Medical Tourism in Developing Countries

98 ● Medical Tourism in Developing CountriesProduct differentiation succeeds in fostering brand or place loyalty onlyamong a certain type of patient and tourist. 6 The extent to which a destinationachieves monopoly status depends on real and perceived factors.Among the former are tangible sights or natural resources that cannot beduplicated. There is, for instance, only one Eiffel Tower; there is only onehospital in Cuba where vitiligo is treated. The development of niches is aform of product competition, and depending on the size of the niche, itmay also result in price competition. In addition, tie-ins to hotels andvacation packages allow providers of medical tourism to price servicesacross a larger price range.Price competition among LDC medical providers in part explains whyoperations that cost $5,000 in Chile are available in Argentina for $2,000. 7Price competition within any given country also explains price differentials(in Singapore, where health services are as expensive as in the West, theMount Alvernia Hospital began offering prices on par with those inMalaysia and India 8 ).Currency FluctuationsThe price of a service export reflects the value of the currency in which itis sold. Therefore, those countries whose currencies are weak on internationalmarkets have an advantage over those with strong currencies insofaras the service supplied is more competitive. Asian countries continue to behighly competitive because their currencies are still weak from the Asianfinancial crisis (except for Singapore, which has managed to withstand theworst of the crisis, and thus its currency remained strong, and its medicaltourism prices are high). Favorable exchange rates resulting from the financialcrisis were cited as one of the reasons Malaysia has been attractinggrowing number of foreign patients. 9 In Thailand, the crisis effect on medicaltourism was bolstered further by the fact that in the 1990s, Thailandbuilt private hospitals (its hospital capacity grew by 70 percent during1990–97), so that by the time the Asian crisis hit, there was an overcapacity.10 As a result, the Thai government began promoting medical tourismto attract foreign patients. Across the globe in Argentina, authorities alsobegan promoting medical tourism (among other industries) during thedevaluation of the peso following the economic crisis of 1999–2002. Thelow price of the currency in part explains the large price differential betweenstate-of-the-art medical services in Chile and Argentina. 11 Finally, the SouthAfrican rand has enjoyed a long-standing low exchange rate with majorcurrencies, making medical tourism packages seem like bargains. 12