Christmas is over, the New Year is upon us, so it’s time to dust off the
crystal ball and put forward our take on what’s in store for medical
tourism in 2012 and beyond. We’ve looked at the future of medical
tourism from three perspectives – the market, the patient and the
The global economic downturn and medical tourism
Forecasts for the global economy are not encouraging....recession in Europe, anaemic growth in the US and slow growth in the emerging market economies is anticipated for 2012 (Morgan Stanley: 2012 Outlook). If you are in the medical tourism sector, you need to understand some of the fundamental trends that affect businesses and markets in a recession.
- In the mature, developed economies (e.g. USA, Europe) continued unemployment and pressure on disposable income will influence demand in 2012. Consumers will minimise or reduce spending on healthcare where they can. This does not mean that hard pressed consumers will be flocking abroad for their operations to save money. Many will delay treatment, or in the case of “optional surgery” such as cosmetic surgery, they may not be able to afford it at all. Domestic prices for surgery will be driven down as hospitals apply marginal costing and prices to fill empty beds. In areas of treatment, where the need for treatment is “income-inelastic”, demand for medical tourism services will remain strong. Patients will continue to dig deep for services such as infertility treatment, stem cell treatment, and for surgery which is essential, life-saving or life changing.
- In emerging markets (such as Russia, China), the growth in incomes (and freedom to spend) is outstripping the development of domestic healthcare services and this may drive demand for medical tourism and present new opportunities.
The big question is whether corporate or insurer paid medical travel will get off the ground in 2012. Will employers and insurers see medical travel as a realistic and credible option to reduce healthcare costs. And will their client and subscriber base actually “buy in” to the medical travel option if it is offered to them?
Medical tourism..... global healthcare or regional medicine?
In 2012, there’s a risk that we get distracted by the trumpeting of “global healthcare”. It’s a nice turn of phrase, but in the real world, medical tourism is about regional medicine and cross-border healthcare; this is not going to change in 2012. In fact, the boundaries of medical travel may be drawn in, as travel costs increase. As travel costs climb, the concept of long distance medical tourism becomes less attractive. The imposition of hefty departure taxes in countries such as the UK, Germany and elsewhere will reduce the cost advantages of some destinations.
If you are in the medical tourism business, ALWAYS remember that, for most patients, going abroad for treatment is a decision of last resort. AND that the further a patient has to go... further from their own country....further from their own culture... the greater is the actual and perceived risk. The patient needing major surgery who takes a five hour flight to a country with a different language and a different culture is a comparative rarity.
So is it medical tourism boom.... or bust?
The honest answer to this one.... is probably neither. In recent years, we’ve listened to the hype of industry associations and commentators, touting medical tourism as “the next big thing”, a “boom industry”, “experiencing exponential growth” and so on. Much of the hype has emanated from the US and focuses on the potential for medical tourism to solve the problems within the US healthcare system. The latest published data on US medical tourism comes from the OECD in their late 2011 report, “Health at a Glance 2011”. According to the OECD report, Americans spent $600 million on medical care outside the U.S. in 2009. The amount grew 13% from 2004 to 2009..... a very different level of growth from that quoted by many pundits.
So, is medical tourism going bust? Well... the reality is that some people have indeed gone bust. In our Treatment Abroad business, our customer base consists of healthcare providers and agencies around the world that depend on medical tourism for their revenues. The churn in this sector continues. Agencies and facilitators enter the market and disappear 18 months later, disillusioned by the lack of demand and doomed to fail due to their own shortcomings.
In 2012, we need to see some realism about the potential for business and the opportunities in the medical tourism market. Nevertheless, we’ll still see people pursuing medical tourism gold, and persuading others to make major investments in development projects. The industry has been there before. (See “From a private medical tourism hospital to a UK public National Health Service hospital in eight easy years!”). The Cayman Islands medical tourism venture is probably the best current example of history repeating itself. Local and overseas investors intend to invest $2 billion in a 2,000 bed hospital to target US medical tourists. According to Renee Stephano at the Medical Tourism Association, this is “the ideal approach to jumpstart a medical tourism industry”. She continues, “It’s not like the Fields of Dreams ‘if you build it, they will come’. The hospital first needs to build up a brand and a reputation, which it can do by treating local patients”.
