Saturday, December 30, 2006

The Thai Touch

A nice read about a Thai hospital that is making waves in the region, captured in the Raffles Conversation in The Business Times, Singapore, 30 Dec 2006.

Thai hospitality
Curtis Schroeder, the American Group CEO of Bumrungrad International, may be credited with turning the Bangkok hospital into an icon of medical tourism. But he tells ANNA TEO that the service and quality standards that set it apart are quintessentially Thai in origin

HIS early days as the new CEO of Bumrungrad International Hospital - indeed its first non-Thai employee - were a little disconcerting, to say the least. Whenever Curtis Schroeder stepped into the elevator to get to his office, everyone else would scramble out. Nobody would ride with him.

'Because they didn't want to inconvenience the CEO by having to stop at five different floors, I found out later. I thought maybe I had some sort of problem, I didn't know what it was,' he recalls with a soft chuckle. That was his introduction to the Thais' deference to authority. Coming from a background of US hospitals where nurses have no problem unloading on the CEO over lunch in the cafeteria about problems at work, and 'doctors pound on your door and tell you what's wrong', it was perhaps culture shock in reverse.

'In Thailand that's considered very rude. So the doctors never pound on your door, and the nurses - if you try and sit down and have lunch with them, they'd panic. And so it's very difficult to get feedback.'

But it has been 14 years since Mr Schroeder - a veteran hospital administrator of over 30 years who has opened and run hospitals in Saudi Arabia and in the United States, New Orleans and Los Angeles - first arrived in Bumrungrad, and the American has embraced the land, its people and its culture. Thailand is where his two daughters, now 21 and 18 years, grew up, and where he and his wife have built their retirement home.

'It's a great place, good people, and it's been a lot of fun working there,' he tells BT during a recent business trip here. 'My wife said now I can never work in a hospital in the United States again, because the nurses would never treat me like that,' he laughs.

Business tenets

Bumrumgrad is today, of course, one of Thailand's best-known export successes - its opulent setting, plush amenities and legendary turnaround having been featured in stories about the rise of medical tourism in umpteen newspapers and magazines such as Newsweek, Time and Conde Nast Traveller. The statistics are well-touted: It treats more than one million patients a year, of whom about 400,000 come from some 190 countries. Turnover for the listed hospital in 2005 amounted to US$170 million. And Mr Schroeder is credited with having led the hospital on its breakthrough path as an international medical destination - and probably pioneering the way in the region. But ask him about it and he wants to set the record straight.

Bumrungrad opened as a 200-bed facility in 1980, went public on the Stock Exchange of Thailand in 1989, and by the early 1990s, the owners (then mainly Bangkok Bank) were looking to take it further.

'They went out and looked at other hospitals, in Singapore, in the United States; they were looking for models on size and scope and design and look and feel. They discovered that running very large hospitals is quite different from running medium or small-sized hospitals.

'At that time Bumrungrad was a relatively small, family-run hospital, and it had done exceptionally well in the market. It had ridden the wave of the rise in demand by the middle class for private health care in Thailand, and had established a very strong brand name, serving mostly the domestic and local expatriate population, very little fly-in. Thailand was not known in any way in 1990 as a hub destination. I think they had actually done an exceptional job of building a very good-quality product on the basis that it's a service industry, so we have to provide good service, and we have to attract and retain the best doctors we can find.

'I think those two business tenets were what established Bumrungrad in 1980, and to a large extent is still our philosophy today. Health care is a service business, you have to be really good at service. We're not a technology business, we don't make widgets, we don't sell cars, we provide service. And the second is attracting and retaining the best possible medical talent we can. That stays with us today, and that was established long before I came.'

Mr Schroeder was then with National Medical Enterprises, which owned at that time Mount Elizabeth and Eastshore hospitals in Singapore, and which Bumrungrad's owners turned to in its growth venture.

