Big Medical Tourism Boom? Actually, Not So Much

Remember the excitement around the medical tourism industry? Visions of thousands of U.S. patients heading to India and elsewhere to have medical procedures done at a fraction of the cost in the U.S.?

Well, that hasn’t worked out so well, experts said here Monday at the World Health Care Congress.

In 2008, the consulting firm Deloitte predicted that the number of U.S. tourists traveling out of the country for medical care could reach as high as nearly 24 million by 2017, said Irving Stackpole, president of Stackpole & Associates, a consulting firm in Newport, Rhode Island. “These numbers are patently ridiculous,” Stackpole said. “I believe roughly 2.6 to 3.4 million Americans have been leaving the country [each year] to purposely consume medical services elsewhere.”

The bulk of those trips, he added, have been patients in the Southwestern U.S. traveling to Mexico for low-cost, high-value medical and dental care. And currently, there is only one health insurer that will pay for such travel: “a healthcare provider in the farm workers’ union in southern California,” where many of the workers are Mexican Americans.

“These numbers have a legacy, and [it’s] the preposterous idea that medical tourism is an industry, that it’s a sector in the economy,” Stackpole said. “The amount of spending by those U.S. citizens in foreign destinations is a pimple on a duck’s butt — it’s 0.001% of the trillions of dollars spent in the U.S. on healthcare … It’s not a sector and I’d argue it’s not even a business.”

Keith Pollard, editor-in-chief of the International Medical Travel Journal, agreed. “Patient interest turned out to be much lower than predicted,” he said. “People didn’t buy in at the numbers everyone hoped for.”

Why didn’t the medical tourism industry take off? Pollard listed several possible reasons:

• Savings are insufficient to trump concerns about quality. People are always trying to balance value and risk, “and in their mind is always ‘This is a risk — it’s a different culture, people I don’t know, hospitals I may not trust,'” he said. “People are not yet convinced that this is a safe thing to do.”
• There is a lack of recourse if something goes wrong. “When something goes wrong, where does it end up?” Pollard said. “On the front page of the newspaper, on CNN, on BBC News. ‘This patient went to this country for this, and it was a disaster.’ In many countries, medical tourism does not have a very positive image. The providers tend not to handle stuff very well when things go wrong.”
• Insurers are reluctant to invest in this concept. “In the U.K., our [employer’s] insurance company would not fund me to go to Croatia” for a procedure, said Pollard. “The reason for that is they can’t measure the risk.” A few years ago, Pollard said, he invested in a startup medical travel-based insurance product that would allow patients to travel to certain approved hospitals within Europe. “It took 2 years to find an underwriter who would underwrite this product,” he said. The insurers were having trouble figuring out “How do we compare the risk of going to Barcelona or Dubrovnik or Zagreb or Poland or wherever?”

The medical tourism industry can learn from marketers’ past mistakes, Pollard continued. One mistake was that “too many people believed the hype” about the market, and they didn’t have a clear strategy in place before they jumped in. Instead, the attitude was “‘Let’s go sell what we’ve got before getting our product and service right,'” he said. “That’s one reason [medical] tourism has a bad image in the media; the clinics providing the service haven’t done a good enough job of providing an outstanding patient experience.”

Marketers also need to think more about which markets to target. “There were lots of [medical tourism] providers coming to the U.S. 4-5 years ago because they thought that was a big opportunity,” but that didn’t pan out, he said. “The message is, think local, not global — think about countries within a 3-hour flight time.”

Targeting the proper customers is also important. “Who is going to pay for this — employers? Governments? Patients? Insurance?” said Pollard.

Several new trends are beginning to affect the medical tourism business, said Elizabeth Ziemba, president of Medical Tourism Training, a medical travel consulting business, also in Newport. Technology is bringing more commodification of services, including online marketplaces for consumers to shop for healthcare internationally. “This works better in the traditional [medical tourism] services of in vitro fertilization, dental care, and cosmetic [procedures]” than for complex medical cases, she said.

In the “business to business” arena, “the traditional model has been healthcare providers and hospitals in high-income countries partnering with hospitals in lower-income countries to exchange knowledge and technology, and transfer skills,” although that was often just a way to get more patients to come to places like the U.S. for treatment, Ziemba said. “That model has changed quite a bit.” Now the providers in high-income countries are actually setting up shop in other places — such as the Cleveland Clinic’s building of a facility in Abu Dhabi — “a more serious and more balanced approach to the transfer of skills and knowledge, to help other countries build their own infrastructure.”

Self-insured employers are also having an effect on medical tourism, she added. For example, the Blue Lake Rancheria Indian tribe in northern California contracted with providers in France to send its casino employees there, she said.

“Government to business” contracts — in which governments arrange with providers to provide services across borders — are also popping up, said Ziemba. “We’re starting to see this with small countries that can’t provide their own complex care … like the Maldives contracting with [providers in] India, or Palau contracting with the Philippines.”

All in all, “it’s a fascinating time and a confusing time” to be in the medical tourism marketplace, she said.

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