Published on : July 31, 2012
Free Healthcare Zones - Maximize this Potential
All players in the medical tourism industry are searching for ways to attract more patients. As with any marketing strategy, creating a brand is the key to becoming known as leaders in the industry. A not so new, but constantly emerging concept, of free healthcare zones is on the tip of everyone’s tongue recently. Developing a Free Healthcare Zone is another way to showcase an area as a destination for healthcare. These zones have so much potential to succeed, but developers need to make sure there is a sustainable model for healthcare in place. “Build it and they will come,” is a motto developers should stay away from.
There are many Free Trade Zones, but not many are dedicated to healthcare. Developing a Free Zone that is focused on healthcare is becoming attractive to those interested in serving more medical tourists. Since facilities in this type of zone are usually taxed very lightly or not at all as a way to encourage economic activity, they are able to offer lower operating costs, which is attractive to medical tourists and investors. Another important factor for those developing these zones is that they will not have to pay duties on importing the equipment.
In addition to the tax reliefs, these zones will host many other benefits for patients and investors.
- Foster economic development & investment in healthcare infrastructure
- Establish world-class medical clusters of hospitals, life sciences and medical research and education
- Foster international standards and excellence
- Serve patients locally, regionally and internationally
Realization – Turkey
For years Turkey has been taking strides to develop its facilities and become known to the world as one of the best medical tourism hot spots. Its next step is to establish free healthcare zones in major Turkish cities. Istanbul, Izmir, Antalya and Diyarbakir are the current candidates for this project, but it is expected that only two or three free zones will be released in 2014.
“Turkey is working very hard to become an attraction for health tourism, and the establishing of free zones is one of the tools to make this happen,” said Dr. Cemal Yılmaz, consultant for the Turkish Project for Health Tourism Free Zones.
The Ministries of Health, Economy, Tourism and other shareholders, which work on the free healthcare zones, are working to determine strategies of action in order to be prepared to submit the project to the Cabinet in June 2012 for approval.
Dr. Süleyman Budunoğlu, Vice Chairman of Orsakon, pointed out the importance of setting a balance between the western and eastern regions of Turkey in investments and incentives with those guidelines; Diyarbakir is the most appropriate due to its economic and health infrastructure for patients and health tourists to come from all regional countries, mainly Iraq, Syria and Iran.
Consultants for this project are using the Dubai Healthcare City Free Zone as an example. These zones will establish several facilities such as education, healthcare, consultancy and research, with healthcare being the main focus. Special incentives for treating foreign patients in these zones will be offered, including 50 percent tax reduction, less government intervention and more freedom for investors and companies working in these zones.
“It will not be a copy of Dubai, as the circumstances and conditions of both countries are different. But we can learn from the experiences and problems that they are facing,” Yılmaz said. “Our model must be a real Turkish model with its own vision, goal, target groups, methods, infrastructure and medical staff.”
Standards are currently being developed for healthcare facilities and facilitators in order for them to handle international patients properly. In addition to certification, at the end of this year the Ministry of Health (MOH) will require that facilities have accreditation; the MOH has been developing the standards and criteria it will require.
Established – Dubai
Dubai Healthcare City (DHCC) is the first international, integrated free healthcare zone developed to promote medical tourism in Dubai. Launched in 2002 by the UAE Vice President, Prime Minister and Ruler of Dubai, His Highness Sheikh Mohammed Bin Rashid Al Maktoum, DHCC is home to two hospitals which are internationally accredited, over 100 medical centers offering expertise in more than 80 specialties, over 2,500 licensed professionals speaking over 40 languages and more than 180 commercial healthcare and retail businesses.
The plan for this free healthcare zone was to actualize the concept of a unique free healthcare zone with what would be the center of clinical, educational and research excellence in the region and globally. The project was supported by the Government of Dubai, and the establishment of a corporate governance infrastructure, central to the free zone status is made up of comprehensive regulations, rules, policies, standards and guidance, designed to guarantee the delivery of world-class qualitative healthcare related services within the free zone.
They work with The Center for Healthcare Planning and Quality as a regulator for implementing international best practices in patient safety and practitioner licensing. They are also the home of Harvard Medical School Dubai Center and Dubai Harvard Foundation for Medical Research.
DHCC is an attraction for investors as they receive many financial incentives like 100 percent tax-free income, 100 percent foreign ownership, no corporate tax, no income tax and no restrictions on capital and clinic lease/purchase options at competitive costs. They also offer fast-track company registration and immigration procedures, which allows quick hiring of healthcare professionals.