'So they did something that's not terribly normal in Asian family-run businesses - basically back off and say, you hire good people and let them do their jobs. And that's when I came on board in late-1992, and my job initially was to take the first vision, if you will, from a 200-bed, essentially family-run, good brand name hospital and put it on an international standard both in facility, standard operating procedures, accreditation, and make it something that had the potential for further reach.'

But there was no intention to become any medical hub. 'That was not the business plan in 1992, it's not supposed to be a hub of international care,' he says.

The 200-bed facility was torn down and a new one million square feet building came up next to it. 'We opened the hospital in early 1997. Six months later, we were hit by the economic downturn.'

It was the turning point. Subsequently, often asked what led to Bumrungrad's pioneering breakthrough strategy in 1997, Mr Schroeder says he would like to say it was a bunch of MBA-types sitting around a room looking at possible futures of health care.

'But it was much more pragmatic than that. What happened was - the crisis of 1997 put us in a position of having a brand new US$110 million hospital with about $60 million in US dollar loans in an economy that was suddenly in crisis, where local demand at best would be stagnant and probably decline, and we were a business that buys mostly in dollars, Deutsche marks and guilders, but we sell in baht. So our margins got squeezed, our market was shrinking, the paying ability of our customers was slashed, and the cost of our loans doubled overnight,' he now recalls with a wry laugh.

'That's a very, very tough situation to wake up to in the middle of July in 1997. At that time about 9 per cent of our business was international, 91 per cent was Thai. And at that time we said we got to do something very, very different here. I literally in August of 1997 walked into the boardroom and took our well planned-out, neatly typed and tabbed 1997 business plan, and I threw it in the trash, in front of the administrative team to make a point.

'The concept that we had planned, thought out and done all that important MBA-type stuff you should do, was useless. Because the landscape had completely changed. And where we were going to get our growth had changed. I've often said that we would not be the company we are today if we didn't have the crisis in 1997. It fundamentally changed and opened up new things, it forced us, it was a catalyst that was irreversible, we had to go after it, we had to find another way to survive. Because the alternative was bankruptcy. It would have been a very tough time, our shareholders would have wound up, giving up an awful lot of their equity to the banks and the others if we had not found a new market to go after. That new market was international.'

Not that Bumrungrad began to abandon its local patients. 'As a matter of fact, they continued to grow quite nicely through this period. But we needed a much larger playing field. So we looked at ourselves and found - what do we have? We have a new million square feet, internationally designed facility, we had an international management team which at that time in Thailand was unique, that had success in opening proprietary hospitals from Australia to China. We had a very strong, multinationally educated staff, all Thai, and over 200 US board-certified physicians. We were in the centre of a big city. So we said we'd better go and see if we can get patients to come from outside Thailand. And at least the one thing that happens in a devaluation of your currency - at least your exports become more attractive to people outside your country.'

Change of mindset

What was needed, it is now evident, was a mindset shift to begin to look at health care as an export product, which no one had done then, including the Thai government.

Mr Schroeder recalls an exports roadshow with the government in the early days in 1998 to introduce Thai health care along with other products.

'They weren't quite sure what to do with us, because we'd go on these roadshows and there would be people selling Thai jasmine rice and milk powder and fruit and commodities and steel, and we were there, this health-care group. And I remember sitting in the middle of a dirty parking lot in the rain with the dust on the floor in Cambodia, in Phnom Penh, and we were sitting there selling, you know, cardiac catherisations, next to people selling milk powder . . . I said, what are we doing here? Those early days were very much about trying to figure out how to define health care as an export product. And ultimately, I think, we figured out that there was a demand, because the cost had come down so much.

'Bangkok had always been cheaper, but for the first time it dropped much further against world currencies than, for instance, the Sing dollar did. So it widened that gap.

