The Health Travellers-1
The market is $40 billion and counting. It is growing at 20% every year. But how does one tap the opportunity?
Cyril Parry waited for a very long time for his turn to come. The 59-year-old retiree from Birmingham, UK, was suffering from rheumatoid-arthritis. He needed a hip replacement operation urgently. He waited patiently though his pain was getting worse and his movements increasingly restricted. Unfortunately, Parry was stuck at the end of a very long queue. The overburdened National Health Service orthopaedic surgeons in the UK were booked solid - for several years. Finally, Parry was told that his turn would come four years and nine months down the line.
That was when Parry started surfing the Net to see if he could get his hip surgery done elsewhere in the world. After a full year of research, he shortlisted two destinations: a hospital in Thailand and Apollo Speciality Hospital, Chennai. In November this year, Parry opted for the latter because, at £4,000 (excluding airfare but inclusive of a 10-day stay, post-operative care and a full health check-up), it was almost £5,000 cheaper than the Thai option.It was ironic that Parry needed to travel abroad for his treatment. He was, after all, undergoing a procedure called the 'Birmingham Hip Resurfacing' - a new technique considered as a superior alternative to the full-hip replacement surgery, and named after the city it was pioneered in. It was perfected at the Royal Orthopedic Hospital in Birmingham as recently as 1998.
Cyril Parry needed to travel because of the healthcare system followed in the UK which is creating long waiting lists of patients in that country. More on that later. But long waiting lists are not the only reason that there's been a huge surge in medical travel globally in recent years. Patients from rich countries in the Middle East travel to the US when they need top notch medical care. Residents of poor developing nations such as Nigeria or Bangladesh travel to their more developed neighbours for medical treatment because there aren't enough good facilities available in their own countries. Thousands of Japanese citizens seeking medical treatment fly abroad because of the prohibitive costs of treatment in their home country. Americans seeking cosmetic surgery often fly to South Africa for face tucks and breast augmentation because their insurance coverage doesn't pay for those - and it is cheaper to get them done in South Africa than back home.Nobody has collated the complete worldwide statistics about how many people travel abroad for health- and medical care-related reasons every year or how much they spend. But a Saudi Arabian report pointed out that in 2000, medical travellers from the Gulf region alone spent over $27 billion seeking treatment in various nations around the world. If the medical travellers from around the world spent even half as much that year, the total business in 2000 alone would have been in excess of $40 billion. And even that could be an underestimate."The estimate is that the healthcare market in the Organisation of Economic Cooperation and Development countries alone is worth about $3 trillion, and expected to go up to $4 trillion in 2005," says Rupa Chanda, professor at the Indian Institute of Management-Bangalore, and who was part of a working group led by Isher Ahluwalia of ICRIER which prepared a report for the World Trade Organization on the potential for trade in health services. Chanda refuses to hazard a guess on how much of this is actually cross-border medical traffic, just saying that the opportunity is huge.More importantly, it is growing rapidly and turning out to be an immense business opportunity for nations that are positioning themselves correctly. Last year, just five countries in Asia - Thailand, Malaysia, Jordan, Singapore and India - pulled in over 1.3 million medical travellers and earned over $1 billion (in treatment costs alone). In each of these nations, medical travel spends are growing at 20%-plus year-on-year.
Elsewhere around the world, Hong Kong, Lithuania and South Africa are emerging as big medical/healthcare destinations. And a dozen other nations including Croatia and Greece plan to make themselves attractive healthcare destinations.By itself, travelling abroad for health is not a new phenomenon - even in ancient times, there were examples of people travelling abroad to spas or famous medical centres for health treatment. But in the past five years or so, the movement has accelerated sharply. It has developed a massive momentum for two critical reasons.The first is, of course, the demographics of the developed nations and also the problems that are cropping up in their healthcare systems. In the US, the UK, Japan and many European nations, the proportion of the elderly (60 years and above) vis-à-vis the total population is increasing rapidly. In the US, the baby boomers - the biggest chunk of the population - have either hit retirement age or are heading towards it. The number of people aged 65 years and above is expected to double in the next 15 years. In the UK, the people aged 60 years and above will form 25% of the population in the next 30 years - up from 16% now. Similar trends are being seen in almost all nations in Western Europe. Meanwhile, life expectancy here has risen steadily over the years. Add the two up and you get a big surge in demand for healthcare.
