International Trade in Services.pdf - DSpace at Khazar University

Health without Borders 111
Mode 2 and Mode 1 present similar regulatory challenges. How is one to control
the quality of the services provided abroad Who should bear the costs of follow-up
operations in case of medical complications (Many insurance companies refuse
to reimburse for such operations.) On what basis should there be reimbursement
The answers to these questions have important ramifications. At stake are the
equity of access—absent an adequate sponsoring or insurance scheme, only the
rich can afford to seek treatment abroad—and the quality of health care. For
patients, travel abroad remains suboptimal because of the inconvenience of travel
and the desire to undergo medical procedures in a familiar environment.
It should also be noted that resources spent abroad are diverted from the
domestic health system, while the dynamic effects are enjoyed abroad. In addition,
the unit cost of hospital care depends on the volume and overall capacity utilization
of a facility; thus, increased imports under Mode 2 may result in higher treatment
costs at home (and, in the worst case scenario, among those who cannot
afford to travel).
Mode 3
The impact of imports under Mode 3 will vary considerably according to the
nature and the objective of the investment. It is often feared that foreign establishments
will only target a traveling foreign clientele or a rich domestic clientele,
which would raise concerns regarding the equality of access to health care. Moreover,
foreign establishments (supposedly paying higher salaries than the public
sector or the domestic private sector) could divert scarce human resources to treat
a more wealthy clientele, to the detriment of the poor and of the objective of universal
access to health care. For the government, this internal human resource
drain could be a drag on public investment in education. It could also add to the
initial cost of attracting foreign investors (fiscal incentives, building infrastructure,
and so on).
There are, however, a number of measures that a government can take to mitigate
these risks. Leakages are greater if markets are segmented. For example, in Tunisia,
offshore clinics benefit from a more significant degree of openness to trade (such as
investment incentives for foreigners, authorization for foreign doctors to practice),
but they can treat local patients only within a certain legal limit (20 percent of the
clientele). As a result, there is more leakage, while the spillover effects on the local
population are minimal. In contrast, in Indonesia, foreign investment is directed at
private wings in teaching and tertiary care hospitals in cities other than Jakarta so
that positive spillover effects are maximized. Similarly, in the case of Thailand, the
government has introduced compulsory public service and requires the private
sector to contribute to investments in education to help avoid and also offset the
effects of the internal drain on human resources (see box 4.7). 4