The global medical tourism marketplace had already been slowed by the recession when President Obama signed health care reform into law in March. The new legislation sent the industry into a stall as it scrambled to figure out how extending insurance coverage to an estimated 30 million Americans might change the medical travel landscape.
"That created a lot of insecurity in the marketplace," said Renee-Marie Stephano, president of the Medical Tourism Association, which in October served as host of the Third Annual Medical Tourism and Global Healthcare Congress in Los Angeles.
More than 1,200 delegates from some 84 countries participated in the three-day event, and Stephano said that health care reform was certainly top of mind for many of those in attendance.
"There was a question that [maybe] if you give 30 million Americans insurance, then no one is going to travel overseas," she said. "From the international market perspective, they really expected medical tourism would decrease."
The Affordable Care Act that was signed into law last year requires more Americans to have health insurance, and it has been widely reported that under its provisions, an estimated 30 million people who are currently uninsured would get coverage.
The reason the once-booming medical tourism industry is keeping a close watch on health care reform is that until now, the U.S. health care system has helped fuel the growth of the medical tourism industry as medical travelers ventured abroad for procedures that they couldn't afford to get, couldn't wait to get or couldn't get at all at home.
These include procedures such as heart bypass surgery, which carries a price tag of more than $100,000 in the U.S. compared with between $10,000 and $20,000 in countries such as India, Thailand and Singapore, or hip replacement surgery, which runs about $43,000 stateside but in Asia costs between $6,000 and $12,000, according to data from the health services research arm of Deloitte. Recession woes
When the downturn hit in 2008, the medical travel industry had been gaining momentum as a thriving international travel and treatment business.
One of the first comprehensive studies of the size and potential of the medical tourism industry was the Deloitte 2008 Survey of Health Care Consumers, a national study of more than 3,000 Americans. The survey concluded that in 2007, an estimated 750,000 Americans traveled abroad for medical care. The organization estimated that that number would increase to 6 million by 2010.
The survey did include the disclaimer that the findings could be tempered by capacity constraints in foreign countries; the possibility that U.S. health plans could decide not to cover services provided offshore; the possibility that U.S. providers might decide to compete more aggressively with outbound programs; and the possibility that government policies might curtail demand.
But what it did not take into account was the recession, and as a result, Deloitte had to grossly readjust its estimates to account for the downturn.
In Deloitte's 2009 health care survey, it estimated that there were 750,000 medical travelers out of the U.S. in 2007. That number fell to 540,000 in 2008 and was expected to inch up from there to 648,000 in 2009, 878,000 in 2010, 1.3 million in 2011 and reach 1.6 million in 2012, a far cry from the initial estimate of 6 million by 2012.
Yet, even given the recessionary slowdown, the basic findings of the report held true.
"Medical tourism has transitioned from a cottage industry to an acceptable alternative for elective care that's safe and cost effective if coordinated by reputable health plans and providers," Paul Keckley, executive director of the Deloitte Center for Health Solutions, wrote in the 2009 report. "With health care costs increasing at 6% per year for the next decade [in the U.S.], and medical tourism offering savings of up to 70% after travel expenses, we anticipate that the industry will recover from the current economic downturn and attain 35% annual growth in coming years."
Josef Woodman, author of "Patients Beyond Borders," a guidebook for medical travelers, said he believed that even Deloitte's adjusted numbers are still inflated. He estimated that some 480,000 to 490,000 Americans ventured abroad for medical procedures in 2010 and that the number will increase to about 540,000 in 2011. That's up from his estimate of 150,000 medical travelers in 2006.
Woodman estimated that globally, between 3 million and 5 million patients cross borders for medical care each year.
An industry that only a few years ago was widely believed to be booming, anticipating 40% to 50% growth annually, has in reality seen 20% to 30% growth year over year, he said. Woodman added that adjusted expectations were inevitable for an overly hyped niche market that ran head-on into a recession.
Patrick Marsek, managing director of Vernon Hills, Ill.-based MedRetreat, a medical tourism company that helps Americans find health care abroad, said that "as a result of the economy and the uncertainty of the health care reform [act], the medical tourism industry is experiencing a bit of a slump," resulting in fewer clients traveling for elective procedures, such as cosmetic surgery.
"It used to be cosmetic was 80%" of MedRetreat's business, Marsek said. "The rest was 20%. And now it's the opposite. Orthopedic is probably the driver right now. With those types of procedures, there are high cost savings and high success rates."
Moreover, Marsek said, "It's a quality-of-life issue. It's not so much how I look, but how I feel now." Question marks in reform
It is still unclear how health care reform will play out in the U.S., let alone in the global medical tourism marketplace -- whether having more or better coverage will encourage Americans who might have sought medical procedures abroad to get the health care they need in the U.S. instead, or whether the U.S. health care system will in fact become more strained, pushing even more people to seek alternatives abroad.
