Reality bites in the market, what can we expect for 2010?

 

If you find this article of interest,  visit the Health Tourism Blog, or download a PDF of selected blog posts from 2009.
   

Was 2009 a good year for medical tourism?

In 2009, we heard medical tourism “experts” across the world continue to talk up the potential for medical tourism without any sound basis in reality. It’s in the interests of some within the industry to boost the profile of medical tourism and frankly to exaggerate its potential. But whereas some industry pundits talk in tens or hundreds of thousands of patients, others talk in millions.

These over optimistic forecasts have in themselves created a burgeoning medical tourism industry and a flurry of market entrants who may find that the going gets tough in 2010. Much of the current medical tourism sector has been built on hype rather than solid foundations. “In the land of the blind, the one eyed man is King” said Erasmus, and this has certainly been true in medical tourism.

Reality bites.... in the UK

The medical tourism sector is:

  •     (a) not immune to recession and
  •     (b) is not going to thrive in a recession.

The argument that people are more likely to look for low cost treatment overseas if money is tight just doesn’t stack up at the moment

How has the recession affected self paid treatment in a mixed healthcare economy such as the UK? The number of patients paying cash for elective surgery such as hip and knee replacements and the discretionary spend on cosmetic surgery is down 20% over the last 12 months. And the missing 20% are not going abroad because it’s cheaper. They are hanging on to their money, delaying treatment or deciding to spend their money on more essential outgoings.

Reality bites.... in the USA

For many new entrants to the market, the USA is seen as the “golden goose” of medical tourism. It depends what you read and who you believe. Compare these predictions and numbers:

2008

  •     Prediction: “it is expected in 2008 that several million Americans will travel overseas” (Medical Tourism Association).
  •     Reality:  - outbound US medical tourist numbers declined to 540,000 in 2008 (Deloitte Medical Tourism Update)

The future

  •     “23 million Americans could be traveling for medical tourism in 2017.” (Medical Tourism Association – Sep 2009).
  •     Recession adjusted forecast: 1.62 million medical tourists in 2012. (Deloitte Medical Tourism Update – Oct 2009)

Is either of these future predictions anywhere near the mark? What might be the factors influencing an upward or downward trend:

  •     Obama... the President who may change the way that the USA funds healthcare. And he’s making progress. Universal healthcare coverage in whatever final form it takes pushes medical tourism to the margins.... which is where it is in most developed countries. People do and will travel for treatment but it will always be a small minority wherever they are.
  •     Insurers, employers, HMOS’s. We’re still a very long way from seeing funders of healthcare make a significant move towards using medical travel as a way of reducing healthcare costs. Will it happen? Yes... but slowly and at the margins.
  •     The recession isn’t over.... and it isn’t going away anytime soon.  In both the US and Europe, unemployment levels hit 10% in December 2009. American workers have been unemployed an average of 29 weeks, the highest ever recorded since the data was tracked from 1948 onwards. Americans are visiting their physician less, reducing the number of drugs they pay for. They are reducing their level of care. But as with the UK, large numbers are not offsetting this by pursuing lower cost options overseas.

According to a report in USA Today this month, medical tourism is number nine in the top ten travel trends for 2010 in the USA. According to USA Today, the three drivers are:

  1.     More coverage of overseas medical care by major U.S. insurers.
  2.     An increase in individual insurance policies that typically carry a high deductible.
  3.     A marketing push by companies that combine travel and medical services.

Will these drivers drive significant growth in the USA or elsewhere in the world?

  •     Some, but only a few, insurers will provide coverage....but will patients actually want to travel?
  •     There may well be an increase in deductibles....but will patients be able to afford to “top up” their healthcare anywhere....in their home country or overseas.
  •     Companies may well increase their marketing spend and may increase public awareness a little....but what we don’t have in medical tourism is a “big player”, a company that’s prepared to risk hundreds of thousands of dollars/pounds/euros in bring medical tourism to the masses.

So... is it medical tourism boom or bust in 2010?

Neither. Medical tourism is not the Holy Grail that will save holiday destinations around the world who are already suffering from the “let’s stay at home” effect of the credit crunch? It’s not the easy win for hospitals and clinics who have been adopting the “if we build it, they will come” approach. The reality is that we will see growth in the long term.....growth where medical tourism makes sense and not at the exponential rates that some have predicted.

