Category: Healthcare

In a competitive landscape of rising costs and disruptive technologies, providers and investors must harness their brand as a key business asset. Director of Healthcare + Wellness Ruben Toral discusses the power of branding in healthcare M&A.

Investor enthusiasm for healthcare assets in Asia-Pacific is strong and getting stronger.

According to Deloitte, the global healthcare market is valued at over $8 trillion. In 2018 alone, global cross-border mergers and acquisitions (M&A) in healthcare totalled $182 billion. The report highlights Asia-Pacific as one of the fastest-growing regions in healthcare spending—a mega trend driven by demographics, lifestyles, disease rates, urbanisation, rising incomes and higher demand for private healthcare.

The takeaway is obvious. Healthcare is the place to be and no one understands that more than investors and private equity companies specialising in healthcare. Valuations are getting frothy, and as the pool of quality targets shrinks, deals become more competitive and valuation multiples rise. In that environment, providers and investors want to optimise every part of the business—and that should, but rarely does, include the brand.

Having a trusted brand in healthcare is not only desirable—it is critical. Consumers trust brands, and no industry is more trust-driven than healthcare. Strong hospital brands drive volume, acuity and loyalty and generate higher margins than their peers. They also attract medical tourists—a lucrative source of high value patients that will travel for higher acuity, specialty services.

McKinsey research shows that “top-ranked brands outperformed the world market by 74% as measured by return to shareholders.” Yet, brand value is rarely ever fully captured in M&A, because operators and investors focus on levers they can control to impact margins—cost optimisation, operational efficiencies and capital allocation. Brand is an intangible asset and as such not recognised on the balance sheet.

Yet, the same report emphasises that “the value of a strong brand cannot be underestimated in today’s fast-moving commercial environments, where customer loyalty is notoriously difficult to acquire and sustain.”

Globally, hospitals are investing billions of dollars—purchasing, acquiring, merging, integrating and upgrading—all with the goal of improving patient care and maintaining a sustainable, profitable business. But to connect with patients, healthcare providers and investors must recognise, invest and leverage one of their most important business assets—their brand.

Providers and investors at every level are now competing harder and spending more to acquire assets, grow their business and retain patients in the face of rising costs, disruptive players and digital technologies. The one constant in this sea of change is the role of a brand as a value creator that impacts choice, pricing, loyalty, advocacy and shareholder value.

Ruben Toral is a healthcare industry veteran with decades of experience in hospital marketing and medical tourism. He has built healthcare businesses, brands and physician networks in Asia, Latin America and the Middle East, and his work has been featured in whitepapers, articles and books, including Fast Company and Aerotropolis: How We Will Live Next.

Tell us about your experiences working in healthcare and wellness. How did you get your start?

My career in healthcare spans over 25 years and started innocently enough while working on a wellness project for Noble Holdings, a Thailand-based property developer. That project morphed into a career in medical services that included co-founding a medical services company specialising in lithotripsy (shock wave therapy for kidney stones) and a two year stint in Mexico, where I set up the company’s Latin American operations.

While in Mexico, I was contacted by the CEO of Bumrungrad Hospital and offered the opportunity to lead the hospital’s international business development, which I did for 7 years. I then founded Medeguide, a portal to connect patients and doctors online. After Medeguide, I co-founded Intermedika Consulting, a healthcare consulting firm specialising in business strategy.  Our clients were primarily hospitals, investment companies and government health promotion agencies.

What is your role with QUO and why did you make the move to work with a branding company?

QUO is a leading branding agency specialising in hospitality, tourism, and advocacy. While the agency has worked with a handful of clients in healthcare and wellness, it has ambitions to expand its reach in the healthcare space. Given my experience in healthcare, strategy, and marketing, it was a natural fit. I have a longstanding personal and professional relationship with QUO CEO and Founder, David Keen, so the transition was easy.

Most people associate you with medical tourism and your work at Bumrungrad International.  Tell us more about your experience there.

Bumrungrad was one of those special career moments when you find yourself at the right place at the right time working with exceptionally talented people. I joined the hospital in 2001, and was in charge of developing relationships with referral doctors and clinics, creating a new international patient centre, building out the hospital’s overseas representative offices network in Asia and Middle East, and developing partnerships to support our medical tourism efforts. I also managed the brand, the public relations and media.

At that time, the term ‘medical tourism’ was unknown and Singapore was the go-to centre in Asia for patients seeking international standard medical care. By 2007, when I left the hospital, everything had changed. Medical tourism emerged as one of the hottest trends in healthcare and Bumrungrad was its epicentre. International patient revenue surpassed domestic patient revenue, and Bumrungrad was featured by virtually every major news outlet in the world. It was a very exciting time.

That’s a significant business transformation in a very short period of time. Was medical tourism the trigger?

I’ve often said that Bumrungrad won the medical tourism race due to ‘fast mover advantage’. By that I mean management was quick to understand and react to opportunities and challenges, including medical tourism. Bumrungrad was the first hospital in Asia to receive JCIA accreditation; it was the first to establish referral contracts in the Middle East; and we led the whole cosmetic surgery boom that started in the early 2000s.

