Michael R. Czinkota: Medical tourism is a gift for U.S. health care

01:00 AM EST on Friday, December 25, 2009

By MICHAEL R. CZINKOTA

WASHINGTON

Consumers and providers of medical services in the U.S. often search for opportunities to cut costs. Increasingly, it is possible to find low-priced care alternatives abroad. In the heated debate about health-care changes, a key aspect is, of course, the expense of providing such care. The emergence and efficiency of medical tourism may well help bridge the chasm between costs and revenues, and between desire and ability.

Already today, prospective patients are traveling in ever-increasing numbers to such exotic destinations as Brazil and Thailand in search of high-quality care at a fraction of the cost. Sarah Murray reports 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 35 percent annually by 2010. By 2012, it is predicted to 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 much the better. Now, however, there are additional new key players in the U.S. government and the health-care industry, who may reconsider their previous lack of support for medical tourism.

A medical procedure at an Indian or Chinese hospital can cost 70 percent less than what a patient would pay in the West. For patients from countries with public health-care systems, such as Canada and Britain, 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, reports Murray, 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 to promote their health-care services internationally. As their industry’s medical skills increase, their comparative advantage will attract more custom from abroad.

For those concerned about quality, the increased flow of international students to learning centers of global excellence may ease some of these worries. Also, the existence of international accreditation standards can increase the confidence and comfort that institutions and patients can have in institutions abroad. Furthermore, as time passes there will increasingly be a track record that can be checked and compared. In addition, there may well be better legal protection of patients and providers abroad.

Medical tourism also gives rise to new industry growth. New companies are formed that 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 health care, more corporations are searching for alternatives to home-country care, and insurance may become more willing to cover procedures conducted abroad.

While the health-care-plan alternatives are debated, its cost continues to soar. More coverage and coverage of more patients definitely will mean higher cost, if other dimensions are not changed. In addition, the demand for elective procedures such as cosmetic and dental surgery continues to rise. In light of all these financial pressures, international trade in medical tourism may well offer the tipping point, which allows acceptance of more coverage while restraining costs.

Michael R. Czinkota ( czinkotm@georgetown.edu) researches international business and marketing at Georgetown University in Washington, D.C., and the University of Birmingham, in Britain. He served in trade-policy positions in the Reagan and the Bush administrations.