Feasibility Study and Recommendations for Medical Tourism Development and Promotion of Medical Services Export in Lithuania

Executive Summary
1. Context, Object and Goals of the Feasibility Study
Feasibility Study and Recommendations for Medical Tourism Development and Promotion of Medical Services Export in Lithuania was commissioned by the Ministry of Economy of the Republic of Lithuania and prepared under the public tender announced on 11 July 2011 and carried out by way of a simplified open procedure. The object of the analysis carried out and the recommendations provided in the Feasibility Study is medical services as defined in Chapter 5 of the Law of the Republic of Lithuania on Tourism (Official Gazette, 1998, No. 32-852; No. XI1496, 22 June 2011, Official Gazette, 2011, No. 85-4138 (13 July 2011)). Medical tourism is part of health tourism and covers medical services (including medical spa). Another part of health tourism wellness tourism was not in the scope of this feasibility study. The Feasibility Study examines the experience of foreign countries in promoting medical tourism, analyses the international competitive environment and context of the medical tourism sector as well as evaluates the current situation in the field of medical tourism in Lithuania. Based on the conducted analysis, the following goals set for the Feasibility Study were implemented:

The potential of export of Lithuanian medical services and its strategic development directions were identified; The most appropriate measures for the of Lithuanian medical tourism development and promotion of export of medical services were defined and substantiated; Detailed and accurate information and recommendations, on the basis of which the Ministry of Economy of the Republic of Lithuania could make the most appropriate decisions on the Lithuanian Medical Tourism Development and promotion of Export of Medical Services, were provided.

2. Results of the Analysis of Good Practice and the Competitive Environment in Foreign Countries
In order to identify good practice in promoting medical tourism and evaluate the international competitive environment, the analysis of 11 foreign countries, which announced medical tourism promotion as a national priority, five of which are close competitors of Lithuania in the medical tourism market, was conducted. The analysis of the aspect of strategic planning revealed that active strategic planning and implementation of the promotion of medical tourism at the national level was featured in all analysed countries. The countries define the priorities and directions of medical tourism promotion in their strategic medical tourism promotion documents, which are sometimes integrated into more general health care or tourism planning documents. The countries provide specific financing programmes for the implementation of the defined strategic directions and measures. A central agency coordinating medical tourism is usually established for the implementation of medical tourism promotion strategies. When analysing the main marketing measures and sales channels in medical tourism, it was observed that proactive networking and cooperation with medical tourism agencies, companies providing insurance and medical services as well as state institutions are of particular significance. In some cases, a direct relationship is created by attracting direct investments from foreign medical service providers. It was also identified that the marketing measures that have the greatest impact on the decision of tourists to travel to a particular country are as follows: 1) Content on the Internet; 2) Image of the country and comprehensiveness of information; 3) Recommendations, feedback, and success stories.

Taking this into account, the countries promoting medical tourism usually have well-developed central sources of information on medical tourism and unified databases on the Internet. When assessing the measures related to the improvement of the legal basis, attention should be paid to the fact that the majority of the analysed countries have medical visas, and the procedures for obtaining such visas are shortened and streamlined. Such visas permit multiple arrivals at the country, and they are issued not only to the patient but also to the person and/or family members accompanying him/her. The major markets to which the analysed countries export medical services are usually distinguished for the following general features: 1) geographical proximity; 2) large country; 3) high purchasing power of the countrys residents; 4) mobile residents. The major export markets of the analysed countries are as follows: the USA, the United Kingdom, Russia, and Germany. Most often countries export medical services that are distinguished for low riskiness and relatively higher prices and could be planned in advance. Having regard to the aforementioned criteria, countries usually export plastic surgery, cardiological, medical SPA, orthopaedic and odontological services. When assessing the international context, the importance of Directive 2011/24/EU of the European Parliament and of the Council of 9 March 2011 on the application of patients rights in cross-border healthcare for the further development of the medical tourism market in Europe should be emphasised. It is likely that the implementation of the aforementioned Directive will have a positive impact on the potential of export of Lithuanian medical services. In order to exploit this potential, Lithuania should place a major focus on the improvement of the quality and safety of the provided medical services and the presentation of these services in the target foreign markets. Furthermore, it would be expedient for Lithuania to take advantage of the possibility afforded by the aforementioned Directive to obtain support to establish a European reference centre (centres) this would enhance the image of Lithuania as a highly competent provider of certain niche services in the medical tourism market.