Three islands with a local population of 51,000 currently supported by a 120 bed hospital isn’t exactly the foundation of an international healthcare brand. The planned facility will need to attract over 100,000 medical tourists a year to make any financial sense. Where will the patients come from? And why?
The patient (and customer) service must come first
In the Treatment Abroad Medical Tourism Survey 2011 (awaiting publication), 85% of medical tourists were satisfied with their experience of going to another country for treatment. BUT...15% were dissatisfied. The standard of care, the quality of treatment, the level of customer service and patient communication all come under fire from patients who have participated in the research.
According to Rudy Rupak at PlanetHospital, his business success is based on “disciple marketing” - “former patients are what drive clients to us”. Within the industry as a whole, the message that excellent customer service and outstanding treatment quality brings more customers is yet to be widely adopted. The sector continues to be plagued by the bad news medical tourism stories that appear in the press and media. I see little change in 2012. It’s going to be a very long haul for the industry to establish credibility and trust within the media and ultimately broaden its potential customer base.
The patient’s voice will get stronger
As patients evolve into healthcare consumers, they are considering the purchase of healthcare in much the same way that they consider the purchase of any consumer good or service. And medical tourists are no different. They take a holiday and they write a review of the hotel or destination on TripAdvisor. They opt for surgery in another country, and they want to tell people what it was like...by word of mouth and increasingly online. Take a look at the Fertility Treatment Abroad section of the FertilityZone web site, and some of the discussions that take place around the services provided by various IVF and infertility clinics abroad. Take a look at the Medical Tourism Ratings and Reviews site.
In 2012, there will be more healthcare providers who see the benefit of encouraging patients to rate and review their services. They want the patient’s voice to be heard. They want to hear what went right AND what went wrong. Comparisons of healthcare quality are difficult on a national basis, and virtually impossible for a patient to make on an international basis. And this will not change next year or in the next decade. The “patient’s voice” is probably the best comparator that people currently have in choosing healthcare providers. It just needs the providers to buy into the concept.
We are likely to see fewer players with greater focus on customer needs in 2012.
- Fewer players because as the recession bites the weak will either go to the wall or will withdraw from the sector. We may finally see the appearance of some bigger players in what is a highly fragmented market in terms of providers and facilitators. If medical tourism is big business, there should be facilitators out there handling several hundred patients every month. But so far....., there’s little evidence of this.
- Greater focus because successful medical tourism is about delivering services to niche market segments that have specific needs and requirements. And one of the biggest shortcomings in medical tourism marketing is lack of understanding of customer needs and failure to deliver to these needs
Joined up healthcare
Criticism of medical tourism is often targeted at the lack of “joined up healthcare”. There are very few operators offering a truly coordinated approach to surgery and treatment abroad. Ask the average facilitator to define the clinical/care pathway for their patients and you will probably be met with a blank stare. If such pathways do exist, then they may be in place within the destination hospital, but the pathway starts on admission to the hospital and stops on discharge. The industry still hasn’t overcome the problem of how to handle pre-admission and post-operative care at a distance. From the patient’s perspective, they are on their own when they return home. When complications or problems arise, many providers will make the standard “fly back and we’ll fix it” offer, but this is probably the last thing that the patient wants to consider.
Some of the participants in the dental tourism sector are probably furthest ahead in providing pre- treatment assessment and post-treatment care within their “package”. Let’s hope the rest of the industry will follow.
So...2012... will it be a great year for the medical tourism industry? Probably not. But it will be no different in many business sectors. And there are plenty of opportunities for the astute business to thrive. Individuals and corporate healthcare buyers don’t stop buying in a recession. They may buy less and they may buy cheaper. But they will buy more wisely.
Understand your customers, get your service offering right, and focus your marketing, and 2012 could be your opportunity to grow your market share and your business.
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