Ian Youngman from IMTJ
highlights the confusion in the medical tourism sector about what the business
is all about. Back to front marketing, a focus on low cost, and misguided
business strategy has meant that many businesses have been and gone. Learning
from the travel trade, embracing marketing not sales and focusing on the
customer experience might just turn things around.
The popular image of medical tourism is of someone flying to
a distant country for low cost surgery. Many agencies, hospitals and countries
are basing their business model and marketing strategy on this premise, hoping
that thousands of Americans and Europeans are seeking cheap surgery in distant
places.
I believe this is a myth. The majority of long-distance
medical travel seems to be for cosmetic surgery, dental work, fertility
treatment and very rare diseases. Most medical travel (meaning for elective
surgery) is short-distance. For elective surgery, long-distance travel is rare.
If medical tourism businesses were in the travel trade, many
would be out of business in a few months. We have already seen a high attrition
rate in medical tourism intermediaries/agencies with medical tourism businesses
starting up and disappearing within their first couple of years in business.
When you visit some of the medical travel related forums where people are
asking basic questions about how to do business in medical travel, this is perhaps
not surprising. Most travel agents and tour operators know that while long-haul
travel is one part of the business, short-haul travel is usually a bigger
slice. For many hotels the main part of their business is people from within
their own country, or even country/state/region.
When we argue whether or not Americans prefer overseas or
domestic medical tourism, we can get confused. For a Texan, Mexico is nearer
then New York. For Canadians, hopping over the US border may be easier than
going to another Canadian province. The distances involved confuse us too. If
the USA was 52 countries, or the 27 European Union countries merged into one
new country, the “United States of Europe”, it would be easier to understand.
The distances across the US are huge, the travel time between most EU countries
is very short; we still think of vast countries like China as one simple place,
despite there being massive cultural and wealth differences between regions
within China.
International...or domestic medical tourism?
We have also become confused about international versus
domestic medical tourism. The US is the easiest one to understand, but even in
the UK you see people going from Scotland to London, or London to Cornwall.
Many people in the medical travel business travel regularly between countries,
but you are not typical. The average person spends most of the time in their
own village/ town/city. Globally, over 90% of the population has never left
their own region, let alone their country.
So where am I going with this?
US employers have often commented on now hard it is to get
an employee to travel out of their own city, let alone out of their state, for
cost-saving surgery and as for going to a foreign country... it’s “out of the
question”. But on the other hand across Europe and the US, we have high numbers
who cross their local border for dental or medical treatment. We need to get
away from the mindset that medical travel is just country-to-country, as for
many ordinary people cross-border means leaving their state or region.
I think we as an industry have got it back to front. We talk
about the cost saving, but find that many medical tourists travel to expensive
destinations. We talk about high quality, but quality comparisons within countries
are as wide as between countries. We talk about holidays and beaches, when for
most dental or cosmetic operations you will be too fragile afterwards to enjoy
the sights, or sunbathing will ruin what you have had done.
Back to front marketing...
Much medical tourism marketing and advertising makes me
cringe. Not just because it is badly written in mangled badly translated prose,
but that it is all about how wonderful the country/hospital/doctors are. It is
back to front marketing, devise a product, seek to advertise it, and then try
to find customers that fit that market.
As any marketing professional knows, you first find out what
the customer wants and needs, how much they will pay, what competitors offer,
and then design the product /service. So why does medical tourism continue to
ignore these basics? Partly because it has been misled by self appointed experts
on what the demand is, what customers want, and that cost is the only thing
that matters.
Back to my tourism scenario.....Particularly in the current
climate, a huge proportion of holidaymakers stay in their own country, with
probably less travelling to nearby countries and even fewer on a long-distance
trip. But the analogy is not perfect as what holiday makers often want is to
experience foreign culture and experiment. Now... this view this may bring
criticism, but I feel that the last thing that someone wanting a new hip, new
teeth or heart surgery is to “experiment” in a foreign country with a foreign
culture.
The inverted pyramid model
Here is a simplified model of medical tourism; for any
medical or health treatment there is in effect an inverted pyramid. The vast
majority of people want to be treated in their own town or city. Fewer will
travel within their own state/region. Fewer still will travel far afield within
their own country, or across a nearby border. Even fewer will go to a slightly
further away country, and then as distance/travel time increases then the
numbers decrease. A complex version of this model would add in culture and
cultural differences, such as language, heritage, ethnicity; as well as income
and age.
My belief is that many in medical tourism, by concentrating
almost exclusively on the point of the pyramid, are totally missing the market.
Many hospitals in Asia, despite what they say about wanting Europeans or
Americans, do in fact realise that the vast majority of their medical tourism
business comes from within their own country, or nearby countries.
