No Other Choice: Why Medical Tourism Continues to Thrive: President of the United States Barack Obama recently urged Americans to seek medical treatment at domestic health care facilities, rather than traveling overseas. In India, where so-called "medical tourism" (known internationally as the global health care delivery system) is a booming industry, his statements have created quite a stir. In this opinion piece, Ravi Aron, a professor at Johns Hopkins University and a senior fellow at the Mack Center for Technological Innovation at the University of Pennsylvania, argues that people can't take advantage of something that doesn't exist. Until affordable universal care is a reality in the U.S., Aron says, Americans will continue to travel abroad for health care services.President Barack Obama has asked Americans not go to India and Mexico for medical treatment. There are reasons why these appeals will have no impact on global health care delivery. Patients do not travel to India for health care services because they have a choice and they choose to go to India. They travel to India because they have no choice. They are either uninsured or grossly under insured and they cannot afford the cost of care in the U.S.
If a consumer exercises choice -- among comparable options -- then he or she can be asked to buy American. But the choice that these consumers of global health care services face is between care delivered overseas (Mexico, India or elsewhere) and no care at all. So asking them to stay in the U.S. is pointless. Until affordable universal care is a reality in the U.S. they will continue to travel abroad for health care services. This is not a discretionary spending that they can postpone or redirect.
Characteristics for Success
The globalization of health care services is inevitable in this environment. What are the characteristics needed for the industry to flourish? Look at it at the level of the multi-specialty hospital. The hospital needs to address the patients' sense of risk. If somebody in frail health is going to fly 12 hours to reach a point on the other side of the globe to get a bypass surgery or a hip replacement done in a country that they know very little about and one with a strange culture, they experience anxiety that stems from risk. Most of us weigh the choice of a vacation destination carefully; these people are literally entrusting their lives and well-being to a hospital and doctors that they do not know. So this is a decision that is characterized by a great deal of risk. Hospitals like Bumrungrad in Thailand go out of the way to address this risk. There are four levels at which they do this:
The Four Levels of Addressing Risk
The physical environment: The hospital lobby and the building feel like an excelsior hotel in a first world country. They go out of the way to showcase the sense of order and calm that prevails everywhere. The western patient would instantly feel at home with the Starbucks Café and Wi-Fi-enabled waiting lounges. The hospital and its lobby, lounges and wards gleam in their antiseptic cleanliness.
Process discipline: Bumrungrad hospital is pretty close to what we call a 360-degree automated hospital. From the point the patient has been admitted (from his overseas location) till discharge, all processes are centrally linked to the patient's records and care delivery, and support services are delivered and monitored at the level of each patient. They have extraordinary efficiency in the way they support clinical care with other services -- travel, hospitality (accommodation), transport within the city, billing and post-procedure follow-up.
Excellence in clinical care: Many of their doctors are board certified in the U.S. and in Thailand and Bumrungrad was the first hospital to get the JCI [Joint Commission International] accreditation in the region. On most parameters of medical care -- these statistics are available at the hospital site -- they compare more than favorably with the median hospital in U.S. and the E.U. (They were in the 90th percentile in patient satisfaction scores compared to similar hospitals in the U.S. and Europe).Strategic use of IT: They use IT both to offer fine-grained information about the hospital, treatments and procedures at the hospital, and physician background to overseas patients, as well as information as a tool for monitoring and delivering clinical outcomes.
In terms of clinical information, they have been able to automate three crucial elements of clinical information flow: (i) Physician-level information from multiple physicians attending on the same patient; (ii) Information from clinical sources pertaining to a patient (tests, labs, nurses and clinical support services); and (iii) patient case history. This, in turn, has allowed them to implement a variety of innovations in care delivery that minimize medical errors, infection rates, etc. It also allows them to monitor patients and their progress in fine-grained detail. (Automating these three kinds of clinical information flows is very critical not only to deliver higher quality of care, but also to create "patient information portals" where the patient can constantly access his or her EHR (electronic health record) after the procedure from his or her country of origin, as well as schedule repeat check-up visits. Automating these three kinds of information flows is one of the reasons that Bumrungrad is referred to by some as the "gold standard" in global health care delivery).
