Globalization Meets Healthcare: Medical Tourism Boom Forthcoming

Globalization Meets Healthcare: Medical Tourism Boom Forthcoming

Thirty-five years ago, 75% of the world’s middle class was based in the developed world, with only one out of every four consumers living in the emerging markets. Within the next ten years, the percentages will flip: by 2025, 75% of a rapidly growing global middle class will be in the emerging markets. The world is on the verge of a global consumption boom that will affect everything from agriculture to education to energy and air travel.

The expanded availability and rising affordability of international air travel has combined with increased accessibility of online information about medical services to create a rapidly growing market for medical tourism. And while the world’s wealthy have for decades been traveling to the developed world for healthcare services, the global middle class has proven more willing to go elsewhere.

Healthcare is colliding with globalization, generating enormous shifts in the geography of medical service delivery.

Top destinations for medical travelers are no longer only in the Western world. According to Patients Without Borders (click HERE), the most frequent destinations for medical travelers were Thailand (1.2 million patients), the US (>600,000), Mexico (between 200,000 and 1 million), Singapore and Malaysia (each > 500,000), India (> 250,000), and Brazil (~180,000) in 2013 (click HERE).

This booming market is driven by consumers seeking quality care at reasonable costs. Although the market initially focused on cosmetic surgeries, it has expanded to include dentistry as well as cardiovascular, bariatric, organ transplant, eye, orthopedic, fertility, and cancer-related procedures (click HERE).

Cost savings for patients (after incorporating travel costs) can range between 30%-90% depending upon the procedure and destination. Consider that heart surgery that would cost $286,000 in Houston would cost $26,000 in Colombia (click HERE); or that a knee replacement costing $48,000 in the United States would cost ~$10,000 in Thailand (click HERE).

Several innovative and forward-looking healthcare companies explicitly target medical tourists. Bumrungrad International Hospital in Thailand currently serves 520,000 patients a year from over 190 countries with more than 900 physicians covering more than 50 specialties (click HERE). Apollo Hospitals in India notes that it has treated over 42 million people from 120 countries over the past 30 years via its global footprint of hospitals (click HERE). And Parkway Hospitals in Singapore has more than 1200 accredited specialists on staff to treat the hundreds of thousands of patients it receives from nearby Indonesia (click HERE). Within the United States, the Mayo Clinic and Cleveland Clinic both receive thousands of international patients per year.

So what? First, medical tourism is big business! The market for treating traveling patients is enormous and growing quickly. It is estimated to generate ~$55 billion this year (click HERE) and is growing between 15%-25% per year (click HERE).   The booming middle class will likely sustain strong growth for the foreseeable future.

Secondly, as cost-pressures continue unabated within developed markets like the United States, medical tourism growth seems poised to accelerate. American health insurance companies such as Anthem and Blue Cross Blue Shield already have pilot programs sending US patients to Apollo Hospitals in India and Bumrungrad International Hospital in Thailand (click HERE). It’s easy to imagine these programs expanding.

Traveling great distances for medical treatment goes back to ancient times. The Sumerians (~4000 BC) constructed healthcare facilities around hot springs, and hill tribes in St. Moritz noted the therapeutic benefits of drinking and bathing in iron-rich mineral springs during the Bronze Age (click HERE). Later, the Greeks began the first network facilities catering to the needs of medical tourists with a network of Asclepia Temples that catered to the healthcare needs of those from near and far (click HERE). Ancient India also catered to the healthcare needs of those from afar, with Ayurvedic medicine and yoga-based healing at various locations around the country (click HERE).

What’s different this time is the scale of the phenomenon. There are literally billions of middle class consumers that have the ability to travel and the access to information to evaluate global medical options. And the world is aging, further pressuring the demand for healthcare. Consider the following chart from The Economist:

The double whammy of a larger consumer class and an older world is likely to drive a global healthcare boom unlike any the world has previously seen…and while the timing and pace of this boom are ambiguous, one thing is certain: humans are happy to spend whatever they must in their never-ending quest to extend life.

Originally posted June 17, 2015 on my website:
http://www.mansharamani.com/so-what/globalization-meets-healthcare-medical-tourism-boom-forthcoming/

Vikram Mansharamani is a Lecturer at Yale University in the Program on Ethics, Politics, & Economics and a Senior Fellow at the Mossavar-Rahmani Center for Business and Government at the Harvard Kennedy School. Visit his website for more information or to subscribe to his mailing list. He can also be followed on Twitter.