- Medical tourism landscape and growth drivers
- Burgeoning growth in the sector
- Scenario in developed vs. developing economies
Medical tourism or travel mainly refer to a movement from one country/province to another for medical purposes. The concept is not new and has been around for thousands of years. There are archaeological evidence from ancient Mesopotamian civilization in 3rd BC of travel to the temple of healing god/goddess at Tell Brak (Syria) for eye disorders. Likewise, Greeks and Romans travelled by foot or boats to spas and cult centres all over the Mediterranean.
The size of the global medical tourism industry is valued at $61 billion (2016) and is estimated to reach $165 billion by 2023 at a CAGR of 15% ([2017-23], [Source: Allied Market Research]).
The market size estimates for the global medical tourism industry are complicated as various stakeholders as well as numerous indirect revenue streams exists (e.g. tourism revenue; medical tourists spend 5-10 times more than a typical vacationer owing to a longer stay. The patient or their family members engage in local tourist activities as well) that are indirectly attributable to the industry. This is further complicated by expatriates who seek medical treatment.
Medical tourism landscape for stakeholders
In the contemporary world, medical travel needs are dictated by several factors including unavailability of high-quality healthcare professionals in a home country, cost-effectiveness and affordable foreign treatment with instant availability of healthcare services with a negligible wait time; tourism and recreation opportunities, etc.
Furthermore, world medical tourism market is spearheaded by the Asia-Pacific (2016) with India (Yoga, Ayurveda and the local wellness industry setting it apart from other medical tourism destinations in the world) and Singapore emerging as popular and lucrative medical destinations. Meanwhile, Thailand accounted for a lion’s share in the region and is forecasted to witness substantial growth along with India owing to improved healthcare infrastructure and increasing awareness on these economies. Further, Europe is also slowly catching up as a preferred destination due to the inflow of a large number of medical tourists, especially in countries like the U.K., Germany, France, Italy, etc.
Reasons for a burgeoning growth of the sector:
- The medical expenses are high in the developed economies (e.g. the United States). On the contrary, technological advancements and availability of cheap labour have made these expenditures relatively cheaper in the developing economies (e.g. India, Thailand, Costa Rica, etc.) and Singapore (although medical treatment is expensive than other Asian countries, but it is still cheaper compared to other developed economies like United States/Canada) for similar state-of-the-art medical services for patients. According to the OECD (Organisation for Economic Co-operation and Development) projections, nearly 50 million medical tourists travel to the emerging economies annually.
- It is anticipated that approx. 50% of the patients who leave their home nations to receive a medical treatment believe that they can receive a better quality of medical care in a foreign country. Thus, these developing economies not only offer cost advantage, but also provide superior patient-centric and high personalized care (that is available almost immediately) to remain competitive and attract medical tourists.
- Additionally, in the past few years there has been a spike in the ‘International Joint Commission’ accredited hospitals (a non-profit organization that evaluates and accredits >15,000 healthcare organisations in the United States since 1990) in Asia-Pacific alone with over 300 hospitals meeting the standards (one of the main criteria for the US residents opting to go abroad in a chosen hospital with high quality of patient care).
Televisory examined certain hospitals in the developing economy (Thailand, ‘Thai Nakarin Hospital Public Company Limited’, ‘Chularat Hospital Public Company Limited’, ‘Bangkok Chain Hospital Public Company Limited’ and ‘Bumrungrad Hospital Public Company Limited’) and the developed economy (the United States, ‘Kindred Healthcare, Inc.’, ‘HCA Healthcare, Inc.’, ‘Universal Health Services, Inc.’, ‘LifePoint Health, Inc.’ and ‘SunLink Health Systems, Inc.’) and tried substantiating the above difference in these two distinct kind of economies.
Hence, it was seen that both the inpatient and outpatient treatments are manifold expensive in the developed economies vis-à-vis the developing economies. This is based on the above analysis of the two prominent economies in developed and developing world.
The number of patients served per point of care is much higher in developing economies and these nations also enjoy a higher occupancy rate than the developed economies. Thus, owing to a cheaper healthcare, these serve a large number of patients (both domestic and international).
Moreover, the operating expenses incurred in the developed economies are higher than those in the developing world.
The EBITDA margins are higher for developing economies as these cater to a large percentage of outpatients, which does not require substantial operating cost, in contrast, the developed countries serve a high proportion of inpatients.
Therefore, medical tourism provides an opportunity for developing countries to take advantage of the favourable international situation and invest in the creation and promotion of a competitive medical tourism landscape. At the same time, stimulate the overall growth in their economies by the inclusion of the sector in the national strategy. Medical tourism brings in additional revenue from healthcare services as well as tourism and helps in the economic development of a nation. Televisory expect that in the future, the developing economies (such as India and Thailand) and Singapore will see a substantial growth in the medical tourism. This will be in lieu of investments in infrastructure, medical technology and increasing awareness on the world-class medical facilities in these economies, provided they capitalise on medical tourism opportunities while offering globally renowned services at a fraction of the cost in the developed world.