The good news (for medical tourism) from the economic downturn is that every Western government is going to be under pressure to cut public expenditure and that usually means cuts in healthcare provision. Let’s take the UK as an example. The UK government knows that it cannot afford to fund the healthcare system as it has in the past. The UK national debt in 2010 is 72% of Gross Domestic Product; ten years ago, it was 33% of GDP. In Ireland, the Irish government unveiled one of the most severe budgets in the Republic's history embracing cuts in public expenditure across the board.

In many countries, the pressure on public funding of healthcare will be greater than ever before. In the long term, an ageing population demanding more healthcare and pressure on healthcare budgets will mean more patients funding their own care and looking at overseas treatment as a serious option. And that means there’s an opportunity for medical tourism

Regional healthcare not global healthcare

In truth, there never has been a global healthcare market, and it’s unlikely that there will be one in the near future....unless, of course we:

  •     Invent an aircraft that can cut flight times by several hundred percent without increasing flight costs and global warming! Unlikely.
  •     Convince disparate healthcare systems worldwide to standardize the way they treat patients. It isn't going to happen.
  •     Get doctors in different countries to work together in providing continuous care for an individual patient (or at least talk to each other!). Some hope here, perhaps....

Where does medical travel really work...and happen? Across borders....from one neighbouring country to enough....within rather than between continents. However in need of treatment they are, and however desperate they are to save money, the number of patients who are prepared to board a plane and fly for eight hours plus to a different country with a different language and culture is minimal. It’s medical tourism at the margins. And it’s medical tourism that puts patients at risk through combining surgical procedures with long flights.

Patient flows in medical tourism follow low cost airline routes with short flight times or cross border land routes. Americans flying or driving South for surgery, Brits traveling to Budapest for dental treatment, the Japanese heading West to Korea for cosmetic surgery, the Indonesians travelling to Malaysia and Singapore, Central Africans heading for South Africa and so on.

The competition is going to get hotter

With medical tourism numbers failing to live up to the inflated predictions, we may now be faced with too few patients for too many providers. Those who have come to the market in the last twelve months are going to wonder where all the promised patients are. The simple laws of supply and demand mean increased competition. But that doesn’t necessarily mean that prices will plummet. Only the foolish will drop prices to attract patients. Consumers don’t opt for the cheapest  when it comes to making healthcare decisions. Yes, they want to save money, but cheapest implies low, quality, risk...all those things that medical tourists are trying to avoid. Added value, customer service, creating new business from existing or past customers will all become important in differentiating your business, and attracting new patients.

New models for medical tourism?

The credit crunch, increasing competition, the slow growth in patient numbers (if we see any growth at all) will encourage new approaches to medical tourism. We’ve seen the Hungarian “dental tent” come to the UK, and we hear that cruise ship medical tourism is on the agenda of the European Medical Travel Conference. And perhaps in 2010, we may see the serious adoption and exploitation of telehealth and e-medicine in the medical tourism sector.

In a recession....find a niche

So, what can those pursuing the Holy Grail of medical tourism learn from all this?

One key to success in a recession is to find a niche and ideally one that is a recession proof niche - one that people spend their hard earned cash on when money is tight. Whereas many healthcare providers try to be all things to all patients, those that succeed will select their niche and focus their efforts.

There are some niche areas of healthcare that are relatively recession proof and may prove attractive. Infertility treatment is a good example:

  •     Public funding of infertility treatment is under pressure in many countries.
  •     The need is high and people aren’t prepared to delay treatment too long.
  •     Money may be tight, but having children is the one thing that they may spend money on rather than anything else.
  •     It’s high value.

 In summary

2010 may be the year in which we see some rational thinking and some rationalisation in the medical tourism world. Perhaps the recession will bring some of the “blue sky” thinkers down to earth. New market entrants are going to feel the pinch; the long established players will maintain their reputation, improve their services and continue to thrive.

Long term, the medical tourism sector is here to stay.

Stay with it.... businesses that ride out the recession will come out of it in better shape. It’s still an attractive market sector and the business is there for those who take the long term view.