3. Results of the Analysis of the Current Situation and Competitiveness of the Lithuanian Medical Tourism Sector
When assessing the personal health care institutions that export (or are potentially capable of exporting) medical services in Lithuania, it was observed that the flow of foreign clients to them comprises up to one thousand of patients per year, who mainly arrive from Eastern neighbouring countries. The main channel for attraction of foreign patients is medical tourism agencies and the presentation of information on the Internet. Establishments providing rehabilitation and sanatorium treatment (medical spa services) attract a significantly larger flow of foreign clients totalling 110,000 per year. Tourists from Russia (54%), Germany (15%), Poland (14%) and Latvia (13%) account for the largest share of that flow. The main channels of attraction of foreigners to medical spa providers include travel agencies, information on the Internet, and verbal recommendations (by the tourists who have visited the places before and medical specialists). Taking into account the results of the current situation analysis, the following key factors constraining the competitiveness and further development of the Lithuanian medical tourism sector were identified:

The absence of the image of Lithuania as the country promoting medical tourism, the limited availability information in the public domain The lack of coordination and unification of medical tourism promotion as well as shortage of resources for active marketing The insufficiently developed private medical services sector The public medical services sector is insufficiently adapted for foreign clients The medical service quality and result monitoring and assessment systems are underdeveloped; there are no medical institutions that have international accreditation Exclusively strong competence (known on a global or regional scale) has not been developed in individual fields of medical tourism, except for certain fields such as, for example, cardiac surgery; The pricing of medical services is not based on expenses, particularly, in public sector institutions, as a result of which the provision of these services to foreigners may be loss making

The barriers in the existing legal basis (for example, the complicated visa obtaining process, restrictions on the provision of new health care services and financing for private medical sector institutions).

When assessing the aspects increasing Lithuanias competitiveness in the medical services market, the following key factors should be highlighted:

Medical spa service providers have significant foreign client flows, which could serve as a sales channel while seeking to attract more foreign clients for other medical services Due to the geographical, linguistic and cultural proximity Lithuania is more accessible to Eastern markets than some of its competitors Lithuania has more physicians and a greater number of inpatient beds at hospitals than other EU Member States or other countries competitors; thus, Lithuania has the potential to accept significant flows of medical tourists provided that available resources are used efficiently and are adapted for export

4. Recommended General Strategic Direction for the Development of Medical Tourism in Lithuania
With regard to the results of the analysis of good practice of foreign countries, the current situation and competitive environment, the concept of the general strategic direction for the promotion of medical tourism in Lithuania has been formulated.

Vision and Objectives

The potential vision of the promotion of medical tourism in Lithuania: Lithuania is the most rapidly growing medical tourism country in the Northern Europe and the Baltic States. The potential objectives of the promotion of medical tourism in Lithuania formulated for the implementation of this vision are as follows: Lithuanias annual income from medical tourism LTL 500 million (in 2022); Annual growth of the number of medical tourists arriving in Lithuania 15 %; To be among the TOP 5 countries in Europe in terms of the number of medical tourists per capita; Income from medical tourism accounts for at least 20-30% of the total income of Lithuanian private medical service providers.

Implementation Stages
The promotion of medical tourism in Lithuania could be implemented in the following stages: Stage I definition of the product and improvement of its quality. During this stage, the institutional setup (cluster structure) combining capable medical and related service providers, which could be oriented towards export, should be developed, thus minimising potential risks for the reputation and image of the Lithuanian medical tourism sector abroad. The package of medical services focused on export and the quality of the services should be defined in greater detail, the needs and possibilities of quality enhancement should be identified. Accreditation and certification of the selected service providers should be carried out. Stage II improvement of the image and awareness-raising of Lithuania as the country promoting medical tourism, sales of the medical services abroad. During this stage, marketing and communication measures oriented towards increasing the accessibility of information about the possibilities of medical tourism in Lithuania, the overall awareness of Lithuania and formation of its positive image should be implemented. Furthermore, active sales of the services should be planned on the tactical level and implemented. Sales channels should be developed by making contacts with potential agents, sales representatives, private medical service providers, insurance providers, and foreign public institutions. Stage III improvement and development of physical infrastructure. By implementing investment projects, the existing infrastructure for the provision of medical services should be adapted to export needs and new

infrastructure (a hospital oriented toward the export of services only) should be developed in order to meet the needs of potentially increasing medical tourist flows.

