The slumbering giant of medical travel?

Where do you think the international patients' centre shown above is? Singapore? Thailand? Malaysia? India? Korea?

Read on to find out...

This week’s International Medical Travel Journal covers a recent announcement by the UK Department of Health (See: Liberated UK hospitals to attract medical tourists) that it plans to remove the cap on the proportion of income that NHS hospitals can earn from private surgery. NHS hospitals are allowed to treat private patients (both domestic and international patients) in addition to their primary responsibility for serving the needs of the UK public.

Many NHS hospitals have private patient wards or dedicated units which benefit from their location close to the extensive clinical resources and medical technology which are available with an NHS general or teaching hospital. These are well supported by private patients but these NHS units have been restricted in terms of their revenue potential; across the UK, NHS hospitals were not allowed to generate more than 2% of their income from private paying patients. Some individual hospitals were allowed to generate a much greater proportion but were still limited in their revenue earning potential.

At medical tourism conferences around the world, the UK gets barely a mention. Yet it ranks in the top ten destination countries in terms of medical tourist numbers and probably in the top five in terms of revenue generated (Source: Team Tourism Consulting 2010). London continues to attract high value medical travellers seeking expertise and quality rather than the lowest prices. The average treatment cost for these patients is around £20,000, and for individual patients it can be much more. London also benefits significantly from the related expenditure of these medical travellers e.g. accommodation for friends and family during these extended patient stays.

Private patient facilities at leading London teaching hospitals such as Moorfields Eye Hospital, Great Ormond Street Children's Hospital, Royal Brompton & Harefield Hospitals, Kings College Hospital, Royal Marsden Hospital, and Guy’s & St Thomas’ Hospital have always been attractive to international patients and they compete with other international centres of excellence in countries such as the USA and Germany . Indeed, these NHS private patient facilities earn more from international private patients (medical tourists) than they do from UK private patients.

The Harris International Patient Centre at Great Ormond Street (pictured above) is a good example. The Centre has 130 staff, working with over 170 clinicians in Great Ormond Street Children's Hospital. It’s bigger than most international patient departments serving “medical tourists” that you would find anywhere in the world. And it’s very busy. But, until now Great Ormond Street and similar NHS run international patient facilities have been limited by the private patient income cap.

That is about to change... London “the slumbering giant of medical travel” may wake up to some of the newly emerging opportunities presented by the international patient market:

• The London hospitals mentioned above have a long and impressive track record in attracting international patients.


• They were involved in medical tourism long before the term was invented.


• And they are able to provide quality and prices that will be attractive to many emerging source markets for medical travel. For example, if US derived medical tourism does eventually take off, and American patients can make significant savings by travelling to London for major surgery (not far short of those available in Singapore or Thailand), would London be an attractive option? Same language (...almost), same culture (...almost).

This American who travelled to Wales for surgery may be the start of a growing trend....

Change in UK regulations may reduce infertility tourism

One factor that can affect any aspect of medical travel and medical tourism is that the market sector can be a victim of its own success. Constantine Constantinides has highlighted this previously in his IMTJ article “Medical Tourism and the West's Revenge”, arguing that in effect the success of medical travel is self limiting.

How can this success be self limiting?

Where overseas treatment becomes an attractive option for patients, domestic providers and governments may react to this trend by becoming more competitive (e.g. by reducing prices for local treatment) or by removing the causes and drivers for medical travel (e.g. by changing local regualtion of a treatment). Thus, the more patients travel abroad for treatment, the greater will be the reaction within the domestic market and a “balance of trade” will be reached.

An excellent example of this phenomenon is this week’s announcement by the Human Fertilisation and Embryology Authority (HFEA) that it intends to conduct a consultation over changes to the rules governing egg and sperm donation in the UK. There has been a significant shortage of egg and sperm donors in the UK due to the restrictions on the payments that can be made to donors. The £250 maximum "compensation" payment for both men and women donors has meant that demand for donor eggs and sperm has far exceeded supply. Waiting lists can be as long as two to three years for those patients eligible for NHS treatment.

