CHAPTER 2LITERATURE REVIEW2.1 World Trade Organization (WTO) and World Tourism Organization (UNWTO) on Medical TourismIt was not until 1973 that medical tourism was first categorized as a commercial activity by the International Union of Travel Officials. As a form of international trade in services, it can be classified according to the categorization of trade in services of the World Trade Organization (WTO). The World Tourism Organization (UNWTO) defines tourists as people who "travel to and stay in places outside their usual environment for not more than one consecutive year for leisure, business and other purposes not related to the exercise of an activity remunerated from within the place visited". A country that offers medical tourism services to foreign patients, the destination country is, therefore, the exporter while the patients home country becomes the importer of the service.2.2 Medical Tourism

Over the years the need for better healthcare has grown significantly in recent years, which resulted in an increasing number of countries started promoting medical tourism (Bookman and Bookman, 2007). Demographic change especially in the increase of ageing population promotes the requirement for more medical services with this population. The rise of chronic diseases also fuels the demand for more and better health services. Factors such as waiting time, cost of medical treatment and unavailability of organ donor in developed countries, has lead new healthcare consumers, or medical tourists, to seek treatment overseas (Sarwar,2012). This activity eventually coins the term medical tourism. Medical tourism is a new branch of the tourism industry that encompasses both the healthcare and tourism components. Tourism is defined as traveling for predominantly recreational or leisure purposes or the provision of services to support this leisure travel. Globally, tourism has become a popular global leisure activity. In 2012, there were over 81.035 billion international tourist arrivals according to United Nations World Tourism Organization (UNTWO, 2013). The primary goal of international patients or medical tourist engaging in medical tourism is to have access to the highest quality of health care from internationally accredited hospitals around the world at a more affordable medical treatment cost.

Medical costs are very high in developed countries such as in United States and United Kingdom which eventually promotes more and more people to travel abroad in search of less expensive medical treatment. Factors such as state-of-the-art hospital facilities, excellent health care services, certified professional physicians and reasonably priced medical procedures are some of the key drivers for medical tourism (Churnrurtai et al., 2009). It furthers encourages medical tourist to opt for treatment aboard rather than in their home countries. Certain medical tourists will deliberately choose medical tourism is an option to perform certain surgeries as it provides anonymity since it is been carried out miles away from their home country (Bhavin, 2008).

Medical tourism is being actively promoted in developing Asian countries, Middle East and South American countries which targets mainly patients from developed countries (Bookman and Bookman, 2007). The scope of medical treatment in medical tourism is broad and it involves the trade of service in particularly the health sector in the form of surgery for example and the tourism sector in terms of accommodation. Types of treatment include wellness, cosmetic surgery and also dental surgery. Countries such as Jordan, Singapore, Israel, and India have adopted medical tourism as the main thrust behind national economic development (Medical Tourism Magazine, 2010).

According to Mattoo and Rathindran (2006), for a surgery to be easily traded, it not only has to constitute treatment for a non-acute condition and the patient has to be able to travel without major pain or inconvenience, but the surgery also has to be fairly simple and commonly performed with minimal rates of post-operative complications. Not all healthcare procedures can always be traded across borders. For instance, an acute condition or a surgery that requires intensive follow-up treatment on-site are some of the factors that inhibit consumption health care abroad. Even though the tradability of health care does not apply to all treatments, the authors still suggested that a sufficiently large range of treatments can be obtained through medical tourism. Various academic literatures have stated different medical tourism terms in their context. Even the term medical tourism and health tourism is reported to have different functions. According to Lee et al. (2007), medical and health tourism can be distinguished into separate categories. The first is the serious medical tourism that consists of treatments of illness, cosmetic surgeries, dental tourism and reproduction (fertility). The health tourism is considered to be less medical and more focused on wellness tourism which includes spa, alternative therapies and fitness tourism.

Figure 2.1: Components of Medical Tourism (Source: Lee et al., 2007)

Another term that is suggested by Carrrera (2007) is that medical tourism may be defined as the deliberate attempt on the part of a tourist facility example hotels or destination to attract tourists by promoting healthcare services and facilities in addition to regular tourist amenities. Authors such as Connell (2006) define medical tourism as a new form of niche tourism where people travel often long distances overseas to obtain medical, dental and surgical care while simultaneously being holidaymakers. Bookman and Bookman (2007) identify three forms of medical tourism which are invasive, diagnostic and lifestyle. Invasive treatments involve high-tech procedures performed by a specialist; diagnostic procedures encompass several types of tests such as blood screenings and electrocardiograms; and lifestyle includes wellness or recuperation treatments. Gonzales, Brenzel and Sancho (2001) for instance, define medical tourists as people traveling to another country specifically to consume health care services, without even making reference to touristic activities. Another study elucidated medical tourism as the combination of products and services intended to encourage patients in preserving and maintaining their health through a mixture of vacationing and other form of recreational activities in a different location other than their home. Medical tourism may be defined as the provision of cost effective medical care with due consideration to quality in collaboration with tourism industry for foreign patients who need specialized treatment and surgery.

Figure 2.2: Concept of healthcare tourism (Source: Caballero Danell & Mugomba, 2006)

World Tourism Organization (WTO) defines medical tourism as the tourism services based on healthcare and nursing, sickness and health, and recovery and rehabilitation, where medical tourism contains Health Tourism and Medical Tourism. The former aims at tourism but is assisted with healthcare, while the latter focuses on healthcare but includes travel. Early medical tourism, based on health tourism, promoted tourism for health but however, modern people pursue health abroad because of the progress of medical technology. While it is clear that medical tourism is an economic activity that involves trade in services from two distinct sectors, health care and tourism, it is not necessarily clear which kinds of treatments are encompassed in health care. Engaging in one or more of the above-mentioned forms of medical or wellness treatments should be the primary reason for traveling. Touristic activities, although possible, are not necessarily required. Although medical tourism agents promote the tourism feature as an essential part of the healthcare package, the recreational value of travel is less important for patients with complex medical problems (Horowitz, Rosensweig and Jones, 2007). Further, the term medical tourism is preferred in this survey over health tourism because the former is perceived to better describe the fact that it can involve highly specialized and complex treatments. Besides, the phrase is increasingly being used by the general public and the media (Horowitz, Rosensweig and Jones, 2007).

Figure 2.3: Concept of health tourism (Source: Jabbari, 2007)

The term medical tourism in relatively new but the practice of travelling for treatment has existed years back. In the early times people have been travelling around the world to seek treatment. According to Ross (2001) the earliest form of health tourism is said to date back to the Neolithic and Bronze ages and in Europe when people traveled to visit mineral and hot springs. Medical tourism can also be traced back to the ancient Greeks and Egyptians who went to hot springs and baths to improve their health. As early as 4000 BC, the Sumerians constructed the earliest known health complexes that were built around hot springs. These healthcare facilities included majestic elevated temples with flowing pools. Greek pilgrims traveled from the Mediterranean to Epidauria, a small territory in the Saronic Gulf. It was said that this small territory was the sanctuary of Asklepios, known as the healing God. Thus, it was recorded in medical tourism history that Epidauria is the original destination for medical tourism (understanding-medicaltourism, 2013). During the 16th century, the rich and the elite of Europe rediscovered Roman baths and flocked to tourist towns with spas like St. Mortiz, Ville d'Eaux, Baden Baden, Aachen and Bath in England. Bath or Aquae Sulis enjoyed royal patronage and was famous throughout the known world. It became the center of fashionable wellness and became a playground for the rich and famous (medvarsity.com, 2013). By the 18th and 19th centuries, spa towns, especially in the south of France, became popular destinations for people living in the north of Europe searching for sun and an escape from the cold weather at home (Cook, 2008). In the late 19th century patients from less developed countries would travel to medical centers in Europe and the United States for diagnostics and treatment procedures not available in their own countries (Horowitz, Rosensweig and Jones 2007).