'At the same time we had a brand new fantastic physical plan, we had time for two to three years to get the operations up, and we were ready to rock and roll. And we just hit the market at the right time at the right price. At the same time, all the surrounding Indochinese economies were also hit by the slowdown, so the people in those countries who had traditionally left their countries for health care - I'm talking about Vietnam, Laos, Myanmar, Cambodia, and also Bangladesh, Nepal, Bhutan - they were looking for alternatives. They had a catalyst, they had a reason to look elsewhere. Because they had been going to Singapore, a little bit less to Hong Kong, some to UK, and they were suddenly looking at a very small purse. And Singapore was starting to look pretty expensive. And suddenly here is this other alternative - and it's a third of the price and when they got there, it was pretty good. They liked the service and they liked the people, they liked the facility, and they came.'

From an initial six countries, Bumrungrad expanded its network of overseas offices to 12, and now 18. It receives on its website, set up back in 1997, more than 700 international email enquiries every day, seven days a week, and has a staff of people who do nothing but respond in 17 different languages to the emails, Mr Schroeder says. Its doctors speak as many languages 'on a fluent basis', and there are also some 60 full-time interpreters covering everything from Arabic to Greek and Hebrew.

The Thai doctors tell him that 'it's so much more interesting when you have a Nigerian patient, followed by a Bhutanese, followed by a sheikh from Oman, then you get a Thai from up the street, and next you know, someone comes in from Cambodia'.

It is the most international hospital in the world, and 'if you walk through the lobby it takes you just five seconds to figure it out', he notes. 'The lobby just looks like the United Nations - every kind of dress from Nigeria to Oman to Bhutan to Thai to all the various African dresses and things. They're milling around, they're at Starbucks, they're having sushi. It's fascinating, there's just nothing like it.'

And while its foreign patients - 40 per cent of the total - account for 53 per cent of revenue, Mr Schroeder says Bumrungrad charges everyone, foreign or local, the same rates. 'The foreigners buy more because they are more intense when they come,' he says. 'We charge exactly the same whether you're the Queen of Bhutan or a sheikh in Oman.' Or a businessman in Krabi. 'It's the same price. That's a matter of ethics.'

Service ethic

At the end of the day, Bumrungrad's success stems fundamentally from the Thais' own ethic, he emphasises. Indeed the Thais were worried when he first came on board, wondering how 'Americanised' things would become.

'In fact, there was fundamentally very little to change. It was not a clean-up issue. It was taking what they'd done and moving it to the next level, and systematise it a lot so we could replicate it on a much larger scale.' The hospital was, since its early days, already revolutionary from a service perspective, he says.

'When I was first asked to interview for the job back in 1991, I came to Thailand and I did what most people would do - you ask other people what they think about the hospital without saying what I was there for. And I asked everyone from taxi drivers to hotel managers what they thought of Bumrungrad. The interesting part was - the first thing they said was - it's really good in service. Now I had been in health care for 30 years and I've never ever heard the first things out of a person's mouth when you talk about a hospital, is good service. They could say - good doctors, good equipment or good marketing even, but never 'good service'. I'd never heard that in operating hospitals on four different continents.

'And that, to me, said that they're doing something very, very different in how they approached it. And I think that foundation is what enabled us to do what we could do in later years. Yes, we gave them a nicer building; yes, we gave them lots of policies and procedures; yes, we systematised what they had been doing and formalised it. But the fundamental Thai service ethic, the fundamental approach to understanding medical care as a service business, was Thai from the beginning and is Thai today.

'This isn't some American concept,' he laughs. 'Matter of fact, Americans are very bad at service. Every time I go back to the US, I remind myself how lucky I am to live in Asia, from a service perspective.'

Pie is huge, so don't worry about competition
BUMRUNGRAD is a huge success story and hospitals across the region, including Singapore, are hot on its heels. Or at least are pulling out all stops to get a firm foothold in the medical tourism market. But Curtis Schroeder, Bumrungrad's group CEO, is quite unfazed by any notion of competition.