First World Skills in Emerging Regions
So why is all of the above important? These are first-world institutions of skill and service excellence located in developing regions. The developing region economics makes these regions attractive from a cost (price) standpoint to overseas consumers. The first world skills and service excellence makes them attractive from the standpoint of actual care delivered to patients. For the paying patient, it is important to signal that the hospital is an island of calm and order founded on a reliable first world infrastructure and where care delivery is monitored with great precision and discipline. The patient needs to feel that this hospital has been insulated from its environment.
India is not lacking in clinical skill (quality of physicians). Traditionally, Indian hospitals were seen as weak in post-procedural care delivery (sometimes referred to as "post operative care"). But that, too, is changing. Some hospitals are beginning to get their acts together on post-procedural care in terms of significantly lowering medical errors and hospital infections, and improving nurse and support clinician hygiene standards. There is still much that can be done in this regard.
An area that is often overlooked by the Indian care delivery establishment is that of support services: travel, logistical support, accommodation and hospitality, transport within the destination city, billing, etc. Overseas patients are probably comfortable with the quality of Indian physicians; they are more concerned with clinical post-procedural care, support services and the infrastructure.
Medical services in India are where the IT-enabled services and the business process outsourcing (BPO) industries found themselves in the mid 1990s -- the challenge is to convince the customers that these hospitals are islands of excellence that have been insulated from the frailties of India, even as they draw upon its strengths. These services are not branded as "made in India" as much as "made in spite of India."
The Advantages of India
The one advantage the country has is that a doctor in India -- especially a surgeon -- would have acquired in 10 years' time more experience -- both in terms of scale of procedures done and the exposure to varying levels of complexity -- than what a surgeon in the U.S. would get in, say, 30 years of practice. So a doctor with about 15 years experience will probably be unrivalled in the scope and scale of his exposure.
In the well-run hospitals and multi-specialty centers, they have deep reservoirs of capability to treat patients who come in for a procedure with comorbidities [the presence of one or more disorders in addition to a primary ailment]. Not only can they perform the procedure, but they can also deliver related chronic care where necessary (procedure plus care for cardiovascular disease, diabetes, etc). Specialists are readily available to deliver care for comorbidities from a single location.
Almost all these institutions are private hospitals that cater to the needs of India's wealthy, powerful (Anglophone) elites. They are used to delivering services to a demanding clientele. This serves them well with overseas customers. A large number of physicians in the U.S. and the U.K. and in some Gulf countries are of Indian origin. So, overseas patients do not have the problem of entrusting themselves to Indian doctors.
The doctors of Indian origin can also serve as a distribution channel of sorts to hospitals in India. These institutions can tie up with these doctors to deliver some measures of post-procedure diagnostic care and ongoing care in the countries of origin of the patients.
The Low Cost Is a Given
The other advantage is, of course, cost. But there is no need to stress the difference in costs. The patient is usually acutely aware of the difference in the sticker price for care. The multiples range from eight to one to three to one, even after factoring in travel and other non-clinical costs. There is no reason to draw attention to this. It is far better to highlight capabilities and excellence for two reasons. First and less important, is that this will translate into "capabilities and excellence at an affordable cost" in the patient's mind. Second, and more important, the patient is worried about capabilities and support care and the risk of entrusting his life and well-being to a strange system far away from his home. So it is vital to address those concerns rather than emphasize "cheap." The patient is all too aware of the cost difference anyway.
Finally, the use of web-based channels to inform potential patients is key to running an efficient marketing operation. Hospitals should be able to offer information about JCI certification, physicians' experience and qualifications, the depth of their capabilities in performing specific medical procedures (coronary bypass, hip replacements, etc.) and give patients an accurate estimate of the costs.
Bumrungrad's use of electronic channels is a case in point in effective marketing. The hospital has developed a cost simulation where the patient can key in details of his or her condition and the simulation gives a clear estimate of the cost frontier that he or she will face: it gives the patient a distribution of costs that similar patients in the past faced -- including an average, a high percentile and a low percentile number -- allowing the patient to form his or her own estimate of the costs of care. This electronic estimate is based on actual costs of past patients and it is constantly updated from the hospital's database. Bumrungrad is able to do this because every element of the final cost the patient pays is itemized and categorized in the final invoice. This is yet another example of their strategic use of IT to both serve the customer and market their services effectively.