Asia also has a history of medical tourism. India and Japan are two Asian examples. Yoga and Ayurvedic medicine became popular in India as early as 5000 years ago, wherein constant streams of medical travelers and spiritual students flocked to India to seek the benefits of these alternative-healing methods (medvarsity.com, 2013). Japans affluence of mineral springs known as on sen have also been favorite health retreats for therapeutic properties for centuries. These springs are known for healing wounds. The modern concept of medical tourism has only emerged in the past 10 to 15 years (Yanos, 2008). According to Bookman and Bookman (2007), what is different in the twenty-first century is that tourists are traveling farther away, to poorer countries and for medical care that is invasive and high tech. 2.3 Medical Tourism MarketThe wide expansion of the global market allows some international organizations to be established in order to prevent malpractice and raise awareness of best business practices that sustain incentive growth and respond directly to future demands. For example, the General Agreement on Trade in Services (GATS) was established in 1995 by the World Trade Organization and the Council for Trade in Services. The aim of this agreement is to create policies, standards, and regulations that encourage the development of international trade in services between countries. These foundations create a safe environment for global trade in services, allowing developing countries to benefit from their developed counterparts through the exchange of information, ideas and technology. Therefore, some developing countries such as Jordan, Singapore, and India have recruited skilled physicians who have obtained their degrees in the western world and returned to their home countries to practice their profession (Lambier, 2009). This is a general trend in healthcare and medical education by which developing countries provide physicians and developed countries provide consultations and education in best medical practices. Thus, international patients seeking to travel to developing countries for medical services could be viewed as people seeking adequate medical procedures (Zahra, 2008). Medical tourism cannot enter the global market, and services cannot be traded safely, unless there is a global market environment that allows trust to be established between developing and developed countries (Bookman & Bookman, 2007). Cateora and Graham (2005) have constructed a framework that demonstrates the environment of the global market. The framework contains three overlapping circles. The inner circle represents the controllable elements that impact a service provider decision (e.g., price, product, promotion, research, and channel of distribution). The second circle represents the internal local environment that has a direct impact on the foreign operations decisions. These local environmental elements include the competitive structures of the local market, political and legal forces, and/or economic climates. The third circle represents the uncontrollable elements, namely, cultural forces that influence the life style of the local population, geography and infrastructure, structure of distribution, level of technology, competitive forces, and economic forces. These elements cannot be controlled by a service provider because they represent the external market in different countries where foreigners do not have the authority to change their policies, standards, or regulations. To overcome these uncontrollable elements, service providers must work with the requisitions and standards of the external market. Horowitz and Rosensweig (2007) argue that certain countries, namely those which put confidentiality and privacy as a first priority for patients seeking sex changes, plastic surgery, or drug rehabilitation, offer attractive medical destinations for American patients who are looking for privacy somewhere outside their home country.

In the case of medical tourism, the international market often leads patients to travel abroad to a medical destination in order to receive a medical service for a lower price. Facilitators who work to promote a medical facility at a particular destination should understand the internal medical policies and standards, the international medical policies and standards, and the market policy and standards (Bravin, 2008). In this market, foreign tourism operators and facilitators looking to attract for example American patients should have an in-depth knowledge of up-to-date medical regulations in order to target the United States market. The global medical tourism market (GMT) is a confluence of such factors as medical and healthcare development, information technology and local law, economics and politics. These factors can be considered as barriers for many medical destinations to reaching an external market such as the US, unless these medical destinations modify their medical regulations, standards, and polices to match those regulations existing in the US market. To this end, Jagyasi (2009) suggests that the international community should agree on an organization that is able to develop rigorous international policies and standards to motivate medical facilities around the world to become part of the global medical tourism market. To adapt and better reflect large, global trends, the development of the medical tourism sector on a greater scale by medical and tourism stakeholders could incorporate more factors that play a primary role in enhancing the medical tourism market at a particular location for promoting extensive medical services (Garcia-Altes, 2005). Some of these factors include lifestyle changes. For example, the rapid growth of the population is prompting the creation of new models of medical facilities and procedures including retirement communities, fitness centers and cosmetic surgeries. These new models of medical and healthcare facilities are being established by local or international investors according to the market demands. Also, what could further motivate patients to travel abroad is to experiment with new tourism models. Figure 2.4: Medical tourism countries (Source: Medical Tourism: Consumers in Search of Value, Deloitte, 2008)Medical tourism offers incentive opportunities such as interacting with local culture, visiting historical sites, and visiting relatives and friends. These opportunities could be attractive for foreign patients that are interested to receive adequate medical treatments and visit some tourism attractions. The limitations of domestic medical services, the lack of medical insurance, the length of local waiting lists, and the high costs at home have forced patients to travel abroad in search of adequate medical treatments that offer a high quality of medical service at low costs.

Malaysia has focused on developing the quality of its healthcare, realizing that to enter the global market requires fulfilling certain requirements (Chee, 2007). The government has initiated a collaboration strategy to promote the medical tourism sector in Malaysia as one piece (Garcia-Altes, 2005). Local health private providers and government agencies cooperate together in order to provide excellent healthcare services for foreign patients. On the other hand, hotels have integrated with hospitals and medical facilities to provide incentive healthcare packages at attractive costs, which will play a crucial role in the marketing campaign that will reach new markets in North America and Eastern Europe.2.4 Medical Tourism Factors

The rising healthcare cost in the United States and in many European countries has left little choice for patients. This has forced the patients to seek treatment in other countries (Bookman and Bookman, 2007). The choice of country that a medical tourist will seek for treatment depends on various factors and not solely on cost. According to a study by Palvia (2007) on the perceptions of the American medical tourist, there two types of factors that will influence the choice of medical tourism destination, which are internal factors and external factors. The external factors consist of economic conditions

political climate

social behavior

regulatory standard

In terms of political culture, most patients are only attracted to regions where safety is a high priority in the host country, and where the political system is protected from corruption and violence (Smith & Forgione, 2007). In terms of social behavior, the local residents perceptions about tourism in general and medical tourism in specific play a primary role for attracting foreign patients. According to Smith and Forgione (2007), foreign patients like to travel to destinations where they can feel welcomed by the local community and travel around the countries without limitations. In terms of regulatory standards, American patients often care about the regulations and laws of the host country.

Figure 2.5: External factors (Source: Smith and Forgione, 2007)The internal factors consist of:

costs, accreditation quality of care

physician training The first factor is cost. According to Sarwar, et al (2012) cost is the most important factor for medical tourist when planning for medical tourism. Cost is likely to be mostly and importantly considered. For the American patients, the cost is the only factor for preferring medical tourism and the current healthcare cost back in their home. As the cost of healthcare in the United States is excessively soaring, many employers together with the insurance companies prefer medical tourism as an option in lowering healthcare costs. The most important thing countries that are involved in medical tourism is that, they offer premium medical services at significantly lower prices, which have become the major motivation for the patients in traveling abroad for the intention of treatment. Studies have found that the cost of surgery is 30% to 70% lower in the countries those are promoting medical tourism than in the United States (Caballero et al., 2007). Figure 2.6: Internal factors (Source: Smith and Forgione, 2007)

According to statistics the number of uninsured Americans in healthcare exceeded 46 million in 2005, which means that Americans who are not covered by a health insurance plan will pay a significant amount of money to be medically treated, while insured Americans have access to medical facilities with low fees (Insurance Information Institute, 2007). However, despite this rapid growth in uninsured American patients, the World Bank has outlined that the medical industry in the United States is excessively expensive and higher than in any other country in the world. In Smith and Forgiones (2007) study, the lower costs to medical services in developing countries are cited in as due to lower labor costs, lower pharmaceutical costs and no malpractice insurance costs.Other factors related to Palvias work (2007) are based on hospital accreditation and quality of care. In this rapidly growing consumer oriented health industry, quality has become the integral part. Without providing quality services, no business can survive. People from rich countries are traveling to less developed countries because of less expensive but high quality medical care (Sarwar, 2012). In the healthcare industry, technical equipment and other related medical diagnoses systems is a core for patients checkup for their treatment and functional quality is measured by the service offer by the healthcare centers such as services of staffs, nurses, administrations and most importantly the doctors towards the patient and their assistants. It has been found from different healthcare researches that, patients mostly give priority to the functional quality rather than the technical quality though the technical quality may not be satisfactory. However according to Sarwar (2012) for the medical patients, the technical quality should be a prime object because the proper treatment of patients largely depends upon the proper diagnoses of the diseases. Service quality works as a bridge, which links within customer and organization, thus shows the valuable exchange among them.

