Discovering Medical Tourism

Michel Rocard is quite an affluent man in the history of France. Looking at his curriculum he was the former Prime Minister of France for three years (88 to 91) before being sacked because of his bickering rivalry with francois Mitterand. Recently he became quite popular with his very phoney interviews during which he appeared as a sincere man  full of humor and nuances. In a word, he is someone that stands high in the French opinion.

        

BEFORE                                           AFTER

Yet, recently, while being on a tour in India for the IFUNA, Michel Rocard experienced many problems while trying to walk and he was sent to emergencies on the 30th of June in Calcutta while barely being able to speak. From what it seems, Michel Rocard had a major hematoma in the brain and a surgery was quickly performed by Dr. G. K. Prusty.

Michel Rocard now comments: ” the surgery performed on me was quite serious (…) and could have crippled me”, but it was undertaken under excellent conditions (…), I believe there will be no side effects, it is formidable“.

Form Wikipedia: “Public relations (PR) is the managing of outside communication of an organization or business to create and maintain a positive image. “ This has been perfectly epitomized by Mr Rocard who is the living and well publicised study case that medical tourism was waiting for. Actually there was another case previously when Nepal Prime Minister Girija Prasad Koirala needed medical care in 2006 (he went to Thailand). Even though in this case, the medical operation performed was an emergency one, the comoplexity of the latter and the good results expected makes it a very good ad. Plus Michel Rocard, soon to be 77, commented extendidly on the quality of the service in India, the warmth of the medical staff etc etc. He also commented that Nicolas Sarkozy a right wingist had been very with him, a left wingist (the political scenary in France is in shambles conversly to medical tourism).

In a more serious note, I feel that what medical tourism needs is PR agents. The main marketing tool used to lure medical patients is the cost effects but not the technical prowess used or the genuine difference in terms of service or sometimes or after surgery care. These PR agents can only be reputed or famed people. When thinking twice about it, everything began with Pamela Anderson and her silicon breasts that never exploded but were partially removed. For men it was a cosmetic revolution, for women a source of complexion. 30 million US citizens are actually seeking for cosmetic surgery thanks to her. But if we look at things inverted, if an Indian hospital could save Brad Pitt or Maria Carey, how would people react? By converting them into Indian pilgrims, or perhaps by taking a closer look on these hospitals.

So Brad, Maria, if you want to help the industry, you know what you have to do!!

In this Short extract from the Simpsons TV Series, we have Homer Simpson looking for 40000 USD in order to perform his heart bypass. Homer the living epitome of the average American is getting at grips with the American insurance system and unnafordable medical costs. Here is Homer looking for a handout.

In fact, Homer previously sought for medical insurances but couldn’t pass the standard interview. This perfectly illustratesd the current hyperbola going on the adverse selection topic among American insurers. In this other extract, you will witness the fact that Homer is uninsurable.

At the end of this episode, Homer finally gets a cheap surgeon, Nick Rivera, who will perform o Homer’s heart in front of an audience (in order to trim down cost for Homer). This pastiche was done about 10 years ago but still depicts perfectly the social drama attached with a heart bypass in the US. How come so little progress have been done?

A few days ago I remembered one very trite fact. Before 1965, Singapore was still part of the Third World and quickly positionned itself as one of its leaders. I read about an innovative public management with highly paid top public servants many public private collaborations, an efficient central planning. But what really shocked me was that in 1965 the average  age in Singapore was 18,8 years old, while now it’s 32,7. Now, the demographic transition is well consumed as Singapore will have 1/4 of its population beyond 60 year old in 2030!

The Tan Toc Seng hospital - A new fashionable hangout for old people?

This ageing population is posing huge problems as Singapore hasn’t yet adjust to the high health cost implied. In fact today; Singapore has an extremly low private health expenditure barely toping the 2,5% of GDP against Mamoth expenditures such as in the UK 17,8% in 2004 or Australia 34,2%. Even though this is mainly due to the little amount of second opinion requested, the welfare system(that is not equalitarian but socially oriented) or even the small number of hypocondriac people (compared to some European countries), this small figure is stemming from a healthy population. This figure should indeed soar up to 5% by 2030, exactly the same figure  than in 1965.

