Is medical tourism still a pioneer, or merely a bandwagon?

 

Over the years I have studied industries and products that have risen from nowhere and become mainstream, then have either stayed as mature markets or become obsolete. At the moment, new, ‘out of nowhere’ financial sectors such as payday lending, crowdfunding and peer-to-peer lending threaten to wipe out huge chunks of the traditional banking sector…. or fall into obscurity.

Pioneers and followers in medical tourism

The initial phase of any new industry involves pioneers and early followers. The pioneers are those very first developers, while early followers come a year or two later and mostly copy what the pioneers have done. Being a pioneer is not always the road to success. In the UK, many consider Direct Line to be the pioneer of telephone based motor insurance; in fact, they were number two and the real pioneer company vanished within a few years of launch. Being an early follower has advantages, and in medical tourism it has allowed countries and hospitals to develop experience and build on that. But early followers rarely stay as market leaders; in motor insurance nine out of the first ten direct-to-consumer motor insurers no longer exist at all. In medical tourism, early users risk getting set in their ways and losing out to faster, sharper competitors who bring in new ideas. In medical tourism, India is the classic early follower that has been overtaken by others.

A risk of being a pioneer or early follower is that you attract criticism from those who have a vested interest in blocking your progress... “it isn’t safe”, “there are big risks”, “what if something goes wrong”.

The next stage of market development is the growth of competition. In medical tourism, new countries, agencies, organizations and hospitals embrace the idea and come into the market.

There follows a bandwagon effect. The excitement and newness sweep up people who had never previously considered the concept. This is the most dangerous stage for new and existing competitors. Price competition and too many competitors chasing too few customers can drive competitors out of the business. This time is also the dangerous one where those who made a return in the earlier stages of the market have gone beyond the obvious candidates and encourage new competitors, often with over enthusiastic projections and outmoded concepts. This is exactly what happened in direct-to-consumer motor insurance; consultants persuaded existing companies to enter the market and new ones to emerge. This is the stage where almost all these newcomers were too late in and lost a lot of money.

The medical tourism bandwagon

So how do I know that medical tourism has reached the bandwagon stage? The first pointer is when I have to reach for an atlas to see where the latest country eying up medical tourism actually is. The second pointer is the score or more of late entrants who mostly have basic or inferior facilities for their own citizens. The third pointer is when you see historic predictions and information recycled as if it were current.

Some argue that the more countries in medical tourism the better. But when you look at both the newcomers and a handful of older entrants, you notice that large numbers of their own citizens go overseas for medical treatment. Building new clinics and hospitals at home, ostensibly to attract medical tourists, can even reduce medical tourism numbers as fewer people travel overseas. Medical tourism is still a niche market; estimates of global numbers vary from five million to seven million. This sounds like a big number…. until you realise that the inbound tourist numbers in 2011 to the USA were 62.7 million and 29.3 million to the UK.

What does maturity bring?

After the bandwagon stage comes market maturity. This is where players leave the market or get taken over. This is what happened to telephone based motor insurance. At this stage you also get market splits with players concentrating on niches or more newcomers. Newcomers who just copy existing players may as well tear up bundles of dollar bills and scatter them to the wind. But newcomers who take the industry to a new post-mature stage can succeed. In insurance this is when new Internet based companies took out existing players by changing the rules of the game and made telephone based companies into dinosaurs.

This is what could happen in medical tourism; countries or hospitals will come in with new ideas. Perhaps the use of telemedicine, or taking doctors to patients, or new technology that has not been invented yet. In business and personal finance, crowdfunding and peer to peer lending mean investors and borrowers deal direct via online platforms and take the traditional banking gatekeepers out of the equation. Social media has taken the power of controlling information away from government and newspapers.

3D printing machines that can build almost anything from special plastics and metals allow people to build anywhere from online systems and open source software. The possibilities for healthcare and in particular for healthy organ transplants are fantastic. Surgeon Anthony Atala has printed a working human kidney!

Where next for medical tourism?

Do I know where medical tourism goes next or what the next market step will be? If I did it would make me rich, but what I do know is that the more I study new markets the more I see that new possibilities come out of the blue. Ten years ago the global crowdfunding market did not exist; in 2013 it is worth $ 5 billion a year; by 2015 it will be worth $15 billion.

There were huge predictions made for medical tourism; these have not happened. At least in the short term the market will grow, but probably mostly in specialist niches on a regional basis.

We have passed the tipping point where newcomers can easily make money. We are also in a new era of investment for all types of business globally where small companies and investments that make a small return over a very long time – or social investments - are already replacing those where investors expected to get their money back and make high returns within five years. Investment in health facilities and/or medical tourism has to look at the long term; and for every new market player who makes some money, two or three will lose their money. Existing players cannot see themselves as safe either as world events or medical tourism’s version of replacing telephone insurance with online insurance could come out of the blue.

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