There is, in addition, a limited pool of specialists for care providers to draw from.

Nevertheless, there are ways that these barriers could be overcome. For instance, Australia could lead the way by setting up free trade agreements with emerging markets, as well as by targeting governments to help facilitate regulatory change. In addition, healthcare professionals could undergo a process to receive international licensing and credentials.

B. Australia’s onshore foreign student market, and medical tourism

In the last decade, there has been a surge in the number of overseas students who are travelling to Australia to get a tertiary education. In 2013, 26 percent of students studying in Australia’s universities were fee-paying overseas students. Foreign students contributed $15 billion to the Australian economy in 2014. 8

In a similar way, Australia’s neighbouring Asian countries are utilising their public facilities to serve foreigners — in their case, through medical tourism. Their well-trained health professionals, modern medical infrastructure, and lower wages attract people from wealthier countries who want less costly procedures. For instance, Thailand has long been a popular destination for Western patients seeking inexpensive dental and cosmetic procedures, and Singapore attracts patients seeking cancer treatment, cardiac surgery, and fertility treatment.

With its high standard of care and well-trained doctors, Australia could offer medical services to foreigners seeking high-quality care.

With its high standard of care and well-trained doctors, Australia could offer medical services to foreigners seeking high-quality care. Rather than competing for low-cost procedures in such areas as cosmetic surgery or dentistry, however, Australia is well placed to compete with countries like Singapore, India, Malaysia, and South Korea in higher-end treatments and procedures, including acute medical care, fertility treatment, oncology, and cardiology.

A strong medical tourism industry serviced by both public and private hospitals in Australia could help boost revenue and help fund health services for the Australian population.

However, healthcare tourism in Australia lags behind its competitors in many areas. Its visa application processes are much slower than those of competitors like India, and there are limited on-the-ground networks to facilitate the referral of overseas patients to potential clinicians. Australia also lacks appropriate marketing companies to promote services overseas, as well as companies that coordinate the delivery of the medical records of overseas patients. Unlike its Asian counterparts, the Australian government does not offer any incentives to promote medical tourism. There is also a strong view in Australia against using public health services to follow commercial pursuits.

Still, there are a number of solutions that could be put in place to make Australian medical tourism a more feasible export. For instance, dedicated facilities could be set up, such as the Victorian Comprehensive Cancer Centre, which opened in 2015 and includes a private floor for insured patients and medical tourists. Australia could also follow the lead of countries like India, Thailand, Singapore, and South Korea, which provide a supportive framework for medical tourism, such as special visas, incentives, and tax breaks. Finally, Australia could set up specific avenues to promote and market medical tourism to the appropriate countries.

C. Overseas campuses of renowned Australian universities, and Australian public hospitals’ trading arms

In addition to opening their doors to visiting international students, Australian universities have set up a number of campuses overseas, where students complete their first one to two years in their home countries, and then come to Australia to complete their degrees. Australian tertiary institutions such as Monash University and Flinders University have been able to leverage their strong reputations abroad and have opened campuses across multiple continents.

A number of Australian private hospital operators are having similar success by branching out beyond their own borders to grow their revenue. For instance, in 2014, the Australian healthcare provider Healthscope received 10 percent of its revenue from the 43 pathology labs it owns in New Zealand and across Asia. Meanwhile, Australia’s largest private hospital provider, Ramsay Health Care, has been expanding international operations since 2007 through acquisitions and joint ventures. From 2011 to 2014, 28 percent of the company’s revenue came from foreign markets.

Australian public hospitals could learn from the experience of their private-sector counterparts — but also from overseas public hospitals, which have managed to commercialise their services nationally and offshore to create additional revenue. In the U. K. the NHS has created the Healthcare Evaluation Data (HED), an online solution that delivers information for healthcare organisations. The HED is sold to more than 45 hospitals around the U. K. and in the Middle East for an annual licence fee of about $35,000 each year.

Another way that not-for-profit hospitals can commercialise at least part of their services is by joining forces with other entities that could provide financial backing, as U. S. not-for-profit Johns Hopkins Hospital did through its joint venture with energy company Saudi Aramco. The hospital now receives considerable revenue from providing healthcare to 350,000 Saudi Aramco employees and their families.

Care providers: High-level estimate of revenue

Estimating with much accuracy the sort of revenue that these initiatives could generate for Australia’s GDP is difficult at this stage; however, a very rough estimate reveals that the “size of the prize” makes them at least worth considering.

We estimate that by 2020, Australia could raise annual revenue of as much as $3 billion through medical tourism, and close to $1.9 billion for delivering telemedicine and teleradiology overseas. In addition, if public hospitals setting up facilities in China have the sort of success that private providers like Healthscope and Ramsay Health Care have enjoyed, they could generate about $1 billion or more in revenue each year.


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