All in all, Singapore has been viewed for years by the World Health Organisation as the 5th or 6th best medical system in the world. The central planning is perfectly channeling its demographic evolution while promoting the expansion of medical tourism activities (Singapore is expecting 1 million medical tourists per year in a short horizon). The number of beds should grow as the City  State establish itself as the best medica hub in the World but is gearing towards a bicaphal approach: geryatrics and the outsourcing of general medical procedures… Not exactly the same thing…

Plastic surgery and cosmetic surgery seem to be two close knitted words. In fact, cosmetic changes is one of the posible consequences of plastic surgery. Therefore there cold be an inclusion of cosmetic surgery as a part of the plastic surgery, a very popular segment indeed as 11 million coswmetc operations in the

US were performed in 2006. Taking a closer look to figures we see that cosmetic sugeries earned almost 6.5 billion USD for practitioners in 2005 and 372 million USD in revenue for equipment manufacturers (according to Medical Insight Inc., 2005). Botox procedures only generated over 2.1 billion USD in procedure fees. Yet, specialists tends to make a clear distinction.

Miss Taboo: Cosmetic Surgey has even become a form of subersive art…

Plastic surgery as defined by the American Boar of Medical Specialties as the subspecialty dedicated to surgical repair of defects of form or function. Cosmetic surgery can be legally performed regardless of specialty by any doctor. In the UK, doctors who perform cosmetic medicine are primarily those who dropped out of specialist training to work in the private sector. In fact, there is no specialist register for cosmetic medicine in the UK.

In Australia, of the estimated 500 doctors who provide cosmetic procedures about 25 per cent are general practitioners. It leads to a highly competitive and protectionist industry where every little research is published for fear of disclosure of trade secrets. Hence, one of the main concerns over cosmetic surgery is that the qualifications of the surgeon for cosmetic procedures is quite irrelevant when compared to the situation in developed countries.

However one can wonder why the cosmetic surgery industry is constrained by little regulations. The main reason evocated by specialists is the fact that cosmetic surgery is mainly consumer driven and therefore the industry should be self regulated. An underlying problem is the political sensitivity connected to cosmetic surgery that makes it hard to debate openly. Cosmetic surgery is hindered by unnecessary taboos that can be seen through the lens of medical tourism. Furthermore, many regulatory authorities foresee fiscal and administrative limitations in regulating the industry and are reluctant to be accountable for the quality and safety of aesthetic services.

Medical tourism suffers directly from the taboo of cosmetic surgery in developped countries because there is no open debates on the downfalls of the system, the lack of specialisation, the heavy medical malpractices in countries. Assuming people are aware of the lack of reins that exists in this industry, medical tourism would be seen as an upgrade more than a cheap alternative…

Medical tourism is a thorny commercial product because of a confidence crisis between the customer and the foreign based doctors or surgeons. How could we thwart this major issue?

 Best of both Worlds by Planet Hospital - a tailor made solution to ease up the fear of US medical tourism customers 

Planet hospital is proposing through their best of both world program an innovative solution: this company has observed that an US hospital is directly and indirectly way too expensive, due to the cost of the facilities and the insurances that must be held  in order to perform. An hospital in the eyes of Planet Hospital is an uneeded intermediairy, a third man who weights too much on the final bill.

Best of both Worlds has convened a series of doctors and surgeon performing in the US and tie them up with the company’s customers. Besides doing pre and post op check ups and follow ups in the US, these surgeons will eventually perform the heavy surgery on the patient assisted by top tier surgeons from Asia IN the various asian hospitals. A really clever solution, that however bear a cost but allows a real follow up throughout the medical procedure something that medical tourism agencies pain toi achieve.

