Medical Tourism Ailing in Global Financial Downturn

November 16, 2008 08:00 AM
by findingDulcinea Staff
After years of rapid growth, health facilities overseas that rely on American and other international patients are faltering.

Mixed Outlook for Foreign Medical Care

BusinessWeek reports that in some medical tourism hotspots, formerly booming hospitals are seeing empty beds.

Asian countries such as Singapore, Thailand and India, which have attracted huge numbers of Americans and other international visitors seeking cheaper or cutting-edge medical care, are now lowering their expectations. Just a few months ago, they had been anticipating rapid expansion.

But with a global recession looming on the horizon, things have changed. "We are not predicting robust growth," said Curtis J. Schroeder, chief executive of Bumrungrad Hospital in Bangkok, to BusinessWeek. The increased cost of travel from the U.S. to Thailand has discouraged some visitors, in addition to political unrest in the country.

DBS Vickers Securities in Singapore is predicting that earnings in the industry will drop 9.2 percent this year and 20.9 percent in 2009. "We foresee the number of international and local patients to be scant," write analysts at the Singapore-based bank. "Patients [will] delay unnecessary or nonemergency treatments (i.e. plastic surgery, hip/knee replacement, etc.) and decrease length of stay, as the financial turmoil has caused significant cutback on expenses."

Background: The rise of overseas medical care

As recently as Aug. 2008, an Associated Press report predicted that medical tourism could "jump tenfold in the next decade." Health care consultants at the Deloitte Center for Health Solutions forecasted that over the next 10 years, as many as 16 million Americans a year may look for cheaper surgeries in other countries.

American consumers, fed up with high costs, long waits at the doctor's office, medical errors and quality issues in the U.S., are increasingly heading to Thailand, Singapore, Mexico and Brazil to get care that can cost less than half of what it does here, even when including airfare and accommodation expenses. About 750,000 Americans sought major health care abroad last year, while about 1.5 million are expected to do so this year, according to a Deloitte Center report.

In addition to lower-cost care, some Americans travel abroad searching for cutting-edge and experimental procedures and treatments that they cannot find at home. Americans with neurodegenerative conditions such as Alzheimer's and Parkinson's disease are going to Tijuana for adult stem cell treatment, while cancer patients are seeking innovative surgical techniques used in Singapore. While critics say these patients are vulnerable to medical malpractice, the Los Angeles Times reports that the globalization of health care has also made it possible for patients to make informed decisions by researching the backgrounds of foreign doctors and hospitals.

Timmi Ryerson of Vista, Calif., traveled to India for a procedure called hip resurfacing. The procedure has been available for years in Europe and Asia but is new to the U.S. Ryerson flew to Chennai and spent 11 days in an accredited hospital before moving to a five-star resort. The total cost of her treatment came to $7,000, compared to $50,000 to $60,000 in the U.S., and her insurer paid 80 percent of the cost. She says that the U.S. health care system should beware. "They are going to lose a lot of patients to these overseas facilities," Ryerson said to the Los Angeles Times. "It's called the free market."

Reactions: American insurance companies start to pay attention

Most insurers refuse to cover medical procedures performed outside of the U.S. but some are beginning to consider it, reports BusinessWeek. Some insurance companies are in talks with medical tourism companies, and earlier this year, Blue Cross & Blue Shield of South Carolina signed agreements with seven foreign hospitals.

But many are still wary of sending their policyholders abroad, citing credentialing issues and legal concerns. Providers must ensure that overseas facilities have the credentials they claim to have in order to provide adequate care. And when procedures go badly, legal recourse is not always available in the U.S., and is often unavailable in the country where the procedure took place. "What happens if there's an adverse effect?" asks Scott Edelstein, a lawyer with the global law firm Squire, Sanders & Dempsey, to BusinessWeek. "Will they have any recourse? That's a very hot area in the legal arena. For the most part, those patients are not going to have much recourse in the U.S."

Related Topic: Medical tourism hotspots

Several Asian countries, including India, Singapore, Thailand, Malaysia, the Philippines and Taiwan, have left their mark in the global medical tourism market. According to the International Herald Tribune, hospitals in these countries are providing procedures such as heart bypasses, spinal surgery, hip-joint replacements and cosmetic surgery for one-third or even one-tenth of the cost of a U.S. hospital. Waiting times are often shorter and medical specialists often possess Western educational backgrounds.

South Korea is doing everything from relaxing visa requirements for foreign patients to building a $232 million "Health Care Town" on a resort island to attract international patients. Americans and wealthy Middle Easterners are popular customers, and the country's plastic surgeons attract tourist buses full of Chinese and Japanese visitors on package tours. South Korean hospitals, which often struggle in an environment where medical fees are controlled as part of a national health insurance program, are finding foreign visitors who pay cash to be essential to their survival.

In Singapore, Health Minister Khaw Boon Wan said that medical tourism in the country, which has been growing at a rate of about 20 percent annually, has not been affected by the financial crisis. Xinhuanet, a Chinese news Web site, reported that Khaw blames slower growth on a lack of capacity. Singapore is hoping that medical tourism will become a mainstay of its economy, and aims to attract more than 1 million foreign patients by 2012, about three times the current number.

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