The removal of donor anonymity has also been a contributing factor to the reluctance of donors to come forward. According to the most recent HFEA statistics (2008), only 1,184 women donated eggs and there were only 396 new sperm donors in 2008. Around 2,000 babies a year are born in the UK using donated eggs, sperm or embryos. As a result, we have seen an increasing number of UK couples seeking infertility treatment abroad; it has been one of the fastest growing areas of medical tourism. (For the background see “New research paper provides insight into infertility tourism”). The response from the HFEA to the increasing number of infertile couples going abroad is therefore to consider how to reduce this ...... by increasing the payments and incentives to egg and sperm donors, AND thus increasing the supply of eggs and sperm. Payments may increase to £1,000 plus.

It’s unlikely that the changes will have any immediate effect on the market sector. No decisions will be made until the end of the HFEA public consultation next year. The three-month public consultation will not start until January 2011 and the HFEA is expected to be subsumed into the UK’s Care Quality Commission as a result of the UK public expenditure cuts. But there’s a clear warning here for those involved in medical tourism businesses and the medical travel sector. Don’t put all of your eggs in one basket..... Or more seriously, be aware that any segment of the medical tourism market may be limited by its own success when domestic providers and governments seek to reverse the trend.

Wales....... the latest medical tourism destination for US patients?

A recent news story on CNN attracted my interest when it featured a US patient who travelled to Wales (in the United Kingdom) for sinus surgery to save money. It was headlined “'I can't afford surgery in the U.S.,' says bargain shopper”. It’s an interesting story which shows how the media can sometimes put a slant on a story to create news, but it does highlight some real opportunities for medical tourism providers.

The story (view the CNN video) tells us about Godfrey Davies, an American, who needed sinus surgery. It tells how he “set out on a mission to find an affordable surgeon”, and was appalled at the costs that he was going to incur in the USA. The story was picked up by a multitude of other web sites who took it at face value.

If you view the video, you get one impression. If you dig a little deeper, you actually get to understand the full story and where this patient fits within the medical tourism marketplace.

As a Brit, I found it a bit odd when I viewed the video. My first impression? Here’s a story about an American guy travelling all the way to Wales for surgery....... Why would he do this? And why Wales? But then I dug deeper. It was in fact a story about someone who started life as a “Welsh bloke”, became an “American guy” and went home for an operation. There’s a clue in his name (Davies...it’s a Welsh surname) and in his slightly odd accent (It’s a Welsh accent). Godfrey comes from Wales. It is where his family lives. He’s a UK and a US passport holder. He married an American and became a US citizen in 2002. He doesn't have health insurance in the US because he believes that the quoted premium of $1,000 per month is too much. He says that "with the deductible and co-pay, I would have had to pay more in over three and a half months than coming home to Wales."

So, what can medical tourism businesses learn from this story?

Firstly, don’t take news stories at face value. There’s sometimes an underlying logic to a news story which the media doesn’t always fully expose. It may make the news less newsworthy. In this case, it’s understandable why a Welshman (as opposed to an American) might choose Wales as a medical tourism destination.

Secondly, it highlights one of the key factors in why people select medical tourism destinations. Godfrey Davies chose Wales because it is an excellent cultural match, there is no language problem for him, and he feels 100% safe there. And it’s cheap!

Godfrey went to the BMI Werndale Hospital in Bancyfelin, Carmarthenshire. It is part of BMI Healthcare, Britain's leading provider of independent healthcare with nearly seventy hospitals and clinics nationwide. To give you another example, I myself had a total knee replacement at one of BMI Healthcare’s hospitals near London, The BMI Clementine Churchill Hospital. How much would it cost for a knee replacement in an American hospital? $50,000. How much did it cost me in the UK? £10,000 all in ($15,000). The UK price is cheaper than Korea ($17,800), and not far off the prices that Americans pay in countries such as Thailand ($12,000) and Singapore ($10,800). Given the cultural and language match, and the lower travel cost, if you were an American which destination would you choose?

Thirdly, it’s a great example of the kind of American medical tourists that some medical tourism businesses should be targeting..... people from their own country. Thus, the biggest and most realistic opportunity in the USA for Korea based medical tourism providers is most likely to be Korean Americans. Target the easy win, if you want to succeed.

Fourthly, it supports the argument that the UK might actually be an attractive medical tourism destination for US patients. Despite the different accent, there’s no language barrier! There’s a public healthcare system that delivers excellent outcomes. And there’s a private hospital system that already provides treatment for patients from all over the world who travel to the UK to access healthcare quality and expertise. And...... as Godfrey Davies has demonstrated, you can save an awful lot of money over UK prices.