We focused brand messaging around the hospital’s key differentiators e.g. hotel-like facilities and service, US trained doctors, international accreditation, and prices that were 30%-50% less than Singapore. As I used to say at the time, Bumrungrad offered a Mercedes product at a Toyota price. It was a simple message that everyone understood.

As part of Bumrungrad’s transformation, you also led the hospital’s rebranding in 2005. Is that correct?

Yes. Our international patient business was outpacing our domestic business 2 to 1, and it became clear that the brand originally created in 1980 no longer fit the business 25 years later. The business had evolved and the brand needed to evolve too. That’s where my association with QUO started. I selected QUO to help with the hospital rebrand. Together, we changed the name, tagline, colours, visuals, tone of voice, and applied it to signage, marketing collateral and all corporate identity materials. It was a significant undertaking, but well worth it. The rebrand repositioned Bumrungrad Hospital,  a Thai hospital treating international patients to Bumrungrad International, an international hospital in Thailand providing world-class medical care on par with top medical centres in Europe and the US.  It did what branding is supposed to do—define and differentiate.

How important is branding for hospitals and healthcare in general?  Bumrungrad made the change but not many others have followed.

Strong brands establish trust, and no industry is more trust-driven than healthcare. At the consumer level, strong brands drive consumer awareness, choice, loyalty and advocacy. At the business level, strong brands influence pricing power, profitability and share value.

As a rule, hospitals lag other industries, like hospitality, when it comes to branding. My experience is hospital owners and CEOs don’t see branding as a source of value creation so they don’t fix what they perceive isn’t broken. But brands evolve with the business, and branding supports reputation. Consumers, by and large, select healthcare providers based on reputation. Medical tourists even more so. If a hospital is not investing and cultivating its brand, it is effectively leaking value.

Wellness seems to be the big trend now.  Where do you see this going?

Wellness is a trend with lots of momentum. Over the past 10 years, wellness has been trending, but COVID supercharged it. That awakening, if you will, has driven industries and businesses to add wellness as a ‘new’ ingredient to make their products ‘healthier’.

My issue is that the term ‘wellness’ is very broad. It is everything and nothing. So, the challenge is taking an amorphous term and shaping it into a product or service that has value for the customer. Many companies simply re-label old products and services as ‘wellness’, and that’s not sustainable.

The combination of wellness and hospitality is an exciting hybrid space that is ripe for development, but it requires matching capabilities and needs with cost and risk. I have worked with hospitality companies, hospitals, wellness clinics and wellness resorts so I have a good sense of the issues, opportunities and challenges in the wellness space.

Finally, where are the new opportunities in the healthcare and wellness space?

That’s a huge question, but I see healthcare as one of the most exciting industries entering one of the most disruptive periods. In short, we are moving from the old analogue model of care that is doctor centric, focused on sick care, delivered episodically and in silos, and paid for by a third party, insurer or government. The new model is digitally enabled, continuous, connected, personalised and paid for by individuals through savings and incentives. The healthcare system we have today is built around sick care rather than well care.

What is wellness?  If you are a half glass full person then it is a tool to help you live a healthier, happier, longer life.  If you are a glass half empty person then it is a branding ploy to get you to pay twice as much for something that may or may not have any real impact on your health and longevity.

Regardless of where you stand, McKinsey estimates that wellness is a $1.5 trillion market with a lot of room to run.  You may not believe in it, but you certainly cannot ignore it.  McKinsey breaks down the market into six segments ranging from fitness to sleep.

With the growing trend towards healthy living, more industries are trying to incorporate wellness into their offerings, including hotels, real estate, F&B, and tourism. Hotel companies, in particular, have been flirting with adding wellness and medical services to their offerings for years, but COVID-19 supercharged that intent, and now wellness is on the map to stay.

For hotels, wellness is a new channel to boost guest spend and create product differentiation, especially for resort hotels. Resort guests are relaxed, they eat better, sleep better, and have more time to exercise. But the challenge hoteliers face is  shrinking the broad concept of wellness into a tangible offer and delivering it to guests in a profitable, sustainable way.

There are typically three models when it comes to offering medical or wellness within hospitality.  The first is to bundle existing amenities like spa, fitness, and F&B and repackaging it under wellness.  The second is to rent space to a doctor or clinic specialising in wellness or aesthetics. This is often the easiest route because it fills space and generates rental income with almost no effort. The third is developing a bespoke wellness program and making it a signature feature of the property or brand.  That’s the heavy lift.

There are other models and variations on these three themes, but it all boils down to intent.  Is the goal to develop a wellness product that is strategic and sustainable or short term and opportunistic?

The bigger hotel companies like Accor are investing in bespoke, branded, scalable solutions, working with partners, and deploying digital technologies that keep guests connected on and off the property. The smaller hotel groups tend to explore wellness services and themes they can weave into the guest experience.  Individual properties may choose a highly specialised path focused on doing one thing and doing it well.

Regardless of their path, hospitality companies are actively looking to blend health into their amenities portfolio and will eventually need to settle on a strategic path forward.  One that ideally fits the brand, business and guest mix.