Target Markets
On the basis of the results of the target market analysis provided in the Feasibility Study, it is proposed that Lithuania should focus on the sale of medical services in the following markets: In a short-term perspective (1 3 years): Russia (medical and medical spa services) Ukraine (medical services) Belarus (medical and medical spa services) Lithuanian expat communities in the United Kingdom, Germany, Scandinavia, and Spain (medical services) Poland (medical spa services) Latvia (medical spa services) Germany (medical spa services) In a medium-term perspective (3 6 years): United Kingdom (medical services) Germany (medical services) In a long-term perspective (6 10 years): the United States of America and other countries, for example, Scandinavia and the Far East (medical services)

Priority Services
Taking into consideration the results of the analysis of the Lithuanian medical services with the largest export potential, it is proposed to concentrate on the promotion of export of the following services: The services oriented towards the Eastern markets: Cardiology Plastic surgery The services oriented towards the Western markets: Medical examination Non-invasive diagnostics Odontology The services oriented towards Eastern and Western markets: Hip and knee joint replacement surgeries Urological surgery Medical spa

Assessment of Lithuanias Potential

Taking into consideration the target markets and priority medical services to be exported, as provided in the strategic direction of medical tourism development in Lithuania, the potential flows of medical tourists that Lithuania could attract by implementing the proposed strategic concept, and potential additional income from the export of medical services were calculated. The size of the target markets and the assessments of Lithuanias potential by each target market are provided in the table below. It is forecasted that Lithuania could attract approx. 292,000 medical tourists and earn income amounting to approx. LTL 284 million from the export of medical services in 2022.
Medical services Country Forecasted market size in 2022 Existing flows to Lithuanias potential to attract

Lithuania Million LTL 1,067 878 1,799 250 971 Number of medical tourists (units) 383,572 367,442 391,123 54,498 213,753 88,750 1,499,138 1,880,039 1,576,473 218,431 877,970 51,245 4,604,157

tourists in 2022 Income, million LTL 16.3 13.4 45.0 6.2 14.8 8.3 19.1 123.1 31.8 82.7 18.9 23.8 3.9 161 Number of medical tourists (units) 11,707 11,214 21,824 3,047 6,524 7,193 10,863 72,372 43,393 112,772 25,765 32,435 5,308 219,674

Germany United Kingdom Russia Belarus Ukraine Lithuanian expat 177 community Other countries Total 5,142 Germany Russia Belarus Poland Latvia Total 1,378 1,155 160 643 38 3,375

N.D. N.D. < 1000 < 1000 < 1000 N.D.

N.D. < 3000 Medical spa services 16,137 59,729 15,194 15,839 3,062 109,962

5. Proposed Actions and Recommendations for the Promotion of Medical Tourism in Lithuania Creation of a Medical Tourism Cluster (Required investments for 2013-2022 LTL 6.7 million)
In order to pool and purposefully use the available resources, to implement common marketing principles, to ensure and enhance the quality of the provided services as well as promote cooperation, it is proposed to create the Lithuanian medical tourism cluster. The cluster could consist of the operator implementing the coordination of cluster activities, medical and medical spa service providers, other companies (hotels, agencies) operating in the medical tourism value chain, and associated organizations.

Ensuring and Improvement of the Quality of Medical and Medical Spa Services (Required investments for 2013-2022 LTL 15.3 million)
In order to ensure and enhance the quality of medical and medical spa services oriented to export, it is proposed to create and implement a quality standard system of the medical tourism cluster comprising the assessment and monitoring of the appropriateness and transparency of business processes, pricing and the quality of services of the cluster members. In a short-term and medium-term perspective, it is proposed to carry out accreditation and certification of medical institutions according to the universally accepted standards (JCI, EUROPESPA med., etc.). For this purpose, certification and accreditation financing (support) schemes should be developed and information/training events intended for interested institutions providing medical services should be organised. In a medium-term and long-term perspective, it is proposed to develop a national medical service quality measurement and data collection system, the indicators of which would include the assessment of the structure, processes and results of institutions providing medical services.

Implementation of Changes in the Legal Basis (Required investments for 2013-2022 a separate evaluation is needed)
Taking into consideration the aspects of the existing legal basis limiting the competitiveness and development of the Lithuanian medical tourism sector; it is proposed to consider the implementation of the following changes in the existing legal basis:

Introduction of cost-based pricing for medical services

Creation of a medical visa Creation of proper conditions for the development of the private medical sector (new services, reimbursement for inpatient services) Certification of natural factors

Development of Physical Infrastructure and Competence (Required investments for 2013-2022 LTL 104 million)
In order to meet the demand resulting from the growth of medical tourist flows, private medical service providers could use private funds and EU Structural Funds assistance to further develop their infrastructure. In case there is a significant growth in medical tourist flows, the construction of a new hospital oriented towards medical tourism should be considered. A foreign investor could be attracted for this purpose. In order to successfully position itself in the medical tourism market, Lithuania should strategically select the field of medical services and, by directing available resources to this field, develop a competence centre, i.e. seek to acquire competence and technical capacities which would confer a competitive advantage, compared to other competing countries in the region. Strategic human resource and competence demand planning is vitally important in order to successfully develop a competitive competence centre in a particular medical field.