How much does private treatment cost in the UK?

In addition to Treatment Abroad, we also run various UK health information sites. One of these is Private Healthcare UK. It will tell you all you need to know about private treatment in the UK.

If you want to know what UK private treatment costs go to Private hospital treatment - What does it cost? and select an operation.

And if you’re an American (or a Welshman) and you want to follow in Godfrey Davies' footsteps, you can get a quote for UK surgery by completing the enquiry form for UK private hospital treatment.

The US healthcare reforms and medical tourism

Caroline Ratner at IMTJ has just published a summary of US reaction to the Obama healthcare reforms from the medical tourism sector, so I suppose I had better throw my comments into the mix.

First, let me stress that I am by no means the world expert on the US healthcare reforms! (Does one exist?) But I have been asked by the UK media recently to comment on the reforms and in particular to comparisons with the UK healthcare system. It’s been interesting to watch from afar how a nation is having to deal with both rising healthcare costs and demands for increased expenditure on healthcare.

It’s acknowledged that the USA is one of the most expensive healthcare systems in the world, spending 15.3% of the nation's GDP on healthcare (WHO statistics). This compares to around 8.2% of GDP for the UK and similar for other European countries. Despite the high expenditure, the USA gets atrocious value for money out of what it spends.

Take a look at these comparisons:










The UK spends less than half the amount per capita compared to the USA, but provides a similar number of doctors, more nurses and more beds per 10,000 citizens. Not bad value for the taxpayer's money.

Despite these facts......in the healthcare reform debate in the US, the UK NHS has been used as an example of “how not to do it” and at one point those campaigning against the reforms launched a series of television adverts using “tragic” stories from Britain's National Health Service to contest Barack Obama's plans. The reality of the UK NHS is rather different... it works pretty well most of the time and it costs the nation half of what the US spends (as a percentage of GDP). If .......you were a US politician and could wave a magic wand which would transform the US healthcare system overnight to an NHS system of universal healthcare, free (in most cases) at the point of delivery, AND it would cost the country half the money....what would you do. It’s a no brainer. But there are no magic wands.

The perception of the NHS overseas is very different to the experience of the NHS within the UK Here’s a couple of recent, typical quotes from US industry commentators on medical tourism and the US healthcare reforms:

• “People from UK and Canada is (sic) not looking for treatment outside their countries because of being denied of healthcare insurance or financial constraints, it is because of high cost of care and extensive waiting times for elective surgeries”
• “ (the reforms) will also potentially create long waiting times for medical procedures which will create situations like in Canada and the UK, where patients travel outside their country because of long queues for important surgeries.

Note the references to the long queues and extensive waiting times in the UK. This kind of uninformed and factually incorrect comment does little for the credibility of the medical tourism industry. It’s political dogma.

Here are the hard facts on UK waiting lists:

• The average NHS waiting time from referral to treatment is around 8 weeks. It’s often much shorter.
• Anyone suspected of having cancer has the legal right to wait no more than 2 weeks to see a specialist
• Anyone referred for elective procedures has the legal right to start treatment within 18 weeks
• If there is a significant waiting list in your local area, you have the right to exercise patient choice and go to another hospital anywhere else in the country to avoid the wait. (internal medical tourism). You can also compare outcome data, infection rates and many other data online through NHS Choices
• If you have a serious and life threatening problem, there’s virtually no waiting list. That’s why I’ve only ever met one British heart surgery patient who has gone abroad for treatment. Despite this, I’m regularly amazed by overseas providers or consultancy companies who call me to discuss their plans for attracting British patients overseas for major surgery such as heart bypass.

And here’s some recent “real life” experience.

• The Web Communications Manager at my company recently celebrated the birth of his first child. Unfortunately, the birth was at 27 weeks so it has not been easy for him or his wife. The child has been in paediatric intensive care for some weeks in a local hospital, and has recently been transferred to Great Ormond Street Hospital in London for heart surgery. Is he happy with the NHS care?....Yes. Has it cost him a penny?.... No.
• My wife has a recurrent inflammatory problem at the back of her eye. She has regular assessments at the local NHS eye unit, and recently went for a minor procedure. It was urgent, so she didn’t have to wait. She went to the brand new eye state of the art NHS eye unit at Stoke Mandeville Hospital. How long did she wait?..... a week or so. How much did she pay?..... Nothing?

