Cayman Islands locks out medical tourism competitors

Ten years ago, Dr Steve Tomlinson opened the Chrissie Tomlinson Memorial Hospital in Grand Cayman. The surgeon and politician has been a leading critic of a proposed new medical tourism hospital. The proposed Shetty Hospital, Narayana Cayman University Medical Centre, is supported by the local government but with all development paid for privately.

Ten years ago, Dr Steve Tomlinson opened the Chrissie Tomlinson Memorial Hospital in Grand Cayman. The surgeon and politician has been a leading critic of a proposed new medical tourism hospital. The proposed Shetty Hospital, Narayana Cayman University Medical Centre, is supported by the local government but with all development paid for privately. Recently, the terms of the agreement signed by the government for this project have been revealed. Critics argue that these terms could operate to prevent Caymanian entrepreneurs in the health care field such as Dr Tomlinson, from competing on a level playing field with foreign investors and promoters. The agreement signed by the Cayman Islands government with Dr Devi Shetty’s company for the construction and operation of the Narayana Cayman University Medical Centre contains an exclusivity clause that seems to prevent the establishment of any other large-scale medical tourism facility in the islands.

Specifically, from April 7, 2010, until a period of five years from the time the Shetty hospital commences operations, “no other non-Caymanian will be permitted to come to the Cayman Islands to compete in the field of large-scale medical tourism.” To back this exclusivity commitment, the government has undertaken to take “Such action as may be necessary to prevent a non-Caymanian from operating a health care facility involving the conduct of large scale medical tourism facilities” during the same specified time period. That period is likely to be at least 8 years and could be as long as ten years.

Also, until April 7, 2015, the government has undertaken not to grant “to any other entity in connection with large scale medical tourism facilities,” the same, up to 100-year concessions on various taxes, fees and import duties that it has extended to Dr Shetty’s company. This exclusivity applies to foreign individual or company investors. But in a curious restriction to the exclusion, it does not apply to any non-Caymanian company that currently offers medical services in the Cayman Islands; or any Caymanian who intends to establish health-care facilities of any kind in the Cayman Islands. Caymanian means an individual who has Caymanian status within the meaning of section 20 of the Immigration Law (2009 Revision); and includes an entity that is wholly owned by one or more such individuals but does not include an entity that is not so wholly owned. So a local company with majority Caymanian ownership will be prevented from competing with the Shetty hospital for period of time provided by the agreement and no one, Caymanian or not, could expect to get the same fees and taxes concessions until 2015.

These restrictions were not made public by the government when it announced the deal with Shetty, and only local media investigation has revealed the clauses in the agreement. The government may come to regret the exclusivity deals and will probably have to either renege on the Shetty deal or defend them in court. A group of local doctors and investors intend to develop a 120-bed hospital in Grand Cayman over the next four to five years at a cost of US$560 million. They aim the hospital at locals and medical tourists and with local knowledge and contacts expect to be able to build and open the hospital several years before the Shetty one, that still has no planning permission, is open. Dr Shetty and his partner investors have personally inspected several potential sites, but the final location of the proposed facility has not yet been decided. The competing group argues that the government has no right to restrict their business and the Shetty exclusivity deal is legally void as it would prevent them offering medical services to Cayman Islanders.