In the past, U.S. President Barack Obama has singled out India for what he sees as the country usurping American jobs and business. In May 2009, he removed some tax incentives for U.S. companies who allegedly preferred to outsource rather than create domestic jobs. "Buffalo before Bangalore" was his rallying call at the time. Now, India is back in his crosshairs. In April 2011, he told a town hall gathering in Virginia that Americans shouldn’t have to go to India or Mexico for “cheap” health care. "I would like you to get it right here in the U.S.," he said.
"It’s a 100% political statement," Gopal Dabade, convener of the All India Drug Action Network, told weekly newsmagazine India Today. Others in India were equally critical and dismissive. But some have taken more serious objection. "Not acceptable," says federal health minister Ghulam Nabi Azad. Affordable health care does not mean our medicine is inferior to any superpower’s. I would like to say our medicines are indigenous, they are superior, and superiority does not come by escalating costs."
The bone of contention is the word "cheap." Obama probably used the term in the sense of less expensive. But Indians have interpreted it as meaning "tawdry and inferior." Analysts don’t expect Obama’s political posturing to make any difference to the flow of U.S. medical tourists into India. But there is a lurking fear, nevertheless, that a nascent sector could be hamstrung at birth.
There Is No Choice
"Patients do not travel to India for health care services because they have a choice and they choose to go to India," says Ravi Aron, professor at the Johns Hopkins Carey Business School and a senior fellow at The Mack Center for Technological Innovation at Wharton. "They travel to India because they have no choice." Adds Rana Mehta, executive director, PricewaterhouseCoopers (PwC) India: "If patients see value in what India has to offer, they will continue to come."
Indians feel aggrieved that they have been singled out. In medical tourism, the country is still a bit player. According to a report by the Delhi-based RNCOS, which specializes in Industry intelligence and creative solutions for contemporary business segments, India’s share in the global medical tourism industry will reach around 3% by the end of 2013. The December 2010 report -- titled "Booming Medical Tourism in India" – says that the industry should generate revenues of around US$3 billion by 2013. "The Indian medical tourism industry is currently in its early growth stage," says RNCOS chief executive Shushmul Maheshwari.
Guess who’s the biggest beneficiary of medical tourism? It’s the U.S. "The largest segment, with 40% of all medical travelers, seeks the world’s most advanced technologies," says a McKinsey & Co paper titled "Mapping the market for medical travel." "These men and women take their search for high-quality medical care global, giving little attention to the proximity of potential destinations or the cost of care. Most such patients travel to the U.S." What worries the Indian industry is that this is not the first attack on Indian medical tourism. In August last year, leading medical journal The Lancet had published an article about a new superbug which it called the New Delhi metallo-beta-lactamase 1 (NDM-1). "The potential of NDM-1 to be a worldwide public health problem is great, and coordinated international surveillance is needed," said the article. Later, a co-author noted that some material had been inserted into the article without his knowledge; the editor of The Lancet had to apologize for naming the bug after New Delhi, and the Indian ministry of health had to weigh in. "The conclusions are loaded with the inference that these resistance genes/organism possibly originated in India and it may not be safe for U.K. patients to opt for surgery in India," said the ministry. "The medical journal's claim is not supported by any scientific data and thus tarnishes the reputation of the country." Rightly or wrongly, the government and many in India’s medical establishment believe that naming the superbug New Delhi was to keep U.K. medical tourists at home. "The superbug certainly garnered a lot of media attention given its name," says Preetha Reddy, managing director of Apollo Hospitals.
It won’t keep medical tourists at home, just as Obama’s appeal is likely to be ignored. "People will always weigh the cost and the benefit," says Reuben Abraham. "If there is a 10% saving and there is a danger of the superbug then chances are that people will not want to take it. But if you are offering an 80% discount, it is a different matter. If India continues to offer high quality health care at one-tenth the cost in the U.S. then these things will not make an impact."
The Next Big Thing
If all this is going to have limited impact, why is India getting so agitated? The answer lies in the potential of medical tourism. It could easily be the next big thing. Unlike business process outsourcing (BPO), which is on the whole very low-tech, health care -- particularly sophisticated procedures -- is very high-tech. India has not been able to set up an adequate health care infrastructure for its own citizens and it doesn’t have the money to do so. Creation of a sophisticated medical tourism structure will have a trickle-down effect.