This article was first published on the Health Tourism Blog.  If you found this article of interest,  visit the Health Tourism Blog, or download a PDF of selected blog posts from 2009. Other recent articles on the blog include:

FURTHER CONTENT PUBLISHED BY THIS AUTHOR

UK infertility tourism

Articles, 11 July, 2017

NHS shortcomings driving fertility treatment abroad

Vetting the realities of global medical travel

Resources, 01 May, 2017

Keith Pollard, Destination Health: The Medical Travel Summit USA

Targeting the UK medical tourist

Resources, 26 April, 2017

Keith Pollard, IMTJ, IMTJ Medical Travel Summit 2017

How to create a unique value proposition in medical tourism

Resources, 26 April, 2017

Keith Pollard, IMTJ, IMTJ Medical Travel Summit 2017

Prepare for the future of medical tourism

Resources, 25 April, 2017

Keith Pollard, IMTJ, IMTJ Medical Travel Summit 2017

Foolish foray

Articles, 01 April, 2017

IMTJ launches medical tourism fake news service

Medical tourism market growth?

Articles, 21 March, 2017

Is the medical tourism market growing?

Target UK medical tourists?

Articles, 09 March, 2017

Should I target the UK for medical tourism?

Medical tourism market size

Articles, 06 March, 2017

How big is the medical tourism market?

5 key medical tourism questions

Articles, 23 February, 2017

Medical tourism... market size, growth, opportunities

The role of "online" medical tourism

Resources, 21 October, 2016

Keith Pollard: 7th Global Healthcare & Medical Tourism Conference

Delivering an outstanding international patient experience

Resources, 09 October, 2016

Keith Pollard, Intuition Communication Ltd: IMTJ Masterclass 2016

When will medical tourism reach the tipping point?

Resources, 26 May, 2016

Keith Pollard, Intuition Communication: IMTJ Summit 2016

What makes a destination attractive?

Resources, 16 March, 2016

Keith Pollard: The 2nd Bursa Medical & Thermal Tourism Forum

Marketing health tourism on the web

Resources, 16 March, 2016

Keith Pollard: The 2nd Bursa Medical & Thermal Tourism Forum

Does your online presence reflect the quality of your care?

Resources, 16 October, 2015

Keith Pollard: IMTEC 2015

Third age healthcare

Articles, 25 August, 2015

Opportunities in health tourism for the "third age"

The EU Directive Getting the Message Across

Resources, 15 April, 2015

Keith Pollard: IMTJ Summit 2015

What do we know about medical tourists?

Resources, 15 April, 2015

Keith Pollard: IMTJ Summit 2015

Best of 2014

Articles, 06 January, 2015

The top ten most popular medical tourism articles in 2014

Lessons from Passport2Health

Articles, 22 April, 2014

What can be learned from Passport2Health's failure?

Flying blind

Articles, 10 February, 2014

The risks of medical tourism are hard to find

Top ten of 2013

Articles, 06 January, 2014

The most popular medical tourism articles of 2013

The Kreativ solution

Articles, 20 November, 2013

The secret of Budapest's success in dental tourism.

Report from MIHTE 2013

Articles, 22 October, 2013

Government and providers must work together to drive a destination

Cyprus at a crossroads

Articles, 09 August, 2013

The future plans for Cyprus as a medical tourism centre

Cross Border Healthcare

Articles, 29 July, 2013

What is it all about?

PriceWatch 2013

Articles, 23 July, 2013

Participate in IMJT's price transparency survey

New councils launched

Articles, 02 April, 2013

Two new bodies are trying to bring together medical travel

Survey of medical tourism sector

Articles, 02 April, 2013

Survey highlights the fragmented nature of medical tourism

Malaysia, the best kept secret

Articles, 03 December, 2012

How Malaysia is developing as a medical tourism destination

Hungary ....Europe's no 1 destination for dental tourists

Resources, 14 June, 2012

Keith Pollard

PIP implants

Articles, 04 May, 2012

The PIP scandal could provide a landmark case for medical tourism

Ten things you need to know about medical tourism

Resources, 27 April, 2012

Keith Pollard: EMTC 2012

How to turn the web "window shopper"? into a paying patient

Resources, 27 April, 2012

Keith Pollard: EMTC 2012

All that glisters

Articles, 10 April, 2012

San Serriffe made an impact on the medical travel world, but never existed

What's in a brand name?

