Global Expansion Strategy

of
Bumrungrad Hospital

Prepared for Strategic and International Marketing Module

of
Master of Business Administration
in
Health Care Management
Geneva Business School
Yangon, Myanmar.
by
Dr. Zayar Naing
ID: 20JUN169MBA
 Global Expansion Strategy
of
Bumrungrad Hospital

Bumrungrad hospital is well known internationally for their high medical and
service standards, five-star facilities and very competitive prices. You can even walk into
the hospital without an appointment, see a US Board Certified specialist in under 15
minutes, pay 15$ for the consult and have a Starbuck’s cappuccino on your out. That’s
really quite unique for them back in 2004. They have also got several international
awards including Best Small Cap Company award as the first time this award has been
made to a hospital company. Their referral offices are located in almost all of the
countries around the world and they even have opened hospitals in UAE and
Philippines.
It has started initially as a 200 bedded hospital when it opens doors for business
in 1980. Nine years later, Bumrungrad become public, and it emerge as the best
privately managed hospital in Thailand. It has a good reputation and is well known
among Thai people and foreigners living in Thailand since the hospital is famous in
international standard treatment, service, and professionals. On the first day of 1997,
they shifted to their 554 bedded new facility which is located at the center of Bangkok.
Unfortunately, in July of 2017, the Asian financial crisis began in Bangkok and the
private sector demand for health care in Bangkok and pretty much around the region
dried up. The crisis had its fall-out on the middle-class Thai population from which
Bumrungrad derived most of its revenues. However, as the silver lining of the crisis,
Thai Baht depreciating from 25/$1 to 50/1$, became half price almost overnight for
those paying for their care in US dollars. That prompted them to change their strategy
and start marketing to patients in the surrounding area. That let them to begin foray
into caring for international patients. They have used the crisis as an opportunity to
build market share by following the Jack Welch approach, which is that where you make
your biggest share is during down markets.
After moving to the new location, Bumrungrad began their aggressive marketing
effort to project itself as a global health care place with all international standards. The
new hospital has a western-style ambience to woo foreign patients. The lobby of the
hospital is similar as a five-star hotel with attractive oriental carpets covered the marble
floors while flowering trees and shrubs are tastefully arranged around. The hostesses are
trained in different foreign languages and there is a variety of restaurants in the lobby
which cater to people of different nationalities according to their preferences. While big
brands like McDonalds and Starbucks are there in the lobby, Thai and Japanese
restaurants are there as well. They made the ambience of the hospital to feel like home
by the patients. They have made the hospital not to be afraid of but to be feel like a hotel
or supermarket where the people usually visit every day.
As Bumrungrad aim to provide a great customer experience, it ensures that their
patients are treated in quick time. The average time for treatment of outpatients is just
42 minutes estimate. To give their services even faster and more efficient, Bumrungrad
installed a medical information system called “Hospital 2000” in mid-2001. The system
facilitated dealings with customers of different nationalities. Customer could register at
the website and could choose to communicate in any of 17 languages. When patients
checked into the hospital too, they could indicate their language of choice, from among
Japanese, Chinese, Thai and English and the system automatically translated all their
records, payment particulars, medical bills, and pharmacy labels into these languages.
The system was originally a combination of digital data and a very sophisticated scan
and sort [system for handwritten documents]. In 2007, Microsoft purchased H2000
software and modified it as Amalga HIS and then the hospital become totally digitalized
hospital in 2009. They have also developed computerized physician order entry (CPOE)
in conjunction with their HIS for medication directly to Swisslog robot dispensing,
which dispense in unit doses. The robots put the unit doses in the sequence in which the
nurse should administer the medication. They have also put in bedside monitors and
medication-administration stations because one of the main sources of medication
errors are simple transcription errors by the pharmacist or nurse not being sure what
the doctor wrote or said. These systems help to eliminate errors by typing in or
identifying a drop-down menu by a doctor before he selects the medication, dosage, and
route. This allowing them to deliver more medication to a higher number of patients and
increase patient’s comfort level that they’re getting the right medication at the right
time, the right dose and so on.
For the highly skilled professionals, Bumrungrad have opened an opportunity for
US trained Thai doctors to come back and have a meaningful practice in the private
sector in Bangkok. Some of them even have obtained their U.S. board certification
before they came back. Besides, some of the professors in medical treatment from
famous universities in Thailand has joined the hospital. It makes the patients to trust
that they would get a high-quality treatment from them. To get international
recognition, Bumrungrad had applied and received the ISO 9002 accreditation for all its
departments and systems in March 1997 and became the first healthcare company in the
world to receive such certification. They have also become the first JCI accredited
hospital in Asia in April 2002. They even hired an international management team led
by American professionals who had prior experience of running a hospital in California.
The combination of management practices and top-class medical skills within the
hospital walls is one of the factors to their success.
Well-planned pricing is also a major contributor to Bumrungrad’s success. As
long as quality is held to be good or better, the price is the most compelling factor. The
health care costs at Bumrungrad are significantly cheaper than those at similar medical
facilities at Hong Kong, Singapore, and US. They have even provided low-rent service
apartments for the family of those being treated at the hospital.
