Before looking forward to 2010, let's look back and assess where medical tourism is now. So, was 2009 a good year for medical tourism? In 2009, we heard medical tourism “experts” across the world continue to talk up the potential for medical tourism without any sound basis in reality. It’s in the interests of some within the industry to boost the profile of medical tourism and frankly to exaggerate its potential. But whereas some industry pundits talk in tens or hundreds of thousands of patients, others talk in millions.These over optimistic forecasts have in themselves created a burgeoning medical tourism industry and a flurry of market entrants who may find that the going gets tough in 2010. Much of the current medical tourism sector has been built on hype rather than solid foundations. “In the land of the blind, the one eyed man is King” said Erasmus, and this has certainly been true in medical tourism.
Reality bites.... in the UK
The medical tourism sector is (a) not immune to recession and (b) is not going to thrive in a recession. The argument that people are more likely to look for low cost treatment overseas if money is tight just doesn’t stack up. How has the recession affected self paid treatment in a mixed healthcare economy such as the UK? The number of patients paying cash for elective surgery such as hip and knee replacements and the discretionary spend on cosmetic surgery is down 20% over the last 12 months. And the missing 20% are not going abroad because it’s cheaper. They are hanging on to their money, delaying treatment or deciding to spend their money on more essential outgoings.
Reality bites.... in the USA
For many new entrants to the market, the USA is seen as the “golden goose” of medical tourism. It depends what you read and who you believe. Compare these predictions and numbers:
For 2008
- Prediction: “it is expected in 2008 that several million Americans will travel overseas” (Medical Tourism Association).
- Reality: - outbound US medical tourist numbers declined to 540,000 in 2008 (Deloitte Medical Tourism Update)
For the future
- “23 million Americans could be traveling for medical tourism in 2017.” (Medical Tourism Association – Sep 2009).
- Recession adjusted forecast: 1.62 million medical tourists in 2012. (Deloitte Medical Tourism Update – Oct 2009)
Is either of these future predictions anywhere near the mark? What might be the factors influencing an upward or downward trend:
- Obama... the President who may change the way that the USA funds healthcare. And he’s making progress. Universal healthcare coverage in whatever final form it takes pushes medical tourism to the margins.... which is where it is in most developed countries. People do and will travel for treatment but it will always be a small minority wherever they are.
- Insurers, employers, HMOS’s..... We’re still a very long way from seeing funders of healthcare make a significant move towards using medical travel as a way of reducing healthcare costs. Will it happen? Yes... but slowly and at the margins.
- The recession isn’t over.... and it isn’t going away anytime soon. In both the US and Europe, unemployment levels hit 10% in December 2009. American workers have been unemployed an average of 29 weeks, the highest ever recorded since the data was tracked from 1948 onwards. Americans are visiting their physicians less, reducing the number of drugs they pay for. They are reducing their level of care. But as with the UK, large numbers are not offsetting this by pursuing lower cost options overseas.
According to a report in USA Today this month, medical tourism is number nine in the top ten travel trends for 2010 in the USA. According to USA Today, the three drivers are:
- More coverage of overseas medical care by major U.S. insurers.
- An increase in individual insurance policies that typically carry a high deductible.
- A marketing push by companies that combine travel and medical services.
But will these drivers drive significant growth in the USA or elsewhere in the world?
- Some, but only a few, insurers will provide coverage....but will patients actually want to travel?
- There may well be an increase in deductibles....but will patients be able to afford to “top up” their healthcare anywhere....in their home country or overseas.
- Companies may well increase their marketing spend and may increase public awareness a little....but what we don’t have in medical tourism is a “big player”, a company that’s prepared to risk hundreds of thousands of dollars/pounds/euros in bring medical tourism to the masses.
So... is it medical tourism boom or bust in 2010?
Neither. Medical tourism is not the Holy Grail that will save holiday destinations around the world who are already suffering from the “let’s stay at home” effect of the credit crunch? It’s not the easy win for hospitals and clinics who have been adopting the “if we build it, they will come” approach. The reality is that we will see growth in the long term.....growth where medical tourism makes sense and not at the exponential rates that some have predicted.