Likely the first thing that comes to any medical tourist mind is the qualifications or reputation of the hospital to be having the treatment. Most American patients are more attracted to hospitals that work with similar standards in the quality of care to the ones in the United States. In many cases, hospitals in developing countries are equipped with advanced technology and trained practitioners that exceed western standards and expectations (Nicola PS & Hong PK, 2011). The World Bank has conducted a study that clearly shows that healthcare quality in developing countries is above the minimum acceptable standards in industrial countries (Matto & Rathindran, 2005). Accreditation is crucial as it strengthens confidence in the quality of healthcare. This confidence increases if accreditation is accompanied by an affiliation with prestigious hospitals or health care systems in industrial countries. The intending medical tourist should check whether or not a hospital is wholly accredited by an international accreditation group or at least with local government system. Once healthcare providers are accredited and part of international referral networks, they can be properly rated for risks and consequently, helps in building confidence among the potential medical tourists (Sarwar, 2012).

Another factor and the last factor studied by Palvia (2007) is physician training. A hospital without properly trained practitioners will not be as attractive as a medical facility with skilled physicians for the American patients. Consequently, developing countries provide incentive work opportunities within the medical industry given that they attract international doctors, some of whom are trained in western hospitals. Now, international medical facilities offer complex surgeries that compete with other facilities in terms of costs and quality (Marlow & Sullivan, 2007). Despite this, however, hospitals around the globe are attempting to enhance the communication technologies between medical facilities in order to connect all trained physicians within one network. This plan will help patients in their selection of whom they deem to be the most appropriate physician to preside over their surgery (Smith & Forgione, 2007).

Other factors that can also contribute to the medical tourism are treatment types and the availability of the treatment. According to Sarwar (2012), types and availability of various types of treatments are also an important factor in selection on medical tourism. Medical tourism is procedures that are routinely covered by health care benefits knee replacement surgery and elective cosmetic surgery, cosmetic dentistry and reproductive (in vitro fertilization). However, medical tourism is not limited to few specific treatments as a wide range of treatments can be obtained through medical tourism. Medical tourism involves a wide range of therapeutic treatments ranging from various essential treatments to different sorts of traditional and alternative treatments. Citizens of England and other European countries are traveling both within the European Union and to Asia for various medical and surgical procedures, which are not available in their home country. Certain types of surgery such as gender change or sex change is not common in every country. Although United States and United Kingdom are developed countries but it does not ensure that the type of treatment in their country is available or it might be ethical wrong back in their country. Thus the factor of unavailability of a particular treatment is also drives the medical tourism industry.2.5Medical Tourism StakeholdersMedical tourism stakeholders can be identified as serving multi-purposes such as the promotion of medical services through the use of tourism facilities. By combining the medical and tourism sectors and highlighting the area of overlap between the two sectors, a clearer image of the medical tourism sector will be recognized, making it easier for stakeholders to identify a medical tourism network for improving the medical tourism sector. The definition of medical tourism network may vary from one country to another. Therefore, having a single definition of network is becoming trickier (Lambier, 2009). In 2009, a meeting was organized by the Medical Tourism Association (MTA) to discuss the development of medical tourism in developing countries such as Jordan, Turkey, Mexico and Costa Rica. They all agree that the development of a medical and healthcare tourism network (MHC) is vital for increasing the growth of medical tourism in the most efficient way (Lambier, 2009). The medical tourism network contains four stages of evolution: pre-network stage, the start-up stage, expansion stage and mature stage. The pre-network stage represents all stakeholders such as hospitals, hotels, and facilitators, but no collaborative efforts have taken place at this stage. The start-up stage represents cooperative efforts among medical and tourism stakeholders for the purpose of achieving mutual benefits. The expansion stage represents insurance companies, medical tourism operators, educational institutions, and government bodies which participated in the overall medical tourism network and which can be called a medical tourism network (Lambier, 2009). Finally, in the mature stage, medical tourism stakeholders collaborate among each other on a regular basis. For instance, Thailand has identified its medical tourism stakeholders by developing a medical tourism network that is based on four elements: suppliers, core activities, service providers and support players. The network among medical tourism stakeholders has been expanded to include the support players like the Medical Research Affiliations and Certification, which help private hospitals obtain accreditation by international organizations such as the Joint Commission International (JCI). Industry Professional Accreditation Groups can help local doctors meet the minimum American and British standards and gain the relative accreditation. Educational Institutions are considered important players when it comes to providing the medical and tourism industry with a capable labor force. Ultimately, the last group of players within this network is that of the government agencies, which includes the ministries of tourism and health. Some researchers, however, realize that the network among medical tourism stakeholders faces some challenges (Harryono, Huang, Miyazawa, & Sethaput, 2006). First of all, having insurance companies play a part within the medical tourism network will increase the cost of medical services for patients, because private hospitals will be obligated to buy insurance to cover potential malpractice issues. Second, in the network there is no a specific organization that directs medical facilities for improving their medical services in order to target medical tourism market. Therefore, private medical facilities have their own market campaign for promoting their medical services without putting into the consideration how they are going to handle the operation of medical tourism businesses. Therefore, private medical facilities should have direct participations with the medical tourism network for collaborating with other stakeholders such as medical institutions, tourism agencies, facilitators to conduct medical tourism services more professionally. Also, including environmental organizations within the medical tourism network (MTN) is crucial for private hospitals to convert from being profit-focused organizations to sustainability-focused organizations. Hart and Milstein (2003) have proposed a framework for achieving a sustainable value, meaning a value that provides environmental, social, and economic outcomes. 2.6 Medical tourism in Malaysia In the year 1997 the Asian financial crisis, most of the industries in Malaysia were badly hit. Even the private health sector was not spared during this time. Many of the businesses affected by the crisis either closed, downsized, or cut back on the range of benefits for employees, resulting in healthcare benefits being reduced or removed. Companies also cut benefits, or placed restrictions on healthcare spending per person and choice of providers (Chee, 2009). This not only affected purchasing power for healthcare and employer health benefits, but also caused utilization rates in private hospitals to drop, plus the prices of imported pharmaceuticals, medical supplies, and medical equipment to soar. Many of the patients had to opt for treatments from the public sector due to the situation at that time. In the prevailing economic climate then, private hospitals could not increase prices, and therefore, their operating margins and profits were badly affected. It was downturn in private healthcare sector in Maldrdgraysia as many were struggling to cope with the losses (Chee, 2009).

The 1997 Asian financial crisis was a turning point in Malaysia, where it signaled the start of the medical tourism industry. The devaluation of ringgit Malaysia caused the private hospitals to lose out in their revenue but in turn it was the best way to promote to international market with respect with the treatment cost. The private hospitals started to turn to international patients in order to compensate the excess capacity left during the crisis. The private hospitals were equipped with the best technology and also with expertise to make it attractive for international market for health tourist. Learning from this cue, the government in January 1998 decided to start up the National Committee for the Promotion of Medical and Health Tourism. This committee was placed under the Ministry of Health (MOH) and was given three important functions which are to formulate a strategic plan, to promote a strategic partnership between the government and the stakeholders of the industry namely from the private sectors (healthcare facilities, travel organizations, insurance agencies and to forge also partnerships with centers of excellences in other countries such as the Mayo Clinic, John Hopkins University Medical Center and Great Ormond Street Children Hospital (MOH,2010). The committee also formed subcommittees whereby their task was to find and identify suitable target countries for patients, develop tax incentives for the stakeholders, to come up with a fees structure to make it more competitive with other countries, accreditation of the healthcare service providers and promotion guidelines.