The big problem is that as their health needs increase exponentially, the healthcare systems in these countries are beginning to creak under the pressure. The number of doctors and nurses joining the workforce in both the UK and the US is not keeping pace with all the demands of the ageing population. This is creating the push factor.Meanwhile, there is a pull factor being created by a handful of developing countries like Thailand and Malaysia that have good doctors and excellent facilities, and which are positioning themselves as medical destinations in order to boost their economies. Both Thailand and Malaysia see this developing into a multi-billion dollars-a-year business. There is also the other factor - like people from the least developed countries who find affordable sophisticated medical care facilities in developing countries like India and Malaysia. "The competence and skills of Indian doctors is accepted internationally and people are coming from all over the world to our hospital to get treatment," says Prathap C. Reddy, chairman, Apollo hospitals group. Curt Schroeder, CEO of Thailand's Bumrungrad Hospital, echoes that sentiment about his country's healthcare facilities.Cross-border travel for healthcare reasons is still a highly disorganised movement, but nations are slowly waking up to its potential. In some places the governments have taken a lead. In others, like South Africa and Lithuania, travel agents specialising in medical tourism are driving the trend. In India, private hospitals like Apollo and Escorts Heart Institute and Research Centre are trying to attract patients on their own. Though the movement can still be considered to be in its infancy, medical travel has come under the radar of both the World Health Organization (WHO) and the World Trade Organization (WTO). As far back as the early 1990s, the WHO commissioned the Social Sector Development Strategies, Inc. (SSDS, Inc.), a Boston-based non-profit organisation specialising in global healthcare systems, to see whether the English-speaking Carribbean islands could become a significant healthcare destination for travellers from the US, the UK and Canada. The study took a hard look at both the advantages and the disadvantages of these nations before reluctantly coming to the conclusion that they would be uncompetitive in most of the areas. The WHO's interest is simple - it realises that medical travel can help boost the medical facilities (and the medical economy) in developing countries while also taking care of some of the problems of rich nations. The WTO sees medical travel as one of the four modes (See 'WTO: How The Medical Trade Will Grow') that will help boost trade in healthcare services worldwide. Both WHO and WTO understand that medical travel could ameliorate much of the demand-supply imbalance in global healthcare. Developed nations benefit as costs or waiting time - or both - come down for a significant chunk of their population. Developing countries benefit as it brings in revenues - and provides the right spur to improve their overall healthcare sector, apart from reducing brain drain in their medical fraternities. Least developed countries, too, benefit as they lack facilities for cutting-edge treatment.
The Travellers You could divide the world's medical travellers into four distinct geographical groups who travel for distinctly different reasons. The first is made up of the Americans. Indeed, countries like Thailand, Malaysia and South Africa, which were the first to try and tap 'medical tourists', all geared their systems to attract the growing American clientele.Why would the Americans travel abroad when their own country boasts of the best medical facilities in the world? And especially as they don't have to wait in queue like the British? The two Es: ego and economy. The US healthcare system is predominantly insurance-driven. But health insurance covers critical care - not cosmetic care. And there are vast numbers of Americans today who are looking for cosmetic surgery - whether it involves a facelift, a liposuction or dental treatment for a brighter smile. According to the American Society of Aesthetic Plastic Surgery, in 2002, 6.6 million Americans went in for cosmetic surgery in the US itself. They were also the biggest chunk of foreign customers for cosmetic surgeons in Thailand, Malaysia and South Africa. These three countries, between them, pulled in over 100,000 Americans seeking cosmetic surgery.As the baby boomers - those 76 million Americans born between 1946 and 1964 - age, they are increasingly going in for facelifts, botox treatments, tummy tucks, et al. And since cosmetic surgery is mostly not covered by medical insurance, many Americans prefer to travel abroad. A full facelift costs $8,000-20,000 in the US and only $1,252 in South Africa. Thailand is slightly more expensive at $2,682. Best of all, going abroad means a vacation as well after the surgery is over.Vanity isn't the only reason why Americans seek treatment abroad though. Lack of insurance cover is another. Last year, 15.2% of the US population - some 43.6 million people - had no health insurance coverage. And a significant proportion of even the 84% with insurance were under-insured.Many of these people weren't poor - at least according to developing country standards. Some of them were people between