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How consumerism, globalization and the internet are changing health care

Man using laptop for social media

Ruben Toral, a health care marketing consultant and founder of Medeguide, looks at how medical tourism has entered the mainstream, and how its disruptive model will change the nature of healthcare. 

It was January 2005 and my secretary at the time came into my office and handed me a note. The message was brief but clear: “Producer from 60 Minutes called. Please call back. Urgent.” Four months later, Bob Simon, the veteran 60 Minutes journalist, was at Bumrungrad International hospital in Bangkok, Thailand, where I worked, to do a story on medical tourism.

If you don’t know 60 Minutes, it is the most successful prime-time television news program in history. The show is America’s No. 1 news program, and has won more Emmy Awards than any other prime-time broadcast. It is a cornerstone of television journalism in the United States, attracting more than 13.5 million viewers every week to its Sunday evening broadcast.

The 12-minute segment on medical tourism aired in April 2005 and showcased two hospitals: Bumrungrad International, where I was the marketing director, and the Apollo hospital in New Delhi.  It focused on four ordinary Americans who decided to do a most extraordinary thing - travel halfway around the world to developing countries for medical treatment because it was cheaper, better and faster than what they could (or could not) get back home.


Medical tourism enters the mainstream

Overnight, medical tourism entered the mainstream consciousness of America on the back of one of the country’s most watched and respected TV programs.  It was, as the saying goes, the kind of advertising money just can’t buy. While sitting in the comfort of their living rooms, 13 million Americans learned how Byron Bonewell, a middle-aged small business owner from Shreveport, Louisiana travelled to Thailand, a place better known for beaches and brothels than for life-saving heart bypass surgery.

The power of the piece was Bonewell himself.  Byron was your every-man. Uninsured and suffering from congestive heart failure, Bonewell could not afford the $100,000 he would have to pay out-of-pocket for heart surgery, and was faced with two grim choices – death or bankruptcy.  Bonewell had resigned himself to the inevitable because, as he told Bob Simon: “I guess I figured I’d rather die with a little bit of money in my pocket than live poor.”

That was until he read a story about Bumrungrad in Businessweek magazine while waiting to see his cardiologist in Shreveport.  When he returned home, he logged on to the hospital’s website, found his doctor and two weeks later was travelling to Thailand.  The total cost of treatment was just under $20,000.  He saved a fortune and his life. 

The “60 Minutes” segment was a watershed moment for medical tourism (and Bumrungrad International).  The story unleashed a tsunami of interest from the US -- the world’s largest health care market.  Overnight, emails came pouring in from thousands of uninsured and underinsured Americans who wanted to know more about treatment options at this hospital with a funny name.

The rise of medical tourism was not lost on the American Medical Association (AMA), the American Hospital Association (AHA) or major US insurers, like Cigna, Aetna and United Health.  The AMA published guidelines on medical tourism that were remarkably straightforward and sensible. The AHA dismissed claims that medical tourism was a viable threat to US hospitals, and US insurers sent their respective medical directors around the world on familiarization trips to see what all the fuss was about.

A potential time bomb?

Depending on where you sat, medical tourism was a either a dud or a potential time bomb that had, as the pre-eminent Princeton health care economist Uwe Reinhardt put it, “the potential of doing to the US health care system what the Japanese auto industry did to American carmakers.”

This analogy has more than a grain of truth in it.  In 1973, the OPEC oil crisis catapulted gas prices to historic levels in the US, and the Japanese responded by exporting small, fuel-efficient cars to America.  At first, Detroit laughed it off saying that no self-respecting American would drive a sardine can on wheels with a name like Datsun.

When the Japanese imports kept coming, the carmakers ran to Congress for protection, but protectionism only slowed the inevitable. Detroit finally responded by trying to design and build small cars that would compete against the Civic and Accord.  When was the last time you saw a Vega, Pacer or Pinto on the road?