There are many factors which influence medical tourism. Among them are modern medical facilities, quality internationally recognized professional, short waiting time, political stability, low medical cost, infrastructural and lodging facilities and so on. Two important factors make Malaysia a desirable choice for medical tourism: competitive medical cost and modern sophisticated infrastructural facilities (Nicola and Hong, 2011). For example, heart surgery in Malaysia costs within the range of RM 18,000 to RM 21,000 compared to the same in United States which costs about RM 60,000. Cost of treatment in Western countries is usually high. This causes many of their citizens to seek treatment in medical tourism destinations which offer a lower cost. Malaysia offers a lower and competitive cost compared to United States and European countries as well as other countries in the Asian region. The Asian countries which become competitors in various low cost health services are Thailand and India. For example, Thailand offers various health services, such as heart surgery to organ transplant, at a far lower cost than in Western countries, whereby a patient who undergoes coronary artery bypass surgery in Bangkok Hospital pays a total cost of about USD 12,000 (RM 37,908) compared to 10 times more or about USD 100,000 (RM 315,947) in his own country (Herrick, 2007). Furthermore, overseas treatment also cuts down long waiting time for surgery due to the system or procedure in their respective countries. Thus, they are inclined to choose overseas treatment. The United Kingdom government is also beginning to encourage its citizens to seek overseas medical treatment to avoid the long queue and for the lower cost (Bookman and Bookman, 2007).

According to the industrial firm, Frost & Sullivan in International Medical Travel Journal (2010), a medical tourist pays attention to three important matters when choosing the destination for treatment: accredited doctor and nurse, easy access to hospital and accommodation facilities. Malaysia has the advantages of all three factors. The study by them shows that Malaysia has the added advantage of political stability. Furthermore, the economic crisis has caused medical cost in Western countries to go up and many choose treatment in Asian countries which can offer treatment and sophisticated infrastructure. In some countries, the patient faces difficulty having to wait a long time for treatment with limited choices thus leading them to choose treatment in Malaysia. Penang Island is the main center for this sector, followed by Langkawi Island.

Figure 2.7: The Cost of Medical Procedures in Selected Countries (in US dollars) Source: (Herrick, 2007)Private hospitals have not generally been seen as ideal investment because it has often taken up to 10 years before companies have seen any profits. However, with the advent of medical tourism, the situation has now changed and hospitals are looking forward to lure foreigners coming to Malaysia for medical care. Majority of private hospital facilities are in urban areas and, unlike many of the public hospitals, are equipped with the latest diagnostic, imaging facilities and western trained doctors are generally to be attached with the hospitals (Quek, 2009). The number of private hospitals is increasing yearly and providing more specialist treatment not to just cater the health tourist but also the general public. There are currently more than 210 private hospitals providing more than 10,000 beds (AHPM, 2012). The figures have increased tremendously compared to only 50 private hospitals with 2,000 beds in 1980 (Cruez, 2008). The potential medical tourists are targeted from countries with inadequate medical facilities within the South East Asia countries such as Indonesia, Myanmar, Vietnam and Laos. Medical tourism in Malaysia is also targets medical tourist from Singapore, Japan and Taiwan due to high cost of treatments or surgery procedure in their country. It offers an alternative to the medical tourist in sense of cost and quality. Other factors that might attract medical tourist to Malaysia are also with long waiting list for in their public healthcare system and the expensive private healthcare system in their country such as United Kingdom. Malaysia image as a Muslim country provides an advantage also in promoting medical tourism among Muslim countries such from the Middle East countries, Brunei and Bangladesh (Mujani et al., 2012).

Malaysia has gained reputation as one of the preferred locations for medical tourism by virtue of its highly efficient medical staff and modern healthcare facilities. The top medical tourism destinations are Malacca and Penang state. Both states garner more than 70% of the medical tourism revenue for Malaysia followed by the Klang Valley (23%) and Johor (3%) (Lek, 2004). Penang has the highest number of hospital attracting medical tourists from Indonesia due its location nearer to the west coast of Indonesia and traveling there is faster and cheaper than to travel to Jakarta. Approximately 70% of the patients are from Indonesia and Singapore. The rest belong to Australia, Bangladesh, China, New Zealand and Saudi Arabia. The European market is attracted to Malaysia from wellness tourism perspective (Chee, 2007). A survey conducted by APHM shows that in 2005, 232,161 foreign patients were treated in Malaysian private hospitals, generating over RM 150.9 million in revenue. The year 2006 has attracted over 295,000 medical tourists to Malaysia. This figure has risen to 341,288 in 2007(Cruez, 2008). Number of medical tourist was 583, 000 in 2011 and 670,000 in 2012 respectively. This is a positive development in the medical tourism industry, whereby it is said to have successfully generated financial returns of RM203.66 million up to the year 2006. From 2001 to 2008, the number of outpatients increased threefold while generating income of about RM 180 million in 2006. The medical tourism industry was expected to generate as much as RM 540 million for the country in the year 2010 compared to RM 300 million in the year 2009. There is growing demand in healthcare tourism in this region due to its value-for-money, high quality care and competitive pricing (Chee, 2007)

2.7 Public Private Partnership (PPP) in Medical TourismIn a general term, a partnership is an agreement between two or more parties. However, most partnerships are more formal than merely a handshake or verbal agreement, and require a written agreement that specifies the reciprocal rights and obligations of each party, the objectives of the partnership, and how the partnership will be managed or governed. Put simply, a partnership is a relationship based upon agreements, reflecting mutual responsibilities in furtherance of shared interests. Two elements of this definition are critical: one is the specification of the shared interests or objectives of the partnership. Partnerships only work when both parties benefit from the relationship and the expected benefits are made clear in advance. A second key element is the mutual responsibilities. Partners must understand that they will share both the risks and the benefits of any joint venture, and how this sharing will occur must also be specified in advance. Public Private Partnership (PPP) is a strategic partnership alliance between the government and also the private sector to carry out or joint together to execute projects deemed useful for the public and also for the private sector (Marc Mithcell, 2007). According to Johannes Jtting (1999) the increasing interest in the potentials of a public-private-partnership (PPP) in developed as well as in developing countries can be mainly explained by three factors. First, due to fiscal pressures governments have to reallocate resources with the utmost effectiveness. Important projects or services to the country at times are impossible to be implemented by the government of the day for the benefits of the people of the country during economic turmoil. Financial situations at time of a country will not permit the government to carry put the necessary projects. Lacking of financial inputs or the risk to be taken might be catastrophic in long run if a project turns out to be a failure. Secondly, private providers both non-profit or for profit oriented play an important role in social service provision a role which has been largely neglected by governments. Third, given the intrinsic different strengths and public infrastructure and services both play a huge part in any modern society. PPP is a globally accepted public sector procurement mechanism whereby the government engages commitment from private sector and transfers a certain level of responsibilities to the private sector in providing public facilities or services. The fundamental justifications for adopting PPP are claimed to be that PPP would significantly reduce upfront costs of for the government in providing and maintaining public facilities and it allows improvement in the public facilities and services as PPP encourages innovation by the private sector (Suhaiza Ismail, 2013).

The Public Private Partnerships (PPP) is formally defined in the Ninth Malaysia Plan report (2006) as: the transfer to the private sector the responsibility to finance and manage a package of capital investment and services including the construction, management, maintenance, refurbishment and replacement of the public sector assets which creates a standalone business. The private sector will create the asset and deliver a service to the public sector client. In return, the private sector will receive payment commensurate with the levels, quality and timeliness of the service provision throughout the concession period. During the past private and public sector were completely independent, but today that world does not exist. According to Marc Mitchell, (2009), there is probably no country in which the private sector is not deeply affected by government regulations and laws, by policies on practice and pharmaceuticals, and increasingly by government funding of private services. Similarly, almost all governments today rely on the private sector for pharmaceuticals and equipment, and increasingly contract with private (often not-for-profit) organizations for training, IEC development, and often for direct service delivery in areas where the government does not provide services. The author also stressed that as the government programs move toward social insurance programs and contracting mechanisms as ways to expand coverage, the interdependence of the public and private sectors has deepened. The interdependence has also made each sector understand how cooperation and partnership might be mutually beneficial despite the effort that is required to maintain the relationship. Although many governments and private organizations find the need for trust and transparency difficult, they also recognize that their interdependence must lead to an environment of mutual cooperation.

Medical Tourism is an inevitable emerging industry and it is the fastest growing healthcare service industry worldwide (Carrerra, 2007). According to Medhekar (2011) the growth of the medical tourism phenomenon is based on two factors which is the number of foreign medical tourist travelling and the amount of revenue they generate in terms of foreign exchange. Medical tourism can play an important role in improving a countrys balance of payment position and foreign exchange reserve position. The growth of medical tourism can also be seen as an opportunity for regional innovation, regeneration rejuvenation for economic development and growth in developing countries. Using medical tourism as an export led growth strategy, many socio-economic challenges and problems faced by developing countries can be resolved.