“The majority of DHCC businesses are from foreign investors. This is a very good thing as it supports our strategy to offer a diverse range of healthcare services as we continue to bridge the gap in the market for high-quality specialist care,” said Dr. Ayesha Abdullah, managing director of DHCC. “Also, with the increase in income of the population – and lifestyle change – patients can afford private healthcare and therefore, attracting international brands and foreign investors is key to our development strategy.”
All of these components contribute to the growth of the healthcare zone and to ensuring it is a world-class destination for healthcare, which in turn attracts patients from all over the globe.
“Our emphasis is as much on retaining local patients that typically travel abroad for medical treatment as it is to attract patients from overseas. DHCC’s continued focus on attracting internationally accredited providers and physicians is integral to making DHCC a leading medical tourist destination,” Abdullah said.
DHCC noted that over the past three years there has been a growth in medical tourism, and currently 15 percent of their patients are medical tourists. They saw over 500,000 patients in 2011. By the end of 2012, medical tourism is expected to generate AED 6.1 billion.
While healthcare is their main priority, they offer a range of amenities such as: hotels, restaurants, banks, shopping malls, super markets and spas. They are also linked to major transportation networks and are only a 10-minute drive to Dubai International Airport. All of these amenities are a huge attraction for local and international patients as convenience is important, especially when you are in unfamiliar territory or need to stay in the hospital for a while.
DHCC has successfully attracted and retained a number of international brands – success metrics include increasing the number of medical centers, expansions and diversity of specialties offered year-on-year.
DHCC is aiming to further strengthen the healthcare infrastructure through increased focus on medical education and research. The Mohammed Bin Rashid Al Maktoum Academic Medical Center, the academic and research arm of DHCC, includes a 400-bed university teaching hospital, conference center, medical library, dental school and medical simulation center.
Foreign Hospitals and Foreign Investors – Korea
Korea has free economic zones (FEZ) where world-class cities are built through development of cutting-edge airports, ports and office facilities as well as schools, hospitals and tourist facilities.
Healthcare plays a major role in the FEZs in Korea, even though it is not the main focus. Recently, new ordinances were passed in order to allow foreign medical centers in FEZs. This was always permitted, but there was a lack of rules on procedural details that made it difficult to set them up.
Foreign hospitals are important to FEZs as a way to attract foreign investors, raise global competitiveness as special economic zones, and they will help to attract more medical tourists to the destination. According to the Korea Herald, the Seoul government has been interested in opening foreign medical facilities since 2002 as a way to improve the residential environment for foreigners and boost foreign investment.
Since the new ordinances have been passed, the first foreign hospital will be a 600-bed facility built in the Incheon FEZ in Songdo. The Ministry of Health and Welfare expects that the envisioned hospitals will take in around 60,000 patients from in and out of the country annually.
The new ordinances require that:
- The foreign medical institutions must operate in cooperation with medical facilities run under foreign law, and doctors from the hospital must make up for more than a half of members of the decision-making body regarding healthcare service
- For flexible operation of human resources, the minimum portion of foreign license holders will be 10 percent, and one or more foreign license holders shall be assigned to each department that will be established
What is the Medical Tourism Association™ (MTA) Doing with Free Healthcare Zones?
A lot of times free healthcare zones are built with no road map. No one is really looking at the initial stage and figuring out how they will bring in business; they are expecting that once it’s built the business will come. Another mistake commonly made is that they are developed more for real estate and not healthcare.
The MTA sees how much potential zones like this could have for the industry, so it has launched a program to raise awareness and provide guidance to governments on creating a sustainable model for free healthcare zones. Putting all pieces of the puzzle together before development is essential. The MTA will provide guidance in areas such as infrastructure, location and the right facilities to be built for healthcare, education and other industries not related to healthcare. For more information on this program please send an email to info@MedicalTourismAssociation.com.
i. Dr. Cemal Yılmaz, Consultant, Turkish Project for Health Tourism Free Zones
iii. Dr. Ayesha Abdullah, managing director of DHCC
iv. Dr. Ayesha Abdullah, managing director of DHCC
v. Dr. Ayesha Abdullah, managing director of DHCC
vi. The Korea Herald, Kim So-hyun
vii. Ministry of Health & Welfare Korea, Procedure of Approval for FEZs