Neverthess, there is two major hurdles to this business model:

a. the limited coverage of the territory by this program (Planet Hospital actually started this program in California and starts scratching the surface of other  federal states)

b. the deal flow: considerong the natural limitation of the number of US surgeons available for this program and the number of days necessary to perform a surgery overseas, the maximum capcity of this system is quickly reached even though the process is regulated by a precise yield management tool (however difficult to implement considering the fact that the schedules of a surgeon is a mix between long and short term planned surgeries)

All in all, a very interesting business model that is however limited and too demanding and tends to comfort people on their understanding of the medical tourism phenomenon. Best of both Worlds is turning a blind eye on the real problems of medical tourism such as the cognitive interpretation of ‘Surgery in India’, ‘Surgery in Singapore’.

Planet Hospital has positionned themselves as a serious operator in the medical tourism industry, however they perhaps tend, like many other companies, to focus too much on the medical side and therefore stress upon the causes of defiance expressed by US customers.

The press releases throughout the world about medical tourism are often quoting one example. I would like to also talk about it: the Blue Ridge Paper Factory study case!

Blue Ridge Paper Products is a manufacturing firm in Canton North Carolina, with 2,100 workers. In 1999, while the company’s health care costs were increasing at 18 percent a year,

Blue Ridge was bought by a venture capital firm. As part of the company’s transition to a 45 percent employee stock ownership program, the union agreed to a 15 percent wage cut and seven-year wage freeze. However, between 2000 and 2006, employee healthcare costs for the company rose over 75% to a staggering 24 million USD.  

An innovative policy derived from a voluntarist corporate culture

The relative weight of the healthcare benefit system was denting profit growth and slowing down recruiting processes.

 

Blue Ridge had to find a way to trim down healthcare costs that were rocket soaring. The company did so by launching for instance a diabete management program that waived copays on medicine. However in 2005 the healthcare cost was still increasing by 3,5% therefore Blue Ridge visited overseas hospitals and worked with IndUSHealth to find more cost cutting solutions.

 

The latter company produced a DVD encouraging people to go to

India in order to perform their surgery. By doing so, employees will get a 100% reimbursement plus travel expenses for themselves and a companion and the employee can receive up to 25% of the savings garnered fro; the outsourcing. For instance, one of their employees in 2006 decided to remove his gallstones and have his rotator fixed. The company will save about 80000 USD on both surgeries while the employee will receive a 10000 USD bonus for the trouble. 

How can one decently say no?

In this short log we will try to convert medical tourism into a theory of finance problem (sorry for those for whom the word finance gives pimples):

A customer using medical tourism services has to model by himself all the real options and put a good price on it (see previous article). This price is made out of both the price of a heavy surgery operation and the intrinsic cost derived from the pain and suffers generated by a dwindling health (the pricing of this last element is however extremely correlated to the perception every individual has on its own body).

 

Creating a parrallelism between financial and medical tourism words

A so called smart tourist will be able to make the right moves and call the right options (anticipating any health hazards through preventive programs…) while being able when maturity is reached (when the decease occurs) to properly hedge the risks. The elasticity of time is different under medical This comparison to financial modeling can seem a little bit abusive but as in the financial markets, health in the same as a stock is a dynamic factor that relies on a good management and decision making. The stock holder as any customer of medical tourism needs thorough and clear information (notes from brokers in one case, medical information by doctors in another) before being able to make a move that makes sense.

This flow of information must be regular and qualified with indicators that are easily understood and a simple rule of thumb to make decisions. In the case of medical tourism the rule of thumb for a heavy surgery is trite, but for a body treatment or a preventive care it is way more complicated. Perhaps that incentive has a big stake in enticing people to take these options as it is the case with dividends in the stock market.Like for any stock market operation, information and transparency are the key points to develop in order to boost the medical tourism market. In fact, today medical tourism is lacking liquidity (namely transactions; customers) most notably due to the lack of confidence in the various overseas medical services. Nevertheless, medical tourism can already communicate on its transparency: the price of a given medical service is always clear as well as all the side costs (airfares, resorts stays, visits…).

Medical tourism will only boom throughout a better communication from the various actors of this industry. Perhaps this blog will be the center of a new economy?

We have previously established the fact that medical tourism was not only dedicated to heavy operations but could also concern lighter medicalfeatures such as body care or preventive care that makes more sense from a tourism point of view when using the term “medical tourism”.

