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Make money on medical tourism
More Americans are going abroad for health care — how to cash in
 | The accommodations at Bay View Private Hospital in Mossel Bay on the southern tip of South Africa, make for a luxurious convalescence from plastic surgery. Best known for its Cardiac Cath Lab, where heart surgeries and diagnostics are regularly run at less than half the cost in the U.S. |
Bay View Private Hospital |
Last year, more than 500,000 U.S. citizens traveled abroad for health care. They went to Thailand to get heart bypass surgeries for $11,000 instead of the $130,000 it would cost in the U.S. Or they went to India for spinal fusion at $5,500 a pop, well below the $62,000 sticker price in the states.
The trend of more people traveling abroad to get medical treatment shouldn't take Americans by surprise. As our population grows older and health care costs keep rising, more people want cheaper ways to get hip replacements and liposuction. Web sites like MedRetreat.com facilitate medical tourism and allow potential patients to comb through vacation-like packages for procedures and destinations as if they were going on a honeymoon.
This is getting everyone's attention. Consulting firm Mercer is developing programs for companies to allow them to outsource elective surgeries. The West Virginia state legislature is considering a plan to cover state employees for foreign treatment, including first-class flights for the patient and a companion, plus recovery in a four-star hotel and other incentives like bonuses and sick leave.
So how can investors cash in on this boom? By buying stock in countries' medical infrastructure, like hospitals, airports and medical record management companies.
David A. Semple, portfolio manager of the Van Eck Global, manages the firm's emerging-market fund, which includes medical tourism plays. The fund, with a 1.95 percent expense ratio, is up 38 percent in 2007, besting its benchmark by 13 percent.
One play he recommends is Thailand's Bumrungrad International Hospital in Bangkok. "It's certainly better than any hospital I've ever been to in the U.S. or the U.K.," says Semple, noting the hospital has a doorman and is home to a Starbucks. "This is a far cut above the rest."
Bumrungrad had 66,000 American patients last year and is seeing tremendous demand from the Middle East. In 2005, 70,000 patients came to the hospital, 13 times as many just five years earlier.
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He says the higher prices are justified for two reasons. One, because of the high demand for the companies' services and, thus, the stock. Second, investors will ultimately benefit from the companies' real estate holdings. Semple says his picks can cash in on land they own, much like the strategy Edward S. Lampert touted in 2004 when he combined Sears and Kmart into Sears Holdings.
But how easy is it to get your hands on one of Semple's stock picks?
Well, it does take some effort since none have American Depositary Receipts, meaning investors will have to buy shares directly from the foreign exchanges. Charles Schwab Corp. can do it, but the trade value must be more than $5,000, and investors will have to fork over the greater of two fees: $100 or .5 percent of principal.
TD Ameritrade can facilitate some trades online, but if certain stocks aren't available, all an investor has to do is call a broker. This carries an additional custody charge, which varies depending on what exchange the stock is listed on but doesn't exceed $100.
One major landowner is Minor International, a Thailand-focused company that owns 630 restaurants and 15 hotels and resorts in Asia. Semple says many medical tourists will choose to stay in posh accommodations, which means those owned by Minor, which operates properties under the Four Seasons and Marriott names.
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