Youngman from IMTJ explains how the world of medical tourism is shrinking and
how this may actually be good news for the industry. The factors driving this
shrinkage offer opportunities to those businesses who really grasp what is
going on and want to ensure their long term success in the sector.
I have often accused the medical tourism world of ignoring world events such as natural disasters, wars, political instability, terrorism and drug violence. As one who writes news on insurance, health, finance and medical tourism on a daily basis, a huge amount of information passes through my computer every day. I may have missed it, but I have yet to see a national or international trade association, government body promoting tourism or medical tourism, or international hospital group issue anything on any of these areas that now dominate our television screens daily.
In the past, individual acts of terror, short term localized demonstrations and even natural disasters have happened and the tourism and medical tourism industries have recovered, or at least say they have. They may have experienced a short-term recovery but tucked away in the mind of the international consumer is the “shorthand memory” e.g. Mexican border equals drug violence, Iran and Iraq equals war. You can shout at me as much as you want with loud denials that for country X this simply is not true as it is all in the past. But it is not me you have to convince; it is the public, who are not as credulous as some medical tourism advertising thinks.
The effect on investment in medical tourism
And the turmoil has another knock-on effect. Much of the growth of medical tourism facilities, including current projects and many proposed ones, is financed from investors from outside the country. Investors are under pressure on four fronts - problems in their own country, problems in countries they have invested in or have partially completed projects in, pressure to fund half-completed projects, and the need to get financial returns from existing projects. Some investors, particularly in India and Thailand, see an opportunity to grab market share across Asia and elsewhere with new projects and takeovers, The logic is that there is a limit to the number of large hospital groups that can make money, while in small countries the idea is that the limited potential means that once a group has a dominant position, nobody else can make money. We are already seeing many proclaimed projects across the Arab world, put on hold as investors have no spare money and although still publicly holding the line that major new medical tourism destination investment will eventually happen, in private they are far from sure that either the demand is there or the returns. Major investors are canny, and have stopped believing the hyped figures that are still churned out by a few sources.
Impact on medical tourism to the Middle East
Looking at troubled North African countries, Libya was never a destination, while Egypt, Algeria and Tunisia have always been at best, minor players. All, with the possible exception of Egypt, will see European business fall. Morocco is another minor player and although it seems to be dealing well with limited political unrest, may be tarnished with the problems of near neighbours.
In the Middle East and the Gulf, Bahrain’s plans to develop a medical tourism island are now unlikely for a long while. Saudi Arabia and the UAE are being drawn into the problems in Bahrain, while Saudi Arabia also has internal problems. Other medical tourism destinations or potential destinations with political protests and problems include Lebanon, Yemen, Qatar, Jordan and Oman. The idea that Iran and Iraq could ever be seriously considered as medical tourism destinations for Westerners is laughable.
Japan is going to have problems for a long while, so the chances of developing medical tourism in any numbers are unlikely. Other wannabees include the Cayman Islands, where medical tourism will only happen if the government bows to pressure from one investor to change laws on medical malpractice, doctor registration and investment. Pakistan has problems with terrorism, while neither New Zealand nor Australian will ever be more than minor players due to the location and travel times.
The increasing cost of travel
Another real problem for long-haul medical tourism is how the rising cost of oil will hit airfares. This may be a much bigger factor than any political problems, in deciding who goes where. But as mentioned before, I firmly believe that regional medical tourism will drive future growth, with Europeans staying in or near Europe, North Americans concentrating on Central and South America, while much Asian, African and Middle East business will be local.
The way forward for medical tourism….
This may all sound like doom and gloom for medical tourism, but it is far from the case. Yes, we have to ignore the inflated figures and estimates of the usual suspects. Yes, medical tourism now and in the future will not be as envisaged five years ago. But we cannot go on with every month seeing another country, often one where most readers would struggle to locate on a world map, declare not only that it will become a medical tourism destination but a major one. Reducing the competition to a workable number and forcing out all those wannabees that are falsely driving down prices and driving up expectations can only be for the long-term good.
Even economic problems can, in the medium term, work in its favour. However much the US and European countries reform health provision, every one of them knows that they are fighting a losing battle against medical science advancement and people living longer.
This is where medical tourism must stop the foolish concentration on major surgery. Most major surgery is and will continue to be dealt with in a home country and paid for either by the state or insurance. Minor surgery, where people go overseas not for cost reasons but to avoid lengthy waits, is a potential market, but only if medical tourism stops shooting itself in the foot by quoting false figures such as for the NHS or Canada. Specialised treatment where people may have to travel to get any/affordable care is another key area. But the surgery aspect that still dominates much medical tourism advertising is only ever going to have a finite global demand. Where people pay for private treatment at home, and are willing to compare domestic and foreign prices, is going to still be the most lucrative; cosmetic surgery, cosmetic dentistry, fertility treatment, dental implants etc.
…and where the opportunities are
Where the tougher health economy will kick in is in that grey area that some state care, and some insurances, pay for; obesity surgery, stop smoking, health check, eye surgery etc. State healthcare will inevitably pay for less and less for care. Doctors are now openly arguing something they would not have discussed a few years ago - whether people should be forced to pay for self-imposed health problems from obesity, smoking, failure to exercise etc - and the state withdraw help. Even cancer treatment falls into this grey area. This is where medical tourism can take over from state healthcare, as individuals are forced/encouraged to look after their bodies. People service their cars regularly and pay for repairs and improvements, leaving insurance only to pay for accident damage; so the logic is that state healthcare should pay for the unexpected, but not for the annual service, running repairs, cosmetic improvements or damage brought on by areas that people can control (smoking, obesity, lack of exercise, children).
I am not here to debate what an individual country should or should not pay for, or whether political dissent is right in certain countries. I am merely pointing out that medical tourism must get a better understanding of health politics in target countries; the effects of political, economic and natural upheavals; and the types of treatment it can best cover.
The world has changed, and will continue to change at a rapid pace. A shrinking in the number of real medical tourism countries will be for the long-term good. Those countries and businesses that understand the world around them and adapt to it, will prosper. Those that do not change, have no understanding of why people will or will not go to a particular country or destination, and expect the original view of medical tourism to happen, will wonder why they are getting bypassed.
Ian Youngman is a writer and researcher specialising in insurance and health. He writes regularly for a variety of magazines, newsletters, and on-line services. He also publishes a range of insurance reports and undertakes research for companies. An ACII, with an honours degree in Economics from the University of Liverpool, Ian was a co-founder of The General Insurance Market Research Association. He also has widespread experience within the insurance industry at management level, working for brokers, a bank and an insurance company.