Public Private Partnership (PPP) provides a mechanism that it ensures that sustainability in the medical tourism industry is able to be achieved in the long run. It provides the platform for a strategic partnership between the government and the private sector to work together in medical tourism industry. The medical tourism involves more of the private sector not only in terms of healthcare services but also the tourism sector in terms of accommodation (hotel). The role of government is largely on the regulations side for example in providing a medical visa for the health tourist. Sustainable PPP in medical tourism involves the sharing of responsibilities, planning, accreditation of medical facilities and qualifications, service quality, product innovation, promotion, packaging, trade expos and marketing, undertaking financial risks, insurance accountability and implementing various health and medical packages (Medhekar 2011).

In Malaysia the context of PPP is more prevalent in the infrastructure or the service industry in terms of construction, procurement activities or privatizing the service sector. Malaysia healthcare system is a two tier system whereby the medical tourism is more on the private and not related the public healthcare system. It is solely under the private healthcare in terms of providing service. Nevertheless realizing the importance of medical tourism, the government is working closely with the private sector to implement strategic plans for the sustainability of the medical tourism industry. It is impossible without the cooperation of the private sector in the medical tourism industry is able to move forward. The government has outlined certain incentives for the betterment of the industry such as providing tax relief and also setting up an agency under Ministry of Health to monitor and collaborate with the stakeholders of the medical tourism industry.

PPP will enhance the competitive advantage of the medical tourism industry. It will provide viable and alternative efficient and effective delivery of healthcare and medical tourism infrastructure facilities and value for money medical treatment to not only the foreign patients, but also to the local community, through collaborations and partnership between the various stake key stakeholders from medical tourist and the service providers (private and government sector) (Medhekar, 2011).2.8 Healthcare System in Malaysia

Malaysia healthcare spans from the British colonization time where the first hospital was built in Taiping in 1880s. The demographic of building the hospitals were then more concentrated on areas focused on tin mining industry (MOH, 2010). This was the first introduction of western based healthcare system and the essence of it is still being practice especially in commonwealth countries. Before independence the practice pre-colonial medical care was confined to traditional remedies current among local populations of Malays, Chinese and other ethnic groups. This practice is still continued until today and even offered at the some hospitals in Malaysia. Over the years the healthcare system in Malaysia has evolved in accordance with time and also the needs of the people in general. The current Malaysia healthcare system is operated based on a two-tier health care system consisting of both government healthcare system and also the co-existing private healthcare system (David Kl Quek, 2009). The public healthcare system is fully funded by the government where the allocation of the budget is being done every year. The public healthcare system encompasses from the infrastructure such as the general hospitals in major cities, district hospitals and also rural clinics. Some of these facilities predate back before independence and the cost of managing of this hospitals are fully taken by the government. The ministry responsible of healthcare is the ministry of health and its under the prerogative of the minister of health. The workforces of the public health system are employed under the government such as the doctors, nurses and allied health personnel.

In Malaysia the fresh graduate doctors are required to serve the government for at least 3 years during their houseman ship. This is to ensure the doctors are fully trained and aware of the Malaysian healthcare system. However, Malaysian medical officers and specialists above the age of 45 and working abroad have been exempted from this rule as an incentive to attract more them to return back and serve the country. Foreign doctors are encouraged to apply for employment in Malaysia, especially if they are qualified to a higher level. The need of the medical staff is based on the location and also size of the population based on the districts and also states. (David Kl Quek, 2009). Patients are only needed to pay a nominal sum for their outpatient treatment or hospitalization. Every state in the country will have its own hospitals. There is still, however, a significant shortage in the medical workforce, especially of highly trained specialists. Thus certain medical care and treatment are available only in large cities. Recent efforts to bring many facilities to other towns have been hampered by lack of expertise to run the available equipment. As a result certain medical care and treatment is available only in large cities.

Various health related training colleges are established by the government to provide sufficient allied staff to the respective hospitals. For example the first nursing training college was Penang Nursing College, established back in 1947. Today the private college offers also the same courses that were used to be only available in government related health colleges. The number of private universities in Malaysia offering medical and dentistry programs have increased in the early 2000. At the moment it is estimated there are 10 private university offering medical programs. The Malaysian government has allocated RM 10,276 million for health services according to the Ninth Malaysia Plan report (9MP), a 7% increase over the previous plan. It has plans to improve the condition of its existing hospitals in order to cope up with the rising and aging population. Over the last couple of years they have increased their efforts to overhaul the systems and attract more foreign investment. Various departments are based under the health ministry in terms of public health management, disease control and also research centers. The established research centers such as Institute for Medical Research (IMR) in Kuala Lumpur was also a part of the government needs in to have a proper healthcare facility that accommodate all the basic needs of the people in the country.

Figure 2.8: Outline of the two tier healthcare system in Malaysia

(Source: Rozita, MOH, 2011)

The private sector of healthcare is more concentrated in providing specialist treatment compared to outpatient treatment. Nevertheless the existence of clinics to provide is still there since from the older days. Malaysia private hospitals are focused on providing specialist care and most of specialists are largely based in private specialist centre. The majorities of private hospitals are in the urban areas and unlike many of the public hospitals are equipped with the latest diagnostic and imaging facilities. Private hospitals have not generally been seen as an ideal investment as it has often taken up to ten years before companies have seen any profits. However, the situation has now changed and companies are now exploring this area again, corresponding with the increased number of foreigners entering Malaysia for medical care and the recent government focus on developing the health tourism industry (Chee, 2007).

The Government has also been trying to promote Malaysia as a health care destination, regionally and internationally. Healthcare industry players such as the state-owned KPJ group (Johor State Development Board), Parkway Holdings (Singapore-based, American-invested), and latterly Khazanah National Berhad (a Ministry of Finance Malaysian GLC) have greatly influenced the direction and expansion of these private services, while at the same time inflating the cost of private health care services by offering more sophisticated amenities and newer technology driven expert care (Nambiar, 2009).

One of the major issues related with healthcare for any developed country or developing country is the escalating cost per year that has to be absorbed by the government or from the society. The needs for a better facility plus manpower whether from the public or private sector are the issues that need to be attained. The concept of public private partnership in healthcare system is an ideal way of going forward for the benefit of both parties namely the government and also the private sector. The participation of private sector in healthcare dates back in 20 years time. According to Dr. David KL Quek the past president of Malaysia Medical Association (MMA), there have been efforts of privatizing and the successful attempts of various components of the public health sector. One of the examples is Pharamaniaga. It is responsible for the government drug procurement and distribution to all the government based hospitals and clinics. Apart from that the support service which is the cleaning, waste management and equipment maintenance has also been contracted out to private companies such Medivest and Faber Medicare.

In the economic transformation program ETP outlined by the government, it is stated that the healthcare industry is capable to generate a RM35.3 billion incremental gross national income from the sector between 2010 and 2020 (ETP Annual Report, 2011). The government is set to change the healthcare sector from a social service and to a private driven section driven for economic growth. One of the subsector which has been identified as a key driver of this growth is the medical tourism industry (Chee, 2009).

2.9 Public Private Partnership in Malaysia

Public Private Partnership (PPP) in Malaysia starts years back with the important component of the Malaysian Incorporated concept, a development approach introduced in 1981 (Nambiar,2009). Through this policy both parties depend on each other; where the private sector upholds the commercial and economic activities, while the public sector draws up major policies, identify the direction and provides the specialized supporting services which are conducive to the success of businesses (ERIA Report, 2009). In 1983 the Privatization Policy was launched to support the Malaysia Incorporated Policy towards increasing the private sector's role in the country's economic development. The main objective of this policy is to lessen the financial and administrative burden of the Government, improve skills and production, accelerate economic growth, reduce the size and involvement of the public sector in the economy, and to assist in reaching the country's economic policy's goal. This policy was subsequently replaced by the Privatization Masterplan in 1991. The Masterplan contains an overall policy framework for privatization which outlines its objectives, models, guidelines on asset and equity valuation, staffing and ownership structure as well as changes to relevant laws and regulations (ERIA Report, 2009).

