Medical tourism: Trends for 2012 and beyond

To keep things simple, this blog has moved to the IMTJ web site. You can find the Health Tourism Blog here in future. Here's an extract of the latest blog post entitled: "Medical tourism: Trends for 2012 and beyond"

Medical tourism: Trends for 2012 and beyond
Christmas is over, the New Year is upon us, so it’s time to dust off the crystal ball and put forward our take on what’s in store for medical tourism in 2012 and beyond. We’ve looked at the future of medical tourism from three perspectives – the market, the patient and the industry 

The market

The global economic downturn and medical tourism
Forecasts for the global economy are not encouraging....recession in Europe, anaemic growth in the US and slow growth in the emerging market economies is anticipated for 2012 (Morgan Stanley: 2012 Outlook). If you are in the medical tourism sector, you need to understand some of the fundamental trends that affect businesses and markets in a recession.

• In the mature, developed economies (e.g. USA, Europe) continued unemployment and pressure on disposable income will influence demand in 2012. Consumers will minimise or reduce spending on healthcare where they can. This does not mean that hard pressed consumers will be flocking abroad for their operations to save money. Many will delay treatment, or in the case of “optional surgery” such as cosmetic surgery, they may not be able to afford it at all. Domestic prices for surgery will be driven down as hospitals apply marginal costing and prices to fill empty beds. In areas of treatment, where the need for treatment is “income-inelastic”, demand for medical tourism services will remain strong.  Patients will continue to dig deep for services such as infertility treatment, stem cell treatment, and for surgery which is essential, life-saving or life changing.
• In emerging markets (such as Russia, China), the growth in incomes (and freedom to spend) is outstripping the development of domestic healthcare services and this may drive demand for medical tourism and present new opportunities.

The big question is whether corporate or insurer paid medical travel will get off the ground in 2012. Will employers and insurers see medical travel as a realistic and credible option to reduce healthcare costs. And will their client and subscriber base actually “buy in” to the medical travel option if it is offered to them?

Medical tourism..... global healthcare or regional medicine?
In 2012, there’s a risk that we get distracted by the trumpeting of “global healthcare”. It’s a nice turn of phrase, but in the real world, medical tourism is about regional medicine and cross-border healthcare; this is not going to change in 2012. In fact, the boundaries of medical travel may be drawn in, as travel costs increase. As travel costs climb, the concept of long distance medical tourism becomes less attractive. The imposition of hefty departure taxes in countries such as the UK, Germany  and elsewhere will reduce the cost advantages of some destinations.

If you are in the medical tourism business, ALWAYS remember that, for most patients, going abroad for treatment is a decision of last resort. AND that the further a patient has to go... further from their own country....further from their own culture... the greater is the actual and perceived risk. The patient needing major surgery who takes a five hour flight to a country with a different language and a different culture is a comparative rarity.

So is it medical tourism boom.... or bust?
The honest answer to this one.... is probably neither.  In recent years, we’ve listened to the hype........

.........to find out more about "Medical tourism: Trends for 2012 and beyond", read the full medical tourism article at IMTJ.

Will Obama end the American medical tourism dream?

As reported in International Medical Travel Journal this week, President Obama has pledged to cure Americans from "the crushing cost of health costs." His proposed reforms include lower prices from hospitals, salary cuts for doctors, and payment to hospitals by government insurance schemes linked to quality of care not quantity of care. He also wants to give Americans the option of a public health insurance plan. His plans follow a social insurance model which is found in some European countries.


Simplifying the funding structure within US hospitals could also lead to significant cost savings. At present an individual US healthcare provider may have to administer payments through upwards of 700 different providers.

Past research (1) has shown that while the United States spends significantly more on health care per capita than Europeans nations, Europe actually delivers more real resources per capita. For example, Europe employs a larger health workforce per capita and delivers more physician visits, hospital days, and prescription drugs than the United States. Higher prices and administrative inefficiencies account for most of this differential.

Obama's grand plan could end the American medical tourism dream. Introducing what is in effect a publicly funded healthcare system and forcing down prices could remove a key driver for outbound medical tourism from the USA.

The IMTJ's conclusion:

"If Americans are a target market, you need to keep a very close eye on US healthcare reform as it could quickly impact your business. You may even have to change from marketing on price to marketing on quality alone."

...and I tend to agree.

Recent years have seen a bandwagon effect in the medical tourism sector. And it's been a "get it cheap" bandwagon. But for decades medical tourism has been driven by patients seeking better treatment, specialist expertise, and higher quality. Some new market entrants may need to rethink their strategy.