For many of those running medical tourism businesses, what
they are doing is like running a travel agency but only offering long-haul
holidays, or like running a second hand car dealership but only selling
Porsches. Many hospitals and clinics too are guilty of only concentrating on
far away medical travellers. There is some indication that longer running
agencies, and an increasing number of medical establishments, are beginning to
understand that their real target market is anybody not living locally.
The real culprits in concentrating so hard on long-haul
markets, and often only targeting certain source countries, are the
destinations themselves. They do this, partly out of ignorance, or based on
poor research or believing what they hear at numerous conferences, without
questioning the data or the underlying motives of those who benefit from
“bigging up” the industry. Exaggerated forecasts and over optimistic
predictions have done little for the image of medical tourism or for those
market entrants who have followed this guidance.
Be a radio mast
My advice (which does not come with a massive consultancy fee!)
is that all hospitals, clinics and agencies should pretend they are a radio
mast. From it, circles of radio waves emanate. The further away a listener (the
patient) is the harder it is to hear you, and the less relevant your views and
news are to them. So your business model
should be first the local market, then domestic medical tourism, then regional
medical tourism and only finally to full long-haul international medical
tourism. Think of how the customer really chooses healthcare, and abandon “vanity publishing” to get them to change their needs and wants to what you
offer.
Much of medical tourism exists in a bubble. We have had
riots in Egypt, Thailand and Tunisia; swine flu in Mexico; terrorism attacks in
India, and natural disasters in various countries with officials in major
countries recommending that non-essential trips to these countries should be
avoided. What has been the reaction of the medical tourism sector? Nothing. I
have yet to see a website that makes any reference to these problems. Look at
airline or tour operator websites and press statements and they provide
detailed information or offer alternatives to customers. Perhaps medical
tourism intermediaries and hospitals have privately warned customers, but all I
seem to see is total blindness. Even when rioters raged through a hospital, a
medical tourism promotion body was effectively saying, “Don’t worry what you
see on television, it is safe here.” And where were the national and
international associations when members needed advice or the public needed a
statement?
Cost, quality and the customer experience
Moving on to cost saving...... The US, Singapore, UK,
Germany and Switzerland are typical of major destinations that are not the
cheapest in the world, they sell on quality. So with several major destinations
selling on quality, why do we equate medical tourism with dramatic cost saving?
Health systems and doctors under pressure find it easy to
attack medical tourism with stories of botched surgery and poor care.
Undoubtedly, some of the cheapest surgery is not top quality, but look at any
country and you can dig up stories of incompetence. Ignoring the negative
stories as a mere nuisance misses the point. Medical tourism may focus on lower
cost, but the message has to be of lower price for an equivalent or better
quality of care than you can get at home.
Retailers everywhere may focus on price competition, but in
retail and tourism the brighter minds focus on the overall customer experience.
This is where some in medical tourism are getting it right, but many more are
getting it very wrong. The average American and Western European customer is
now used to getting a good customer care experience. They may pay for cheap
food and clothes and expect a lower standard of service than for the more
expensive equivalent, but they still expect the product to be fit for purpose.
So, for medical tourism, even when the price is lower, the customer still
expects excellent care and after-care, and this base level of care may be well
above what locals expect and get. People do get scared of very cheap prices.
You can sell surgery at 20% or 25% less than at home, but when you offer it at
75-80% lower, the customer simply does not believe they will get safe surgery.
It’s not credible. Bottom price implies bottom quality. You can wave all the
accreditations in the world at them but it will not remove the fear of
something that looks too cheap. This
lack of “credibility” in huge savings is a key reason why US businesses have
not bought into medical tourism in a big way; they do not trust massive
savings. So, my argument is – and I
expect it will provoke a response – that medical tourism has got its pricing badly
wrong. Setting prices for any product or
service is tricky, but there is plenty of marketing science on setting price
points; lowering prices does not itself
increase long-term sales. Any business can increase short-term sales by cutting
prices below the competition, but if medical tourism wants long-term profitable
business, it cannot exist by putting low
cost above everything else. Putting it simply, much of medical tourism has not
optimized the price-point at which the customer will buy and the organization
can make money
Embrace marketing not sales
Sadly, this brings me back to the bubble. Dealing with
crises, getting the price and target markets right, and pushing the right
customer buttons are not new. Across the globe, many retail and tourism and
insurance businesses have found answers to these problems. Is it because so
many people in the business have a medical background rather than a service
business one, that they struggle on trying to learn from scratch rather than
seek to adapt what retailers, tour operators, hotels and the food industry have
learnt over the last century?
If medical tourism businesses want to prosper,
rather than scrape a living, they need to benchmark against the best businesses
in other service industries. I know it is difficult moving from a background
where the obedient patient does what the all-knowing doctor tells them, to one
where agencies, doctors, hospitals are really patient focused and base price,
product and service on real customer needs. But if this industry is to move
forward, it has to rapidly evolve a service orientation that embraces marketing
rather than sales.