Articles, 06 March, 2012

What part of a brand does a customer remember the logo, the name, or their treatment?

Trends for 2012

Articles, 30 December, 2011

We look at the future of medical tourism in 2012

Everyone's a critic

Articles, 18 November, 2011

Medical tourism has a bad reputation, but what can we do about that?

Turkey, bucking the trend

Articles, 04 November, 2011

In a difficult market Turkey is still making progress, but why?

Medical tourism: Past Present and Future

Resources, 02 November, 2011

Keith Pollard: International Health Tourism Congress in Istanbul

Misspell Bumrungrad? Visit the MTA

Articles, 27 October, 2011

MTA's domain registration activities steal away Bumrungrad's visitors

Gamete shortage

Articles, 27 October, 2011

Will changes to donation payment help solve the lack of UK sperm and eggs donations

Do we need an EU Health Tourism Certificate?

Resources, 12 October, 2011

Keith Pollard: EU Symposium, "Health tourism - Establishing a new culture in Europe"

Can Europe lead the way?

Articles, 07 October, 2011

Can Cross Border Healthcare help develop medical tourism in Europe

An introduction to medical travel

Resources, 06 October, 2011

Keith Pollard: Latvian Health Tourism seminar

Marketing medical tourism online

Resources, 06 October, 2011

Keith Pollard: Latvian Health Tourism seminar

The future of spa tourism

Articles, 01 August, 2011

Dr László Puczkó presents a report on the future of spa tourism.

The Slumbering Giant of Medical Travel: the UK in the medical tourism market

Resources, 25 May, 2011

Keith Pollard: EMTC 2011

Medical Tourism: After the Goldrush

Resources, 04 May, 2011

Keith Pollard: EMTC 2011

Medical tourism: International Patient Streams Past , present, and future

Resources, 04 May, 2011

Keith Pollard: EMTC 2011

Thousands, not millions

Articles, 05 January, 2011

A new study reveals the real numbers of American medical tourism

Opportunities in health tourism: World Travel Market 2010

Resources, 12 November, 2010

Keith Pollard: World Travel Market 2010

Where are we now?

Articles, 17 September, 2010

An update on the EU directive on Cross Border Healthcare

Abandon ship!

Articles, 06 August, 2010

Keith Pollard explains why we should abandon medical tourism

Recession proof?

Articles, 02 July, 2010

Keith Pollard talks on why infertility tourism could be recession proof

Future of Medical tourism: Presentation

Resources, 30 June, 2010

Keith Pollard: Destination Health, London Olympia 2010

The Do's and Don'ts of Medical Tourism

Resources, 30 June, 2010

Chris Fearne: Malta Medical Tourism Summit 2009

Climate Survey 2010 results

Articles, 10 May, 2010

Keith Pollard reports on the IMTJ Medical Tourism climate survey

What is a medical tourist?

Articles, 12 March, 2010

Medical tourism statistics: Comparing apples with apples ....

Patients judging quality

Articles, 27 November, 2009

How can patients make an informed choice?

Marketing medical tourism: Malta Conference

Resources, 20 July, 2009

Keith Pollard: Malta Medical Tourism Summit 2009

Past experience and patient choice

Articles, 09 July, 2009

Keith Pollard talks on how patient choice is affecting the market?

Winners and losers in medical travel: International Medical Travel presentations

Resources, 19 November, 2008

Keith Pollard: IMTC 2008

Advertisement

ADD AN ARTICLE

Do you have an article that you’d like to share with the medical travel industry?

Publish for FREE on IMTJ.

ADD ARTICLE

Related Articles

Argentina medical tourism

14 June, 2017

It takes more than two to tango in medical tourism

EU citizenship post Brexit

08 June, 2017

What happens to EU/EFTA citizens in the UK after Brexit?

Brexit, the NHS and medical tourism

02 June, 2017

Brexit bill: the half a billion pound NHS bill

EU Package Travel Directive

06 April, 2017

Do you know about the EU Package Travel Directive?

Tele-surgery and medical tourism

22 March, 2017

Is tele-surgery a threat to medical tourism?