1 Mark V. Pauly, “US health care costs: The untold true story,” Health Affairs, 1993, pp. 152–9.

What can medical tourism learn from previous recessions?

How will the medical tourism sector fare in a global recession that's affecting everything from house prices to car sales to polar bears and dog ownership!

If unemployment in the Western world climbs to record levels in the coming year, is this good news or bad news for the healthcare sector?

Some good news comes in a recent McKinsey analysis. According to McKinsey, in previous recessions, US consumers changed their their spending priorities rather than cutting all expenditure across the board. In discretionary areas of expenditure such as dining out, personal care products, and charitable donations fell. But expenditure on groceries, books, insurance, education and healthcare actually rose.

See the McKinsey analysis - Industry trends in recessions.

However.... compared to the 1990/91 and 2000/01 downturns what we are facing now could be much much worse. In the UK, there are early indications that discretionary expenditure on private education and, of more relevance, private self paid surgery is being affected.

It remains to be seen whether those with less money in their pockets will be attracted by low cost treatment abroad , and whether the credit crunch stimulates new demand for medical tourism.

Marketing in the medical tourism downturn

There are conflicting views on how the global financial crisis is affecting medical tourism. The view expressed by organisations such as the Medical Tourism Association is that the "...with the economy and the credit crisis, more people are waking up and paying attention (to medical tourism)."

The harsh reality may be somewhat different. BusinessWeek reports that "...in some medical tourism hotspots, formerly booming hospitals are seeing empty beds." The MD of Parkway Hospitals in Singapore, "expects the foreign patient numbers to stabilise after dropping 10 per cent".

Whether the credit crunch encourages more people to consider travelling abroad for treatment remains to be seen. People are short of cash, unable to borrow and are delaying expenditure on house purchases, cars and other major expenditures. Healthcare is not immune to this. Although in the last global recession, healthcare was less affected, the likelihood is that people who might have considered medical tourism may decide to postpone their expenditure.

Areas likely to be affected most are those “non-urgent”, discretionary treatments such as cosmetic surgery. In countries where medical tourism is influenced by waiting lists, patients may decide to hold out for free treatment in their own country rather than go for the paid for, immediate treatment available elsewhere. In the USA, the story may be different, as the financial crisis puts pressure on health insurers and employers to find ways to cut rising healthcare costs.

The simple answer is that no one knows yet how the financial crisis will affect medical tourism. But it’s best to be prepared.

So, here are our recommendations for marketing in a medical tourism downturn (....follow these and they will also pay off, if there’s an upturn).

And no apologies for giving the services of Treatment Abroad a plug!

1. Target your activities
There are many hospitals, clinics and medical tourism operators out there who don’t have a clearly defined service strategy. What service am I selling, into what markets and to what demographics? Now is the time to think this through, and identify very clearly your market niche.

2. Maximise your return on marketing investment
Measure your return on investment on all marketing activities. And invest in those that deliver results:

• Invest in the web, because it’s the one area of marketing expenditure where you can measure your return and control your budget easily.


• Use PR. It’s a low cost and effective way of promoting your services to patients in other countries. (Become a Treatment Abroad client and we’ll give you our free guide to generating PR coverage!)


• Take advantage of free web promotion. Send your news articles to Treatment Abroad (it’s a Google approved news feed for medical tourism – your news story will get indexed by Google within the hour, if published).

3. Improve your conversion rate
Turn more web enquiries and leads into paying patients and customers. If someone has bothered to complete an enquiry form for your service, then they have probably done the same for some of your competitors. Respond faster, and respond better with an informative, personalised and high quality response. (Become a Treatment Abroad client and we’ll give you our free guide to enquiry management!)

4. Generate referral business
Past patients are the one of the best sources of future patients. 20% of medical tourists who travel for treatment have been recommended by a friend or relative.

• Give a “Recommend a friend” discount voucher that your past patients can give to a friend or relative.


• Generate word of mouth recommendations by encouraging patients to contribute to reviews sites such as Medical Tourism Ratings and Reviews.
  

5. Be brave!
Don’t cut back your marketing budget. In a recession, the strong survive. Use the opportunity to take market share from competitors who are less well equipped, and ill prepared to deal with a downturn.

Don’t cut your prices because you think it will bring you more business. Think about where you can add value to your service offering to give yourself a competitive edge and concentrate on customer service and service quality.

Put the above into practice. Then, whether we see an upturn or a downturn.... you'll be on the winning side!