Figure 2.9: Timeline of PPP in Malaysia (Source from PricewaterCoopers, 2007)In March 2006 the Private Finance Initiatives (PFI) programme was announced in the Ninth Malaysia Plan, aimed at facilitating greater participation of the private sector to improve the delivery of infrastructure facilities and public service (PPP Guideline Book, 2009). It sets out many of the key principles on how some of the public sector infrastructure projects will be procured and implemented. PFI will be undertaken as part of the new modes of procurement under the Public Private Partnerships (PPP) to further enhance private sector participation in economic development (Ninth Malaysia Plan, 2006). In the light of further refinement to the partnership concept, the Government has introduced a new guideline in 2009 entitled PPP Guideline. This Guideline complements the Privatization Masterplan, particularly for projects where a Government entity is the paying party. Under the Ninth Malaysia plan, the government officially announced the implementation of public projects using the Public Private Partnership (PPP) or Private Finance Initiative (PFI) scheme. In the Tenth Malaysia Plan, the persistent continuous effort of the Malaysian government in promoting private sector involvement was revealed with the announcement of more development projects to be implemented using the PPP scheme (Tenth Malaysia Plan, 2010). Malaysia adopts a centralized approach in the implementation of the PPP program, whereby 3P Unit (3PU) or Unit Kerjasama Awam Swasta (UKAS) a dedicated unit under the Prime Ministers Department, is entrusted with the responsibility of spearheading the development and execution of PPP projects.

Figure 2.10: Typical PPP structure (Source: Public Private Partnership Guideline, 2009)

2.10 Role & Models of Public Private Partnership (PPP)The role of Public Private Partnership (PPP) in developing countries such as Malaysia is currently being used in sectors such healthcare, infrastructure and also education. PPP have become an accepted norm in delivering public infrastructure or services in Malaysia since the Privatization Plan back in 1980s (Suhaiza, 2007). PPP is not new approach being practiced in Malaysia. Countries such Hong Kong, United Kingdom, Singapore and Australia are among the countries that are have been successful in implementing PPP in various industries in their country. The concept of PPP existed way back in 1983 when Tun Dr. Mahathir then the prime minster of Malaysia started to privatize some of the government agencies and also the healthcare industry. The privatization of the medical procurement division and also the National Heart Centre (IJN) pave the way in late 1980s for the involvement of private industry in the government day to day activities (Ismail and Rashid, 2007).

The main objective of PPP in Malaysia is to revise and improve the implementation process of the existing privatization policy (Ninth Malaysia Plan, 2006 and Tenth Malaysia plan, 2010). PPP will be employed for infrastructure and service development projects that meet two conditions. First, the implementation of PPP must be able to make government projects more efficient where the risks and rewards are optimally shared between the two parties. Second, PPP is to be used where government support enhances the viability of the private sector projects in strategic or promoted areas .The five year development plan, with a total expected investment of RM230 billion aims to increase private sector participation in the Malaysian economy through a variety of means including public-private partnerships (Ninth Malaysia Plan, 2006). This proves that Malaysia government emphasis PPP for economy development and sustainability. Hence the effective risk allocation strategies and framework of PPP projects should be established and developed to achieve a more efficient process of contract negotiation.

PPP in Malaysia is defined broadly as an arrangement where the private sector provides services and invests in infrastructure assets which would traditionally have been undertaken by the Government. At the core of this arrangement there is an optimal risk sharing among the parties involved, mutually pre agreed performance parameters that govern the conduct of the business and a definite duration for the service concession. Another important characteristic is the continuing interest of the Government, directly in the form of an equity holding or indirectly in the form of operational oversight in the projects. These features differentiate PPP projects from the privatization model, whereby Government no longer has control or interest in the entity. Since the introduction of the PPP approach in 1983, more than 500 projects have been implemented using PPP / Privatization approach. These projects cut across a variety of sectors, such as transport, highways, communication, health, energy and utilities, education and training and general administration. Given the differences in output specifications, risk appetite, payment structure and a host of other factors, four distinct PPP models have been adopted (ERIA Report, 2009). These are:

a. Concession Model: This model is used for highways/ bridges and it is normally structured on the BOT (Build Operate, Transfer) concept.

b. Accommodation Model: This is used for administrative complexes, teaching hospitals and university branch campus projects. The model is typically structured on the BLMT approach. Recently, Government has introduced the BLMOT (Build, Lease, Operate, Maintain and Transfer) approach for this model too.

c. Process Plant Model: This particular model is being used for power generating projects. It is structured with two forms of payment, a fixed capacity payment and a utilization payment.

d. Usage Model: This model is suitable for projects with high risk of technology obsolescence where Government is not planning to take ownership of the underlying asset upon the expiry of the contract, such as for services in sophisticated medical facilities. Investment is recouped from charges imposed on the utilization of the facilities by the ultimate users, i.e. user charges. By using PPP model it enables governments to utilize alternative private sector sources of finance while simultaneously gaining the benefits that the private sector can bring in terms of skills and resources. The type of partnership is useful for counties that are already stretched for resources during uncertain economic climate. The speed, efficient and cost effective delivery of proposed project or service industry is made better. To date the PPP model has been applied in a wide range of public projects, such as development of administrative complexes, university campuses (including student residential buildings), hospitals, highways and bridges, integrated transport terminals, port facilities, medical equipment and supplies, solid-waste treatment and public cleansing, power generation, and a guest worker monitoring system.

Figure 2.11: Models of PPP (Source: ERIA report, 2009)

2.11 Public Private Partnership (PPP) in Malaysia Healthcare System

AccordingtoBlankenandDewulf(2009), governments are increasingly looking for ways to cope simultaneously with both booming health care costs and decreasing governmentalbudgetsandpublicprivate partnership arrangements have emerged as onemechanism to manage this set of problems. The discussion of a new public management also had an impact on health policy debates in developed as well as in developing countries. The specific term used here is contracting out meaning the outsourcing of activities former done by the public sector to the private sector. The private sector is not under the direct control of the government and it can function according to a different set of objectives and norms. Private providers can choose which services to provide, determine their own levels of quality, mix of inputs and costs (Berman, 1997). Two lines of argumentation why contracting out improves health care systems are used (WHO 1998): Economic: the replacement of direct, hierarchical management structure by contractual relationships between purchasers and providers will increase transparency of prices, quantity and quality as well as competition which will lead to a gain in efficiency.

Political: In the context of welfare systems reform worldwide, decentralization of services from the national to the local level is frequently suggested in conjunction with an improved participation of the population in determining and implementing the services. The PPP application in healthcare sector is gaining importance in recent years. Over the years the cost of healthcare is rising and governments of developed and developing countries are faced with at times fiscal constraints that force them to reduce expenditure. Other factors such as the increase in ageing population and outbreak of certain diseases will further put the strain on the expenditure. In the past, the private and public sectors in health operated more or less independently in most countries. The theory was that the private sector provided services mostly to the wealthy in any country, while the government served the poor who were unable to pay for services.

Figure 2.12: Conceptual Framework of PPP in healthcare sector

(Source: Johannes Jtting, 1999)

The role of private health sector in Malaysia is something that is not new. Malaysia has always had private healthcare during colonial times prior to independence. The private healthcare can be considered as the engine of growth and in future greater integration and synergism is expected between government and the private health care sector. Its undeniable that the government healthcare delivery system has been stronger than private healthcare sector.

The idea of public private partnership in healthcare in Malaysia existed back in 1960s and 1970s. Traditional Birth Attendants (TBA) were preferred during that time by the public and in order them to recognize the public preferences at that time, government decided to carry out certain steps to ensure that maternal and child safety at the time of delivery (Rozita, 2007). Among the step taken is by registration of TBAs and providing proper training to the TBAs. The TBAs are required to attend monthly meetings with public sectors. The TBAs are also provided with sterile midwifery kits and medicines which can be obtained at the health centers for free. At present there a lot steps are taken by the government and also the private in order to provide the public sector the best healthcare services. One of the fields that the government is focusing is the medical tourism industry. The medical tourism industry enables the health sector service to be exported to the tourist that comes over to Malaysia.