jobs who didn't have insurance simply because they were earlier covered by their employers. Given the increasing cost of medical treatment in the US, it made sound economic sense to seek treatment abroad. If cosmetic surgery and costs were the factors driving the Americans to travel abroad, the second major group - the British - were being forced to seek medical treatment in other countries by the sheer waiting lists caused by the National Health Service (NHS). Unlike in the US, the British healthcare system ensures free treatment to all its citizens. The only problem is that the NHS, which was set up in 1948, is struggling to cope because of a shortage of both doctors and hospital beds. (Private medical facilities are available in the UK, but they are prohibitively expensive and also relatively fewer in number.) In 2001, more than 1 million British citizens were waiting for inpatient treatment and half-a-million for outpatient treatment according to a study by the Vienna University of Economics and Business Administration. At least 40% of the people requiring inpatient care needed to wait over three months for their turn to come. Hip replacement and eyecare had the longest waiting periods.The situation is so bad that in 2002, the NHS started a pilot scheme 'overseas treatment' to see if surgery services abroad could be bought to shorten the waiting lists. The project focussed mainly on facilities available in the European Union - in countries like Austria and Germany. Meanwhile, many thousands of British patients take the initiative to seek their own treatment abroad without waiting for the NHS to sort out its problems.
The third big group of medical travellers comes from the Middle East. These are citizens of the oil rich nations flying abroad to seek medical facilities that are either unavailable or in short supply in their own countries. An agency in Saudi Arabia estimated that every year, more than 500,000 people from the Middle East travel seeking medical treatment for everything from open heart surgery to infertility treatments. They travel everywhere - to Jordan, Saudi Arabia and Bahrain; to the US; to India, Thailand and Malaysia. By some estimates, India itself attracted 70,000-plus medical travellers from the Middle East last year.Finally, the last group of medical travellers form a motley lot. They are from the least developed countries and countries with generally poor medical infrastructure, who usually seek treatment facilities at some neighbouring country with better infrastructure. Last year, it was estimated that at least 50,000 people from Bangladesh and Nepal came for medical treatment to India. A significant majority of the 126,000 medical travellers to Jordan came from neighbours with poor medical infrastructure facilities.
Tapping The Big MarketA $40-billion-plus market growing at over 20% a year throws up huge opportunities for anyone smart enough to tap into it. The SSDS, Inc. study for the WHO pointed out that business opportunities covered a big spectrum - from retirement homes and spas, to cosmetic and dental surgery, to critical but non-emergency surgery needs like hip replacements, organ transplants, angioplasty and vision correction. Other studies show even alternative healthcare could be a significant niche opportunity.In the initial years, most countries that tapped into the medical destination opportunity essentially focussed either on spas or on the 'vanity' and the 'exotic' surgery requirements. In South Africa a number of outfits (travel agents with hospital connections) sprang up to tap into the market for facelifts, tummy tucks and cosmetic dental surgery. Thailand initially had a somewhat dubious reputation as an excellent country to go to for sex change operations. India's primary claim to fame was its ayurvedic treatment centres. "Beauty, youth and wellness is a huge area for growth and we need to promote it aggressively," says Apollo's Reddy.Over the past few years, though, many countries have realised that an equally big opportunity lies in promoting the more conventional treatments. Some of this, of course, was always happening in the background - like people from Mauritius, Bangladesh and the Gulf coming to India for conventional surgeries and people from Japan flying to Singapore, Malaysia or Thailand for similar reasons. Only now, the nations have started pitching themselves as world-class but inexpensive destinations for almost all health requirements.
They might be getting some unexpected help soon - from insurance giants. Healthcare insurers in the developed countries are not blind to the fact that the option of medical treatment in countries like Thailand and Malaysia could help them reduce premiums and offer options to people who are currently uninsured. Over the next few years, insurance firms are expected to provide a fillip to the medical travel business.Most insurance companies in the US and the UK have already accredited hospitals worldover where Western visitors can seek emergency medical treatment. Now a few hospitals in Thailand are going a step further - they are getting themselves accredited by the Joint Commission Accreditation of Healthcare Organizations (JCAHO). A full accreditation from this organisation allows a hospital to pitch for the insurance traffic too. Travelling has never been so healthy before.