Bumrungrad also decided to use Internet as an information and marketing
medium to promote its health care services to foreign patients. It launched its website –
www.bumrungrad.com for the first time in 1997. The website had several user-friendly
features to provide the healthcare information. Visitors could find out about the medical
facilities and the range of treatments available at the hospital. One of the main features
of the website was the ‘Find a doctor’ section. Using this feature, patients could choose
between 600 doctors and book an appointment online, on the basis of their preferences
and requirements. Thus, the patient’s preferences for the kind of treatment, the
nationality of the doctor and so on were taken care of at the first instance. Appointments
were confirmed within two hours. Nearly 150 appointments were booked every day
through the site and the customers could also view their medical records through the
website.
In the late 1990s, at the time of Thailand promoting medical tourism as an export
product, Bumrungrad opened representative offices in Ho Chi Minh City (Vietnam),
Yangon (Myanmar), Dhaka (Bangladesh) and Laos (Cambodia). The hospital uses their
patient records and profiles to analyze the appropriate location to establish a
representative in the global market. For the process of representative selection, the
hospital contacts local hospitals in the country of interest and study the possibility of
setting up a representative. They usually go to the hospital in foreign market to observe
activities and learning their culture before choosing any company to be the
representative. In some countries, the hospital has set up the representative by hiring
local interpreters who are able to speak Thai to be coordinators between the patients
and the hospital. When a country develops easy flight connections to Thailand like
Ethiopia and Mongolia, those countries often become ideal markets for the hospital.
Then, they open an office and find a representative in one of those markets and they use
that to help develop those markets because they just become kind of a natural regional
referral center for those markets.
Those representative offices give the hospital information to the interested
patient and ask about the signs and symptoms of the patient. Then, they pass that
information to the hospital which relays information to corresponding doctor.
International Medical Coordination Office (IMCO) from the hospital sends back the
doctor’s feedback about a preliminary plan of how they would be diagnosed, what
treatment plan might be and how much it would cost. If the patient wants to get
treatment, representative will coordinate with the hospital to arrange all transportation,
visa, and all other logistics for the patient such as providing a car or helicopter to pick
up the patient at the airport. If the patients would like to have a doctor or a nurse to take
care of them after they get back to their country, the hospital can arrange staff to fulfill
their requirement accordingly. Once they arrive to Bumrungrad, their appointments
have been prescheduled and any special needs in the way of interpreters, assistants,
wheelchairs or whatever will have been identified. Once they come for their doctor visit,
they are under the care of their attending doctor, but they have a supplemental
coordination who is a case manager from IMCO.
Bumrungrad also started targeting foreigners coming in for routine health
checkups which is one of its main business segments. Initially the main customers
targeted for routine health checkups were the Japanese. For this, it tied-up with a travel
agency in Thailand catering mainly to the Japanese visitors and recruited a Thai doctor
who could speak Japanese. In April 2000, Bumrungrad tied up with Thai Airways
International, the government owned international airlines, to run healthcare package
trips to Thailand. Thai Airways marketed a medical package at Bumrungrad, alongside
its traditional tourism and other relaxation packages. In late 2000, Bumrungrad
launched a campaign aimed at attracting patients in the UK with a package containing
airfare, medical charges, and accommodation. That entire cost was a mere one third of
that in a hospital in UK. Bumrungrad employed similar aggressive marketing tactics to
tap other European countries where people had to wait for a long time for getting
treatment in their countries’ National Health Schemes, while the other option of private
hospitals was very expensive. Apart from Europe, Bumrungrad also targeted countries
like Japan and US where healthcare costs are high and insurance net is low. The hospital
offers services which are not covered under medical insurance including cosmetic
surgery, laser surgery, skin resurfacing, skin and dental treatment and comprehensive
checkups.
After the September 11 incident in 2001, Bumrungrad is very quick to realize this
as an opportunity to boost revenues from Islamic countries and serve patients from that
region. Entire staff of the hospital are given sensitivity training on the fundamentals of
Islam. The staff greeted Islamic patients in traditional style. For the first time in
Thailand, a Halal kitchen was opened in the hospital which served religiously acceptable
halal food for Muslims. The kitchen was certified by the Islamic committee of Bangkok.
The hospital also opened an Islamic prayer room and had seven Arabic interpreters on
board to communicate with the patients. Each room had a prayer rug and a sign
pointing towards the holy city of Mecca. They have also learnt the culture from patients’
behavior such as personal space between men and women; the hospital has to offer
female doctors for Middle East women as being touched by stranger especially men are
prohibited. All these initiatives were aimed at recognizing and fulfilling the specific
cultural needs of Muslim patients, apart from their healthcare needs. These measures
enabled Bumrungrad to attract 10,000 patients from the Middle East in 2001 only. In
early 2002, Bumrungrad launched an advertising campaign in Arabic newspapers. It
also tied up with Middle East travel agents to promote customize services. That
Bumrungrad’s effort have made a 64% rise of Middle East patient volume compared to
the corresponding period in 2001. In August 2002, the hospital received 2700 patients
from UAE alone and they accepted 100,000 patients from Middle East in 2008.