"India has the highest potential in medical tourism in the world," says Maheshwari of RNCOS. "Factors such as low cost, scale and range of treatments differentiate it from other medical tourism destinations. Moreover, growth in India’s medical tourism market will be a boon for several associated industries, including the hospital industry, the medical equipment industry, and the pharmaceutical industry."His study shows that CAGR (compound annual growth rates) in revenue in 2011-13 will be 26%. In terms of medical tourists, the number would touch 1.3 million by 2013 at a CAGR of 19%. "Medical tourism can be considered one of the rapidly growing industries in the Indian economy on the back of various factors," he says. "However, the industry is at a nascent stage and requires a few years to reach the platform already established by the IT sector." "India has been ranked among the top five destinations for medical tourism," says Rana Kapoor, founder, managing director and CEO of Yes Bank, which has recently done a study on health and wellness tourism in India along with apex chamber of commerce FICCI.
The ranking by Nuwire Investors, an online source for news on alternative investments, puts Panama on top, followed by Brazil, Malaysia and Costa Rica. "India is looking at exponential growth as far as tourism is concerned," continues Kapoor. "Yes Bank forecasts that there will be an increase in domestic tourist movements over the period (2008-2020) by 118% and foreign tourist inflows over the same period will increase by 71.87%. What the potential for medical tourism from within this growth rate of 71.87% will be depends upon government policies, faith of the patients and many other external factors. We truly believe that this sector will play a significant role as a contributor towards the overall tourism growth in India."
"I strongly believe that many developments across the world will put India in a fantastic position," says Devi Shetty, cardiac surgeon and chairman of Narayana Hrudayalaya. "We produce the largest number of doctors, nurses and medical technicians in the world. Also, we have been traditionally linked with western health care because of the British influence on our medical education and the ability to speak English. This is extremely important for developing [global] health care. Our greatest asset is our ability to produce the largest number of technically-skilled individuals. We also have the largest number of USFDA (U.S. Food and Drugs Administration)-approved drug manufacturing units outside the U.S."
Differences over Terminology
Shetty doesn’t like the term medical tourism. "Medical care is something that is very stressful and people consider this under tremendous pressure," he says. "It is an event where people are scared of losing their lives. It may not be appropriate to call it tourism. Tourism is a different business altogether." Adds Mehta of PwC: "The tourism component is really very weak. Most foreign patients come to India for chronic and serious medical treatment and I would call it medical value travel." Aron of Johns Hopkins has yet another view. "The world over it is known as the global health care delivery system," he says. Reddy of Apollo agrees with Mehta. Says she: "At Apollo Hospitals, we prefer to term this business opportunity as ‘medical value travel’ as people travel to our hospitals for serious life threatening health conditions, which essentially need highly skilled doctors and medical infrastructure and not mere minor treatments like cosmetic enhancements, dental work or wellness which can be coupled with holidays, as the term ‘medical tourism’ implies."
The multiplicity of names is accompanied by a wide range of numbers. The confusion was started by the McKinsey study on Mapping the Market mentioned earlier. The May 2008 report said that "medical travel has captured the world’s attention and imagination". But it went on to explain that the McKinsey definition of medical traveler was very different from what many others thought him to be. The first to be knocked off were expats looking for health care in their country of stay. That accounted for 25-30% of the traditional medical tourist pool.
Then was the segment categorized under emergencies. These were ordinary tourists caught up in accidents. That eliminated another 30-35%. McKinsey estimated the remaining at "between 60,000 and 85,000 inpatients a year", much lower than generally accepted numbers. For instance, a 2008 Deloitte Center for Health Solutions report on "Medical Tourism: Consumers in Search of Value" put the number of Americans who had traveled abroad for medical care in 2007 at 750,000. McKinsey excludes "wellness" tourists (acupuncture, spas, yoga, aromatherapy and the like), patients from neighboring countries, and outpatients -- those who don’t need to check into hospital.
The Deloitte report says that India is stepping on the gas; the medical tourism sector is expected to grow 30% annually up to 2015. An update on the report says that the U.S. recession is driving more people out of the country for health care; U.S. outbound medical tourism is projected to increase 35% annually from 2010-2012. "Medical tourism [today] represents the maturation of a cottage industry," the report sums up.
Maheshwari of RNCOS agrees that economic problems are driving more Americans abroad for health care. "Under almost stagnant salary increments, the disposable income and saving considerations of U.S. citizens are still well below the pre-crisis levels," he says. "In this scenario, the low cost treatment and nearly zero waiting time coupled with its proven track record offer convenient procedures for tourist arrivals from various geographical locations including the U.S."