To begin with, the pie is getting bigger by 20-30 per cent a year, he says. 'In other words, the people travelling outside the borders (for medical care) by most estimates is growing 20-30 per cent a year. This pie is much larger than either Bumrungrad or Thailand can deal with alone. This is a worldwide phenomenon, not a South-east Asian, Indochinese or Asian phenomenon. It's happening in South America, it's happening in Eastern Europe, it's happening in Africa.'

Trends in economic growth, individual affluence and lifestyles, and in how healthcare is reimbursed, is increasingly placing the decision authority back on the patient, Mr Schroeder says. For years, the insurance companies had been the main drivers. But now, 'when people get money in their pockets, when they become discerning shoppers, they shop', he adds. And their shopping is no longer confined to a 20-mile radius of home - they will search and go for value where they find it.

'So the pie is getting much larger. And I've never been concerned about the issue of competition,' he maintains.

Apart from Bangkok, the Bumrungrad group also runs the Asian Hospital and Medical Center in Manila, and is building another in Dubai. The plan is to have between six and 10 hospitals in major markets in the next five years, Mr Schroeder says.

'But these hospitals are not necessarily built on the concept of medical tourism. They may be an element, but to some degree, the ability to be successful on a global basis may depend on where the hospital is. In Dubai, the cost structure is extremely high. I can't really give a quality-value combination that would hit people from Cambodia willing to fly to Dubai, because the cost is going to be too high. I think Thailand will always be around the same pricing as Malaysia; I think Malaysia and Thailand are slightly higher than India by about 10 per cent by most measures.

'Singapore is now closer to about two times Thailand's (prices), it was about three times. A lot of the prices have actually come down. The cost of getting open heart surgery in Singapore is lower than it was five years ago. Competition is good to some degree,' he quips.

But basically he doesn't see any need to worry about competition between Singapore and Thailand in the healthcare arena, he suggests. 'Where Singapore's strength has been is the fact that it has a highly educated workforce, it has a very strong infrastructure, and it has a very strong ethic in terms of investing in research and teaching on the academic side. What people are learning about healthcare is that 95-99 per cent of the healthcare being delivered in any country can be done by any competent operator of a hospital.

'You don't have to be the Mayo Clinic to do an appendectomy, you don't have to be the Mayo Clinic to do open heart quintuple bypass - any one of 10,000 hospitals in the world are competent in doing that. There's been a feeling that there's this whole chunk of medicine that only the top end can do, but with technology, the playing field has levelled substantially over the last 10 to 15 years, and hospitals with competent access to management and medical talent can do 95 per cent of what the average person in the population needs on a day-to-day basis.

'The small eclectic group is usually the purview of large teaching hosps - places like Mayo Clinic and SGH, National University Hospital. These are access to resources in teaching and research that give them a special edge on that top 5 per cent. I think also that Singapore has a strong advantage when it comes to biotechnology development, bringing new products to the market, developing new intellectual property - Singapore has a strong leg up on that.'

So Singapore will find it difficult to compete in the 95 per cent 'mass market' of hospital procedures 'because the price difference - it's not like it's 10 per cent different; it's a hundred per cent, and it's not something you can do by just performing better, you can't just get better at it'.

The fact of the matter is - salaries make up probably half of hospital revenues in Singapore, he reckons. 'In Thailand it's 16 per cent. In our hospitals in Manila, it's 12 per cent. You can't change that.'

He adds: 'I think a lot of people worry about Singapore and Thailand competing, (but) the pie is so big I don't think it's a question of how to beat Bumrungrad or how to beat Apollo in India. I think it's a question of making sure that all of our systems are aligned to respond to the needs of our customers wherever they are coming from, and they're coming from very different backgrounds. What an American is looking for is vastly different than a Bangladeshi or a Bhutanese. Some markets may have more success with those than others.

'And there is an awful lot of business out there, certainly more than we can probably gobble up. So it's a wide open market - a four, five or six billion dollar business sitting out there per year. I'm only doing a couple hundred million a year. So . . .'

1 comment:

vagus said...

maybe i can get a job there ;)
nice blog btw