Implementation of Marketing Measures (Required investments for 2013-2022 LTL 34 million)

When presenting Lithuanias medical tourism, it is recommended that the following main value propositions identified on the basis of the reasons for the choice of the country as the destination should be communicated: Quality professional qualifications of specialists, compliance with the EU standards and international accreditations, quality of nursing care Price a high value at a favourable price is communicated without highlighting the low price aspect only Convenience the rapidness of the provision of services and the variety of the services provided as one package Cultural/ mentality proximity and linguistic aspect

Taking into account the main groups target markets for medical services export the East and the West, it is recommended that the following two key messages of the marketing campaign should be used:

For the West: Lithuania is a country of high-quality medical services where it is good and convenient to recover. Besides, all this is available at favourable prices (quality, convenience, high value at a favourable price); For the East: Lithuania is a Western country with high-quality medical services, where it is good and convenient to recover as well as easy to communicate. Besides, all this is available at favourable prices (quality, convenience, language/culture, high value at a favourable price). The following three medical tourism marketing directions to be implemented in parallel are distinguished: Provision of information enhancement of comprehensiveness and dissemination of information about Lithuania, medical service providers and services; Image formation international public relations, general marketing guidelines, proactive promotion Presentation of services promotion of the services at the national level, networking, sales, and advertising.

Development of Sales Channels and Promotion of Cooperation (Required investments for 2013-2022 LTL 43 million)
In order to promote the attraction of medical tourists, Lithuania could consider the establishment of medical tourism representative offices in the target markets by choosing the most appropriate form of representative office according to the needs and context: an information representative office, a representative office providing consulting and travel organisation services, and/or a representative office providing medical consultations before and after the trip.

Furthermore, it is proposed to develop cooperation in the following main directions: Cooperation between the Baltic States by jointly aggregating their resources in order to seek for synergies in marketing (strategy development and implementation) Cooperation with the Scandinavian countries aimed at seeking mutual benefit the provision of services to Scandinavians and the retention of qualified specialists for Lithuania/the Baltic States (strategy development and implementation) Cooperation with other EU Member States, while seeking to establish a competence centre in Lithuania in the context of the EU Directive Use of the service accreditation and certification as well as quality monitoring and assessment system results in order to establish contacts with foreign insurance companies Focus on trade unions in Germany by maintaining and coordinating contacts via Lithuanian embassies / Commercial Attach and (upon establishment) medical tourism representative offices

Implementation of Other Recommendations for the Promotion of Medical Tourism (Required investments for 2013-2022 a separate evaluation is needed)
The following additional measures related to the promotion of medical tourism are proposed:

Promotion of local medical tourism by directing marketing activities towards the youth and children, by providing tax incentives to local tourism and including preventive health care into the school curriculum; Evaluation of the possibility to allow the individual allocation of a part of the personal income tax for health care purposes by considering the possibility to implement the health savings account (HSA) system in Lithuania; Prolonging the tourism season by taking advantage of the potential of medical tourism through promoting and supporting the development of tourist attractions, encouraging the resorts to advertise services and attractions not only during the warm but also during the cold season, and developing the services of inpatient rehabilitation, for which the Ministry of Health of the Republic of Lithuania should prepare the general plan for the provision of inpatient rehabilitation services Initiation of health care programmes in the countrys workplaces comprising the supply of healthier food to canteens / automated sale machines in companies, the creation of conditions for physical activities in the workplace, and the enhancement of the overall efficiency of corporate processes by eliminating no value-adding activities

6. Conclusion
The results of this Feasibility Study have revealed that Lithuania has potential to attract a significant number of medical tourists. In order to realize this potential, Lithuania should allocate sufficient resources and systematically implement the following medical tourism promotion initiatives that are recommended in the Feasibility Study:

Creation of medical tourism cluster Ensuring and enhancing the quality of medical and medical spa services Implementation of changes in the legal base Development of physical infrastructure and competence Implementation of marketing measures Development of sales channels and promotion of cooperation

If proposed initiatives were fully and properly implemented, it is estimated that in 2022 Lithuania could attract approximately 292 thousand medical tourists and earn income of approximately 284 million LTL. This would create the basis for Lithuania to become the fastest-growing medical tourism destination in the Baltic and North Europe region.