Over the past 40 years, US automakers have been out-gamed by Japanese (and now Korean) manufacturers who are simply better at adapting their businesses and innovating new products for a global market.  Asian manufacturers gained a foothold on price, captured marketshare through quality, and now lead because of innovation. Today, you don’t buy a Toyota Prius because it’s cheap; you buy a Prius because it is green technology.


Medical tourism is a disruptive agent in health care

Like Japanese cars, medical tourism is a disruptive agent in health care. Sitting in his home in Shreveport, Bonewell was able to call up the credentials of a US-trained Thai doctor, connect with a hospital via email, book his 20-hour flight on-line and save $80,000 dollars in the process.  Multiply that a couple of hundred thousand times, and you have a business that everyone wants a piece of.

Medical tourism exists because there are wide disparities in cost, quality and access in health care markets all around the world. Indonesians leave home to get medical care in Singapore because they don’t trust their doctors. Americans travel to Mexico because they cannot afford care at home. Canadians travel to the US because they don’t want to wait for surgery.

Regina Herzlinger, author of Who Killed Health Care and a professor at the Harvard Business School, frames the medical tourism argument by stating: “The medical travel market is a bit over-hyped today, but economics dictates why it will become huge over time: if a supplier has very high prices and erratic quality, it creates an opening for nimbler rivals.”

In a word, medical tourism is arbitrage.  Not just on price but quality and access too. Today, any consumer anywhere in the world enabled by a computer or smartphone can shop globally for heart, back or prostate surgery. Asian hospitals, including Bumrungrad, have taken the lead in packaging their products for sale on the web to a global audience.

Packaging? Products? Sounds like manufacturing or retail. It is.  Medical tourism is packaging health care in a way that consumers with cash and choice understand.  That’s the real medical tourism story - not patients traveling abroad for care. That has been happening for centuries.

Look at Bumrungrad. It sees more than one million patients a year, generates 55 percent of its revenue from foreign patients, has more customer service staff than most places have nurses, and markets fixed-priced surgical packages on its website.  Bumrungrad is a medical tourism juggernaut because it has refined its system to cater to medical tourists.    


A changing business model

The internet, globalization and consumerism are forcing doctors and hospitals all over the world to adjust their business models to consumer demands for transparency and speed.  It happened in banking, retail, tourism and financial services, and now it’s coming to health care. Understanding what consumers want in health care is pretty simple. They want Trip Advisor. Show me options, tell me the price and give me consumer feedback.

The Health Research Institute at PriceWaterhouseCoopers conducted a survey of 200 health executives around the world, and “satisfying more demanding/empowered patients” was the third-most difficult challenge impacting their health care systems, after meeting the demands of an aging population and controlling costs. 

Winning the hearts and spines of medical travellers is a lucrative business, but it is hard work and requires organisations to rethink and restructure how they deliver care and market their services.  That’s the catch. Hospitals and doctors are challenged to understand new market realities where the consumer, not the doctor, is the centre of the universe.

As Bumrungrad’s marketing director from 2001 to 2007, I was part of a paradigm shift – a real one, not a sound bite.  I saw a no-name hospital in a developing country attract hundreds of thousands of patients from around the world, not because it had the world’s best doctors or best technology or the cheapest price.  Bumrungrad assumed leadership in medical tourism by delivering service and turning patients into disciples that wanted to tell their story. 

In today’s new world order, nothing is more powerful than getting people to share their experiences with your brand.  It’s the engine that powers Facebook, Instagram and Trip Advisor, and “sharing” is exactly what Bonewell did on 60 Minutes.  One man sharing an honest experience that 13 million people could relate to.  Ka-pow!

As a health care marketing consultant, hospitals and health care organizations contact me hoping that I can help them recreate the Bumrungrad magic for their brand.  More than a few walk away disappointed when I tell them that I cannot - at least not in the same way.  The moment and the story have changed.

