BANGKOK -- Thailand's private hospital operators are objecting to the government's plan for controls on fees covering medical care and drugs, a policy that observers see as a populist bid for voter support in the March 24 elections.
"Capping profit margins could eventually lead to cuts to our investment in research and development to improve our capacity and competitiveness," Pongpat Patanavanich, president of the Private Hospital Association of Thailand, said in statement issued earlier this month.
Pongpat also warned that the new policy could undermine Thailand's goal of becoming a bigger regional hub for medical tourism.
Boon Vanasin, chairman of Thonburi Healthcare Group, gave a nuanced view.
"I agree with the plan to cap profit margins on medicines," he said. "However, I don't agree with the plan to cap all medical services in all private hospitals, as each hospital has different costs."
Shares of private hospital operators plunged on news of the fee plan, as these businesses have thrived on the freedom to set their own prices for care and medicine. Bumrungrad Hospital slid 4.7% on Jan. 9, when the government announced the new policy. The shares closed at 188.0 baht on Monday, still more than 2% below their peak before the policy was unveiled. Thonburi Healthcare Group closed at 33.7 baht on Monday topping its pre-announcement price, although it fell to 32 baht at one point on Jan. 9.
Bangkok Dusit Medical Services, the biggest hospital chain in the country, also was hit hard. The shares closed at 24.2 baht on Monday, more than 4% down from their peak before the announcement. The company faced a double whammy as the announcement was followed by founder Prasert Prasarttong-osoth's resignation over a stock manipulation scandal.
Thailand's cabinet said on Jan. 22 it approved a plan to steer prices of drugs and services amid criticism of private-sector hospital fees that far exceed the cost of public care. The plan would put private hospitals' fees under close monitoring by a Commerce Ministry committee. Any fee increases would need approval by the committee.
The new policy will be featured during the election campaign by the pro-regime Palang Pracharat Party, which vows to support Prime Minister Prayuth Chan-ocha -- the former general who led a bloodless coup in 2014 -- to remain in power.
The fee controls are welcomed by many middle-class Thais, particularly in Bangkok, as they will reduce high hospital costs and expand access to quality private medical services.
"We cannot deny that this policy would eventually help increase the popularity of the pro-regime party ahead of the election," said Somchai Chitsuchon of the Thailand Development Research Institute.
Total patients in private hospitals stood at 61.6 million in 2017. They are mostly middle- and high-income individuals who pay more to avoid waiting hours for care at crowded public hospitals. Medicines at private hospitals can cost more than 70 times as much as those at state facilities, according to Thai media.
But the new policy hurts profitability for private hospital operators, industry experts say. Bangkok Dusit reaped a 13% net profit margin on 2017 sales, a level that surpasses the roughly 5% to 10% commonly seen at global peers, according to Parin Kitchatrnpitak at KGI Securities.
Thailand's 347 private hospitals, as counted by the National Statistical Office, generate about 240 billion baht ($7.65 billion) a year, which accounts for around 2% of the country's gross domestic product in 2017.
Private hospitals will have to comply, should the new policy be implemented after the elections. However, an expert said the industry will be able to absorb part of the fee reduction by offering extra treatments and laboratory processes, charging patients more to sustain growth.