Global Medical Tourism

Global Medical Tourism

Michael Czinkota

Nittaya Wongtada

Medical tourism can be traced to 4000 B.C. – when Greek pilgrims would sail abroad to seek the healing power of hot springs and baths. Over the past two decades, the industry encountered dramatic shifts.

Once wealthy patients from emerging economies sought treatments not available in their home countries. Since the new millennium, however, the flow of patients goes in the other direction. Rising health care costs prompt travelers from advanced economies to seek international destinations offering lower-cost or timelier alternatives to domestic care.

For instance, a spinal fusion in the United States costs an average of $110,000 in 2016. The same procedure was $6,150 in Vietnam. Heart bypass surgery, which costs $123,000 in the U.S. in 2016, is $12,100 in Malaysia. For many patients from high-priced countries, the solution is clear – it pays to seek medical care abroad!

The size of such tourism has ballooned since the late 1990s. Its value ranges between US $45.5 billion and $72 billion in 2017, with approximately 14 to 16 million patients seeking medical care beyond their countries’ borders.

Modern medical tourism is a global phenomenon. Traditional models emphasized internationalization as an incremental procedure. But the industry surged after the Asian financial crisis of 1997, which drove hospitals in Malaysia, Singapore, and Thailand to seek patients from abroad. They had already undergone substantial modernization, catering to a domestic middle class that demanded medical services commensurate with their newly acquired wealth. With the economic downturn, however, a shrinking middle class could no longer afford these superior facilities. International clients,  provided a ready solution to an excess supply of private medical facilities..

The success of hospitals in Southeast Asia inspired other countries towards medical tourism. Regional hubs emerged due to advantages of geographical proximity and specialization. Malaysia and Singapore, for instance, received an influx of patients from Indonesia, while many patients in India came from Africa and the Middle East. Brazil, Costa Rica, and Mexico all benefitted from their proximity to the United States.

A clear pattern has emerged in the lifecycle of medical industries. First, countries in the developing world begin to offer services similar to those found in advanced economies. As new segments of international healthcare populations emerge, just like sun flowers, new medical tourism destinations grow towards the new opportunity. Close proximity to wealthy consumers constitute a competitive edge. To retain their market share, leading destinations formulate new strategies and options.

In order to survive growing competition, hospitals in emerging nations tend to implement two strategies. Since technologies stem from post-industrialized countries, most can only imitate. Their novelty comes from specialization in specific medical procedures. Doing few tasks very often improves capability, capacity, and efficiency, and thus improves reputational success.

However, this tactic may be ineffective as other hospitals develop similar capabilities. Consumer preferences will hinge on how closely services comply with their own cultural preferences and norms. Hospitals attract patients based on familiarity with local approaches and usages. Such an approach gives room for the increasingly recognized component of holistic healing.

It is important to understand how the lifecycle of hospitals continues to evolve. Different stakeholders – from governments to accreditation services to healthcare providers to patients themselves – will be affected by the expansion of the industry. For example, to date, there is still much unfounded reluctance to accept health care services offered by international sources. Once the industry manages to break out of restrictive domestic silos, a fundamental reconfiguration of service and cost will be the consequence. Let’s look forward to that!

Nittaya Wongtada is a Professor at the NIDA Business School of the National Institute of Development Administration, in Bangkok, Thailand.

 

Michael Czinkota teaches international business and trade at Georgetown University’s McDonough School of Business and the University of Kent. His key book (with Ilkka Ronkainen) is “International Marketing” (10th ed., CENGAGE).

 

This comment is based on the article “Transformation in the Global Medical Tourism Industry”, Transylvania Review, Vol. 25, 2017.

Biopiracy is the Next Big Issue

Charges of biopiracy — the illegal use of one nation’s natural resources for the economic gain of another are often extreme and are therefore relatively easy to reconcile.  But what happens when pharmaceuticals are involved and people’s lives hang in the balance.

If a rare plant that grows only in the remote regions of an emerging nation has the potential to cure illnesses that plague the Western world, who should exploit it?  Should global pharmaceutical companies who have the money and means to develop medicines and deliver them expediently to patients who need them?  Or should the people who live where the plant grows have the right to protect their natural resources from exploitation by outsiders?  And how do we reconcile the possibility that in our age of dying biodiversity that plant may not exist forever and could disappear before its secrets are cracked?

This is the International Year of Biodiversity developing countries are very concerned about the loss of their ownership of knowledge and resources from their boundaries.  India, a great victim of biopiracy over the years, has announced it will push for and Access and Benefit Sharing program that will help contain biopiracy.