60 Minutes did not “make” Bumrungrad; it was a by-product.  The hospital won mind and market share by adapting quickly to a changing marketplace. It was not necessarily the first mover, but rather the fast mover advantage that propelled the business and the brand forward.  The hospital responded to global events, like the Asian Financial Crisis, September 11, SARS and the US healthcare crisis by providing the right product at the right time.  Do that once and you are lucky; do it twice and you are a leader.


Asia is the new supplier of medical services to the world

Bumrungrad embodies the explosive growth and innovation we have come to expect from Asia in general.  From Turkey to Taiwan, Asia is positioned to become the new supplier of medical services to the world with hospitals that look like hotels, US-trained doctors and brands that will someday rival Mayo, the Cleveland Clinic and Johns Hopkins.

By 2020 health care spending is projected to consume 20 percent of GDP in the US and 16 percent of GDP in OECD countries, as they try to come to grips with fixing an infrastructure that simply cannot cope with populations that are getting older, fatter and sicker. Aging, lifestyle and chronic diseases are forcing employers, insurers and governments all around the world to rethink a better, faster and more efficient delivery model.

Like in car manufacturing, Asia has a chance to redefine health care through innovation. Unlike the US, Asia is not locked into an insurance-based reimbursement model serving an aging, chronically ill market with not enough skilled labour.  Asia is an eclectic mix of cash and insurance systems, young and old populations, developed and developing markets.

Scanning the horizon, the smart money in health care is being spent on building capacity, brands, audience and access.  From India to Indonesia, investment dollars are pouring into the region to build capacity to meet the needs of emerging economies that want more health care services.  But for all the investment dollars being spent on bricks and mortar, it is less clear how hospitals are spending their money to build audience and create better access to their doctors. 

That’s the whitespace in health care and where the next Bumrungrad will be.




If you are interested in hearing more from Ruben, he will be a featured speaker at IMTEC 2013 in Monaco: 22-23 March 2013.


Comment

Profile of the author

Ruben Toral

Ruben Toral is a health care marketing and branding consultant based in Bangkok, Thailand.  He is also Founder of Medeguide, an online international doctor directory.

Ruben has over 20 years experience building health care businesses, brands and physician networks in Asia, Latin America and the USA.  Formerly, the Group Marketing Director for Bumrungrad International, Ruben is best known for his pivotal role in building the Bumrungrad International brand and positioning the hospital as a medical tourism icon. 

He currently works with hospitals, insurers and government promotion boards around the world on branding, marketing and business development, and is an external advisor to the Joint Commission International on Globalization.  His insights have appeared in major health and business publications like Lancet, New York Times and Fast Company and the recently published book, Aerotropolis: The Way We’ll Live Next by Dr. John Kasarda and Greg Lindsay.

Ruben can be reached at: ruben.toral@medeguide.com and his profile can be viewed on LinkedIn at: http://www.linkedin.com/in/rubentoral.


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Comments provided below do not represent the views of IMTJ. Comments will be published "as is" and will not be edited by IMTJ staff. IMTJ is hosting these comments, and is not  undertaking an editorial role in the content of these comments. However, it is editorial policy not to publish comments which have been submitted anonymously.

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Thank you Jeff. Also worth reading this article which was published by NPR on Feb 13 2013. It looks at a recent JAMA reasearch study on package pricing and compares buying a hip replacement in the USA with a 1954 Buick. Apparently the car analogy still works...for some. http://www.npr.org/blogs/health/2013/02/11/171713240/need-a-price-for-a-hip-operation-good-luck-with-that?

Ruben Toral (12/02/2013 15:55:32)

Excellent article Ruben, I think you're right on the money across the board. I think the most poignant paragraph of the article is this one here:

"The internet, globalization and consumerism are forcing doctors and hospitals all over the world to adjust their business models to consumer demands for transparency and speed. It happened in banking, retail, tourism and financial services, and now it's coming to health care. Understanding what consumers want in health care is pretty simple. They want Trip Advisor. Show me options, tell me the price and give me consumer feedback."

