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| Medical Tourism: Global Competition in Health Care |
| The Emerging Market for Medical Tourism |
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Medical tourism is growing and diversifying. Estimates vary, but McKinsey & Company and the Confederation of Indian Industry put gross medical tourism revenues at more than $40 billion worldwide in 2004.1 Others estimate the worldwide revenue at about $60 billion in 2006.2 McKinsey & Company projects the total will rise to $100 billion by 2012.3 [See Figure I.] “Medical tourists are seeking high quality medical care at affordable prices.”
Reports on the number of patients traveling abroad for health care over the past few years are scattered, but all tell the same story. In 2005:
The foreign patients treated in these countries included some of the 500,000 Americans who traveled abroad for medical treatment that year.9 Residents of countries with national health insurance, including Canada and the United Kingdom, often travel to other countries, including the United States, because they lack timely access to elective procedures due to rationing. In Canada, physicians cannot privately treat their fellow Canadians if those treatments are covered by the government health plan (Medicare). Also, national health systems sometimes deny treatment to particular patients (for example, because of age or physical condition), and some treatments may not be available to any patients (for example, because of cost).10 However, for most medical tourists, including those from the United States, the reason for travel is financial. The effect of financial incentives on Americans’ willingness to travel for medical care is shown by a recent nationwide survey.
“Medical tourists include residents of countries with national health insurance, where heath care is rationed.” Some American medical tourists are seeking lower prices for treatments not covered by insurance (such as cosmetic surgery and weight loss surgery). Uninsured patients paying the cost out of their own pocket travel because American hospitals often charge cash-paying, uninsured individuals inflated “list” prices, which can be much higher than government or private insurers have to pay.12 Also, a small but growing number of insurers are creating health plans that encourage enrollees to shop for better prices among approved vendors in other countries and allow them to share in the savings. There are also potential savings for insured patients who bear some of the cost through copayments and deductibles. For example, if a procedure cost $4,000 less in another country, a patient required to pay 20 percent of the cost (through a copayment) would save $800 out of pocket. Where Do Patients Seek Treatment? Most American medical tourists seek treatment in Mexico and other Latin American countries. Clinics in Brazil and Argentina have offered low-cost cosmetic surgery for years.13 India and Thailand are now promoting their high-tech facilities for more serious procedures, including hip and knee replacements and cardiac surgery.14 Other destinations include Singapore, Belgium and South Africa.15 Many Northern and Western Europeans travel to Central and Eastern Europe for low-cost medical and dental services.16 [See the sidebar, “Medical Tourism Destinations.”] Cross-Border Medical Tourism. It may be impractical for sick Americans to travel to faraway places like India and Thailand for major surgery. But many types of medical services are available nearby — in Mexico and elsewhere in Latin America. “Most American medical tourists seek treatment in Mexico and other Latin American countries.” Mexico. Mexican physicians have a thriving business treating American (and Canadian) retirees searching for of low-cost drugs, dental care and physician services.17 Prices in Mexico are about 40 percent lower than in the United States. Cash-paying, uninsured Americans can find better deals on procedures in Mexico, including price quotes and package prices, which most American hospitals do not offer.18 Indeed, some Arizona retirement communities have regular bus tours to take residents across the Mexican border for prescription drugs and dental care.19 Some health plans in Southern California offer lower premiums and copayments to patients who use network providers across the border in Tijuana.20 Facilities are being built in Mexican border towns to take advantage of these plans.21 Dallas-based International Hospital Corp. operates four Mexican hospitals, three close to the U.S. border and one near Mexico City (it has other facilities in Brazil and Costa Rica).22 A Mexican partnership called Christus Muguerza is building and operating hospitals in Mexico that meet American standards. It has identified 40 communities along the U.S.-Mexican border where it intends to build facilities.23 Some 40,000 to 80,000 American seniors live in Mexico. In addition to health care at lower prices (Medicare does not cover care outside the United States), a number of them receive nursing home care at bargain prices. In most areas of the United States, the cost of nursing home care can easily surpass $60,000 per year. But in Mexico, high quality long-term care costs only about one-fourth as much. For about $1,300 per month, a senior can get a studio apartment that includes laundry service, cleaning, meal preparation and access to around-the-clock nursing care.24 Medical Tourism DestinationsCost and quality are obviously the most important factors patients consider in choosing specific destinations for treatment. But many patients also consider amenities commonly found in resorts and hotels. India. Despite the long travel time involved, India is a popular destination for medical tourists. It arguably has the lowest cost and highest quality of all medical tourism destinations, and English is widely spoken. Several hospitals are accredited by the Joint Commission International (JCI) and staffed by highly trained physicians. Prices can be obtained in advance, and many hospitals bundle services into a package deal that includes the medical procedure and the cost of treating any complications.1 Hotel accommodations are extra, but hospitals often have hotel rooms or can offer discounts for hotels nearby. Thailand. This popular destination for medical tourists rivals India in price and quality. Thailand’s large tourist industry is one reason it has a better infrastructure and less noticeable poverty than India.2 Prices are typically not as low as in India, and Thai hospitals do not offer fixed pricing. However, food and lodging during recuperation will likely be less expensive than in India due to Thailand’s competitive tourism industry.3 Bangkok’s Bumrungrad International Hospital is a world-class private health care facility built for wealthy Thais, but foreigners comprise more than one-third of its patients. Singapore. English is also widely spoken in this former British colony, located approximately 1,000 miles south of Bangkok. Singapore has modern, high-quality hospitals and is home to three hospitals accredited by the JCI.4 Prices are higher than in Thailand or India but are much lower than in the United States. Central and South America. Mexico has been popular for some time with American patients seeking primary and dental care. But to attract cash-paying American patients for surgical services, health care systems are building hospitals and clinics with the high level of service and amenities that American patients have come to expect. For instance, Americans expect professional medical staff and upscale private rooms in clean, modern facilities. They also expect high-tech equipment that American hospitals would possess. Other Latin American countries provide services as well:
Plenitas is a Buenos Aires-based boutique clinic that arranges medical travel.8 Although Europe. Northern and Western Europeans have numerous opportunities to get lower-cost medical and dental care:
Latin America. Costa Rica and Panama are popular destinations for medical travel. Around 150,000 foreigners sought care in Costa Rica in 2006.25 This is amazing, considering that Costa Rica is a country of only about 4 million people. By contrast, in 2006 just 250,000 foreigners sought care in the United States — a country with nearly 300 million more residents.26 Panama has high quality health care, concentrated primarily in the metropolitan areas. Medical standards at Panama’s top hospitals are comparable to those in the United States. Indeed, many Panamanian physicians were trained in the United States. Hospital Punta Pacifica in Panama City, Panama, is an affiliate of U.S.-based Johns Hopkins International.27 Medical care in Panama is 40 percent to 70 percent less expensive than in the United States.28 Medical Tourism within the United States. Domestic medical travel involving patients seeking more advanced treatment facilities in other cities or states is relatively common. Specialty hospitals built to provide orthopedic and cardiac treatment attract patients from many communities. These facilities generally provide better quality care and higher patient satisfaction than general hospitals.29 Many patients travel great distances to receive care at the world-renowned Cleveland Clinic and the Mayo Clinic, two high quality health care providers. |
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Internationally-known hospitals, such as Bumrungrad in Thailand and Apollo in India, report revenue growth of about 20 percent to 25 percent annually.