Investing in Hospitals/Clinics to Provide Healthcare Services

November 2021

Indicative Return:

10% – 15%

Investment Timeframe

Medium Term (5–10 years)

Business Model Description

Investments in Hospitals/Clinics to Provide Healthcare Tourism Services for Medically Underserved Countries in the Region

Expected Impact

This IOA will increase access to high-quality healthcare services for the populations of neighboring countries.

Regions

Eastern Anatolia Region, Southeastern Anatolia Region

Sector
Health Care > Health Care Providers

Direct Impact SDGs:

Indirect Impact SDGs:

Sector
Health Care

Development need: According to the Sustainable Development Report Dashboard of 2020, significant challenges remain in Turkey’s performance on SDG 3 (Good Health and Well-being). This situation is exacerbated by COVID-19

Policy priority: Pharmaceuticals and medical devices are listed as priority investment areas (11th Development Plan and the 2020 Presidential Program). The Ministry of Health 2019-2023 Strategic Plan highlights constraints such as the the inefficient use of information technologies, the limited scale of R&D, inequalities in regional health services and the underemployment of health personnel

Gender inequalities and marginalization issues: 60% of healthcare workers in Turkey are women. (19) There is no official data providing a gender-based breakdown of the job categories in the healthcare sector. There are 1.83 doctors per 1000 people in Turkey (20), this is below the OECD average of 3.4.(21) There are currently 19.05 hospital beds per one million people in the country. (20) Although the regional breakdown of these indicators are not provided, rural and remote areas have an unequal access to health facilities and personnel.

Investment opportunities: Wide-scale reforms and significant sectoral growth drive investments towards healthcare.The production of high-value added pharmaceuticals and medical devices are marked as priority investment areas by the country. Moreover, the presence of many clinics and hospitals under the internationally accredited Joint Commission International supports prospects for health tourism

Key bottlenecks: The lack of collaboration among scientists and industry & the shortage of opportunities to encourage the private sector to invest in basic research limit scale. Overall, health research and R&D infrastructure development is necessary

Subsector
Health Care Providers

Development need: This subsector was chosen in line with the inequality of access to healthcare services within and beyond Turkey. Regional differences in service delivery can be addressed through business models such as telehealth and health tourism.

Policy priority: Goal #6 listed in the Ministry of Health’s 2019-2023 Strategic Plan calls for the contribution of the Turkish healthcare sector to global service delivery and national needs.In line with this, the report notes that health tourism and remote diagnostics are vital areas for service delivery

Gender inequalities and marginalization issues: 60% of healthcare workers in Turkey are women. (19) There is no official data providing a gender-based breakdown of the job categories in the healthcare sector. There are 1.83 doctors per 1000 people in Turkey (20), this is below the OECD average of 3.4.(21) There are currently 19.05 hospital beds per one million people in the country. (20) Although the regional breakdown of these indicators are not provided, rural and remote areas have an unequal access to health facilities and personnel.

Investment opportunities: Wide-scale reforms and significant sectoral growth drive investments towards healthcare.The production of high-value added pharmaceuticals and medical devices are marked as priority investment areas by the country. Moreover, the presence of many clinics and hospitals under the internationally accredited Joint Commission International supports prospects for health tourism

Key bottlenecks: The transportation and telecommunication infrastructure in certain regions might prevent access to remote diagnostics or health tourism services.

Market Size and Environment
Critical IOA Unit

Number of health tourists visiting/year

Indicative Return

10% – 15%

Interviewed investors with current portfolios in city hospitals in Turkey estimate an IRR of 10% to 12% (EUR based).

According to interviewed service providers, private hospitals accrue 15% to 20% returns from Social Security Institution (SGK) agreements and 20% to 30% returns if operating independently of SGK agreements.

Investment Timeframe

Medium Term (5–10 years)

Once an investment is made to build a hospital, 2 to 3 years is needed for the construction and licensing processes. After the official opening, at least 5 years is needed for the hospital to generate profits

Ticket Size

USD 1 million - USD 10 million

Market Risks & Scale Obstacles

The 11th Development Plan states that the legal infrastructure behind health tourism is incomplete. Medical tourism is a relatively new venture in Turkey for which the legal, economic and hard infrastructure have to be developed.
Market – Volatile
The priority subregions have high geopolitical risks due to security concerns and the political instability in the border areas
COVID-19 might inhibit the flow of medical tourism for the foreseeable future due to contagion effects.

Sustainable Development Need

There are mid to low income households in developing and underdeveloped countries who struggle to afford and access quality healthcare services.