In 2005, Bumrungrad rebranded as Bumrungrad International Hospital (BIH)
and it started to expand its investment to Asia and Middle East market. Bumrungrad
investment plans were to continue the expansion of investment and they launched a
cardiac program in Beijing with Chinese investors. The flow of investment in overseas
market penetration was not limited there. The hospital has had agreements to manage
hospitals in Myanmar and Bangladesh since 2003. Moreover, in early 2008,
Bumrungrad also increased its value of investment to 53% of shares in Asian Hospital, a
private hospital in Manila, Philippines. They have also bought Asia Renal Care which is
a group of 96 dialysis clinics in eight countries. Furthermore, BIH is one of the
international healthcare centers, including John Hopkins and Cleveland Clinic from
USA, who got invited from UAE to manage hospitals in UAE. It was a five-year
management contract with the government of UAE to manage the Al Mafraq Hospital,
46o bedded hospital in Abu Dhabi. They have also signed joint venture contract with
Istithmar PJSC in order to build a new hospital in Dubai.
The idea behind those investments and management contracts is that they would
take the Bumrungrad name, history, and systems they have developed over many years
and look for opportunities to expand the brand image of Bumrungrad in Asia. So, they
can attract more patients from those regions which extend from Middle East to Pacific
Ocean. Moreover, BIH would also be able to learn the behavior, culture difference and
common disease and illness of those specific groups of patients to give more customized
service to them.
When Bumrungrad went for global expansion, they had faced certain barriers
relating to the target markets. Among them, language is the main problem in the
beginning although the hospital hired local interpreters. There were still some
misunderstandings since medical terms are too difficult for the persons with no medical
knowledge. To solve this problem, the hospital arranged training for representatives to
teach them basic medical knowledge along with medical vocabularies. Moreover, the
hospital also hired more staff with some medical knowledge to reduce this problem. In
term of quick responsiveness, since sometimes there were many patients, the
representatives were not able to serve the service in time. The hospital solved this
problem by adding more channels of contact and the patients are able to contact directly
to the hospital. All information about patients from the representatives will be gathered
by IMCO. In order to improve the service, the hospital has annual conference with the
representatives. The representatives and the hospital share knowledge and obscurity
they found among each other.
Economic condition in each of foreign market is also important factor that
impacts investment of BIH in target markets. In an unstable economy, patients may
have financial problems as the cost of treatment along with the cost of travelling is quite
high and patients usually choose to get service locally. Moreover, the invested value
would have change in almost overnight due to inflation rate in an unstable economy.
Like the economic condition, political conflicts in both Thailand and foreign markets
also influences on patients’ decision to get treatment in Bumrungrad. For example, in
2008, some patients canceled their appointment with the hospital because there was a
demonstration and closure of Suvarnabhumi Airport in Bangkok. Moreover, the
regulation of foreign governments is also a key factor for investing in their countries.
Most of the countries do not allow a foreign company to invest in whole subsidiary. The
foreign company must have one or more national partners to operate with. Most of the
time, the foreign shareholders can invest in the new company only up to 49% of the
whole investment. Furthermore, there are also some construction regulations in some
countries like UAE and Myanmar that the height of the hospital has to be lower than the
pagodas or mosques and the area of building have to be located far away from those
religious buildings. Another barrier for Bumrungrad is culture difference for each
country. To solve the problem, the hospital usually studies the culture of each country
from local representative office and the patients during the appointments. Then, they
have adjusted for the patients from the greeting styles, habitual food to praying rooms
according to the preferences of the patients.
As Bumrungrad become more and more well developed in health care industry,
their offshore global health care model focus on being a multispecialty tertiary hospital
center while supporting to develop many heavy-duty subspecialties like neurosurgery,
cardiology, oncology, and plastic surgery in the hospital. While the world is aging, more
and more people are sick around the world. The cost of health care, particularly in North
America and Europe, seems to continue to go up and ability of traditional payors,
including the government is getting more limited. International travel is getting less
expensive and more readily available and acceptable to many people. So, the long-term
trends to facilitate patients feeling more and more comfortable with going overseas are
positive. In terms of aligning their business culture, Bumrungrad focus on their top
three goals of the company to satisfy patients, to satisfy doctors and staffs and to pursue
continuous quality improvement along with the expansion of hospital campus and
global expansion.
For continuous quality improvement, Bumrungrad initiated town hall meetings
in 2007 at which staffs can ask open questions and give innovative suggestions and
opinions. The intention of this approach is to solicit ideas from staff, evaluate them and
then reward staffs when they come up with innovations, both large and small. Awards
are usually in cash and sometimes with a points program which can redeem for gifts by
collecting points. Moreover, they also have initiated corporate conference where quality
improvement projects are showcased every November. From the presenting projects, 20
finalists are selected and also teach them about the research methodology in
conjunction with the local university, so that they’re not just improvement projects and
they bring in world-class comparative data on whatever problem they’re looking at.
In conclusion, as the world become a global village, Bumrungrad is getting
themselves ready for not only international patients, but also increasingly insurers and
third-party payors as to how they want to be paid for patients and the reports they want
for follow-up care once patients return to their home countries.