Korea becoming a hub for medical tourism
By Tony Michell
Managing Director of Korea Associates Business Consultancy
Although it is a relatively new player, Korea is emerging as a major destination for medical tourism. Its medical technology is considered one of the best in the world in terms of quality of services and speed. And Korean medical practitioners at leading hospitals are certainly some of the best in the world. The world’s media praise Korea’s cutting-edge medical technology, quality medical personnel and services. Korea’s medical tourism has been recently rated among the best in the world for updated technical skills in the human medical and life-saving knowhow by the International Association of Medical Assistance to Travelers (IAMAT) and other organizations.
It is true that foreign visitors can enjoy their Korean tour twice as much by combining sightseeing and medical care. Korea has built up an impressive one-stop infrastructure to serve tourists. The real issue is to attract patients to Korea where the medical aspect is more important than the tourist aspect. Medical tourism is a poor description for a growing global trend ― patients seeking medical treatment in other countries than their own. When someone is worrying about cancer, tourism is the last thing on his or her mind. Here Korea has an opportunity to excel, if it markets itself properly to the global medical community. A cancer patient does not just step onto a plane for Korea ― he needs to be advised by his healthcare provider to do so.
So does medical tourism belong to the Ministry of Health and Welfare, or Culture and Tourism? In 2009, 27 percent of medical tourists discovered about Korea’s specialty in medical tourism during their general-tourist visit to Korea. Most of the obstacles to Korea’s success lie on the many desks of the Ministry of Health and Welfare. But if we look for a government body that understands tourism as an integrated function, we should look to the Ministry of Culture and Tourism.
Korea fails to attract its share of general foreign tourists. Seven million foreign tourists came to Korea in 2009. France attracted 72 million tourist arrivals in 2009. Malaysia had 23.6 million foreign tourists in the same year. So, medical tourism could be considered as one of the options to rev up the travel business. The government goal is to have 400,000 medical tourists by 2015, and one-million by 2020. What strategy can Korea adopt to succeed in the heavily contested field of medical tourism, when it is under-performing in general tourism?
About 60,000 medical tourists came to Korea in 2009 compared with seven million tourists overall. They spent $54 million during their visit, or about $900 per patient, not so very much more than a general tourist. The aim should be to find high-value added tourists who combine medical treatment with the spending associated with tourism, airline fares, hotel fees, shopping and sightseeing.
In general tourism, almost half the tourists come from Japan, followed by the Chinese although arrivals of the latter are up 37 percent already this year. Behind the Japanese and Chinese come Southeast Asians and then Americans, includes ethnic Koreans, and then Europeans. When we come to medical tourism, it is the Americans who predominate. They made up 45.7 percent of tourists. Next came the Japanese, Chinese, Mongolians and Russians each with 5-7 percent in 2009. There are two main drivers for seeking treatment overseas, medical “tourism” because of price competitiveness, and medical “tourism” seeking unique treatments. Each driver can be divided into following categories:
Diagnostic and testing
Cosmetic and elective surgery
High skilled operations
New treatments and innovation
Attracting Americans to Korea where they can have a full course of tests and scans at a fraction of the price of the U.S. treatment, while having a holiday is correctly termed medical tourism. True medical tourism, tourism while being treated as a patient, is probably a niche within a niche. It saves the individual or the insurance company money to come to Korea even after the airfare and hotel expenses are taken into account. Figures commonly quoted in Korea states that it costs the average U.S. in-patient $3,782 at a general hospital, whereas the cost in Korea is only one thirteenth. But for the longer staying patients who have surgery, even if it is cosmetic, it is a different business.
Korea’s competitive advantage is in its diagnostic and testing services as it has state of the art equipment in larger hospitals, and low charges. You do not have to be sick to require an annual check-up, and this can be completed within a tourist’s schedule. Unlike other forms of medical treatment which have to be individualized, this can be standardized for large numbers of patients and is ideal for package tours. This business also offers an avenue for Korean non-life insurance companies and life insurance companies to expand their medical business overseas.
For almost any standard treatment, Korea will be competitive, whether it is heart surgery or elective surgery. A heart replacement valve operation costs only 21 percent of the U.S equivalent (a saving of $140,000) and a hip replacement 38 percent (a saving of $26,000). With these price differences, there is ample left over for airfare, top hotel and shopping for family members who come with the patient. In particular dentistry in Korea is a very high standard, and relatively inexpensive. Korea has the most advanced implanting procedures, teeth whitening, and gum care. Competitiveness is growing in ophthalmology and otolaryngology
Potentially Korea can provide long-term care for the chronically sick in attractive rural resorts with medical facilities attached – for example in Cheju ― and access to the best practitioners in the country when the chronic sickness becomes critical.
Beauty related services are probably the simplest to promote. The patients will be Asian, Korea’s prime existing general tourists. The country has been able to establish a unique position in the cosmetic surgery market. It is leading Asian countries in plastic surgery with its development of new technologies. There are strong synergies with the Korean Wave cultural movement which has been sweeping Asia for the last eight years. Asians from other countries want to look more like Koreans, and the Korean style of beauty
In general, cosmetic surgery is like a luxury good, not really price sensitive. Those who come behave like general tourists shopping for high-end fashion items. Such medical tourists usually stay 3-4 days or a maximum of a week. The figures for 2009 show that this market has barely been tapped, but also that despite its huge potential, it is not being marketed effectively, especially to the Chinese who will make up the majority of future general tourists in Korea.