I couldn't agree more. After working with a traditional medical tourism facilitator operation for several months, I eventually found several holes in that business model that run counter to the things you've identified that modern patients want- incomplete information for the patients, lack of consumer feedback, lack of transparent, up-to-date pricing, incongruous commission structures.... the list goes on.

When I saw this, the exact same analogy came to mind- this industry needs a TripAdvisor. After doing some research I found that there had been some attempts at creating this (whatclinic is probably the most well-known example), but all of them have their problems as well.

That's what spurred myself and some friends to try and create our own solution (which is still very much in Beta stage right now), but we aim to bring a true domacratic, market-driven platform that could help to solve these problems once and for all.

Hopefully we are on the path to providing the type of solution you've outlined here.

Jeff Wyatt,
FindMedicalTourism.com

Jeff Wyatt (01/02/2013 21:31:57)

Ruben,
I would welcome showing you guys the way. I will drop you an email to open a dialogue about advancing the development of the industry and its strategic direction and vision.

Mahatma Davis (23/01/2013 21:14:25)

All good and interesting comments. I continue to think the automobile industry analogy to be constructive. If we look at the industry today, quality and cost have flattened, and the location of manufacture has changed significantly. Will health systems evolve similarly?

I suspect we will continue to see lots of experimentation, and lots of different models that are successful.

Dale Van Demark (23/01/2013 16:52:33)

Dear Mahatma,

The article, if you read carefully, points out how Bumrungrad was able to position itself as a leader because it was fast, consumer focused and innovative (that old chestnut). I agree, the industry (for lack of a better term) is stuck, but instead of carping from the backseat like so many of your ilk do, maybe some of your esteemed clients, or better yet YOU, will show us the way forward. Your comments help underscore the problem -- lack of new thinking. Keep trying though.

Ruben Toral (22/01/2013 01:06:18)

Ruben, unfortunately the market that you are describing no longer exists in the manner that you are trying to portray it. This article represents a highly inaccurate view of the dynamics and behavior regarding international patient flows. Medical tourism is not a mass market industry. It is a niche market one and there is a lot data to back that up. It is inappropriate for industry players to continue to try to push this false notion that somehow everybody on the planet is going to travel abroad for care. I suppose that is why you guys constantly used mass market examples like Toyota to push your agenda versus using examples that illustrate actual international patient flows within the clinical context (which would exhibit the true performance of a small niche market environment).

The readers of the IMTJ would have been better served if you could have given them unique insights into some of the resource capabilities that made Bumrungrad a success at the time (2005). How Thailand counts patients as either Thai national or International and that the majority of these international patients are local (i.e. expatriates and foreigners living and working in Thailand or there for extended stay, with a much smaller percentage of that patient population actually coming from abroad for care).

This industry has had major failures such as the Harvard - Dubai Healthcare City (DHCC) strategic partnership, the dismantling of SingaporeMedicine, Kuwait recently cancelling Johns Hopkins's hospital management contract (an indirect affect to this market), the Deloitte Study proving to be bogus, conferences with the exact same speakers spouting off the same "nonsense" they have spouting off for the last several years, and a whole host of other examples I could cite. The clients that I have come to me wanting to know what are the real dynamics in the marketplace and what caused these failures and lost of "reputational value" for this major players, so that, they can avoid making similar mistakes and decision-making. At some point, you guys need to elevate your debate.

Mahatma Davis
ArabMedicare.com

Mahatma Davis (20/01/2013 19:15:25)

Great article and observations, Ruben. While the whitespace you mention remains vast, the canvas will be filled by a patients aggressively requiring access to quality, affordable global options. Consumers drive consumerism. Transparency--the missing ingredient--is finding its way into the stew, with or without the help of providers .One need look no further than an unlikely a play as Yelp, where docs and clinics are now being consumer-rated in high numbers. Bring it on.

I look forward to furthering the dialog at IMTEC!

Josef Woodman (19/01/2013 14:28:46)