Are British patients flooding overseas for treatment because of “long queues” and “extensive waiting times”? No. The majority of UK medical tourists are not patients requiring elective surgery that they can’t get or will not wait for on the NHS. The reality of healthcare is that patients want affordable (or free) treatment close to home, or within their country. Before they even consider going abroad for treatment, they explore all the avenues for treatment within their own country.The NHS has its faults, of course, but no system is perfect. And would I swap our NHS for the current US model? No, I couldn’t afford it..... either as an individual or as an employer!

So, will the Obama healthcare reforms lead to a massive surge in medical tourism, as some have suggested? No.

Medical tourism will continue to grow as more patients become aware of the possibility of low cost treatment abroad. But we should never forget that what every patient wants is affordable healthcare on their own doorstep.....and travelling for treatment is for many a last resort.

The outlook for medical tourism in 2010

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:

1. More coverage of overseas medical care by major U.S. insurers.
2. An increase in individual insurance policies that typically carry a high deductible.
3. 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.

High UK dental costs driving patients abroad

A new study has been published which compares the cost of providing dental treatment in nine European countries. The UK has the highest costs of dental treatment. (Note: the study compared the cost of providing dental treatment, not the prices that are charged to patients).

According to Siok Swan Tan of Erasmus University Rotterdam, the lead author of the study, differences in dentists' are the most important reason for the variation in costs. "They account for 70 per cent of total costs in England, and range from €0.09 per minute in Hungary to €2.88 a minute in England."

As a result prices for both NHS and private dental treatment in the UK are much higher than in other European countries. It's the main driver for the growth of dental tourism with Hungary the leading destination for UK patients.

The research is part of a wider European Commission study that compares the cost of medical procedure; the study was published in the journal Health Economics.

You can read a full report on the study on the Independent newspaper site. The story made front page news in the UK today.

New health index means good news for medical tourism companies

The recently published Euro Health Consumer Index provides some interesting insights into the state of the UK health services and some encouragement for those who see the UK as a developing market for outbound medical tourists. The Index rates the public healthcare systems in 29 European countries on many factors such as clinical outcomes, quality of care, access to health services and patient information.

Austria emerges as the 2007 winner of the Euro Health Consumer Index, followed by the Netherlands, France, Switzerland and Germany.

The UK comes a very disappointing 17th out of the 29 countries; its score is dragged down by waiting lists and uneven quality performance. Medical tourism destinations such as France, Belgium, Estonia, Cyprus, Spain and the Czech Republic all outscore the UK.

As a separate exercise, the Euro Health Consumer Index 2007 included a value for money adjusted score, the "Bang-For-the-Buck adjusted score", which attempts to measure the value for money which the consumer gets from the healthcare system allowing for the spend on public healthcare in the country.

More bad news for the UK National Health Service.....

The UK sinks to 26th out of 29. Only Bulgaria, Poland and Latvia do worse.

Despite the efforts of successive UK governments, the NHS continues to deliver value for money to UK health consumers.

And that's probably good news for medical tourism companies!

UK media gives medical tourism a favourable press

The UK press continues to provide plenty of coverage for medical tourism, the vast majority of which is incredibly positive. Whereas the media are usually quick to find the "bad news" story, this has certainly not been the case with medical tourism. The recent exception was this story "How my smile was ruined by a dodgy dentist" in the Daily Mail.

However, the UK media is, in general, giving medical tourism a favourable press:

• Record numbers go abroad for health treatment with 70,000 escaping NHS - Daily Mail
• 70,000 Brits have ops overseas - The Sun
• Fears and frustrations driving patients abroad - Sunday Telegraph
• Long distance surgery is a snip - The Times

The recent increases in UK patients traveling abroad are becoming somewhat of an enbarrassment for a Labour government which has invested significantly in the NHS in recent years. The Tory party have seen the opportunity:

"Andrew Lansley, the shadow health secretary, said the figures were a "terrible indictment" of government policies that were undermining the efforts of NHS staff to provide quality services."

Waiting times for operations, lack of access to new treatments and fears of MRSA and hospital infections are significant problems in the UK NHS.

And they all factors which will encourage more people to travel abroad for treatment......

Resources
You can see a regularly updated list of medical tourism news stories on Treatment Abroad.