"The people at the highest levels, whether you're an insurer or provider, have trouble understanding how it's going to be implemented," Woodman said. "The headline on health care reform to me is 'It's too early to tell.' It's contributing to a wait-and-see attitude. The growth [in the medical travel industry] is still there, but it's slowed."
Still, irrespective of the impact of health care reform, those in the medical travel industry see growth opportunities as the aging baby boomer population puts greater strain on insurance companies and medical facilities.
On top of that, Marsek said, if U.S. health care reform does end up adding another 30 million to 40 million people to the health care system, the issue on which the medical travel industry will market product will transition from affordability to access to care.
While there are certainly opportunities to sway companies and insurance providers to begin seriously considering medical travel as a viable health care option, he said, "there are some issues that need to be resolved when it comes to corporations sending customers overseas." The first, he said, is liability, followed closely by regulatory issues and public perception.
Stephano believes that health care reform and more insured Americans could help, rather than hurt, the medical tourism cause.
"Health care reform is essential; I think we needed to have it," Stephano said. "I think it needs to be a comprehensive approach. I think we still have a ways to go. But I also believe in patents' ability to choose. They're going to continue to look for better value. Insurance rates are going to continue to go up. That value is not just price, but quality. I'd rather go to the doctor in India that's done 2,000 to 3,000 procedures."
Moreover, the assumption that if more people have health insurance in the U.S. there will be fewer American medical travelers is refuted by the 2010 Survey of Health Care Consumers, the most recent version of Deloitte's study.
The survey of 4,008 American adults, conducted between Dec. 28, 2009, and Jan. 5, 2010, found that those without medical coverage were actually less likely to travel for medical treatment on a doctor's recommendation than those with insurance. Of respondents who were uninsured, 38% said they would not travel for medical treatment on a doctor's recommendation, compared with 22.8% of insured respondents. Inevitable growth
Despite global economic challenges and the uncertainties brought on by health care reform, people in the medical tourism industry remain optimistic about its prospects. Many feel that the market's continued growth with greater numbers of medical travelers is inevitable in what is becoming an increasingly global marketplace.
"Health costs are likely to increase for most working adults, consuming more of their discretionary spending," Deloitte's Keckley said in a written statement last year. "Insurance companies and employers will likely embrace cost-management strategies, including retail medicine and medical tourism in benefits designs, buoyed by data showing technologies that facilitate coordination of care in these settings lend to safe and effective evidence-based care at lower costs for most non-urgent needs."
Indeed, the industry is hopeful that pressures on insurance companies and employers to get creative regarding health care costs and spending will enhance acceptance of medical travel as a viable alternative to health care at home.
"Insurance companies, the brokers and the agents ... they are going to be looking for profits," Stephano said. "Medical tourism is going to be offered to more and more employers. More and more people are going to understand what medical tourism is. You're going to see more consumer-awareness programs. ... You're going to see U.S. physicians referring patients overseas." Upgraded facilities, treatments
One sign that the medical tourism industry is growing despite the downturn and despite health care reform is the increasing number of international hospitals that have been accredited by the Joint Commission International, the global arm of the not-for-profit Joint Commission Resources.
Since it accredited its first hospital in 1999 -- Hospital Israelita Albert Einstein, a private, nonprofit facility in Sao Paulo, Brazil -- JCI has accredited more than 300 public and private health care organizations in 39 countries, according to the organization.
That is due in large part to a growing number of foreign hospitals racing to upgrade their facilities and services to meet Western standards as they court international patients.
"With almost 400 JCI-accredited hospitals and a lot of hospitals getting really good at Western-style care, your standard procedures -- cardiovascular, orthopedic -- are becoming fairly well balanced around the globe," Woodman said. "For some of the tried-and-true procedures, you've got a lot of choice across a lot of destinations."
In addition, Woodman said, international hospitals are trying to compete with U.S. facilities by employing star doctors and investing in expensive medical equipment.
Deloitte noted that many hospitals in Southeast Asia, particularly in Malaysia, Thailand and Singapore, have invested in state-of the-art medical technology. Many employ physicians trained in the U.S. or Europe and are affiliated with reputable, top-tier U.S. and European medical providers.
According to Deloitte, the number of medical tourists visiting Asia is expected to grow by more than 20% annually, which would create a $4 billion industry by 2012.
A prime example of an up-and-coming medical facility in Asia is Bumrungrad International Hospital in Bangkok, which according to Woodman welcomes some 400,000 patients every year, including 25,000 to 30,000 from the U.S.
While Asia is becoming a hotbed of medical tourism development and activity, closer-to-home destinations such as Mexico and Costa Rica are also emerging as viable options.
Mexico, for example, has nine JCI-accredited health care facilities.
And Johns Hopkins, for example, has opened an international medical center in Singapore.
"You've got a lot of American hospitals going global," Woodman said, adding that when he speaks with hospital representatives in the U.S. he asks, "'Why aren't you doing what hotels are doing? After all, you're in the hospitality business; you're just offering medical care.' Foreign travelers like American hotels, and they would like American hospitals, as well."