Cross-Border Medical Tourism: A Typology and Implications for the ...

Cross-Border Medical Tourism: A Cross-Border Medical Tourism: A Typology and Implications for the Typology and Implications for the Public and Private Medical Care Public and Private Medical Care Sectors in the South-East Asian Sectors in the South-East Asian

RegionRegion

Kai-Lit Phua, PhD FLMIKai-Lit Phua, PhD FLMIAssociate ProfessorAssociate Professor

School of Med and Health SciencesSchool of Med and Health SciencesMonash University (Sunway Campus) Monash University (Sunway Campus)

Biographical detailsBiographical details Kai-Lit Phua received his BA (cum laude) in Public Kai-Lit Phua received his BA (cum laude) in Public

Health & Population Studies from the University of Health & Population Studies from the University of Rochester and his PhD in Sociology (medical sociology) Rochester and his PhD in Sociology (medical sociology) from Johns Hopkins University. He also holds from Johns Hopkins University. He also holds professional qualifications from the insurance industry.professional qualifications from the insurance industry.

Prior to joining academia, he worked as a research Prior to joining academia, he worked as a research

statistician for the Maryland Department of Health and statistician for the Maryland Department of Health and Mental Hygiene and as an Assistant Manager for the Mental Hygiene and as an Assistant Manager for the Managed Care Department of a leading insurance Managed Care Department of a leading insurance company in Singapore. company in Singapore.

He was awarded an Asian Public Intellectual Senior He was awarded an Asian Public Intellectual Senior Fellowship by the Nippon Foundation in 2003.Fellowship by the Nippon Foundation in 2003.

Lecture ObjectivesLecture Objectives

Definition of Cross-Border Medical Definition of Cross-Border Medical TourismTourism

GATS and trade in medical servicesGATS and trade in medical services Typology of medical tourismTypology of medical tourism Hypotheses for further researchHypotheses for further research Possible impact on the home countryPossible impact on the home country Possible impact on the host countryPossible impact on the host country

What is “Cross-Border Medical What is “Cross-Border Medical Tourism”?Tourism”?

Medical care of short term foreign Medical care of short term foreign visitors whose visitors whose primary purposeprimary purpose for for the visit is to seek medical treatmentthe visit is to seek medical treatment

In other words, the seeking of In other words, the seeking of medical care in foreign countriesmedical care in foreign countries

WTO’s General Agreement on WTO’s General Agreement on Trade in Services (GATS)Trade in Services (GATS)

WTO’s four modes of trade in services:WTO’s four modes of trade in services:

(i) Consumption abroad (i) Consumption abroad e.g. cross-border medical tourisme.g. cross-border medical tourism(ii) Commercial presence (ii) Commercial presence e.g. foreign investment in medical care sectore.g. foreign investment in medical care sector(iii) Presence of natural persons (iii) Presence of natural persons e.g. foreign doctor who arrives to treat local e.g. foreign doctor who arrives to treat local patients on a voluntary or paid basispatients on a voluntary or paid basis(iv) Cross-border supply (iv) Cross-border supply e.g. cross-border telemedicine e.g. cross-border telemedicine (teleconsultation, remote surgery etc)(teleconsultation, remote surgery etc)

A Typology of Cross-Border A Typology of Cross-Border Medical Tourism Medical Tourism

(Consumption Abroad)(Consumption Abroad) Price-sensitive medical tourismPrice-sensitive medical tourism Quality-sensitive medical tourismQuality-sensitive medical tourism

Note that medical tourism is not a new phenomenon Note that medical tourism is not a new phenomenon e.g. Third World elites have sought medical care in e.g. Third World elites have sought medical care in Australia, Britain, France, USA etc (quality-sensitive Australia, Britain, France, USA etc (quality-sensitive medical tourism resulting in “higher cost overseas medical tourism resulting in “higher cost overseas treatment”)treatment”)