"Over the past few years, the medical tourism story has changed dramatically in India," says a recent Cover Story in weekly business magazine BusinessWorld. (That it made it to the Cover is a reflection of the growing importance of the sector.) "Not because the government has figured out the solution. But purely because of private enterprise -- with a few corporate hospitals, chemists and freelance agents all working in tandem to build a thriving ecosystem that educates, facilitates and ferries medical tourists from across the world. Last year, this ecosystem was responsible for about 600,000 patients travelling to India and spending US$1 billion in getting treated here. (The numbers are industry estimates as the government does not have any official statistics on the subject.) Corporate hospitals such as Apollo, Fortis Hospital and Max as well as business associations estimate that the business is growing by 40% year-on-year." (Obviously, the growth numbers vary depending on who you talk to.)
Other Markets Will Turn to India
"India’s potential is huge," says Mehta of PwC. "Some 80% of foreign patients coming to India are from the neighboring countries and from Iraq, Afghanistan, the former Soviet Union, etc and now increasingly from Africa. But now with India proving itself as a credible provider of value health care, the western population ageing, and health care becoming more difficult there, I expect more people to come from the U.S. and the U.K."
Mehta says that some things went wrong with the earlier planning. "We expected most patients to come from the U.S. and Europe. We expected people to come for cosmetic and regenerative treatment and this is where there is more potential for tourism. But the majority actually came for cardiac treatment, cancer treatment, knee replacement and other serious ailments. Therefore, tourism was not really of importance. We did not get the cost factor right. We thought that typically in India it costs one-tenth of that in the U.S., so we could cost at 5X. But hospitals have not been able to charge very much. At present, with a foreign patient, there is around 20% more earning."
Cost is, of course, being underplayed in the marketing efforts; this is why the word "cheap" rankles. "The patient is usually acutely aware of the difference in the sticker price for care," says Aron. "There is no reason to draw attention to this.”That’s an area where India enjoys an advantage over other countries too. According to the BusinessWorld report, a heart bypass surgery costs US$144,000 in the U.S., US$25,000 in Costa Rice, US$24,000 in Thailand, US$20,000 in Mexico, US$13,500 in Singapore, and US$8,500 in India. "The quality is excellent," says Maheshwari. In India, there is also less waiting time and personalized services.
Becoming an Industry
Medical tourism is also taking shape as an industry, though there are some who feel that it will eventually fall in many buckets. (The recent FICCI-Yes Bank study talks of wellness tourism, health tourism...) "There are over 3,371 hospitals and around 750,000 registered medical practitioners," says Maheshwari.
Shetty says it is easier to get loans these days. "Earlier, it was difficult for us to mobilize huge financial support to create large hospitals. However, things have changed now," he explains. Indian companies are also taking over hospital chains in Asia -- Fortis has gone on a shopping spree, though it’s not been entirely successful -- and setting up front-ends in other countries for marketing purposes. Apollo has facilitation centers in Oman, Nigeria and the U.S. Max is present in Nigeria, Afghanistan, Bangladesh and Nepal. Says Reddy of Apollo: "There are several key players. Apollo Hospitals continues to attract the largest numbers of international patients followed by Max, Fortis and Workhardt."
"Another opportunity that Indian operators are now seeing is that you don’t have to offer these health care services from India," says Abraham of ISB. "For instance you can offer it from say, Cayman Islands or the Bahamas. Ultimately, the innovation is in the process and as long as you can bring the same process innovation, even if the cost goes up a little as compared to offering it from India, it will still be a substantial saving for the patient."
This is one area where China is no threat. Foreigners in China still rush to Hong Kong when they need treatment because they cannot communicate with local doctors.
But what the budding sector will have to contend with is the Indian government. Take one example. With the intention of making things smoother, the government introduced a medical visa (M visa), which was faster and easier to get. In its wisdom, however, it added a peculiar clause -- "Foreigners coming on M visa will be required to get themselves registered mandatorily well within the period of 14 days of arrival with the concerned Foreigners Regional Registration Office." The end result: even patients who have to be carried into India on stretchers are coming on tourist visas. If the government wants medical tourism to be the next big thing, it has to put its house in order.
As for the immediate controversies, Shetty is very clear. "President Obama’s statement or the New Delhi superbug will not affect medical tourism development in India," he says. "First of all, he was not criticizing India. He was just trying to put his house in order."
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