Medical Tourism and the Advantages of Recently Signed Free Trade Agreements

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Free Trade Agreements (FTAs) have been proven to be useful in opening up foreign markets to U.S. exports and to protect U.S. interests. In the case of FTAs in the healthcare industry, U.S. healthcare providers or hospitals will practice or open up facilities in a foreign country. Aside from tapping into a new market, there are many other advantages to FTAs, Luis Felipe Arango Pardo, managing director of the UC San Diego International Program shared the ins and outs of FTAs at the 5th World Medical Tourism & Global Healthcare Congress (WMT & GHC).

Free Trade opportunities and medical tourism

Many patients from the United States seek care in foreign countries due to cost, long wait times for procedures and lack of insurance coverage. Some countries offer the same procedures at a much lower cost compared to the United States, and the quality is often equal or better.  Below are the potential opportunities that foreign healthcare providers or U.S. providers with an FTA could capitalize on:

  • It is estimated that more than 40 million residents in the U.S. are without medical insurance
  • It is estimated that more than 120 million residents in the U.S. are without dental insurance
  • An estimated 1.6 million residents from the U.S. will travel to other countries for medical care in 2012
  • An estimated 484 thousand foreign nationals will travel to the U.S. for medical care in 2012

Current FTAs and the rights that come with it

The U.S. presently has various Free Trade Agreements in place with Latin American countries such as:

  • Mexico
  • Chile
  • DR – CAFTA includes:
  • Guatemala, El Salvador, Nicaragua, Honduras, Costa Rica, Dominican Republic
  • Peru
  • Colombia
  • Panama (Not in force yet)

Once these agreements were signed they start to operate in different phases, some will be in place not until the next year, some will take place in a few years and others will happen over the next 10 years.

Rights of a FTA

The rights that are generally negotiated when the U.S. signs a FTA with another country include:

  • The U.S. will have easier ways to export to these countries
  • U.S. companies  will have the rights of the national company to build
  • The right for a U.S. company to bid on certain government procurements in the FTA partner country
  • The right for  U.S. investors to get adequate compensation if its investment in the FTA partner country is taken by the government (e.g., expropriated)
  • The right for U.S. service suppliers to supply their services in the FTA partner country; the U.S. are considered nationals with the Free Trade Agreement
  • Protection and enforcement of American-owned intellectual property rights in the FTA partner country; toughest difficulties in negotiation of this agreement
  • The right for U.S. exporters to participate in the development of product standards in the FTA partner country.
  • Reduced tariffs- Some tariffs reduced from 20 percent to 0 when country of origin is USA. This applies to export of goods, today not all products are tax exempt but in time it will be

Note: Source Export.gov

Medical tourism & Free Trade – Costa Rica

Currently, there are many Americans and expatriates living in Costa Rica. This presents the opportunity for Costa Rican hospitals to offer services to U.S. nationals and for U.S. hospitals to offer services to Costa Rican nationals. Costa Rica currently has 29 government owned hospitals which are ran by the Caja Costarricence de Seguro Social (CCSS) and six private hospitals. Free Trade has allowed foreign investment into the CCSS hospital system.  They are seeing many medical tourists that spend an average of 11 days in a hospital and around $6-7,000 per visit.

Medical tourism & Free Trade – Colombia

Colombia has a great opportunity because the government is promoting medical tourism very strong, so hospitals are getting huge tax deductions in bringing patients to Colombia and they are promoting local hospitals to get international accreditation.  The government is investing a lot of money to promote medical tourism as destination, for example they launched ProExport a company designed to promote Colombia to other countries.

“The opportunity I see for the U.S. hospitals is that they will have very big tax exemptions if they get patients from other countries, they could invest and develop hospitals in Colombia and then they would benefit from these exemptions,” said Pardo.

  • Hospitals
  • 1100 Government owned hospitals
  • Instituto de Seguro Social (ISS)
  • Currently privatizing
  • Public healthcare system ran by private provider
  • Popular Medical treatments in Colombia
  • Cosmetic Surgery
  • Gynecology
  • Stem Cell
  • Neurology
  • In Vitro Fertilization
  • Free Trade Agreement
  • Eliminate 80% of import tariffs immediately
  • Remainder of tariffs to be eliminated over next 5 years

Countries specialization

Many Latin American Countries have utilized the medical tourism phenomenon to specialize in various procedures:

  • Colombia- In Vitro Fertilization
  • Argentina- Bariatric surgery
  • Brazil- Orthopedic surgery
  • Mexico- Gastric bypass and dental crowns
  • Costa Rica- Multiple sclerosis
  • Ecuador- Stem cell research

The United States specializes in invasive surgeries such as cancer/oncology and cardiovascular; other procedures they specialize in include orthopedic and cosmetic.

Medical tourism & Free Trade opportunities

  • Business Opportunities
  • Joint Ventures
  • Hospitals
  • Medical Groups
  • Insurance Companies
  • Telemedicine
  • Second Opinion Services- very demanding
  • Medical device & equipment sales
  • Travel facilitators
  • Hospitality services
  • Education
  • Certification courses

FTAs have the potential to accomplish many things within the healthcare industry of that country. In addition to the improvements in local healthcare, revenues for the hospitals and the economy can increase with the incoming flow of foreign patients, all of this will create new jobs and companies further developing the economy.