What’s new is ordinary people from more developed What’s new is ordinary people from more developed countries seeking care in less developed countries countries seeking care in less developed countries because of large price differentials e.g. American because of large price differentials e.g. American seeking medical care in Thailand (price-sensitive seeking medical care in Thailand (price-sensitive medical tourism resulting in “lower cost overseas medical tourism resulting in “lower cost overseas treatment”) treatment”)

A Comparison of Price-Sensitive & A Comparison of Price-Sensitive & Quality-Sensitive Medical TourismQuality-Sensitive Medical TourismType of Medical Type of Medical

TourismTourismPatients InvolvedPatients Involved Main Reasons for Main Reasons for

Seeking Treatment Seeking Treatment OverseasOverseas

Price-sensitivePrice-sensitive Relatively less Relatively less affluent peopleaffluent people

To reduce the cost To reduce the cost of medical care of medical care receivedreceived

Quality-sensitiveQuality-sensitive Affluent peopleAffluent people To receive care of To receive care of perceived “higher perceived “higher quality”; to obtain quality”; to obtain sophisticatedsophisticated

services not services not available in home available in home countrycountry

Medical Tourism in SEAsia and in Medical Tourism in SEAsia and in South AsiaSouth Asia

Main destinations are Thailand, India & SingaporeMain destinations are Thailand, India & SingaporeLesser destinations are Malaysia and the PhilippinesLesser destinations are Malaysia and the Philippines

In 2006 (full citations are listed in my paper),In 2006 (full citations are listed in my paper),

Thailand: 1,200,000 medical touristsThailand: 1,200,000 medical tourists (One hospital in Bangkok treats 400,000 (One hospital in Bangkok treats 400,000 medical tourists per year)medical tourists per year) India: 600,000 (Indian embassies give out M visas India: 600,000 (Indian embassies give out M visas valid for 1 year)valid for 1 year) Singapore: 374,000 Singapore: 374,000 (Medical tourists and other foreigners make up 60% of(Medical tourists and other foreigners make up 60% of the patients of one major private sector medicalthe patients of one major private sector medical corporation in Singapore)corporation in Singapore) Malaysia: 292,000 Malaysia: 292,000 (Earnings in 2006: RM 204 million. Expected earnings (Earnings in 2006: RM 204 million. Expected earnings in 2010: US$1 billion or RM 380 million)in 2010: US$1 billion or RM 380 million)

What Can Account for the Growth What Can Account for the Growth in Medical Tourism? in Medical Tourism?

Malaysian health policy expert Dr Chee Heng LengMalaysian health policy expert Dr Chee Heng Leng(Asia Research Institute, NUS) argues that:(Asia Research Institute, NUS) argues that:

This is a side effect of the “commodification” of This is a side effect of the “commodification” of medical caremedical care

Commodification:Commodification:

Product standardizationProduct standardization Market expansionMarket expansion Active marketing of medical care to consumersActive marketing of medical care to consumers

Characteristics of Medical TouristsCharacteristics of Medical Tourists

Quality-sensitive medical tourists:Quality-sensitive medical tourists:

Affluent people e.g. wealthy citizensAffluent people e.g. wealthy citizens

Ruling elites e.g. Myanmar army Generals Ruling elites e.g. Myanmar army Generals seeking medical care in more developed seeking medical care in more developed SEAsian countriesSEAsian countries

Price-sensitive medical tourists:Price-sensitive medical tourists:

Middle class people who are reasonably Middle class people who are reasonably well-informed about foreign countries and well-informed about foreign countries and which foreign medical centers to go to which foreign medical centers to go to

Kinds of Medical Treatment Likely Kinds of Medical Treatment Likely to be Sought Overseasto be Sought Overseas