Cyril Parry waited for a very long time for his turn to come. The 59-year-old retiree from Birmingham, UK, was suffering from rheumatoid-arthritis. He needed a hip replacement operation urgently. He waited patiently though his pain was getting worse and his movements increasingly restricted. Unfortunately, Parry was stuck at the end of a very long queue. The overburdened National Health Service orthopaedic surgeons in the UK were booked solid - for several years. Finally, Parry was told that his turn would come four years and nine months down the line.
That was when Parry started surfing the Net to see if he could get his hip surgery done elsewhere in the world. After a full year of research, he shortlisted two destinations: a hospital in Thailand and Apollo Speciality Hospital, Chennai. In November this year, Parry opted for the latter because, at £4,000 (excluding airfare but inclusive of a 10-day stay, post-operative care and a full health check-up), it was almost £5,000 cheaper than the Thai option.It was ironic that Parry needed to travel abroad for his treatment. He was, after all, undergoing a procedure called the 'Birmingham Hip Resurfacing' - a new technique considered as a superior alternative to the full-hip replacement surgery, and named after the city it was pioneered in. It was perfected at the Royal Orthopedic Hospital in Birmingham as recently as 1998.
Cyril Parry needed to travel because of the healthcare system followed in the UK which is creating long waiting lists of patients in that country. More on that later. But long waiting lists are not the only reason that there's been a huge surge in medical travel globally in recent years. Patients from rich countries in the Middle East travel to the US when they need top notch medical care. Residents of poor developing nations such as Nigeria or Bangladesh travel to their more developed neighbours for medical treatment because there aren't enough good facilities available in their own countries. Thousands of Japanese citizens seeking medical treatment fly abroad because of the prohibitive costs of treatment in their home country. Americans seeking cosmetic surgery often fly to South Africa for face tucks and breast augmentation because their insurance coverage doesn't pay for those - and it is cheaper to get them done in South Africa than back home.Nobody has collated the complete worldwide statistics about how many people travel abroad for health- and medical care-related reasons every year or how much they spend. But a Saudi Arabian report pointed out that in 2000, medical travellers from the Gulf region alone spent over $27 billion seeking treatment in various nations around the world. If the medical travellers from around the world spent even half as much that year, the total business in 2000 alone would have been in excess of $40 billion. And even that could be an underestimate."The estimate is that the healthcare market in the Organisation of Economic Cooperation and Development countries alone is worth about $3 trillion, and expected to go up to $4 trillion in 2005," says Rupa Chanda, professor at the Indian Institute of Management-Bangalore, and who was part of a working group led by Isher Ahluwalia of ICRIER which prepared a report for the World Trade Organization on the potential for trade in health services. Chanda refuses to hazard a guess on how much of this is actually cross-border medical traffic, just saying that the opportunity is huge.More importantly, it is growing rapidly and turning out to be an immense business opportunity for nations that are positioning themselves correctly. Last year, just five countries in Asia - Thailand, Malaysia, Jordan, Singapore and India - pulled in over 1.3 million medical travellers and earned over $1 billion (in treatment costs alone). In each of these nations, medical travel spends are growing at 20%-plus year-on-year.
Elsewhere around the world, Hong Kong, Lithuania and South Africa are emerging as big medical/healthcare destinations. And a dozen other nations including Croatia and Greece plan to make themselves attractive healthcare destinations.By itself, travelling abroad for health is not a new phenomenon - even in ancient times, there were examples of people travelling abroad to spas or famous medical centres for health treatment. But in the past five years or so, the movement has accelerated sharply. It has developed a massive momentum for two critical reasons.The first is, of course, the demographics of the developed nations and also the problems that are cropping up in their healthcare systems. In the US, the UK, Japan and many European nations, the proportion of the elderly (60 years and above) vis-à-vis the total population is increasing rapidly. In the US, the baby boomers - the biggest chunk of the population - have either hit retirement age or are heading towards it. The number of people aged 65 years and above is expected to double in the next 15 years. In the UK, the people aged 60 years and above will form 25% of the population in the next 30 years - up from 16% now. Similar trends are being seen in almost all nations in Western Europe. Meanwhile, life expectancy here has risen steadily over the years. Add the two up and you get a big surge in demand for healthcare.
