Medical Tourism

Consumers and providers of medical services in the United States are searching for opportunities to cut costs. Increasingly, it is possible to find lower-priced health care alternatives abroad.

By Michael R. Czinkota and James G. Dale

Consumers and providers of medical services in the United States are searching for opportunities to cut costs. Increasingly, it is possible to find lower-priced health care alternatives abroad.

The emergence and efficiency of medical tourism may well help bridge the chasm between costs and revenues, between desire and ability.

Already today, prospective patients are traveling in ever-increasing numbers to exotic destinations like Brazil and Thailand in search of high-quality care at low cost. For years, the Cleveland Clinic has been the institution of choice for wealthy Saudi citizens.

Cancer treatments and cardiac procedures for international patients are a high growth industry. The demand for elective procedures such as cosmetic and dental surgery, and alternative treatments that are not approved in highly developed countries, continues to rise.

Sarah Murray reported in the Financial Times that the medical tourism industry has grown by about 14 percent from 2007 to 2009, and is predicted to expand at a rate of 35 percent annually by 2010. By 2012, it may serve more than 1.6 million international patients.

The rationale behind the industry's development is straightforward ― customers search for convenience and cost-effectiveness. If comfort and coziness can also become part of the outcome, the more the better.

Now, however, there are additional new key players in the U.S. government and the health care industry who may reconsider their antagonism toward medial tourism.

A medical procedure at an Indian or Chinese hospital can cost 70 percent less of what a patient would pay in the West.

For patients from countries with public health care systems like Canada and the U.K., medical travel is already often motivated by the desire to reduce or avoid current delays and waiting periods leading up to their procedures.

The growth in medical tourism is a boon for health care providers in the developing world. For example, Murray reported that in India the sector is projected to expand by 30 percent annually from 2009 to 2015, which may make it worth $4.4 billion.

Increasingly, internationally accredited medical centers are emerging in countries such as the Philippines and Mexico, eager to accommodate the ever-growing stream of Western patients.

Governments in the developing world are beginning to invest in support infrastructure in order to promote their healthcare services internationally. As their industry's medical skills increase, their comparative advantage will attract more customers from abroad.

When dealing internationally, the essential problem of trust is always present in the manufacturing sector. The issue takes on an even higher importance in the medical services sector, which deals with life and death. To build that trust, data and transparency will be a key issue.

The flow of international students to learning centers of global excellence may ease some worries. As time passes, there will be a growing track record which can be checked and compared.

International accreditation standards can increase the confidence and comfort of institutions and patients with clinics and providers abroad. Of great importance will also be the eventual better legal protection of patients and providers abroad.

A key motivator for progress will be the vocal demands of patients for quality and accreditation. But in an era in which we now plan to eventually measure and count the carbon emissions around the world, it should be possible to measure and count health care performance.

Medical tourism also gives rise to new industry growth. New companies are formed which assist patients with scheduling their procedures overseas. They help clients with planning their trips and offer in-country support, such as airport transfers, after-care arrangements, hospital liaisons and dispute mediation.

Most of these companies started out catering to individual clients. However, they are now expanding to offer their services to meet businesses' demand.

With the rising costs of providing employee healthcare, more corporations are searching for alternatives to home-country care, and insurance firms may use procedures conducted abroad as a lever for price negotiations.

We also need to reflect the climate implications of medical travel. The savings gained by having a procedure carried out in Panama may turn out to be negated by a carbon tax.

The systematic buildup of competitive health care industries within reasonable geographic distance from prime patient groups is an important approach.

One would expect there to emerge individual health care clusters for Europe, Asia and the Americas that are close to their patients and specialize in their particular health issues.

Careful scheduling and travel consolidation may even permit such medical travel to soak up current excess or unused capacity, thus limiting the additional climate burden.

While the health care plan alternatives are debated, cost continues to soar. More covered people and coverage of more patients definitely will mean higher cost, unless other dimensions are changed.

Right now, the government and insurance industries exert a great deal of protectionism in the health care sector, and are still stuck on the international shipment of pharmaceuticals.

In light of major financial pressures, international trade in medical tourism may well offer the tipping point, which allows acceptance of more coverage while restraining costs. Offering new alternatives globally may well be the best Christmas gift for both patients and the public purse.

Michael R. Czinkota researches international business and marketing at Georgetown University in Washington, D.C., and the University of Birmingham in the U.K. He served in trade policy positions in the Reagan and Bush administrations. He can be reached at czinkotm@georgetown.edu. James G. Dale is a practicing physician and chief of staff at Page Memorial Hospital in Luray, Virginia. He can be reached at Jdale17@gmail.com.