- They are more likely to attract overseas doctors and specialists than other hospitals;

- They are more likely to be accredited domestically and/or internationally;

- Their costs are likely to be comparable to or slightly higher than those of non foreign funded large hospitals;

- - Their costs will tend to be higher than for small and medium size nursing homes and hospitals, mainly due to greater capital intensity and focus on quality systems and processes and focus on hygiene;

- There could be positive externalities in other areas, some of which could further drive foreign investment in hospitals;

- They could draw away medical personnel at all levels form other hospitals and could adversely impact the quality of medical manpower available to competing institutions;

- There is likely to be closure of substandard institutions, some consolidation of the hospital segment, and new kinds of arrangements could emerge between larger and smaller players as the healthcare sector evolves;

- There could be greater segmentation between the public and private sector with resource flows towards the latter, greater wage disparity, unless innovative arrangements emerge between the two segments and reforms are undertaken in the public sector hospitals.

**While there are clearly concerns about the equity, affordability, and market segmentation implications of growing foreign investor presence in India’s hospital segment, it is evident that the root cause lies in structural problems that are already present in the healthcare sector** , such as lack of affordable health insurance schemes or inappropriate regulations on medical education providers. Therefore, the benefits of foreign investment in hospitals are likely to outweigh these adverse effects, and **the solution lies in strengthening the public healthcare system, in amending certain regulations that affect all players, and in introducing schemes, which provide affordable access to healthcare for all and not in restricting foreign investment** .

**Source:** Rupa Chanda (2007).

# <u>Mode 4</u>

A number of developed and developing countries resort to mode 4 imports to remedy shortages in key health personnel. From the importer’s perspective, this reduces the cost of medical education and training, allows greater flexibility in the management of health personnel, and provides access to top-quality personnel trained in specialties that are sometime not available locally. In turn, this contributes to facilitating technology and knowledge transfers.

The flexibility of mode 4 also allows some countries to remedy health care provider shortages in remote or underserviced areas (see e.g. Canada). In many countries, the attribution of visas to health personnel is subject to economic need tests.

#  **Risks associated with increased trade / aversion to opening**

Domestic health markets are highly regulated and often characterized by a high level of protection against imports. Motives underlying some level of regulation and/or protection may be legitimate, although a number of measures allow mitigating the risks and maximizing the benefits of opening. Here again, a distinction should be made according to the mode of service supply, and to whether the service is provided/consumed domestically or abroad.

# <u>Mode 1</u>

So far, trade in health services under mode 1 has remained limited mostly due to technological reasons. With the current level of technological development, mode 1 does not appear cost efficient. For other services ancillary to health, such as back office or transcription services, the argument may not prevail; however, these activities could be a challenge for regulators, e.g. with regard securing confidentiality of medical information.

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