Foreign Hospitality
‘Medical tourism’ is the new buzzword in the global health industry. Its advocates proclaim it to be a benevolent by-product of globalisation that is simultaneously generating growth in the developing world, while providing solutions to the inflated cost of healthcare in the West. Yet despite the marketed terminology, medical tourism is a complex and often paradoxical phenomenon. While it is true that the industry is providing alternatives for middle-class Westerners, it is increasingly apparent that the benefits for the developing world are limited, and ultimately short-lived.
Medical tourism refers to the process whereby patients from the West travel to developing nations in order to undergo surgical procedures in state-of-the-art corporate hospitals. The competitive advantage for these hospitals is that they are able to perform complex surgeries – such as hip replacements, cardiac procedures, and various transplants – at a fraction of the corresponding cost in countries such as the United States. At the same time, however, they are marketed as world-class hospitals with advanced, modern technology and Western-trained medical staff.
It is this ability to provide low-cost services without sacrificing the quality of patient care that has seen the industry experience staggering growth over the past decade. Currently expanding at a rate of 20-30 per cent each year, estimates suggest that medical tourism will become a $U.S.100 billion industry by 2012. Many countries in the developing world have sought to take advantage of this growth, particularly in Asia where countries such as Thailand, Singapore and India have emerged as leaders in the global market for foreign health services.
While medical tourism is becoming a popular alternative throughout the Western world (including countries with socialised healthcare such as the UK and Australia), the industry is perhaps most developed in the U.S. As American healthcare has become increasingly inaccessible for the middle and lower classes, foreign healthcare has become a viable and indeed favourable alternative to the exorbitant prices charged in the American system. According to the American Medical Association, it is now commonplace for employers, insurance companies and other entities to incentivise foreign healthcare by subsidising the costs of travel – including airfare, accommodation and other incidentals – for those employees or customers who are willing to use their health insurance outside of the U.S. The cost of these subsidies is offset by the fact that the actual cost of procedures overseas can be as much as 80 per cent less than the estimated charge of private facilities in the U.S.
What this trend indicates is that in the absence of wide-ranging structural reform, corporations and governments alike are looking to leverage the global marketplace in order to reduce their own healthcare costs. Gordon Smith, the former Chairman of the United States Senate Special Committee on Aging, makes the point that “for the nation’s 46 million uninsured, travelling overseas for low-cost medical procedures, even with the added costs of travel and lodging, is now an understandably attractive option”.
Of course, foreign treatment is not a perfect substitute for domestic care. There is often limited recourse to malpractice in developing countries, and patients may find themselves unknowingly divested of legal rights. Moreover, travelling overseas for serious procedures inevitably breaks the continuity of patient care and can separate patients from their support network. By and large, however, medical tourism is opening up opportunities for an entire class of Americans who have become disenfranchised by the spiralling costs of private health insurance.
While countries such as the U.S. have tended to benefit greatly from the rise of medical tourism, questions linger as to how it has impacted upon local healthcare systems overseas. On the one hand, proponents of the industry argue that it provides an invaluable source of income to the developing world. In Thailand, for instance, it is estimated that medical tourism will inject 100bn baht ($U.S.3.3b) into the economy by 2015. The situation is similar in countries such as India and Malaysia, where medical tourism has quickly grown into a multi-billion dollar industry.
It must be noted that some of the most vocal supporters of medical tourism include the governments of developing nations. For instance, both the Indian and Thai governments have proactively been encouraging medical tourism for the last decade, through measures such as relaxed visa regulations for medical tourists and the development of so-called ‘medi-cities’ in a number of urban locations. At a speech made in London in 2009, Thai Prime Minister Abhisit Vejjajiva specifically stated: “We are … focusing our attention on developing Thailand as a medical tourism hub for high-quality, low-cost health and medical services.”
Supporters of the phenomenon also make the point that medical tourism neutralises the so-called ‘brain drain’, whereby highly skilled healthcare professionals from third world countries migrate to industrialised nations in order to benefit from higher salaries and improved quality of life. According to its advocates, medical tourism has the capacity to lure these workers back to their home nations, where they can receive a competitive income while having their skills and taxes reinvested into their home economy.
However, others make the point that while medical tourism may reduce the external brain drain, it actually serves to increase the internal brain drain. The nature of medical tourism is such that it isolates highly qualified professionals from the public sector. Most doctors and nurses who work in the field cater almost exclusively to foreign nationals, whose purchasing power far exceeds that of the average citizen. There is also the concern that private corporate hospitals encourage professionals to leave rural areas in the hope of finding high-salary employment in urban centres. In a 2007 statement to the Bulletin of the World Health Organization, Dr Manuel Dayrit, director of WHO’s Human Resources for Health department, stated that although quantitative studies had yet to be performed, “initial observations suggest that medical tourism dampens external migration but worsens internal migration”.
Compounding this problem is the fact that the nature of the private healthcare industry is such that it encourages and perpetuates price inflation. For instance, the marketing strategy of most corporate hospitals is to sell themselves as world-class institutions that not only meet but exceed the standards set by Western hospitals. Accordingly, this requires market leaders to invest heavily in the latest technologies and to constantly improve and upgrade their facilities. This forces the rest of the market to act in kind, the cost of which is then passed on to the patient.
This demonstration effect tends to operate most prominently in heavily privatised systems, where there is a great deal of competition. In the U.S., this has had mixed results: while increased competition has meant that the U.S. has become a world leader in innovation and medical technology, it has also placed healthcare firmly out of reach for millions of low-income earners. The fear is that medical tourism fosters this kind of price-inflating competition in developing nations. In particular, substantial salary packages offered by private hospitals encourage wage inflation in the public sector, as the government desperately attempts to halt the exodus of skilled professionals from the public system.
Yet medical tourism may also have long-term implications for the way healthcare systems evolve in the developing world. For instance, ongoing cost increases in popular destinations such as India and Thailand would suggest that the benefits of medical tourism for the developed world may be short-lived. According to estimates formulated by the India Brand Equity Foundation, it currently costs the same price to have a bone marrow transplant performed in Thailand as it does in the U.S. As prices increase, the competitive advantage of the developed world will decline, ultimately meaning that Westerners will be more likely to reject the third world option in favour of the certainty and safety of the West.
The concern, however, is that by the time international consumers have pulled out of the local market, the domestic industry will have become so heavily privatised that it will become impossible for the local population to access healthcare services. Meanwhile, doctors and nurses who have become accustomed to high incomes and high-quality facilities may find the lure of a foreign salary too hard to resist. This suggests that in the long run, medical tourism may actually increase or hasten the external brain drain.
What becomes clear is that those arguments used to support and justify the expansion of medical tourism appear somewhat spurious when placed under closer inspection. In particular, Western outsourcing of patient care isolates resources from the public sector, as the already limited resources of the developing world are diverted away from the local population. Experience from around the world has shown that as healthcare systems become increasingly privatised, care becomes correlatively less accessible. It is for this reason that the developing world will ultimately lose out from the expansion of medical tourism. While there are short-term reciprocal benefits for the third world, these are far outweighed by the long-term complications of encouraging a privatised healthcare industry.
Matthew Clarke is in his third year of a combined Bachelor of Laws and Bachelor of Arts.
