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.

Today’s Spring Break

Today’s Spring Break

This spring, I wanted Michael Czinkota’s students to remember their “Marketing Across Borders” class while they traveled to azure beaches and Caribbean getaways. They were to connect their break experiences to some of the themes we have explored in class. Their responses offered an interesting – and illuminating – glimpse into how international marketing shapes the decisions of young travelers.

As digital natives, most of my students performed the research and planning for their trips online. Whether scoring cheaper flights or finding top restaurants, these young travelers turned to social media platforms and travel websites like AirBnb and TripAdvisor, to find affordable, and often all-inclusive, deals for hotels and flights. Students noted the power of word of mouth, which they far preferred over mass-market pamphlets, in guiding travel decisions. Much trust was placed in the reviews of peer travelers.

Much international travel was to Mexico, the Dominican Republic, and Germany.

But even when my students ventured outside their comfort zones, they still encountered elements of the familiar. They noted the prevalence of Japanese manufactured cars, such as Toyota, in countries like Mexico and Jamaica. For food, they found a preponderance of American brands – like McDonalds and Starbucks – that were almost identical to those in Cincinnati, Ohio.

A student, involved in a social justice immersion trip to Jamaica, found international marketing to be an important tool in business development. She found billboards with emotional global brand messages: “Kakoo loves Pepsi!”; “Jamaica, land we love; Honda, car we love.” Many messages were targeted toward tourists and rendered in English rather than local languages.

In terms of favorite topics, many of my students’ broached food. There was a fascination with the globalization of food products. Students were delighted to taste the delicious meals of the world. “Food trends from around the world had penetrated the Costa Rican market: Breakfast places were serving cold brewed ice coffee, kombucha, acai bowls, avocado toast, and homemade vegan bread. Australians own the best taco joint in Tamarindo. A woman from Minnesota was the chef at a local breakfast café. Markets served poke bowls (sushi bowls from Hawaii), arepas (shredded beef sandwiches from Venezuela), and traditional French pastries.”

Students saw a choice of goods that were produced in the U.S. but tasted differently abroad. In the Dominican Republic, there were different taste versions of Coca Cola. Snacks of choice, such as Doritos, were sold at two different prices depending on whether they were sold in American or Mexican packaging. In Puerto Vallarta, Mexico, the point of sale changed in supermarkets. Oreos were sold alongside American cereals rather than in the cookie section!

All these observations contribute to a wider understanding of international marketing forces that shape tourism for young travelers today. Travel can be good – it gives more perspective, more context and more variety. Surely, there will be more alternatives and new experiences, which make life more meaningful, spicy and more interesting.

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).

Georgetown University students, Dina El-Saharty and Lisa Burgoa, contributed to this report.