Offshore financial centres as medical tourism destinations in Caymans and Bahamas

 

Offshore finance has been the subject of increased attention from US and European governments. Most offshore centres are losing out to major financial centres. Their other main income is tourism, which has also suffered recently. So medical tourism looks appealing. Many offshore financial centres are current or former British colonies or overseas territories that have lower levels of regulation than the UK.

The twice-yearly Global Financial Centres Index published by think tank, Z/Yen is a ranking of the competitiveness of financial centres .In the latest report, all offshore centres with the exception of the British Virgin Islands fell further in the rankings, continuing a trend since the financial crises began. The Cayman Islands and the Bahamas were the biggest fallers. The report explains that offshore centres are still regarded as tax havens and there has been significant pressure applied to these centres by many national regulators as well as international bodies such as the OECD and IMF.

Tax specialist F. Ron Jenkins of the Meridian 361 International Law Group in a recent presentation at the 9th Annual Off-shore Alert Conference in Miami Beach, Florida painted a picture of an embattled offshore financial industry, "Many of these offshore centers are going through a crisis and not all will survive, especially if they don't learn to diversify their business models. For offshore jurisdictions with good tourism infrastructure already in place, medical tourism will allow for the transfer of technology, skills and know-how to create real economic development. This has economic substance and there are wealthy, motivated economic participants who will incorporate and launch businesses in these jurisdictions and achieve legitimate tax planning advantages," Jenkins has advised two clients on how to establish their medical tourism businesses

In May 2009, US President Barack Obama declared his intentions to curb the use of financial centres by multinational corporations and he singled out the Cayman Islands as a tax shelter. So while it remains an offshore centre, it is under increasing pressure to “clean up its act’ with tougher rules on tax. So it is surprising that Jenkins says jurisdictions need to relax many laws to be more appealing to medical practitioners, "They need to cap, restrict or make off-limits punitive damages and include provisions for no-punitive or pain and suffering damages, or capping damages to $250,000.00.Jurisdictions may need to relax their immigration rules to allow in the number and quality of professionals that successful medical tourism businesses need, relax land ownership rules, and generally codify a package of commercial incentives for such businesses.”

The Cayman Islands government has approved an extension of the agreement with Dr. Devi Shetty to build a huge medical tourism-hospital in Cayman. Local partner in the project, Gene Thompson, says both government and private partners agreed to amend the agreement to give both parties time to satisfy their obligations. These include granting of building permits, planning approvals and various duty concessions. The healthcare city will cost about $2 billion and include a hospital, medical university and assisted-living facility; and target American patients and insurance providers seeking deep cost reductions. Shetty believes it will draw 50% of its patients from the United States. The Caymans recently passed legislation that caps medical negligence claims at $600,000.

Tourism is Bermuda's second largest industry, with the island attracting over one-half million visitors annually, of whom more than 80% are from the United States. Other significant sources of visitors are from Canada and the United Kingdom. Bermuda has often talked of becoming a medical tourism destination but has no national strategy on it.

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