Is the Recession Helping or Hurting the Medical Tourism Industry?
The effects of the current economic situation are evident across the entire healthcare industry, and they are especially noticeable where consumers are concerned. These days, consumers who are saddled with tighter household budgets are becoming more active in the healthcare benefits marketplace – comparing medical fees, gauging provider quality, etc. – and such activity could increase as more employers look toward high-deductible plans to rein in costs. But do these effects carry over into medical tourism, where consumers can seek non-emergency medical procedures in other countries to save money? That may depend on how the latest data is interpreted.
A recent report by the Deloitte Center for Health Solutions reveals a 13.6% drop in the number of American medical tourists between 2007 and 2009 just as the effects of the economic downturn were starting to take their toll. In 2008, only 540,000 Americans traveled abroad for medical care, compared to 750,000 the previous year when medical tourism was just hitting the mainstream. The report cites rising transportation costs and lower consumer incomes as the main contributing factors for the decrease. Even the report’s immediate projections of an increase by the end of 2009 to about 648,000 patients falls well short of the totals from 2007 causing some to speculate that the industry’s struggles may continue into the next decade.
The Deloitte Center, however, predicts the number of American medical tourists will rise by 35% each year through 2012, citing factors such as pent-up demand and improvements in international medical care as reasons for future growth. In essence, as the recession gives rise to the consumerism movement, American patients are becoming more aware of not only the cost savings they can experience (an average of up to 70% over the cost of domestic procedures, according to Deloitte CHS executive director Paul Keckley), but also the fact that many international providers and facilities are quite comparable to those in the U.S. Many physicians abroad are trained in the U.S., are qualified by many of the same organizations as American doctors, and have practices that are certified by the Joint Commission International (JCI), an affiliate of the organization that inspects U.S. hospitals that receive Medicare dollars.
The fact that medical tourism is becoming more readily available and more regulated is changing attitudes toward the industry and changing the demographics of the traditional medical tourist in the process. According to a recent survey by AllMedicalTourism.com, a leading interactive medical tourism referral site, 85% of respondents say they would consider traveling overseas for treatment. When the same segment was asked if they would consider medical tourism a viable option five years ago, the number dropped to 33%. Where medical tourists were generally either uninsured or wealthy, a majority of them are now privately-insured consumers who are just looking to save money.
While the recession may have temporarily hindered medical tourism’s financial impact, the industry is primed for future growth. Several businesses that specialize in catering to medical tourists are still gaining market-share in tough times, including Colorado-based BridgeHealth Medical, which has now served over 1 million patients since its founding in 2007. With lower travel costs and improved care, more American consumers – and possibly insurers – are likely to give international care a long look regardless of the economic climate or what the future of healthcare reform holds.
For more information, please click on the following links:
Cheap Travel, Better Care Drives Medical Tourism
Deloitte Report on 2009 Medical Tourism: Update and Implications
The Effects of the World Economic Recession on Medical Tourism
Insurers Aim to Save from Overseas Medical Tourism
Ailing U.S. Economy Delivers a Blow to Medical Tourism
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Important Notice: Hill, Chesson & Woody does not engage in the practice of law, accounting, or medicine. Therefore, the contents of this communication should not be regarded as a substitute for legal, tax, or medical advice.
December 18, 2009
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