The government has long been the provider for health services in Malaysia. In the pre-privatization era, the government engaged itself in the entire of healthcare, from public health to preventive medicines and including curative and rehabilitative care. The first part of privatization occurred in the early 1990s, when the government decided to privatize non-medical services only, excluding core medical functions and services. In 1994, the Ministry of Health (MOH) divested its pharmaceutical store and services, which was followed by the outsourcing of hospital support services in 1996 and the privatization of health examination of foreign workers in 1997. The privatization of the health support services in Malaysia was part of the larger attempt to launch privatization in the health sector and to liberalize the sector. The objective, ostensibly, was to improve economic efficiency in the health sector. These developments also coincided with the Ministry of Health's plan to privatize clinical waste management services since public hospitals did not appear to have adequate facilities. Two factors were for the attention of the government: the increasing costs of providing medical care, and the burden of providing a wide range of services for the public in connection with administrative, support, medical and preventive services. The government's responses to these problems were twofold. First, it decided to concentrate on its core health services and privatize other activities within the health sector. Second, the government was convinced that it would continue maintaining its commitment to civil servants and the deprived. In consonance with these views, the government chose to privatize non-core activities and to liberalize the health sector. The latter implied that the private sector was encouraged to provide health care (which would lead to the opening of private hospitals) to cater to those who could afford more expensive health care and medical treatment.

The following are some of the key areas that were privatized by the Ministry of Health (MOH):

i. Supply of pharmaceutical services;

ii. Supply of hospital support services;

iii. Monitoring and consultancy services; and

iv. Monitoring and supervision of foreign workers health certification.

The supply of pharmaceutical services was contracted to Pharmaniaga Logistics, a private limited company. Pharmaniaga received a concession period of 15 years, and it was agreed that the government would make purchases from Pharmaniaga at an agreed price that would be re-negotiated every two years. The supply of hospital support services was contracted to two private limited companies, Pantai Medivest and Faber Mediserve. The concession period for these companies was 15 years with the government purchasing the supply of hospital support services at an agreed price. The supply of monitoring and consultancy services was contracted out to SIHAT for a concession period of 5 years. The monitoring and supervision of the health certification of foreign workers was privatized to FOMEMA and regulated by the Disease Control Division and the Ministry of Health. Financing in this case was borne entirely by foreign workers.

2.12 The Public Private Partnership (PPP) roles in medical tourism

The government of Malaysia realized the huge potential of medical tourism industry. The medical tourism is mainly under the private healthcare providers. Therefore steps were taken to ensure the participation of the government and the private sector was fruitful. The medical tourism industry requires synergistic action from both parties and a public private partnership (PPP) entity was important in due course. Although the government and the private sector have contributed together in healthcare and tourism industry in the past but the complexity of the medical tourism requires a more strategic planning. The initial work of setting up medical tourism started back in the year 1998 with formation of National Committee for the Promotion of Medical and Health Tourism (Mujani et al., 2012). This small unit then was expanded in the year 2009 where the government started the Malaysian Healthcare Travel Council MHTC, a government agency under Ministry of Health (MOH) to overlook the medical tourism with involvement of private sector. 2.12.1 Malaysian Healthcare Travel Council (MHTC)

In the year 2005, the government under ministry of health started a small unit known as to promote medical tourism after the recommendations done by the National Committee for the Promotion of Medical and Health Tourism. This small unit later became an agency that will be responsible to promote medical tourism effectively between the government and stakeholders. The government acknowledged the need to have a proper functional unit coordinate the activities related to medical tourism (MHTC, 2012). On the 3rd of July in 2009 with the approval of the Malaysian Cabinet, the government decided to form Malaysian Healthcare Travel Council (MHTC) directly under MOH. MHTC was established to serve as link and also streamline travel service providers and industry players in both private and government sectors so as to drive the industry to greater heights. The MHTC reports to an Advisory Committee chaired by the Minister of Health and co-chaired by the Minister in the Prime Minister's Department heading the Economic Planning Unit (EPU). Members of the Committee are appointed from representatives of the government and the private sector involved in healthcare and the tourism industry. The committee is responsible for advising on policy issues and setting directions for the healthcare travel industry.

Figure 2.13: Malaysian Healthcare Travel Council Logo (Source: MHTC, 2013)

The core of MHTC was to establish to link and facilitate the public private partnership in medical tourism in issues affecting the industry as whole. With this council it is able to streamline both parties and actively plan and promote the medical tourism industry globally. The strategies undertaken by MHTC are making development of strategic planning and programs with the stakeholders of the industry. Among the stakeholders who contribute to actively to the council are The Association of Private Hospitals of Malaysia (APHM), Malaysia External Trade Development Corporation (MATRADE), Malaysian Investment Development Authority (MIDA), Tourism Malaysia and Malaysian Dental Association (MDA). The mentioned bodies will work together with agency to create strategic plans and also execute them in making the industry more viable player in the internationally market. Promotion is one of the core effective in marketing the medical tourism of Malaysia to the international world and with this MHTC also coordinates the promotional activities in Malaysia and globally. Realizing the medical tourism is more private driven MHTC acts also as the nodal point on the developing the policies and also program with involvement of the government agencies. Realizing that the medical tourism is still a new industry, MHTC also organizes training programs and workshops. This workshop brings experts from the industry for that prospective companies or individuals whether local or foreign learn more about the prospects of medical tourism in Malaysia. With the number of private hospitals are on the rise, MHTC also makes ensures only certain hospitals which have the necessary credentials and expertise are considered for the medical tourism package. This is to ensure the industry is not affected by negative perceptions.

In a nutshell the government of Malaysia realized the huge potential of the medical tourism market and the establishment of MHTC was one of the core incentives in helping to ensure the private public partnership in making the industry successful in Malaysia.

2.12.2 malaysiahealthcare.com

One of the most powerful marketing strategies in medical tourism is the usage of internet. Increased access to information via the internet and international media has nourished a global mindset and this eventually created awareness in the medical tourism (Sarwar et al., 2012). In the past people tend to settle for the nearest clinic or hospitals when it is required in their own country. The patient mobility was between states within the country to the maximum and only the well to do can afford to gain treatment in other countries. Today there are more people who are willing to seek treatment beyond their countries (Bookman and Bookman, 2007). With the usage of internet the necessary information pertaining as the health matters and prices of the treatment can be compared. It provides a platform for the patients to access information regardless in which part of the world they are. Realizing this is one of the core promotion strategies the government of Malaysia created a website known as www.malaysiahealthcare.com. This website serves as focal point which serves information on health tourism destination centre for all medical needs and tourism. It brings the entire service provider on this platform and channels the information to facilitate all aspects of medical tourism linking prospective tourist with all related agencies in Malaysia. Information such as hospitals, health service providers, insurance agents, flight information, hotels and so on can be obtained in the website. It provides and enables the health tourist to plan, arrange and manage matters related to complete treatment and vacation package in Malaysia from their own home. Apart from making a selection on the hospital in Malaysia, a potential medical tourist can also inquire the respective doctors or specialist via online for the required treatment regarding procedure and advice on the available treatment. This will indirectly help to foster a better perception on the quality of healthcare and at the same time obtain a comprehensive package to medical tourist from healing to recreation process. The website was launched in the year 2007 by the Tourism ministry in line with the visit Malaysia year 2007. Until now the website still functions as the information channel to health tourist planning to come to Malaysia. The website shows another incentive taken by the government in pursuing it aim to succeed in medical tourism industry with the help of the private sectors. 2.12.3 Tax incentives

The government of Malaysia is committed to promote Malaysia as a medical healthcare tourism destination and aims to attract more than 1.9 million health tourists to Malaysia by 2020 (MHTC,2011). The government also realizes this figures can only be achieved by the active participation of the private sectors that are keen in medical tourism industry. Medical tourism business means a huge initial investment, especially in facilities and equipment. State-of-art technology, visually appealing exteriors and interiors, add-on facilities such as restaurants, prayer rooms, kids playing area and so on, have become a norm to attract medical tourists. User-friendly software to present a globally accepted output format of electronic medical records adds up to the sunk costs (Chee, 2010). To attract the potential and existing stakeholders in the healthcare industry the government had announced tax incentives in the form tax relief. It encourages new players to come into the industry. Private hospitals that are interested to open their doors to medical tourism business are encouraged to apply to the tax incentives offered by the government. However these hospitals must be registered with MOH and also the AHPM.