When life is threatened, cost is not a consideration. Rather it is the quality of the surgeon, the anesthetist, the state of the art equipment, supply of drugs and quality of health care after the operation. Korea’s technology is outstanding in such critical fields as cancer treatment. Korea is strong in competitiveness in treating cancer. According to a 2009 survey conducted by the Korean Society of Health Promotion, Korea had the world’s best diagnosis for cancer, and it has one of the highest survival rates in the world, according to the Korean National Tourism Organization.
Korea needs to be a leader in other new treatments and unique treatments. The regulatory framework should be changed to allow their use. Stem cells probably carry the elixir of self-rejuvenation for many non congenital conditions. Stem cell treatment, in which Korean companies like RIO-BIO are world leaders, is classified by MOHW like a pharmaceutical treatment subject to clinical trials. In Japan and China, it is classified as a medical treatment that does not require clinical trials. Consequently while RIO-BIO can grow the patient’s stem cells in Korea, the patient must be treated off shore in Japan or China or the USA. So what could be Korea’s greatest asset, cannot be offered to medical tourists in Korea.
Korea is noted for its excellent clinical research and drug development infrastructure, world-class researchers, hospitals and facilities. It is already one of the leading countries in a clinical trial tests. Despite these advantages, Korea needs to implement more pro-innovative policies to encourage growth in the healthcare and bio-pharmaceutical sector. A conference on innovation held in Seoul recently was critical of the amount of regulation. If Korea wants to style itself as a leader in innovation, it is time for Korea to shape itself as one, Naveen Rao, regional medical director for Asia-Pacific at MSD Pharmaceuticals, told the participants.
From the aforementioned, it can be seen that Korea has advantages in all of the six areas of medical tourism, as well as in areas such as dentistry and oriental medicine. To succeed in attracting a large number of tourists there are four areas where the industry must change the market place. These four are:
Building the basic infrastructure
Korea fails to attract its fair share of general tourists compared with say – Malaysia. It does not lack natural beauty, heritage, good food or an exciting night life and good shopping. It is geographically located between two of the greatest sources of tourists in the world, Japan and increasingly China.
But it does lack good marketing. The image of Korea is a place of cars, crowded cities and good technology, and not of a good place for a holiday. Advertising by both individual cities and the KNTO is usually in the form that appeals to Koreans, and not to the foreign tourists they wish to attract.
When it comes to marketing medical tourism, there is a need for effectively communicating with foreign patients and healthcare providers whether in the medical or medical insurance worlds; the present quality is much lower. But the true problem for medical tourism is in marketing Korean medical expertise to the correct market segments, and here there is a lack of knowhow. The recognition of Korea as a center for medical tourism as well as for sightseeing needs to be established in the world’s medical community and not with tour companies.
Building the basic infrastructure
A one-stop service is available for visitors from the first moment they step into the airport, including Internet services, call center assistance, visa issuance, immigration, hospital information, tourism and accommodation or finding a medical coordinator. The Korean medical industry still has to improve its English, Japanese and Chinese language abilities to handle foreign patients, or hire nurses from these countries. Current regulations appear to block foreign registered doctors and nurses from practicing – even if they are Korean citizens with qualifications from another country
Alongside the infrastructure, new capacity is required. To cope with one million patients, entirely new hospitals will be needed and new staff engaged; a great engine of growth, but one which will push up the price of treatment. At the moment Korean hospitals are treating foreign patients at marginal cost, using their spare capacity, but when patients have to cover the full cost, will Korea still be cheap?
``Korea has the potential but government policy will have a role in how this potential can be harnessed,'' Kim Choong-ho, managing director of Medtronics Korea told a recent conference. “Korea has neglected the importance of regulatory infrastructure. Reasonable, transparent and consistent regulations and meeting global standards are critical for industry development.'' Korea has plenty of low- cost competitors such as Thailand, the Philippines and India, it cannot afford internal barriers, he added.
The struggle to set up foreign hospitals in Korea, in the FEZs of Incheon and the autonomous province of Cheju has been long lasting. The issue of being “for profit” and “not for profit” has been a major issue – fundamentally because Korea has an inadequate regulatory framework in every sector for the establishment of “not for profits” and “foundations” especially if they are foreign invested rather than because foreign medical establishments want to create pure profit organizations.
Medical tourism may fit Korea’s profile
Surveys of what tourists look for and their image of Korea show a tremendous mismatch. General tourists around the world look for relaxation, cultural and natural sights. But the global image of Korea is precisely that Korea is dynamic, technologically innovative and highly competent. These are qualities which a medical tourist is indeed likely to be seeking as part of the mix. Even so, the tourist usually imagines that after treatment, there follows relaxation in the sun, and not more technology and the stress of a modern city.
The aim is that 80,000 medical tourist arrivals in 2010 will rise at 16% per annum until it reaches one million in 2020. The earning from this industry will also rise so that this could become a $5-10 billion plus business, with potential spin-offs in telemedicine, new bio industries and other areas. However, it will remain a niche, earning less for the nation than the probable $20-29 billion dollars that may come from general tourism in 2020. The Chinese will certainly visit Korea in ever increasing numbers, but they need to value Korean medical practice. In this, traditional oriental medicine with a long history of more than 2,000 years, typified by herbal medicine treatment, acupuncture and chiropractic care may help.
Medical tourism and general tourism can support one another, there is no other engine of growth which can bring wealth to every corner of Korea.