The good news (for medical tourism) from the economic downturn is that every Western government is going to be under pressure to cut public expenditure and that usually means cuts in healthcare provision. Let’s take the UK as an example. The UK government knows that it cannot afford to fund the healthcare system as it has in the past. The UK national debt in 2010 is 72% of Gross Domestic Product; ten years ago, it was 33% of GDP. In Ireland, the Irish government unveiled one of the most severe budgets in the Republic's history embracing cuts in public expenditure across the board.
In many countries, the pressure on public funding of healthcare will be greater than ever before. In the long term, an ageing population demanding more healthcare and pressure on healthcare budgets will mean more patients funding their own care and looking at overseas treatment as a serious option. And that means there’s an opportunity for medical tourism.
Regional healthcare not global healthcare
In truth, there has never been a global healthcare market, and it’s unlikely that there will be one in the near future....unless, of course we:
- Invent an aircraft that can cut flight times by several hundred percent without increasing flight costs and global warming! Unlikely.
- Convince disparate healthcare systems worldwide to standardize the way they treat patients. It isn't going to happen.
- Get doctors in different countries to work together in providing continuous care for an individual patient (or at least talk to each other!). Some hope here, perhaps....
Where does medical travel really work...and happen? Across borders....from one neighbouring country to enough....within rather than between continents. However in need of treatment they are, and however desperate they are to save money, the number of patients who are prepared to board a plane and fly for eight hours plus to a different country with a different language and culture is minimal. It’s medical tourism at the margins. And it’s medical tourism that puts patients at risk through combining surgical procedures with long flights.
Patient flows in medical tourism follow low cost airline routes with short flight times or cross border land routes. Americans flying or driving South for surgery, Brits traveling to Budapest for dental treatment, the Japanese heading West to Korea for cosmetic surgery, the Indonesians travelling to Malaysia and Singapore, Central Africans heading for South Africa and so on.
The competition is going to get hotter
With medical tourism numbers failing to live up to the inflated predictions, we may now be faced with too few patients for too many providers. Those who have come to the market in the last twelve months are going to wonder where all the promised patients are. The simple laws of supply and demand mean increased competition. But that doesn’t necessarily mean that prices will plummet. Only the foolish will drop prices to attract patients. Consumers don’t opt for the cheapest when it comes to making healthcare decisions. Yes, they want to save money, but cheapest implies low, quality, risk...all those things that medical tourists are trying to avoid. Added value, customer service, creating new business from existing or past customers will all become important in differentiating your business, and attracting new patients.
New models for medical tourism?
The credit crunch, increasing competition, the slow growth in patient numbers (if we see any growth at all in the near future) will encourage new approaches to medical tourism. We’ve seen the Hungarian “dental tent” come to the UK, and we hear that cruise ship medical tourism is on the agenda of the European Medical Travel Conference. And perhaps in 2010, we may see the serious adoption and exploitation of telehealth and e-medicine in the medical tourism sector.
In a recession....find a niche
So, what can those pursuing the Holy Grail of medical tourism learn from all this?
One key to success in a recession is to find a niche and ideally one that is a recession proof niche - one that people spend their hard earned cash on when money is tight. Whereas many healthcare providers try to be all things to all patients, those that succeed will select their niche and focus their efforts.
There are some niche areas of healthcare that are relatively recession proof and may prove attractive. Infertility treatment is a good example:
- Public funding of infertility treatment is under pressure in many countrids.
- The need is high and people aren’t prepared to delay treatment too long.
- Money may be tight, but having children is the one thing that they may spend money on rather than anything else.
- It’s high value.
There are others...get your thinking cap on and go out and find them.
In summary
2010 may be the year in which we see some rational thinking and some rationalisation in the medical tourism world. Perhaps the recession will bring some of the “blue sky” thinkers down to earth. New market entrants are going to feel the pinch; the long established players will maintain their reputation, improve their services and continue to thrive.
Long term, the medical tourism sector is here to stay.
Stay with it.... businesses that ride out the recession will come out of it in better shape. It’s still an attractive market sector and the business is there for those who take the long term view.