1. Quality-sensitive medical tourism:1. Quality-sensitive medical tourism: sophisticated services e.g. open heart surgerysophisticated services e.g. open heart surgery2. Price-sensitive medical tourism: 2. Price-sensitive medical tourism: Non-urgent medical procedures such as hip Non-urgent medical procedures such as hip

replacement or knee replacement surgery, replacement or knee replacement surgery, cosmetic surgery, dental surgery, gender cosmetic surgery, dental surgery, gender reassignment surgery reassignment surgery

Other possibilities: organ transplants (“transplant Other possibilities: organ transplants (“transplant tourism”)tourism”)

Medical procedures that do not requireMedical procedures that do not requirean extensive period of treatment or extensivean extensive period of treatment or extensivefollowupfollowup

Favored Destinations and Favored Destinations and Treatment Sites Treatment Sites

Destination Countries with theseDestination Countries with these

characteristics:characteristics:

Ranked high in terms of perceivedRanked high in terms of perceived

medical care qualitymedical care quality

Major languages such as English,Major languages such as English,

Spanish, French etc are widely spokenSpanish, French etc are widely spoken

Foreign visitors feel welcome and safeForeign visitors feel welcome and safe

Politically stable with a relatively highPolitically stable with a relatively high

standard of livingstandard of living

Easy to fly toEasy to fly to

Favored Destinations and Favored Destinations and Treatment SitesTreatment Sites

Treatment sites (hospitals or medicalTreatment sites (hospitals or medical

centers) that are:centers) that are:

Accredited by the accreditation agency ofAccredited by the accreditation agency of

the medical tourist’s own home country the medical tourist’s own home country Owned by the medical tourist’s own homeOwned by the medical tourist’s own home

country health care corporationscountry health care corporations

World-renowned e.g. Mayo Clinic inWorld-renowned e.g. Mayo Clinic in

Rochester, Minnesota, USARochester, Minnesota, USA

Staffed by doctors with credentials fromStaffed by doctors with credentials from

the medical tourist’s own countrythe medical tourist’s own country

Motivations (besides “perceived Motivations (besides “perceived higher quality” or “lower cost”)higher quality” or “lower cost”)

Motivation for Seeking Motivation for Seeking Medical Care Overseas Medical Care Overseas

ExampleExample

To reduce waiting timeTo reduce waiting time Organ transplant patient Organ transplant patient who wants to avoid long who wants to avoid long waiting listwaiting list

Seek experimental care Seek experimental care or controversial careor controversial care

Terminally-ill patient Terminally-ill patient desperate for a “cure”desperate for a “cure”

Convenience/privacyConvenience/privacy Gender-reassignment Gender-reassignment surgery process involves surgery process involves less hassle overseas less hassle overseas

Seek care that is Seek care that is unavailable or illegal in unavailable or illegal in the home countrythe home country

Pregnant female seeking Pregnant female seeking induced abortion (illegal induced abortion (illegal in her home country)in her home country)

Motivation of Less Costly CareMotivation of Less Costly Care For many medical tourists, ........ the real attraction is For many medical tourists, ........ the real attraction is

price. The cost of surgery in India, Thailand or South Africa price. The cost of surgery in India, Thailand or South Africa can be one-tenth of what it is in the United States or can be one-tenth of what it is in the United States or Western Europe, and sometimes even less. A heart-valve Western Europe, and sometimes even less. A heart-valve replacement that would cost $200,000 or more in the U.S., replacement that would cost $200,000 or more in the U.S., for example, goes for $10,000 in India--and that includes for example, goes for $10,000 in India--and that includes round-trip airfare and a brief vacation package. Similarly, a round-trip airfare and a brief vacation package. Similarly, a metal-free dental bridge worth $5,500 in the U.S. costs metal-free dental bridge worth $5,500 in the U.S. costs $500 in India, a knee replacement in Thailand with six days $500 in India, a knee replacement in Thailand with six days of physical therapy costs about one-fifth of what it would in of physical therapy costs about one-fifth of what it would in the States, and Lasik eye surgery worth $3,700 in the U.S. the States, and Lasik eye surgery worth $3,700 in the U.S. is available in many other countries for only $730. Cosmetic is available in many other countries for only $730. Cosmetic surgery savings are even greater: A full facelift that would surgery savings are even greater: A full facelift that would cost $20,000 in the U.S. runs about $1,250 in South Africa.cost $20,000 in the U.S. runs about $1,250 in South Africa.

