Planning for pauses in demand

 

Before the global pandemic, the international health and medical tourism markets relied upon a robust, accessible, and affordable travel and tourism sector, as well as a wide variety of providers offering services to consumers. These underlying market factors have now been severely disrupted.

Capacity but no demand

With the arrival of COVID-19, hospitals, clinics, and other healthcare service providers around the world closed their doors to non-urgent services. Elective procedures were suspended to devote resources for the treatment of severely ill COVID-19 patients. Overnight, hospital ICUs were filled, while elective surgical suites and physicians’ offices were emptied, comprising the biggest supply-side shocks ever experienced in healthcare.

Comparing the number of procedures in US hospitals in 2019 vs. 2020, the decline in elective procedures, including some of the most lucrative disciplines such as orthopaedics, dermatology, and ophthalmology, are frighteningly steep.

Source: Axios May 19th 2020

Certain popular health and medical travel locations such as South Korea, Malaysia, Germany, and New Zealand have done a better job of containing transmission than other locations such as the United States, Brazil, and India. However, globally, travel restrictions remain in place or change frequently reflecting the challenging nature of SARS-CoV-2. 

When restrictions have loosened a little, a burst of business has resulted from pent up demand, producing an uptick in business. The initial surges were comprised of people who needed urgent complex medical care as well as cosmetic services – both considered exigent by these two distinct markets. Unfortunately, travel restrictions were then re-imposed either by the country providing services or the country providing the patients. 

This pattern of stop-and-go travel restrictions with the resulting surges of business is anticipated to continue with uncertainly and frustration for providers and patients.

The large and profitable elective procedures market – dental, IVF, bariatric, orthopaedic services – has yet to be revived. Fear of catching the corona virus is keeping patients away from hospitals and clinics around the world.        The elective surgery market will need to ensure patients have access to a COVID-19 safe environment and clinical excellence in addition to meeting the new patient expectations  generated by the pandemic. 

Providers are facing questions of survival as the duration of the pandemic is unknown. It seems clear that many providers will not survive. Those who can pivot should adapt to the reduction in demand for an indeterminate period of time.

Regional medical travel markets: pre- and post-COVID demand

Prior to the pandemic, health and medical travel markets fitted into one of three categories. 

  1. Primary destination brands: Certain destinations such as the Caribbean, Thailand, and Mexico offered primarily elective procedures in an attractive destination combining to make health travel affordable and accessible with favourable pricing and good outcomes.  

    Post-COVID to become competitive, these destinations need the tourism market to resume and stabilise, and must demonstrate commitment to patient safety and hygiene. Destinations such as Malaysia and South Korea have the opportunity to make inroads into these traditional pathways by effective management and containment of the virus as well as clinical quality and superior patient experience. Travellers who want elective procedures may be willing to visit “new” destinations for the services they want.

  2. Primary complex medical brands: Highly specialised providers of complex medical care such as the Mayo Clinic in Minnesota USA attract patients based on the nature of the quality of their high acuity, tertiary or quaternary services. People travel to these types of providers because of the scarcity of competitors that offer similar services. The role of the destination itself was a secondary consideration.

    Post-COVID, patients and third-party providers are likely to consider how the destination managed the pandemic when selecting the best option, as well as the political issues that could present obstacles or represent higher risk than other locations. For example, how will the geopolitical relationship between the US and China impact visa availability? How culturally comfortable will Chinese or Asian visitors feel in the US political climate of the “China virus”? 

    While the markets for this category of medical travel will most likely be primarily concerned about the availability of the services needed, these secondary issues are important and could tip the scales in favour of one destination over another, located in a less hospitable environment.

  3. Established regional relationships. Some pathways between countries for health and medical services were well established, such as from Indonesia to Malaysia, from the Middle East to Germany, or from the Maldives to India. While there are disruptions and falling numbers now, those routes will resume once travel is normalised and the virus subdued. 

    The “travel bubbles” being established between COVID-safe destinations are creating new opportunities for collaboration and cooperation between countries. The virus has, for example, brought Australia and New Zealand  closer together, as both have done well to contain transmission. The Baltic states have created their own travel bubble  and Fiji is exploring a “South Pacific” bubble.  These travel bubbles require excellent systems and protocols for screening, hygiene, and other factors because, if problems arise, the bubble will burst.

RECOVERY: Surviving Life Support

Predictions for economic recovery vary depending in large part on when a reliable vaccine is produced and distributed. Given the scientific rigour to which vaccine development is subjected, it is unlikely that a vaccine will be available in 2020. Testing, analysis, manufacture, and distribution of doses in sufficient numbers takes time. Based on informed projections, there are three likely recovery scenarios: V, U, or Swoosh.  

  • A ‘V’ shaped recovery calls for a quick recovery with a rebound as robust as the downturn, imitating the shape of a V.
  • The U-shaped recovery calls for a prolonged downturn with a slow and gradual return to a healthy economy. 
  • The most likely path to recovery resembles the Nike “swoosh”. It consists of the pattern of lockdown / release, followed by lockdown / release in many national economies, creating generalised chaos and growing consumer concern. It is a painful pattern that may last for a substantial period of time – perhaps well into 2023.

For the international health and medical tourism markets, these forecasts present a number of problems.

  1. Plan for and invest in supply-side development. Investment in market research, marketing, and investment can focus on highly specific source markets as well as very specific service lines rather than general market development. Travel bubbles might consider joint marketing efforts to maximise reduced budgets.  
  2. Invest in enhanced services. It may seem counterintuitive to spend precious resources on internal investment such as state of the art hygiene equipment and supplies or improved systems and processes through certification or accreditation programs. If the investments build trust and confidence in prospective clients or provide a competitive edge, then the expenditure is worth considering. 
  3. Plan for pauses in demand. Developing a strategy with supporting systems and processes that can be put into action quickly can help to moderate the impact of the upticks and drops in demand. 
  4. Create contingency plans for emergence, or resurgence of SARS-CoV-2.  If the recovery is a prolonged “swoosh”, the long-term implications for providers are serious. During a Swoosh recovery, there will be periods of revenue, which will be welcome but a lengthy and irregular recovery will make planning and staff management, for example, very difficult. Are there market segments that are recession proof? Are local markets ripe for development? Are there gaps in service delivery that can be filled? In other words, what is the worst that can happen and what can you do to survive?

The COVID-19 pandemic presents an enormous challenge to healthcare providers around the world especially those that reply on health and medical travellers. Survival techniques as well as innovation are needed to emerge from this crisis stronger and smarter. While fear and uncertainly are prevalent, these times require intelligent, informed decision-making, along with a dose of good luck.

About the authors

Irving Stackpole is the President of Stackpole & Associates, Inc, a mentor for the European Institute of Innovation and Technology, a co-author of The Marketing Handbook in Health Tourism, and co-host the podcast, The Medical Travel Show.

Elizabeth Ziemba is President & Founder of Medical Tourism Training, which delivers consulting, training, and assessment services for clients in the wellness, health, medical and hospitality sectors. 

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