International patients funded by governments are much fewer than for other self-funded medical travel niches, but the revenue generated from their treatment is much, much higher. A number of factors are however going to impact the future of this aspect of medical travel, says IMTJ editor in chief Keith Pollard in his latest blog.
Medical travel or medical tourism (if you prefer that phrase) is a complex business. In essence, it consists of a plethora of relatively small market niches with a convoluted mix of patient/consumer/payor needs and wants, involving a wide spectrum of healthcare providers, facilitators and payors.
Much of the attention is given to the low cost consumer market – people who travel from one country to another to save money on treatments such as cosmetic surgery and dentistry and fund the treatment out of their own pockets. Many Brits who travel to Europe and Americans who cross the border to Mexico fall into this bracket.
Other self-funded medical travel niches include those who pay for elective surgery abroad who cannot afford the cost in their own country or the surgery just isn’t available. Bangladeshis travelling to India, or Indonesians travelling to Malaysia would be examples of this. And then we have very specific niches such as those individuals who travel for IVF where treatments are always self-funded rather than paid for by a third party.
In most of these consumer, self-pay niches the numbers may be high but the revenue per patient is low.
State sponsored medical travel – high value, high complexity
In contrast to these consumer niches, are those patients where treatment is funded by their government, a state institution or a state employer such as the army, the police force or an oil company. In some cases, medical travel is funded because the treatment or the level of medical expertise is not available in the home country. Cost is a factor but it is certainly not the main determinant when choosing a destination. Quality of care and the desire for a positive outcome is far more important.
Patients in this niche are much fewer but the revenue generated from their treatment is much, much higher. Complex diseases such as heart disease, cancer and neurological conditions are a significant influence on the cost of care. Let’s consider some examples:
- The UK, and specifically, London has historically benefitted form an inflow of international patients from the Gulf seeking complex treatment. Before the pandemic, London’s private and NHS hospitals were generating around £400 million (US$539m) from treating such patients. But the number of patients is relatively small. Average treatment revenue per patient is around £45,000 (US$60,000) but that masks a wide range, with some individual patients generating £200,000 (US$269,000) or more for lengthy and expensive treatment.
- Likewise, the USA is a popular destination for such high value patients. Based on data from the US Cooperative for International Patient Programs (USCIPP), in 2018/2019 58,012 international patients were reported by 51 US hospitals. These patients generated US$2.9 billion of hospital gross revenue. 15% of patients were paediatric (25% of reporting hospitals are specialist paediatric facilities). There were 14,449 inpatient visits and 155,015 outpatient visits. The average revenue per patient… around US$50,000.
Post Covid recovery?
Gradually, the flow of these high value patients is beginning to recover as pandemic imposed travel restrictions are lifted. But it will take some time before we are back to pre-pandemic levels.
A number of factors are going to impact the future of this aspect of medical travel, and it’s difficult to estimate at the moment whether we’re going to see future growth or a contraction of this high value market.
- Many traditional source markets for such patients are investing in their domestic healthcare systems. This is particularly true of the Gulf where investment in healthcare facilities is rampant. However, quality of care is not about buildings and the technology that they contain. It’s about people. Attracting the best surgeons and the best physician to such facilities is never easy. Such new developments will struggle to match the expertise available elsewhere and there will continue to be an outflow of “harder to treat” patients. Partnering with well respected centres of medical expertise in the USA, UK, Germany etc is one way of filling the knowledge gap.
- Governments across the globe are paying the price for countering COVID-19. The state coffers have been emptied to pay for the cost of vaccination and hospital care and support businesses that have been impacted. The state budget for treatment abroad will no doubt be affected and the purse strings will tighten. There will be pressure on cost and a search for best value. Some government payors will be looking farther afield to find similar quality of care but at a lower price.
- The pressure on domestic healthcare systems from COVID-19 has resulted in a backlog of demand for surgery in some source markets. The UK’s burgeoning NHS waiting lists are clear evidence of this. In the UK, the proposed solution is to contract work out to the UK’s private hospital sector. In other markets, the solution to an overworked domestic healthcare system may be to outsource treatment to hospitals abroad.
The next few months will provide a clearer indication of where medical travel is going. We are by no means in a post-pandemic world yet. In 2023 perhaps? In 2024 more likely? It will be a long, slow haul.