B. Hutchinson “Medical Tourism Growing Worldwide”B. Hutchinson “Medical Tourism Growing Worldwide”

http://www.udel.edu/PR/UDaily/2005/mar/tourism072505.htmlhttp://www.udel.edu/PR/UDaily/2005/mar/tourism072505.html

Organisation and Financing of Trips Organisation and Financing of Trips OverseasOverseas

By individual patients and their families using By individual patients and their families using personal savings/borrowed moneypersonal savings/borrowed money

By self-insured employers eager to reduce the cost By self-insured employers eager to reduce the cost of health care generated by their employeesof health care generated by their employees

By insurance companies or administrators of By insurance companies or administrators of national health care systems who realise that national health care systems who realise that costs can be reduced by having enrollees treated costs can be reduced by having enrollees treated overseasoverseas

By “cultural brokers” such as tour operators, agents By “cultural brokers” such as tour operators, agents and others who work with overseas hospitals and and others who work with overseas hospitals and foreign health care providersforeign health care providers

By public agencies set up by governments to By public agencies set up by governments to promote medical tourism e.g. “Singapore promote medical tourism e.g. “Singapore Medicine” and “National Committee for the Medicine” and “National Committee for the Promotion of Health Tourism in Malaysia” Promotion of Health Tourism in Malaysia”

Possible Impact on the Health Care Possible Impact on the Health Care Industry in the Home CountryIndustry in the Home Country

1.1. In high cost countries like the USA, there In high cost countries like the USA, there may be a significant reduction in demand may be a significant reduction in demand for particular medical proceduresfor particular medical procedures

2.2. If so, health care providers such as If so, health care providers such as hospitals and specialists will be forced to hospitals and specialists will be forced to react e.g. health care corporations may react e.g. health care corporations may open up branches overseas; specialists open up branches overseas; specialists may go overseas to seek patients to may go overseas to seek patients to treat treat

Possible Impact on the Health Care Possible Impact on the Health Care Industry in the Host CountryIndustry in the Host Country

1. An influx of medical tourists into a host country is 1. An influx of medical tourists into a host country is equivalent to an increase in the demand for equivalent to an increase in the demand for higher end medical services. This implies higher higher end medical services. This implies higher prices for local people (in the short run).prices for local people (in the short run).

2. May accelerate movements of health personnel 2. May accelerate movements of health personnel e.g. from poorer countries to more developed e.g. from poorer countries to more developed countries in SE Asia; from the public sector to the countries in SE Asia; from the public sector to the private sector; from less lucrative medical private sector; from less lucrative medical specialties to more lucrative specialties (e.g. specialties to more lucrative specialties (e.g. general surgery to plastic surgery) general surgery to plastic surgery)

3. May further distort the allocation of health care 3. May further distort the allocation of health care resources (more devoted to tertiary care)resources (more devoted to tertiary care)

Possible Impact on the Health Care Possible Impact on the Health Care Industry in the Host CountryIndustry in the Host Country

… …. initial observations suggest that . initial observations suggest that medical tourism dampens external medical tourism dampens external migration but worsens internal migration migration but worsens internal migration … it does not augur well for the health … it does not augur well for the health care of patients who depend largely on the care of patients who depend largely on the public sector for their services as the end public sector for their services as the end result does not contribute to the retention result does not contribute to the retention of well-qualified professionals in the public of well-qualified professionals in the public sector service.sector service.

Dr. Manuel Dayrit, World Health Organization Dr. Manuel Dayrit, World Health Organization

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The EndThe End

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