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 of industry associations and commentators,
touting medical tourism as “the next big thing”, a “boom industry”,
“experiencing exponential growth” and so on.
Much of the hype has emanated from the US and focuses on the potential
for medical tourism to solve the problems within the US healthcare system. The
latest published data on US medical tourism comes from the OECD in their late
2011 report, “Health at a Glance 2011”. According to the OECD report, Americans
spent $600 million on medical care outside the U.S. in 2009. The amount grew
13% from 2004 to 2009..... a very different level of growth from that quoted by
many pundits.
So, is medical tourism going
bust? Well... the reality is that some people have indeed gone bust. In our
Treatment Abroad business, our customer base consists of healthcare providers
and agencies around the world that depend on medical tourism for their
revenues. The churn in this sector continues. Agencies and facilitators enter
the market and disappear 18 months later, disillusioned by the lack of demand
and doomed to fail due to their own shortcomings.
In 2012, we need to see some
realism about the potential for business and the opportunities in the medical
tourism market. Nevertheless, we’ll still see people pursuing medical tourism
gold, and persuading others to make major investments in development projects.
The industry has been there before. (See “From a private medical tourism
hospital to a UK public National Health Service hospital in eight easy
years!”).
The Cayman Islands medical
tourism venture is probably the best current example of history repeating
itself. Local and overseas investors
intend to invest $2 billion in a 2,000 bed hospital to target US medical
tourists. According to Renee Stephano at the Medical Tourism Association, this
is “the ideal approach to jumpstart a medical tourism industry”. She continues,
“It’s not like the Fields of Dreams ‘if you build it, they will come’. The
hospital first needs to build up a brand and a reputation, which it can do by
treating local patients”.
Three islands with a local
population of 51,000 currently supported by a 120 bed hospital isn’t exactly
the foundation of an international healthcare brand. The planned facility will
need to attract over 100,000 medical tourists a year to make any financial
sense. Where will the patients come
from? And why?
The patient
The patient (and customer)
service must come first
In the Treatment Abroad Medical
Tourism Survey 2011 (awaiting publication), 85% of medical tourists were
satisfied with their experience of going to another country for treatment.
BUT...15% were dissatisfied. The standard of care, the quality of treatment,
the level of customer service and patient communication all come under fire
from patients who have participated in the research.
According to Rudy Rupak at
PlanetHospital, his business success is based on “disciple marketing” - “former patients are what drive clients to
us”. Within the industry as a whole, the message that excellent customer
service and outstanding treatment quality brings more customers is yet to be
widely adopted. The sector continues to be plagued by the bad news medical
tourism stories that appear in the press and media. I see little change in
2012. It’s going to be a very long haul for the industry to establish
credibility and trust within the media and ultimately broaden its potential
customer base.
The patient’s voice will get stronger
As patients evolve into
healthcare consumers, they are considering the purchase of healthcare in much
the same way that they consider the purchase of any consumer good or service.
And medical tourists are no different. They take a holiday and they write a
review of the hotel or destination on TripAdvisor.
They opt for surgery in another
country, and they want to tell people what it was like...by word of mouth and
increasingly online. Take a look at the Fertility Treatment Abroad section of
the FertilityZone web site, and some of the discussions that take place around
the services provided by various IVF and infertility clinics abroad. Take a
look at the Medical Tourism Ratings and Reviews site.
In 2012, there will be more
healthcare providers who see the benefit of encouraging patients to rate and
review their services. They want the patient’s voice to be heard. They want to
hear what went right AND what went wrong. Comparisons of healthcare quality are
difficult on a national basis, and virtually impossible for a patient to make
on an international basis. And this will
not change next year or in the next decade. The “patient’s voice” is probably
the best comparator that people currently have in choosing healthcare
providers. It just needs the providers to buy into the concept.
The industry
Market concentration
We are likely to see fewer
players with greater focus on customer needs in 2012.
Fewer players because as the
recession bites the weak will either go to the wall or will withdraw from the
sector. We may finally see the appearance of some bigger players in what is a
highly fragmented market in terms of providers and facilitators. If medical
tourism is big business, there should be facilitators out there handling
several hundred patients every month.
But so far....., there’s little
evidence of this.
Greater focus because
successful medical tourism is about delivering services to niche market
segments that have specific needs and requirements. And one of the biggest
shortcomings in medical tourism marketing is lack of understanding of customer
needs and failure to deliver to these
needs
Joined up healthcare
Criticism of medical tourism is
often targeted at the lack of “joined up healthcare”. There are very few
operators offering a truly coordinated approach to surgery and treatment
abroad. Ask the average facilitator to define the clinical/care pathway for
their patients and you will probably be met with a blank stare. If such
pathways do exist, then they may be in place within the destination hospital,
but the pathway starts on admission to the hospital and stops on discharge.
The industry still hasn’t
overcome the problem of how to handle pre-admission and post-operative care at
a distance. From the patient’s perspective, they are on their own when they
return home. When complications or problems arise, many providers will make the
standard “fly back and we’ll fix it” offer, but this is probably the last thing
that the patient wants to consider.
Some of the participants in the
dental tourism sector are probably furthest ahead in providing pre- treatment
assessment and post-treatment care within their “package”. Let’s hope the rest
of the industry will follow.
Conclusion...
So...2012... will it be a great
year for the medical tourism industry? Probably not. But it will be no
different in many business sectors. And there are plenty of opportunities for
the astute business to thrive. Individuals and corporate healthcare buyers
don’t stop buying in a recession. They may buy less and they may buy cheaper.
But they will buy more wisely.
Understand your customers, get
your service offering right, and focus your marketing, and 2012 could be your
opportunity to grow your market share and your business.
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