Medical tourism — the practice of consumers traveling outside their home countries for healthcare — is moving from the medical fringes to mainstream status as a sophisticated, globally accepted approach to care.
Although projections for its growth have been sharply reduced in recent years due to the global economic slowdown, more accurate tallying, and a better recognition of the structural barriers, medical tourism’s financial proposition is so compelling that payors, providers, and governments are working actively to overcome the hurdles to its growth.
Formal oversight, quality standards, and better patient outcomes are in the offing, and a handful of insurers are experimenting with covering medical travel.
Medical tourists are motivated by the deficiencies in their particular country’s healthcare system. For patients from World 2, this typically means traveling to World 1 for higher-quality treatment. Patients from countries with overburdened public health systems that entail long waits, such as the UK, are seeking faster treatment, while patients from the US overwhelmingly want lower-cost — or, in a few cases, experimental — treatments in World 2.
While estimates of medical tourism’s global market size vary significantly, due both to varying definitions of the practice and to the lack of standardized data, the Deloitte Center for Health Solutions pegs the world market at approximately $100 billion in 2010, with more than 35 countries serving at least 1 million medical tourists annually.
In a separate study, Deloitte concluded that 540,000 patients from the US alone traveled abroad for care in 2008 — a drop of nearly one-third from 2007, which it attributed to the recession. Deloitte anticipates growth in the sector to recover in 2010 and reach about 35% per year, with at least 1.6 million Americans going overseas for medical care in 2012. Inbound medical tourism to the US is projected to grow comparatively slowly: from an estimated 400,000 travelers in 2008 to some 560,000 travelers by 2017.
3 KEY FINDINGS
- Medical tourism’s prospects may be less rosy than when estimates of its growth first began to emerge, but the sector should see strong growth as the global economy recovers.
- Although medical tourism faces significant structural barriers, payors’ and consumers’ desire for cost savings will override these hurdles. The sector is maturing rapidly, with a trend toward global standards, oversight, insurance, and better value for consumers.
- Many World 2 nations are developing world-class healthcare capacities to attract medical tourists.
Barriers to medical tourism’s growth are significant. Although eventually they are likely to be overridden by the benefits, in the short term they will pose significant challenges to providers, payors, and consumers.
- Economic downturn — Economic decline and job losses have left more consumers postponing all types of non- urgent medical care. The number of physician visits in the US declined by nearly 70,000 per month from 2006 to 2008, for instance.30 Deloitte estimates that medical tourism’s growth slowed about 14% from 2007 to 2009.31 The downturn has also driven up the cost of airfare, making it harder for patients to afford out-of- pocket air travel.
- Lack of insurance — Most World 1 insurers are still loath to pay for procedures abroad, due to the difficulty of monitoring quality at remote facilities and lack of clarity around malpractice jurisdiction. As noted above, pilot programs that reimburse for medical travel may soon allow more accurate evaluation of the risks and benefits.
- Lack of standards — Although international accreditation is spreading, only a small proportion of facilities have such accreditation, forcing consumers to rely on the highly inconsistent quality measures used by healthcare systems around the world.
3 BUSINESS IMPLICATIONS
1. Although current levels of medical tourism are fairly small, the potential for growth is clearly significant. Companies with either direct or secondary exposure to the healthcare market or health consumers should consider this emerging sector as a target for product, service, or facilities design; marketing; and perhaps direct investment.
2. Payors in World 1 have significant financial incentives to encourage medical tourism — but also considerable structural barriers, as noted above. Paying for elective procedures to be handled offshore could yield major cost savings but also create serious issues around quality control and malpractice exposure. An industry- wide effort to address these issues, for instance by lobbying regulators or provider associations for uniform standards, could help de-risk medical tourism and provide substantial financial upsides for payors.
3. Small and mid-size enterprises (SMEs) may find medical travel especially appealing as a way to offer high-quality yet affordable care to their smaller employee pools. SMEs could prove to be a wedge market for formalizing and insuring medical tourism.