Business Drivers of Medical Tourism

The Key Forces of Globalization are relatively constant and increasingly touch all regions of the world. However, there are several other health-related trends that serve to encourage the growth of medical tourism by increasing demand in developed nations. They include demographic trends as well as many aspects of the health care business and practice.

World War II was a global conflict that had a profound affect on the populations on most wealthy countries because all sent soldiers, and many died. The historical human response after wars is to have more offspring. This coincided with the maturing industrial revolution, which created rapid growth in wealth due to manufacturing and new white-collar jobs. Together, these trends produced a global bulge of population growth that is termed “the baby boom.” In 2010, the baby boomers are reaching retirement, which is driving up demand for health care. Many US providers and hospitals are already overwhelmed by the number of patients, and boomers’ increased demand is only beginning. New, offshore hospitals are maneuvering to address some of the demand. A related trend is boomers who retire abroad and do not have access to Medicare (Boomers Abroad).

The United States of America is the only country in the developed world besides South Africa that does not have a national health care system, and the U.S. system, in which private health insurance is provided by employers, is a poor performer in many measures of cost/benefit. Although U.S. health care pioneers treatments and maintains leadership in many areas, Americans pay more than twice as much on average. This adds tremendous pressure to the financing of health care as well as to providers’ difficulty to meeting the increasing demand from baby boomers.

The insurance business in the U.S. is globalizing. In the U.S. private health system, insurance companies serve as the payment middleman between patients and providers. They send many patients to providers, so they extract large “volume discounts” for medical services. Patients pay premiums to insurance companies, which pay providers for medical services. They create “networks” of providers to which they send patients. In this system, it is natural for insurance companies to try to use the disparities of prices for medical procedures to their advantage. They are experimenting with including foreign hospitals and doctors, with their far lower prices, in their provider networks.

Since 2007, most wealthy nations have been affected by a severe and prolonged global recession that is proving to be the world’s worst since the Great Depression of the 1930s. In the U.S., persistent unemployment hovering around ten percent has increased the uninsured or underinsured, and historically fifty percent of personal bankruptcies are caused by health care costs. Prices for medical procedures have grown at double-digit rates for many years. Patients suffering from medical ailments search for more affordable medical care.

Health care is a service industry, so health professionals account for a large part of health costs. “Emerging” nations such as India, Singapore, Thailand, Costa Rica, Mexico and others have far lower costs of living, so their wages are far lower than those in western countries. Moreover, they increasingly have modern facilities along with U.S.- or Europe-educated medical professionals who can offer medical procedures for less than half the price in western countries. As the recession continues to destabilize people financially, the relevance of medical tourism increases.

Waiting times in many western countries, especially those with national health care, are often very long for elective surgeries such as hip replacements, and waiting is minimal and costs are minimal abroad (Times Online). In addition, patients waiting for transplants search for places where they will be matched with organs quickly. Medical tourist destinations typically have shorter waiting periods for appointments and organ transfers. The affordability coupled with the efficiency and timeliness helps attract patients from the U.S. and the U.K. to India, Thailand, South Africa, Mexico, Singapore, Hungry, China, and Costa Rica.

In the U.S., health care has become a business. It has largely lost the element of personal caring and connection between doctors and patients. Many patients feel that surgeons in the U.S. are not reachable, and pioneers who receive top treatment centers abroad share their experiences of personal service and feeling of connection with their doctors and nurses. Patients prefer to have a Taiwanese, Indian or Singaporean doctor whom they can contact with any questions. Combined with this, most developed nations have large immigrant populations who are predisposed to return to their countries of origin for health care.

The growth of digital social networking sites enables patients to share their stories with each other around the world, for free. Before social networking sites, it was not very easy for pioneers to share their experiences with other people who have similar problems. For example, if an aging carpenter goes to India for a Birmingham hip resurfacing procedure, and it is a very effective procedure, only a small group of family and friends will hear about it, and very few of them would ever need a similar procedure. Now it is possible to find social networks that are frequented by people who have hip problems. When the carpenter shares his story there, now hundreds of people with the same problem hear about it and consider it. The same is true for negative experiences.

People in wealthy nations are increasingly bombarded with media images, and this is homogenizing national ideals for physical appearance. In the U.S., the majority of high school students have braces, for example. Everyone must have perfect teeth; it is the new standard. People not only want to look like people on television or movies: advances in cosmetic surgery make it possible for middle class people to afford cosmetic or reconstructive procedures, so it is becoming increasingly common. “Mommy jobs” are talked about constantly on mommy blogs. A mommy job usually refers to a package that includes lifting the breasts, a tummy tuck and liposuction on the hips. The costs of these procedures in Asia or South America are often one fifth or less than in the U.S. They are rarely covered by insurance in Europe or the U.S. Such elective surgeries are the prime driver of medical tourism.

Accreditation via global standards bodies is growing and normalizing definitions of quality around the world, which encourages patients to seek care from accredited providers irrespective of location. For example, in the U.S., hospitals have a de facto requirement to be evaluated periodically by the Joint Commission (JCAHO), which launched its international division in 1997 (JCI). Now U.S. patients know that JCI-rated hospitals in Thailand, India, Costa Rica or South Africa adhere to the same rigorous standards as U.S. hospitals. This diminishes the risk of seeking care abroad. Moreover, such hospitals must invest extensive time and money to achieve accreditation, so when procedures go wrong, they are highly motivated to protect their reputations. This also means screening the physicians that have privileges at their hospitals and being committed to continuous improvement. In addition to JCI, other international accreditation bodies are: Trent Accreditation (UK), Australian Council for Health care Standards International, Accreditation Canada. Moreover, each country may have its own accreditation scheme, although countries wishing to promote themselves as medical tourism destinations use international accreditation rather than developing their own.

When combined with Key Forces of Globalization, these health care drivers in the U.S., which is still the largest focus of economic demand in the world, are supporting the growth of medical tourism. However, all historical changes encounter resistance in the form of challenges, and medical tourism is no exception. The growth of medical tourism will persist as long as the key forces and health care drivers are stronger than the challenges.

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