The co-payment requirement slated to take effect on March 20 poses a short-term challenge to Thai private hospitals as international revenue is already crimped by the absence of Kuwaiti patients and slower growth from other high-margin Middle Eastern countries.
After a year without Kuwaiti patients, the outlook for their return is uncertain as Kuwait's government has not announced which hospitals it will choose for medical treatment.
The Kuwaiti government ceased sending patients abroad from the first quarter of 2024.
Bumrungrad Hospital (BH) and Bangkok Chain Hospital (BCH) are feeling the greatest impact as Kuwaiti patents contributed 5-6% of their total revenue, said analysts.
Co-payment is a system where policyholders share a portion of medical expenses, unlike traditional all-inclusive plans where all costs within the limits of the policy are fully covered.
The model may influence policyholders' behaviour by reducing hospital admissions for minor illnesses and simple diseases.
The scheme is expected to have a limited impact of less than 3% on sector revenue and net profit, according to analysts.
Among hospitals listed on the Stock Exchange of Thailand (SET), Bangkok Dusit Medical Services (BDMS) had the highest revenue contribution from the insurance segment at 37% in the first nine months of 2024, while simple diseases or general diseases accounted for 5-20% of insurance revenue, said Parin Kitchatornpitak, an analyst with KGI Securities (Thailand).
This implies a negative impact on its net profit of 2-7%, he said.
ANOTHER YEAR OF WAITING
The Kuwaiti government is reviewing a list of Thai hospitals where its citizens can receive subsidised treatment.
A BCH executive said he believes the company will be one of three Thai hospitals on the list.
Panjapon Taensricharoen, an analyst with Bualuang Securities, said a final decision on Thai hospitals eligible for subsidised treatment from the Kuwaiti government is unlikely this year.
"This is why we did not include patients from Kuwait in our revenue forecast for hospitals under our coverage in 2025," he told the Bangkok Post.
However, patients from Saudi Arabia have been growing well, while those from the United Arab Emirates (UAE) and Qatar have also surged, said Mr Panjapon, citing arrival figures from the Tourism Authority of Thailand.
Chalerm Harnphanich, chairman of the executive committee at BCH, said while Kuwait's government has not started the hospital selection process, the company is confident it will be one of the selected hospitals.
The loss of revenue from Kuwaiti patients this year has been almost fully offset by an influx of patients from Cambodia, Laos and Myanmar, said Dr Chalerm.
In 2024, the proportion of foreign patients was 14%, down from 18% in 2023, primarily due to the decrease in Kuwaiti patients, he said.
Nontapat Sahakitpinyo, an analyst with Maybank Securities (Thailand), said Bumrungrad also experienced a decline in patients from the UAE as that nation's government diversified patient allocations to other hospitals.
Other Middle Eastern countries showed slower growth and were insufficient to offset the impact, said Mr Nontapat.
Earnings for this year's first quarter are expected to drop year-on-year due to the ongoing absence of Kuwaiti patients, while Ramadan in March should also mean a decline quarter-on-quarter, he said.
For the sector, Maybank picked Praram 9 Hospital (PR9) as a top choice due to the continued rise in Middle Eastern patients, while Thai patient revenue remained flat.
"Notably, revenue from Middle Eastern patients has increased to 16% of total international revenue," said the brokerage.
Maybank forecasts PR9's earnings to increase 15% this year, supported by 21% year-on-year growth in international revenue and 7% growth in Thai revenue.
In its filing to the SET last week, PR9 posted a 10.3% year-on-year increase in revenue to 4.69 billion in 2024.
Revenue from Thai patients increased by 6.1% year-on-year, while revenue from international patients rose 36.3%.
In response to the Bangkok Post's request, the investor relations division of PR9 said the company anticipates double-digit revenue growth this year, with Qatari patients the largest international customer source.
Kuwaiti customers typically generate 5-6% of total revenue for Bumrungrad Hospital, meaning it stands to lose a lot as the Middle Eastern country mulls its decision on which Thai hospitals it will offer subsidised care.
CO-PAYMENT EFFECT
Kasem Prunratanamala, head of Thai research at CGS International Securities, said co-payment will encourage insurance policyholders and their doctors to consider the necessity of the medical treatment and its cost so they can make an informed decision on appropriate healthcare services.
"We believe a co-payment policy is necessary to reduce the moral hazard of overconsumption and overserving of medical services," he said.
According to CGS, BDMS has the highest contribution from local privately insured patients, which represented 31% of its patient revenue in the first nine months of 2024, followed by PR9 at 27%, while Bumrungrad had the lowest exposure at 19%.
The brokerage estimates the impact of the co-payment scheme on the net profit of hospitals under its coverage at 1-2% this year and 2-3% in 2026.
"The healthcare sector underperformed the market massively in last year's final quarter based on heavy foreign selling, concerns over a slowdown in medical tourism and a weak earnings outlook," said Mr Kasem.
Downside risks for the sector include a sharp drop in patient traffic following the implementation of co-payment and further delays in the announcement of the Kuwaiti government, he said.
PR9 said the company views co-payment as an opportunity, encouraging Thais to purchase more insurance.
"The scheme may cause patients using co-pay to move to hospitals that offer premium services at much lower prices, such as Praram 9 Hospital," said Mr Kasem.