In the budget 2012 tabled by the Prime Minister, Dato Seri Najib Tun Razak announced several tax incentives to healthcare service providers. The tax incentives are income tax exemption of 50% on the value of increased exports will be increased to 100% (10th Malaysian Plan, 2011). This step will encourage the healthcare service providers to offer high quality services and attract more health tourists. In the year 2011 the health minister then Dato Seri Liow Tiong Lai had announced that tax exemptions also will be granted to private hospitals that have received accreditation from the Joint Commission International (JCI), the Malaysian Society for Quality of Health (MSQH) and ISO (New Straits Times, 2011). Any healthcare service providers wishing to build new hospitals, refurbishing and modernizing or expand their current facilities in order to promote medical tourism will also be given tax reliefs as announced in the budget. International unit patients in these hospitals also qualify for this tax incentive. The tax incentive is up until December 31st 2014. This move was important to promote the increase of the number of beds and facilities to achieve the target of nearly 2 million health tourist to Malaysia by the year 2020. This also will make Malaysia to have a competitive advantage to other competitors such Singapore and Thailand in terms of facilities and number of service provider. This is because the cost can be lowered down further as tax incentives will provide a relief in their income.

2.12.4 International Accreditation

In this rapidly growing medical tourism industry, quality has become an integral part. Without providing quality services no business can survive. In medical tourism industry, people from rich countries travel to less developed countries because of less expensive but high quality medical care. Quality in the healthcare sector focuses on the technical and serviceable or functional quality. In the healthcare industry, technical equipments and other related medical diagnoses systems is core for patients checkup for their treatment and functional quality measured by the service offer by the healthcare centers such as services of staffs, nurses, administrations and most importantly the doctors towards the patient and their assistants (Nicola et al., 2011). It has been found from different healthcare researches that, patients mostly give priority to the functional quality rather than the technical quality though the technical quality may not be satisfactory. However, for the medical patient, the technical quality should be a prime object because the proper treatment of patients largely depends upon the proper diagnoses of the diseases. Service quality works as a bridge, which hangs within customer, and organization, thus, shows the valuable exchange among them (Sarwar et. al, 2013). Understanding of the customers requirements has become necessity as this helps the practitioners in developing new approaches to provide improved service quality. The service quality in healthcare industry is a vital part for attracting customer as in the medical tourism and also the healthcare generally. Patient perceptions are measured through the quality of services provided by a healthcare centre. Delivering quality services to the customers is necessary in order to meet customers perception.

Many countries such as Singapore and Thailand promote medical tourism by promoting their standard or accreditation obtained by the healthcare providers as a tool for marketing. The government of Malaysia strongly encourages the private healthcare sectors to obtain domestic or international recognition in providing their service. The quality of the healthcare service is common question especially in the private sector and also for potential health tourist travelling thousands of miles to come for treatments or surgery procedure.

In Malaysia there nearly 220 private hospitals and they are required to be registered with The Association of Private Hospitals of Malaysia (APHM). This is an association representing private hospitals and medical centers in Malaysia and has been in existence since 1972. APHM member hospitals are key partners with the public sector healthcare providers in bringing comprehensive medical care to all Malaysians through its member hospitals. In Malaysia, all private medical centers are approved and licensed by the Ministry of Health (MOH). APHM plays the link between the private hospitals and the MOH.

Many of the private medical centers have achieved certification for internationally recognized quality standards. The types of accreditation are awarded by Joint Commission International (JCI), the Malaysian Society for Quality of Health (MSQH) and International Society for Quality in Healthcare (ISQua). The JCI is an international body that is well known all over the world and the follow an international standard to ensure patient safety and quality of care. JCI is accredited by the International Society for Quality in Health Care (ISQua). Accreditation by ISQua provides assurance that the standards, training and processes used by JCI to survey the performance of health care organizations meet the highest international benchmarks for accreditation entities. JCI accreditations are well-known globally and being accredited by this association is a positive sign to attract foreign tourists especially from Europe and America (AHPM, 2012). As of middle of year 2012, there eight hospitals in Malaysia with JCI accreditation namely Gleneagles Hospital (Penang), National Heart Institut (IJN), Adventist Hospital (Penang) and Sime Darby Medical Centre (Selangor) (MHTC, 2013). 85 private hospitals and facilities have also obtained accreditations from MSQH as the same time.

The government is striving hard to encourage more private healthcare providers to go for accreditations and also have given tax relief for eligible healthcare providers whom have spent money to obtain the accreditations. Affiliation with world renowned healthcare centers such as the MAYO Clinics, Johns Hopkins University Medical Centre, and Great Ormond Street Childrens Hospital is also considered a quality assurance step. Bringing in foreign patients was even used, or at least expressed, as the reason for efforts to benchmark the corporatized teaching hospital, University Malaya Medical Centre, to medical institutions in Australia, New Zealand, and the United States (The Star, 2004).

2.12.5 PromotionsAccording to Sarwar (2013) in his study stated that low cost compiled with other factors such as technological capability, governments inventiveness and promotional campaigns in developing healthcare facilities and qualified workforce coupled with the natural resources like beaches, greens have built the confidence of many from the developed countries to visit foreign locations for medical procedures. In another study on marketing in health tourism by Yang (2013) purposed that marketing of medical tourism should be in line with the promotion of national brand image internationally, in addition to the cooperation of medical institutes and travel agencies. Tourism industry is considered as the major dimension to reflect the national brand, as the product characteristics and positive image in tourism industry would result in considerable benefits. What attracts medical tourist to Malaysia is how the rest and healing time can be spent there. The medical tourist or the patient with their guest shave the opportunity to sightseeing and enjoy tourist activities during the healing period.The Malaysia government has appointed MHTC to coordinate its promotions locally and overseas with the help of other government agencies such as the MATRADE. MHTC is tasked with the responsibility to formulate strategic plans for promotion of healthcare travel services such as to brand Malaysia brand in medical tourism internationally. Every year since the establishment of MHTC, an expo titled Malaysia Travel Expo is held annually to promote medical tourism (MHTC, 2012). To further promote Malaysia medical tourism offering abroad MHTC opened new offices in Dhaka, Bangladesh and Jakarta, Indonesia in the year 2012 (The Edge, 2013). MHTC also plans to open another branch in Hong Kong to increase the marketing activities.

Apart from that MHTC also have their own call center known as MHTC Care line which is dedicated to answer questions all over the world. The call centre is based in Kuala Lumpur. MHTC also are in the pipeline to establish a Medical gallery and Medical Concierge in Kuala Lumpur International Airport (KLIA). The main purpose is to disseminate and facilitate healthcare services information as well as questions pertaining to transportation, accommodation and travel within Malaysia. A team of dedicated medical personnel will assist and facilitate all medical travel inquiries from providing information pertaining to treatment centers to certified doctors, treatment available and even up to assisting with the appointment requests with participating hospitals. It gives much assurance to the medical tourist and providing easy access to all their medical tourism enquiries for a comfortable and fruitful stay in Malaysia. Currently the MHTC promotions have been fully funded by the government. The method of promotion is by attending international exhibitions in various countries and also by using the internet.

Among the potential markets that have been identified by MHTC are the Muslim countries. A strong element in the Malaysian strategy is to capitalize on its image as a Muslim country, with easily available halal food and conveniences for practicing Muslims. The Muslim countries targeted include Middle East countries, Brunei, and Bangladesh. Gleneagles Intan Medical Centre, for example, formed a partnership with a Bangladeshi company whereby patients will meet up with appointed medical representatives in Bangladesh who will assess the type of treatment needed and give an estimate of costs before travelling to Malaysia. (The Business Times, 10 March 2004). One recently established company is aggressively employing both strategies of targeting Muslim countries as well as tying up with agents in these countries. Medical Service Coordination International, officially launched on 30 December 2003, and led by executive chairman Datuk Syed Hussein Al Habshee, former Malaysian ambassador to the United Arab Emirates, aims to act as a one-stop medical tourism agency among various parties locally and abroad. In Malaysia, it collaborates with a panel of hospitals, the government-owned Nationa