Umuh Muchtar was in such agony after botched surgery in Indonesia that he took a friend's advice and contacted a hospital in Singapore where he had his kidney stones removed a few days later.
Muchtar is one of the 1.3 million medical tourists from Asia, Europe, and the United States who fly to Singapore, Thailand or Malaysia each year for medical treatment because they are wary of the hospitals back home or consider them too expensive.
"I'm very satisfied with the treatment in Singapore," said Muchtar, 59, after checking out of Singapore's Raffles Hospital, part of Raffles Medical Group, to do some shopping. "I don't need to wait so long to see a doctor here, compared to Jakarta, where I would not be seen for five to six hours."
Medical tourism is potentially big business in Asia, and is expected to grow from about US $0.5 billion now to US $4 billion by 2012. But for investors, the sector looks very expensive, with valuations about 40 percent higher than their counterparts in North America and Europe.
Shares of Southeast Asian hospital firms such as Raffles Medical and Thailand's Bumrungrad Hospital have soared to record highs this year, as regional economies flourish and as governments throughout stress the need to develop a thriving medical tourism industry.
"They represent a play on the long-term growth in the region," said Peter Chiang, chief equity strategist of DBS Asset Management, which owns shares in Thomson Medical Centre
"Hospital care will serve the needs of a growing affluent population. Singapore, Bangkok and Kuala Lumpur have positioned themselves well in this aspect."
Governments in the region expect medical tourism to boost economic growth. Singapore wants to draw 1 million foreign patients a year by 2012, up from 400,000 in 2006; Bangkok aims to attract 2 million foreign patients by 2010, up from 1.25 million in 2005; while Manila is hoping for 700,000 patients, up from 250,000 last year.
Hospitals in Thailand and Singapore, which have their various niches, are most likely to benefit from the rise in medical tourism in Asia, analysts said.
Singapore has a reputation for handling complicated surgeries such as liver and heart transplants. Most of its hospitals are internationally accredited, while Thailand only has two accredited -- Bumrungrad and Bangkok Dusit Medical Services' Samitivej Sukhumvit Hospital.
In Thailand, low costs are the biggest draw. A heart bypass operation costs about US $12,000 in Bangkok, compared to US $20,000 in a Singapore hospital and US $150,000 in the United States, according to Macquarie Research.
Foreign patients visiting either hospitals in Singapore or Thailand can just call up and make an appointment, even without a doctor's referral, and avoid the long waiting lists in some Western countries. In some cases, they may tack on a couple of weeks of holiday afterwards while they recuperate.
"As you see more of them come in for more complex cases, these foreign patients would bring in a very lucrative form of revenue for the Singapore healthcare providers," said CIMB analyst Gary Ng.
Parkway Holdings and Bumrungrad rank among the world's most expensive hospital stocks because of their strong growth prospects -- a result of their aggressive expansion plans, analysts said.
Both Bumrungrad and Parkway have expanded into other parts of Asia, including China, India and Malaysia, due to intense regional competition for foreign patients.
But risk-averse investors who want to cash in on the industry should pick stocks such as Thailand's Bangkok Chain Hospital and Malaysia's KPJ Healthcare Bhd., which have lagged other Asian healthcare stocks, mainly because of their small market caps, analysts said.
Out of 36 companies listed in Asia Pacific GICS Health Care Facilities Index, only 17 have a stock market value of more than US $100 million, making them relatively illiquid.
Despite the boom, few funds have any substantial holdings in hospital stocks. Some investors say they are deterred by the firms' rich valuations, small market cap, and the potential for government interference when setting hospital fees.
"Basically we prefer to invest in areas where there's little government intervention," said Khiem Do, a fund manager at Baring Asset Management. "You are looking at an industry that's imperfectly priced and it tends to be more tricky."
But analysts point out that many of these stocks have outperformed the market even during times of weak sentiment. "It's not extremely volatile," said Wallace Chu, an analyst with DBS Vickers Securities. "There's always a stream of patients coming in, which would guarantee you steady growth.
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