India’s medical travel revenue will not grow to US$9bn

 

Many people whom I meet in private and government sectors talk about the  medical tourism industry in India as though people from across the world over are flocking to India for the pleasure of getting themselves operated on by our skilled doctors at our five-star hospitals. 

Almost everyone who has read anything about Indian medical tourism has come across statements such as: “Medical Tourism in India is a rapidly growing industry which is poised to reach US$9bn by 2020 because it has world-class hospitals, the best doctors in the world, getting a visa is fairly easy and, most importantly, the cost of treatments is very low.” 

That's the opposite of the truth.  Let's examine these myths one by one.

Myth # 1 – Low cost treatments

Reality check. The term “low cost” is relative. Yes, the cost of most of the treatments for a foreign national in India is lower than that in other popular medical tourism destinations. However, it’s not necessarily affordable for the majority of India’s inbound medical travellers (i.e. patients who travel to India for treatment). 

Seven out of the top ten medical tourist source countries for India have a per capita income of less than US$5,000. 

Let’s compare India to other popular medical tourist destinations, such as Turkey, with respect to their target markets. The majority of target customers for Turkey’s medical tourism industry are based in Russia, Saudi Arabia, Germany, and the UK. All have a per capita income higher than US$20,000, and in three of them it is over US$40,000. So, while the cost of treatment in Turkey is around 30% higher than that in India, its target customers have 400% more capacity to pay. Now, that’s cost-effective.

The greatest proportion of medical tourists coming to India get their treatment in top tier corporate hospitals, which are considered overly expensive even by Indian standards. Flagship hospitals charge a 50% higher fee (international rates) to foreign patients, on top of their already high rates for Indian patients.

It's astonishing to see India marketing itself as an “affordable medical treatment destination” to much poorer countries such as Afghanistan and those in Africa.

Myth # 2 – Obtaining a medical visa is easy

Reality check. India offers an online visa facility to nationals of 173 countries out of a total of 195 countries in the world. This suggests that India provides an easy and hassle-free visa to the nationals of 88% of the countries in the world. 

However, the opposite is true when it comes to those countries that provide India with the greatest number of medical tourists. Patients from countries such as Bangladesh, Afghanistan, Iraq, Maldives, Yemen, Sudan, Nigeria account for more than 83% of India’s medical tourists; they cannot get an Indian medical visa online.

The government may have its internal reasons for not giving an e-visa facility to these countries, but the fact remains that an overwhelming majority of India’s medical tourists have to go through the hassle of getting a physical visa. A large number of people do not even live in the capital cities of these countries where the Indian embassy visa office is located. They have to travel there, not once, but twice, to the Indian embassy to obtain a visa.

The standard time for obtaining a medical visa for India in many of these countries is about one month or more, during which time a cancer patient’s health can decline. Also, there is no defined process for a patient to get a visa rapidly in a life-threatening emergency situation.

Myth # 3 – High number of world-class hospitals

Reality check. JCI (Joint Commission International) is a US not-for-profit organisation that awards accreditation to hospitals based on how well they provide safe and quality care to the patients, as per its standards. As the definition of “world-class” is usually what is comparable to the best in the developed western world, of which the US is a leader, JCI accreditation is widely accepted as a benchmark for a world-class hospital.

India has 33 JCI accredited hospitals for its population of 1.3bn, which is 0.025 hospitals per million people. Thailand, India’s closest rival in medical tourism, has 60 JCI accredited hospitals for a population of 70m. That’s a ratio of 0.85 hospitals per million people. Singapore’s ratio is 2.5 hospitals per million people.

Clearly, India does not have enough world-class hospitals. It doesn't have enough hospitals in the first place. Its hospital bed density is between 0.7-0.9 per thousand people, which is way below its competitors in medical tourism.

Myth # 4 – English is widely spoken

Reality check. This is not the case for a medical traveller. On average, a medical traveller spends around a month in India. During hospitalisation, they interact with the doctor, in English, on average 5-6 times for 5-15 minutes each. However, the rest of their time is spent communicating with paramedics and housekeeping people. Within this staff group, paramedics are barely able to speak a sentence or two in English and, housekeeping staff, a word or two. The same applies to the guest house staff where a medical traveller may stay once discharged from the hospital.

So, when medical tourism advocates boast about the English speaking population of India, they conveniently ignore the fact that these English speakers do not work as guest house attendants or lower level hospital staff, with whom patients interact with the most.

Myth # 5 – India’s medical travel revenue will grow to US$9bn by 2020

Reality check.  Encouraged by these myths and on the back of research reports developed by those whose knowledge of medical tourism is as low as mine is of astronomy, people propagate this myth. Let's bust this myths with simple maths.

In 2019, around half a million people travelled to India on medical visas, which include: 

  1. A medical visa which is issued to the person seeking treatment
  2. A medical attendant visa which is issued to the carer or relative of the patient travelling to India 

The majority of patients travelling to India travel with their families, comprising of two, three or four people. So, even if we assume the number to be 1.5 carers travelling with each patient, 2.5 (1+1.5) medical visas are issued for each unique patient. This means that out of 500,000 patients who travelled to India, only 200,000 people paid for medical treatment; the others receiving medical visas only accompanied them.

Now, let's understand the average amount paid by a medical tourist for medical services. Over 50% of medical tourists who come to India are from neighbouring countries such as Bangladesh and Afghanistan. Many of them come just for health check-ups or consultations which are not major revenue earners for hospitals. 

Furthermore, with the knowledge due to proximity and similarity in language, food, culture, people from these countries do not like to be treated as foreigners in India. Nor do they like to pay “international rates” for treatment. More often than not, Bangladeshi patients in Kolkata and Afghan patients in Delhi access treatment at rates that are the same as those paid by an Indian, or a little more.

So, if on average, the bill for an international patient is US$2,000 (which is on the high side), then the total revenue from 200,000 medical tourists is US$400m, which is less than 5% of the projected US$9bn market share. It's not as big an industry as many suggest it to be.

Conclusion

Having exposed these myths, here are my recommendations on the measures the Indian government and hospitals must take together:

  • Promote small and medium-sized hospitals to foreign patients so that they also have the option of treatment at a lower cost.
  • Provide an online visa facility to almost every country. You don't make it difficult for customers to enter your shop for the fear of shoplifting, you put cameras in your shop. So, if you have security concerns, tighten internal security measures but don't make it difficult for them to get in. 
  • Build small hospitals and clinics in the countries that India wants to target for higher value medical travellers. Train their doctors, assist with technology, equip their facilities. Help them in developing primary and secondary medical care so that they look to India for tertiary care. 
  • Create enablers. People need treatment but don't have ready money. Tie-up with banks in target countries to help medical tourists get quick, easy loans on low-interest rates. The government can also give a discount for medical tourists using the national carrier.
  • Target elective surgery customers from wealthy countries. Distance is not such a big problem, value is. If Australians and Americans can go to Thailand, they can certainly come to India. Show them the value.
  • Stop paying exorbitant commissions to agents. Keep it to 10%, period. If leading hospitals do it, it will become a norm.

About the author: Ashutosh Shrivastava is a healthcare entrepreneur and business consultant. He is Founder and CEO of MediVenue.  The full version of his article is published on LinkedIn

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