Medical tourism revisited: Not as popular as predicted

Earlier reports may have overestimated patients' willingness to travel overseas for care.

By Pamela Lewis Dolan — Posted Dec. 21, 2009

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The recession and high travel costs might explain why one major medical tourism survey found fewer patients going abroad for care now than two years ago.

But those factors alone don't explain why those within the industry are ratcheting down their expectations and acknowledging that the number of medical tourists will never come close to the 20 million a year by 2015 predicted a year ago.

Going overseas for medical procedures is pitched by advocates as a less-expensive alternative to care in the United States. But industry growth is being held back by numerous factors.

Medical tourism's mainstay is elective procedures. But the recession has left more people without insurance and postponing elective procedures in general, whether done in the U.S. or elsewhere.

Gas prices of 2008, and a subsequent rise in travel costs, made it more expensive to travel for care. Even with a fall in oil prices, compared with last year, airfares are still more expensive than they were pre-2007, as airlines cut capacity to protect profits.

But experts said the biggest problem for medical tourism is a long-identified barrier that has yet to be overcome: discomfort with the idea of traveling long distances to strange places for care that patients aren't sure will meet U.S. standards. While health plans and self-insured employers continue to offer medical tourism, experts say patients, lacking incentives such as significantly lower out-of-pocket costs, are more likely to seek care around the block than around the world.

"This is not something that is a mass exodus from the U.S. medical market. It is more a convenient option for a certain group of people who are looking for lower-cost elective procedures, especially outpatient: cosmetic, some orthopedic, some ENT," said Paul Keckley, PhD, executive director of Deloitte Center for Health Solutions.

Deloitte recently released its second survey of medical tourism traffic with major adjustments downward from its first survey in 2008, which it attributed to more accurate gathering of information. Keckley said Deloitte researchers previously relied on self-reported data from medical destinations that didn't have a reliable tracking method. Deloitte is now cross-referencing those numbers with organizations in the U.S. that handle medical tourism.

In 2007, Deloitte counted 750,000 American patients who got care on foreign soil. Deloitte's 2008 survey estimated that the number could more than double to 1.7 million, double again to 3.3 million in 2009, double again to 6.8 million in 2010, and nearly double one more time to 12.6 million by 2012.

But Deloitte's 2009 survey found that actual medical tourism traffic fell in 2008 -- down to 540,000. Deloitte estimated that by 2009's end, traffic would be up 20% to 648,000, which is still below 2007's level. The organization projects that traffic will indeed approach 1.7 million -- but not until 2012.

"Medical travel will always be a niche market," said Wouter Hoeberechts, CEO of WorldMedAssist, a medical travel coordinator.

Elective procedures overall have declined in the past two years. A study by the American Society of Plastic Surgeons a year ago found that 62% of its members saw a 20% or more decline in business. In a separate survey, the academy found that people were avoiding surgery not only because of the cost, but because the recovery time would take them away from work.

Before Deloitte published its first study on medical travel, McKinsey & Co. published a May 2008 report showing projections more closely matching the numbers Deloitte adjusted in 2009. While the McKinsey report was criticized by some in the industry -- the authors admit that the precise number of medical tourists was undercounted -- its interpretation of how cultural and economic barriers would stifle medical tourism turned out to be on the mark.

"While medical travel may offer superior value for elective surgical admissions -- 20%, or 8 million cases, of U.S. inpatient admissions in 2007 -- the actual market will be significantly smaller, since payers and patients probably won't pursue overseas options in break-even or minimally profitable situations," the McKinsey authors wrote in 2008. The study found that $10,000 in savings was the threshold needed to prompt a U.S. patient to consider care overseas. Changing currency values and higher airline tickets have made that threshold harder to meet in recent months.

While economic barriers can be overcome, experts say, it's harder to address people's unwillingness to travel abroad and the lack of incentives for doing so.

David Boucher, president of Companion Global Healthcare, a medical travel coordinator company launched by BlueCross BlueShield of South Carolina, said the number of self-insured employers it has contracted with to provide medical travel benefits has at least doubled in the past year. But few employees are taking advantage of the benefit.

Hoeberechts has seen similar trends. "Even among those companies that we have signed up, the patient flow is not there."

Boucher said employers could do more to encourage people to travel abroad for care, but he agrees with policy adopted by the American Medical Association in 2008 saying medical travel always should be voluntary. Boucher said none of the companies he contracts with had expressed an interest in making medical travel mandatory. But they are discussing ways to make it more attractive.

Without incentives, there's little reason for most people to go overseas, Boucher said. One exception is expatriates, who may feel they can get more culturally appropriate treatment in their countries of origin or who can combine a medical procedure with a trip home. This is the population Keckley thinks will cause the biggest attrition to the U.S. market.

Many self-insured employers are expected to become more aggressive with encouraging medical travel, according to Deloitte. But big business to a company like Global Healthcare or WorldMedAssist does not equate to a significant loss to the U.S. health care market, experts say. Boucher, for example, said that although he expects the number of patients Global sends abroad next year to double, it has sent fewer than 30 this year.

Hoeberechts said he doesn't give much weight to reported traffic numbers, because they never seem to reflect his company's experience. "We're doing very well." He wouldn't share actual numbers of trips he has organized this year but said business has doubled from a year ago, with several hundred trips arranged.

"The numbers are going to be significant, but small. It's a big industry for our company, but a small impact on surgeons and primary care physicians" in the U.S.

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External links

"Medical Tourism: Emerging Phenomenon in Health Care Industry -- 2008 Report," Deloitte Center for Health Solutions, June 25 (link)

"Medical Tourism: Update and Implications -- 2009 Report," Deloitte Center for Health Solutions, Oct. 23 (link)

"Mapping the market for medical travel," McKinsey Quarterly, abstract, May 2008 (link)

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