Protection of property is a conerstone of our free market system.  It makes sense that countries should benefit from their own unique resources and specializations (the principles of trade).  The question we must ask is, is there a moral aspect?  If a developing country lacks the resources to capitalize on a natural treatment, is it worth waiting the years and allowing the deaths? 

I’d like to know what you think.  Comment please!

Medical Tourism: The Christmas Gift for Global Healthcare

Co-written with James G. Dale

Consumers and providers of medical services in the United States search for opportunities to cut costs. Increasingly, it is possible to find lower-priced care alternatives abroad.
The emergence and efficiency of medical tourism may well help bridge the chasm between costs and revenues, between desire and ability.

Already today, prospective patients are traveling in ever-increasing numbers to exotic destinations like Brazil and Thailand in search of high-quality care at low cost. For years, the Cleveland Clinic has been the institution of choice for wealthy Saudi citizens. Cancer treatments and cardiac procedures for international patients are a high growth industry. The ¬demand for elective procedures such as cosmetic and dental surgery, and alternative treatments which are not approved in highly developed countries, continues to rise. Sarah Murray reports in the Financial Times that the medical tourism industry has grown by about 14 percent from 2007 to 2009, and is predicted to expand at a rate of 35 percent annually by 2010. By 2012, it may serve more than 1.6 million international patients.

The rationale behind the industry’s development is straightforward — customers search for convenience and cost-effectiveness. If comfort and coziness can also become part of the outcome, the much the better. Now, however, there are additional new key players in the U.S. government and the health care industry, who may reconsider their antagonism towards medial tourism.

A medical procedure at an Indian or Chinese hospital can cost 70 percent less of what a patient would pay in the West. For patients from countries with public healthcare systems like Canada and the UK, medical travel is already often motivated by the desire to reduce or avoid current delays and waiting periods leading up to their procedures.

The growth in medical tourism is a boon for healthcare providers in the developing world. For example, reports Murray, in India the sector is projected to expand by 30 percent annually from 2009 to 2015, which may make it worth $4.4 billion. Increasingly internationally accredited medical centers are emerging in countries such as the Philippines and Mexico, eager to accommodate the ever-growing stream of Western patients. Governments in the developing world are beginning to invest in support infrastructure in order to promote their healthcare services internationally. As their industry’s medical skills increase, their comparative advantage will attract more custom from abroad.

When dealing internationally, the essential problem of trust, is always present in the manufacturing sector. The issue takes on an even higher importance in the medical services sector, which deals with life and death. To build that trust, data and transparency will be a key issue. The flow of international students to learning centers of global excellence may ease some worries. As time passes, there will be a growing track record which can be checked and compared. International accreditation standards can increase the confidence and comfort of institutions and patients with clinics and providers abroad. Of great importance will also be the eventual better legal protection of patients and providers abroad.

A key motivator for progress will be the vocal demands of patients for quality and accreditation. But in an era in which we now plan to eventually measure and count the carbon emissions around the world, it should be possible to measure and count health care performance.

Medical tourism also gives rise to new industry growth. New companies are formed which assist patients with scheduling their procedures overseas. They help clients with planning their trips and offer in-country support, such as ¬airport transfers, after-care arrangements, hospital liaisons and dispute mediation. Most of these companies started out catering to individual clients. However, they are now expanding to offer their services to meet businesses’ demand. With the rising costs of providing employee healthcare, more corporations are searching for alternatives to home-country care, and insurance firms may use procedures conducted abroad as a lever for price negotiations.

We also need to reflect the climate implications of medical travel. The savings gained by having a procedure carried out in Panama, may turn out to be negated by a carbon tax. The systematic build up of competitive health care industries within reasonable geographic distance from prime patient groups is an important approach. One would expect there to emerge individual health care clusters for Europe, Asia and the Americas which are close to their patients and specialize in their particular health issues. Careful scheduling and travel consolidation may even permit such medical travel to soak up current excess or unused capacity, thus limiting the additional climate burden.

While the health care plan alternatives are debated, cost continues to soar. More covered people and coverage of more patients definitely will mean higher cost, unless other dimensions are changed. Right now, the government and insurance industries exert a great deal of protectionism in the health care sector, and are still stuck on the international shipment of pharmaceuticals. In light of major financial pressures, international trade in medical tourism may well offer the tipping point, which allows acceptance of more coverage while restraining costs. Offering new alternatives globally may well be the best Christmas gift for both patients and the public purse.

 Dr. James G. Dale is a practicing physician and chief of staff at Page Memorial Hospital in Luray, Virginia. He can be reached at Jdale17@gmail.com