The big problem is that as their health needs increase exponentially, the healthcare systems in these countries are beginning to creak under the pressure. The number of doctors and nurses joining the workforce in both the UK and the US is not keeping pace with all the demands of the ageing population. This is creating the push factor.Meanwhile, there is a pull factor being created by a handful of developing countries like Thailand and Malaysia that have good doctors and excellent facilities, and which are positioning themselves as medical destinations in order to boost their economies. Both Thailand and Malaysia see this developing into a multi-billion dollars-a-year business. There is also the other factor - like people from the least developed countries who find affordable sophisticated medical care facilities in developing countries like India and Malaysia. "The competence and skills of Indian doctors is accepted internationally and people are coming from all over the world to our hospital to get treatment," says Prathap C. Reddy, chairman, Apollo hospitals group. Curt Schroeder, CEO of Thailand's Bumrungrad Hospital, echoes that sentiment about his country's healthcare facilities.Cross-border travel for healthcare reasons is still a highly disorganised movement, but nations are slowly waking up to its potential. In some places the governments have taken a lead. In others, like South Africa and Lithuania, travel agents specialising in medical tourism are driving the trend. In India, private hospitals like Apollo and Escorts Heart Institute and Research Centre are trying to attract patients on their own. Though the movement can still be considered to be in its infancy, medical travel has come under the radar of both the World Health Organization (WHO) and the World Trade Organization (WTO). As far back as the early 1990s, the WHO commissioned the Social Sector Development Strategies, Inc. (SSDS, Inc.), a Boston-based non-profit organisation specialising in global healthcare systems, to see whether the English-speaking Carribbean islands could become a significant healthcare destination for travellers from the US, the UK and Canada. The study took a hard look at both the advantages and the disadvantages of these nations before reluctantly coming to the conclusion that they would be uncompetitive in most of the areas. The WHO's interest is simple - it realises that medical travel can help boost the medical facilities (and the medical economy) in developing countries while also taking care of some of the problems of rich nations. The WTO sees medical travel as one of the four modes (See 'WTO: How The Medical Trade Will Grow') that will help boost trade in healthcare services worldwide. Both WHO and WTO understand that medical travel could ameliorate much of the demand-supply imbalance in global healthcare. Developed nations benefit as costs or waiting time - or both - come down for a significant chunk of their population. Developing countries benefit as it brings in revenues - and provides the right spur to improve their overall healthcare sector, apart from reducing brain drain in their medical fraternities. Least developed countries, too, benefit as they lack facilities for cutting-edge treatment.
The Travellers You could divide the world's medical travellers into four distinct geographical groups who travel for distinctly different reasons. The first is made up of the Americans. Indeed, countries like Thailand, Malaysia and South Africa, which were the first to try and tap 'medical tourists', all geared their systems to attract the growing American clientele.Why would the Americans travel abroad when their own country boasts of the best medical facilities in the world? And especially as they don't have to wait in queue like the British? The two Es: ego and economy. The US healthcare system is predominantly insurance-driven. But health insurance covers critical care - not cosmetic care. And there are vast numbers of Americans today who are looking for cosmetic surgery - whether it involves a facelift, a liposuction or dental treatment for a brighter smile. According to the American Society of Aesthetic Plastic Surgery, in 2002, 6.6 million Americans went in for cosmetic surgery in the US itself. They were also the biggest chunk of foreign customers for cosmetic surgeons in Thailand, Malaysia and South Africa. These three countries, between them, pulled in over 100,000 Americans seeking cosmetic surgery.As the baby boomers - those 76 million Americans born between 1946 and 1964 - age, they are increasingly going in for facelifts, botox treatments, tummy tucks, et al. And since cosmetic surgery is mostly not covered by medical insurance, many Americans prefer to travel abroad. A full facelift costs $8,000-20,000 in the US and only $1,252 in South Africa. Thailand is slightly more expensive at $2,682. Best of all, going abroad means a vacation as well after the surgery is over.Vanity isn't the only reason why Americans seek treatment abroad though. Lack of insurance cover is another. Last year, 15.2% of the US population - some 43.6 million people - had no health insurance coverage. And a significant proportion of even the 84% with insurance were under-insured.Many of these people weren't poor - at least according to developing country standards. Some of them were people between jobs who didn't have