Medical Tourism in Singapore: A Structure-Conduct-Performance Analysis

Abstract

This study presents a structure-conduct-performance analysis of the 17 Singaporean hospitals that are engaged in the medical tourism industry. Using data from hospital Websites, Singapore's Ministry of Health and the Singapore Department of Statistics, it argues that barriers to entry give it the structure of an oligopolistic industry. However, because the industry is dominated by two publicly controlled hospital groups, the conduct and performance of the industry differ from those of the classical oligopoly model. The presence of two types of consumers, Western and Southeast Asian, also distinguishes this industry from the classical model. In the end, Singapore's medical tourism hospitals appear to perform well in serving their international and domestic clients.

Keywords:

• hospital
• medical tourism
• structure-conduct-performance
• Singapore

Notes

1. Johns Hopkins-NUH International Medical Centre is a privately run member of the National Health Group. It was relocated from the National University Hospital to Tan Tock Seng Hospital (TTSH) in 2005.

2. There are seven national specialty centers in Singapore for heart, cancer, eye, skin, neuroscience, communicable diseases, and dental care. We omitted the skin and communicable disease centers because they do not have international patient centers, and we omitted the neurological center because it does not provide information about the numbers of beds or admissions.

3. Raffles Hospital is part of Raffles Medical Group, but it is the only hospital in the group.

4. Treating the three groups as three firms, the four firm concentration ratios are 30.4 + 43.0 + 11.3 + 5.5 = 90.2% for hospital admissions, and 33.9 + 42.2 + 12.8 + 4.8 = 93.7% for beds. The HHIs are calculated as 30.4² + 43.0² + 11.3² + 4.7² + 5.5² + 5.1² = 2,979.2 for admissions, and 33.9² + 42.2² + 12.8² + 3.8² + 4.8² + 2.4² = 3,137.13 for beds. Although an HHI can range from 0 to 10,000, values above 1,800 are usually considered high, suggesting an oligopolistic industry.

5. Class B1 to class C wards are given subsidies; 80% for class C, 65% for class B2, 50% for class B2+ and 20% for class B1.

6. The Ministry of Health does not publish data for a hospital-treatment-ward category when fewer than 30 billings were reported to the MOH for that category during the past year.

7. The term lap band is a short form of “laparoscopic gastric band” -- an adjustable plastic band that is placed around the patient's stomach laparoscopically as a weight-loss technique.

8. We think that the cost of treating a foreigner should be a bit higher than the cost of treating a local patient, due to the additional costs of operating the hospital's international patient center. Subsidized local patients represent a very different market.

9. The hospitals' returns on equity are included in the non-financial services figure.