The Health Sector in Mexico and the Promotion of Nearshoring

Mexico is providing a variety of reasons and incentives to companies to accelerate the nearshoring process, which is the relocation of operations and production closer to the main market, in this case, the United States. Some of the reasons why companies are opting for nearshoring in Mexico include the geographic proximity to the United States, Mexico’s highly skilled and competitive workforce, as well as the country's political and economic stability.

Among the incentives are tax incentives, facilities for the import and export of goods, training and talent development programs, as well as the creation of special economic zones that offer additional benefits to companies.

The healthcare and energy sectors are experiencing significant benefits thanks to nearshoring. The environment is conducive to companies seeking to accelerate their growth process, providing incentives and opportunities so they can establish and grow successfully in the country.

In the specific case of the health sector, it has experienced significant advances in recent years due to the cause and effect of certain circumstances that impact the sector and become drivers of investment in the supply and quality of health in the country. 

According to the National Survey of Income and Expenditure carried out by the National Institute of Statistics and Geography (NEGI), the out-of-pocket spending of Mexicans on health services has experienced an increase of almost 31% in the last five years to reach 40%, one of the highest percentages in Latin America, which underlines the need to develop more affordable and efficient solutions in health services.

The increase in hospitalizations is in line with the increase in out-of-pocket spending, and is a reflection of the need for families to go into debt in many cases, due to the lack of accessible insurance and the deterioration and scarcity of facilities in the public health sector.

Other related factors are reduced government investment, as well as the growth in demand due to an aging population. 

This has generated hospital expansion in the private sector, mainly of facilities with less than 25 beds. In a little more than five years, hospitalizations increased by almost a third compared to 2016. Likewise, large hospitals for highly specialized private medicine are growing, but at a lower rate. In addition to these factors, it is expected that there will be new opportunities generated by the phenomena of nearshoring and medical tourism, which pose positive scenarios for the development of the health sector.

Nearshoring as a Catalyst for New Investments

In the competitive global landscape, we have observed the repercussions of disruptive events that have forced companies to rethink their strategies, seeking more efficient logistics chains and reduced response times. The relocation of industrial operations to Mexico will bring with it an increase in employment and, for actors in the health sector, this will represent an opportunity due to an increase in demand. Not only will it be necessary to strengthen installed capacity, but also the degree of specialty and complexity of services. In the short term, we will see significant growth in national and other pan-regional hospital chains, especially with vertical integration that allows the acquisition of clinics, offices, laboratories, and even pharmaceutical companies. This undoubtedly will strengthen the sector

Another factor is that the most important retailer in the world,Amazon, announced that it will offer low-cost primary medical care for its Prime users, through its One medical health program, which confirms that health can benefit from synergies, capacity, shared practices and economies of scale. Without a doubt, initiatives like these will find great opportunities for expansion in nearshoring.

In addition to the investment of large companies and hospital groups, we must also consider the participation of investment funds, which are seeking profitable investments in strategic locations in the country.

In Mexico, potential nearshoring areas have been identified so that those interested in the health sector in Mexico can explore and discover existing opportunities. The locations where the greatest movement is expected are the northern border states (Nuevo Leon, Coahuila, Chihuahua, Baja California, among others), Mexico City and some states in the Bajio region, such as Guanajuato and San Luis Potosi. 

It is essential to evaluate the conditions that will arise at these strategic points, and thus open the possibility of new investments to take advantage of the opportunity to implement services that respond to specific needs.

Health Tourism: Defining New Horizons

On the other hand, Mexico has positioned itself as the second-leading destination for health tourism in the world, with more than 1 million visitors a year, the majority coming from the United States. Factors that have contributed to the success of this opportunity include:

• Lower healthcare costs, especially attractive to American patients

• The border location and the presence of vacation destinations that facilitate accessibility

• The positioning of certain geographic areas as specialized service centers (for example, Tijuana and Baja California, recognized for their concentration of dentists and dental clinics)

• Confidence in services supported by accreditations of excellence, public policies, medical clusters and health tourism seals granted by the Ministry of Tourism.

Furthermore, hospital management is increasingly linked to technology and hospitals and clinics are getting involved in mega digital transformation processes. Artificial intelligence, telemedicine, patient clinical records, examinations and hospital management itself will  generate internal efficiencies and savings, but also synergies, compatibilities and transversal businesses that will drive globalization on the continent, with Mexico being the spearhead.

Mexico represents a highly interesting opportunity for the health sector and the industry, especially for companies that capitalize on these opportunities in strategic models and ensure access to health services through comprehensive portfolios that contain services of lesser and greater complexity as well as competitive prices leveraged in efficient operations.

The nearshoring trend in Mexico has also generated important synergies between various sectors, especially the health sector and the energy sector. This strategy of relocating the production and services of foreign companies to nearby countries has opened new opportunities for collaboration and growth in the Mexican industry. The collaboration between both industries has promoted the research and development of sustainable medical technologies, as well as the implementation of occupational health programs for workers in the energy sector.

In the energy sector, nearshoring has facilitated the adoption of more sustainable and efficient practices in energy production, thanks to the transfer of technology and knowledge from the health sector.

The implementation of occupational health and safety management systems has contributed to improving working conditions and reducing risks in the energy sector. This collaboration has allowed the creation of specialized jobs in the country and has contributed to the reduction of dependence on fossil fuels.

Some success stories in other countries where collaboration between the health and energy industries has borne fruit:

• In the United States, collaboration between renewable energy companies and hospitals has allowed the development of sustainable medical technologies that use clean energy to operate. This has contributed to reducing the carbon footprint in the health sector and has generated both health and environmental benefits.

• In Canada, a pilot project has been carried out in which solar panels have been installed in hospitals to reduce their dependence on non-renewable energy. Thanks to this initiative, it has been possible to reduce the energy costs of health centers and has contributed to the fight against climate change.

These are just two examples of how collaboration between the health and energy industries can generate positive impacts on both people's health and the sustainability of the planet.

Nearshoring in the healthcare sector offers numerous advantages for the coming years. Firstly, it allows greater efficiency in resource and cost management, with qualified labor and competitive costs. In addition, it facilitates greater agility in the supply chain, allowing a faster response to market needs.

Another advantage is the ability to access technologies and expertise that may not be available locally. Additionally, nearshoring promotes collaboration and sharing of best practices among multidisciplinary teams, which can result in significant improvements in the quality of healthcare.

Finally, nearshoring in the health sector can help reduce environmental impact by reducing the need for long-distance transportation of supplies and medicines. Nearshoring in the healthcare sector promises to be a beneficial strategy to improve efficiency, quality and sustainability in the delivery of healthcare services in the coming years.