Treatments in Turkey helps save approximately 60 percent in medical operation costs compared to many European countries. (13)

Gender & Marginalisation

There are regional disparities in the access to health services and personnel in Turkey and its neighboring countries

Expected Development Outcome

Increase access to healthcare for two target groups: mid-low income households in developed countries and citizens of low-income developing regional countries

Increase the job opportunities available in the region and contribute to the economic development of the community

Provide access to quality healthcare services for around 1 billion people and 57 countries within the proximity of a 4-hours long flight (4)

Gender & Marginalisation

Increase access to medical services for female, inmigrants or rural population

Primary SDGs addressed

3 – Good Health and Well-Being

3.b.1 Proportion of the target population covered by all vaccines included in their national programme

3.b.2 Total net official development assistance to medical research and basic health sectors

3.c.1 Health worker density and distribution

Current Level86.47% (18)

2.16 billion US$ (18

1.75 per 1 thousand people (18)

Target Level100%

This is above the world average (1.49/1 thousand), but below the OECD average of 2.86/thousand (18)

8 – Decent Work and Economic Growth

8.9.1 Tourism direct GDP as a proportion of total GDP and in growth rate

Secondary SDGs addressed

Directly impacted stakeholders

People
Patients, caregivers, patients in neighboring countries, healthcare professionals
Gender inequality and/or marginalization
Women, inmigrants or rural population with unequal access to medical services
Corporates
Health tourism agencies
Public sector
Governments, Public and Private Payers, Social Security Institutions

Indirectly impacted stakeholders

People
Tourism sector employees
Corporates
intermediary booking organizations; airlines, hotels, other tourism service providers

Outcome Risks

This business model might redirect healthcare resources and personnel away from areas covered by public health insurance schemes and national health capacity (13)

Environmental damage of international travel is a potential negative externality of health tourism

Infection and the cross-border spread of antimicrobial resistance and dangerous pathogens might be a recurring phenomenon, especially within the context of COVID-19 (14)

Impact Risks

Unexpected impact risk

Execution Risk

Impact Classification

B—Benefit Stakeholders

What

Important, positive outcome: improved access to affordable and quality healthcare delivery.

Who

The underserved populations with limited access to quality healthcare services in the regional developing and least developed countries are likely to benefit from this investment.

Risk

Medium Risk (The risks of this model include infection and contagion effects. Furthermore, there may be potential medico-legal issues if proper quality standards are not maintained.) (14)

Impact Thesis

This IOA will increase access to high-quality healthcare services for the populations of neighboring countries.

Policy Environment

One of the strategic aims of the Health Transformation Project (HTP), inaugurated by the Turkish Ministry of Health in January 2003, is to ” increase the capacity of health tourism, tourist health and cross-border health services provision”

(11th Development Plan): The 11th Development Plan declares the government’s plans to undertake promotion and investment activities towards the development of health tourism

(Ministry of Health’s 2019-2023 Strategic Plan): Expanding the health tourism sector is among the goals listed by the Ministry of Health’s 2019-2023 Strategic Plan

Financial Environment

Fiscal incentives: VAT Exemption from medical services is available for foreigners who do not normally reside in Turkey, plastic surgery operations are excluded from this exemption. (15)

Other incentives: The government has a financial support package for international health tourism investments, including registration and protection, reporting and consultancy, documentation, advertising and marketing, foreign unit and agency commission support etc.

Regulatory Environment

(Regulation): Bilateral Social Security Contracts: If a foreign national of a bilateral contract party state with Turkey comes to Turkey for treatments, they will be able to cover part of their medical expenses through their domestic healthcare scheme and pay the mark-up (9) (10)

(Regulation): The Regulation on International Health Tourism and Tourist Health has been published in the Official Gazette #30123 on the 13th of July, 2017. It sets out the principles and the procedures with which to govern international health tourism in compliance with national and international standards, with respect to human health

(Regulation): The Joint Commission International is the global healthcare services accreditation organization certifying the quality of healthcare tourism facilities

PRIVATE SECTOR

The full list consisting of 940 government-accredited health tourism institutions can be accessed at source (16), government-accredited medical tourism travel agencies- the full list can be accessed at source (17)

GOVERNMENT

Turkish Healthcare Travel Council, The Ministry of Health, Embassies

MULTILATERALS

The Islamic Corporation for the Development of the Private Sector of the Islamic Development Bank, MDBs such as EBRD

NON-PROFIT

Joint Commission International