insurance simply because they were earlier covered by their employers. Given the increasing cost of medical treatment in the US, it made sound economic sense to seek treatment abroad. If cosmetic surgery and costs were the factors driving the Americans to travel abroad, the second major group - the British - were being forced to seek medical treatment in other countries by the sheer waiting lists caused by the National Health Service (NHS). Unlike in the US, the British healthcare system ensures free treatment to all its citizens. The only problem is that the NHS, which was set up in 1948, is struggling to cope because of a shortage of both doctors and hospital beds. (Private medical facilities are available in the UK, but they are prohibitively expensive and also relatively fewer in number.) In 2001, more than 1 million British citizens were waiting for inpatient treatment and half-a-million for outpatient treatment according to a study by the Vienna University of Economics and Business Administration. At least 40% of the people requiring inpatient care needed to wait over three months for their turn to come. Hip replacement and eyecare had the longest waiting periods.The situation is so bad that in 2002, the NHS started a pilot scheme 'overseas treatment' to see if surgery services abroad could be bought to shorten the waiting lists. The project focussed mainly on facilities available in the European Union - in countries like Austria and Germany. Meanwhile, many thousands of British patients take the initiative to seek their own treatment abroad without waiting for the NHS to sort out its problems.
The third big group of medical travellers comes from the Middle East. These are citizens of the oil rich nations flying abroad to seek medical facilities that are either unavailable or in short supply in their own countries. An agency in Saudi Arabia estimated that every year, more than 500,000 people from the Middle East travel seeking medical treatment for everything from open heart surgery to infertility treatments. They travel everywhere - to Jordan, Saudi Arabia and Bahrain; to the US; to India, Thailand and Malaysia. By some estimates, India itself attracted 70,000-plus medical travellers from the Middle East last year.Finally, the last group of medical travellers form a motley lot. They are from the least developed countries and countries with generally poor medical infrastructure, who usually seek treatment facilities at some neighbouring country with better infrastructure. Last year, it was estimated that at least 50,000 people from Bangladesh and Nepal came for medical treatment to India. A significant majority of the 126,000 medical travellers to Jordan came from neighbours with poor medical infrastructure facilities.
Tapping The Big MarketA $40-billion-plus market growing at over 20% a year throws up huge opportunities for anyone smart enough to tap into it. The SSDS, Inc. study for the WHO pointed out that business opportunities covered a big spectrum - from retirement homes and spas, to cosmetic and dental surgery, to critical but non-emergency surgery needs like hip replacements, organ transplants, angioplasty and vision correction. Other studies show even alternative healthcare could be a significant niche opportunity.In the initial years, most countries that tapped into the medical destination opportunity essentially focussed either on spas or on the 'vanity' and the 'exotic' surgery requirements. In South Africa a number of outfits (travel agents with hospital connections) sprang up to tap into the market for facelifts, tummy tucks and cosmetic dental surgery. Thailand initially had a somewhat dubious reputation as an excellent country to go to for sex change operations. India's primary claim to fame was its ayurvedic treatment centres. "Beauty, youth and wellness is a huge area for growth and we need to promote it aggressively," says Apollo's Reddy.Over the past few years, though, many countries have realised that an equally big opportunity lies in promoting the more conventional treatments. Some of this, of course, was always happening in the background - like people from Mauritius, Bangladesh and the Gulf coming to India for conventional surgeries and people from Japan flying to Singapore, Malaysia or Thailand for similar reasons. Only now, the nations have started pitching themselves as world-class but inexpensive destinations for almost all health requirements.
They might be getting some unexpected help soon - from insurance giants. Healthcare insurers in the developed countries are not blind to the fact that the option of medical treatment in countries like Thailand and Malaysia could help them reduce premiums and offer options to people who are currently uninsured. Over the next few years, insurance firms are expected to provide a fillip to the medical travel business.Most insurance companies in the US and the UK have already accredited hospitals worldover where Western visitors can seek emergency medical treatment. Now a few hospitals in Thailand are going a step further - they are getting themselves accredited by the Joint Commission Accreditation of Healthcare Organizations (JCAHO). A full accreditation from this organisation allows a hospital to pitch for the insurance traffic too. Travelling has never been so healthy before.
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