Now let’s focus on the CUSTOMER of medical tourism, assuming it’s an individual. Like my American friend I met in Malaysia, a medical tourism customer is the key decision maker of the system.

However this decision to go or not to go overseas depends on:

 

+ his state of emergency (very high degree of pain, long waiting lists, no insurance and little savings to compensate it): the customer quickly needs a heavy surgery

+ his anticipation and health awarness (taking steps to constantly better his own health status, close monitoring of the different paramters of his health): the customer will decide to go overseas to follow specific programs to boost his physical and dietary condition.

+ external motivation factors (the company for which the to-be customer is working proposes special incentive packages to opt for medical tourism)   

All in all, when considering these various aspect we can consider that a medical tourist is a smart tourist as he is in the middle of many paths and is able to elect the right path. By using the word smart, I do not mean that those who do not use medical tourism are stupid but that someone that weights opting for or against medical tourism is well aware of his options, its risks and the impact of these options on his future health.

The real leverages of medical tourism rely on the various decision factors depicted above and on trying to make the benefits of these decisions clear.

However, we can see that anticipation leads to simple medical tourism services: a preventive care is a one stop shop process whereby someone can easily enroll for a one week and a healf program while for a surgery a customer will need several pre consultations to qualify his decease, tele consultations to link up with overseas doctors, to fly to the hospital , have a new screening… Being a smart medical tourist is also being able to detect simplicity and complexity and know how to avoid unneeded stress

Serge Fabre is an expert of the tourism Industry. In fact he was during his career Commercial Director of Carlson Wagonlit, then Managing Director of Go Voyages (Number 4 in France actually), Co founder of Cofinoga (a fidelity program called Smiles now) Vice President of operations of Liberty TV (a TV channel dedicated to tourism) and co founder of Vivacances an internet tourism agency that has been sold in 2005 to Opodo. In a word he is an extremly seasonned person that has gone from the early day of the brick and mortar agencies to the internet pure players. He has succesfully experienced various changes and is willing to further investigate other fields.

When 57 I would like to have such a resume…

In fact, we met several times in Singapore in order to discuss this strange wording:”medical tourism”. I was still dubious about this association of tourism with medical services as I had the impression that the operation described by my friend from Sacramento boiled down to what we could call medical travel. Medical travel will consist in making all the appointements to an hospital and take the appropriate plane to fly to this hospital. Serge also investigated the sector by analysing some tourism agencies specialised in medical travel and came out with the following elements:

+ incoming services factor heavily in medical tourism: what is really important is the customer focus orientation of the offers. Medical patients want to have a one stop shopping solution that cannot come from a pure medical travel approach. For instance, people are willing to have a limousine service when they get down of the plane (they fear the barrier of language) hence several features to be booked and coordinated by professional.

+ Even though Tourism is an indirect effect of medical intervention there is a strong tie between the latter and pre or post operation phases: people really enjoy to have the opportunity to relax before a stressful operation or to get fit in a nice resort. The booking of these resort stays and the operation is nevertheless conditional most notably for post operation rehabbing, where a stay depends on the health status of a patient after an operation. However, Serge questionned whether or not the tourism part was not the underlying pull factor behind the medical tourism concept.

In fact, all the agencies we have observed (we will analyse some of them in the upcoming days) are mainly focusing on the medical aspect of the business. Their business models mainly consists in tying up with hospitals with a good accreditation and US or UK educated doctors, set up pre consultation and incoming services without really taking care of the tourism part. There is a kind of discontinuity between the “medical” and the “tourism” part of these businesses: they have built a very strong medical offer on complicated operations at a low cost and consider tourism as a marginal source of revenues (or non appealing factor). In our eyes, this has led people to think that medical tourism only concerns heavy surgery such as the heart valve replacement of my friend from Sacramento.

However, when taking a look at what the ”medical” word implies we can consider:

a. Heavy Surgery (orthopedic, facial surgery…)

b. Elective procedures (botox, laser…) 

c. Health care (specific body therapies…)

d. Preventive care (stress, weight management…)

When looking at these factors, we had the impression together with Serge that medical tourism agencies are loosing an important part of the market (most notably b., c. and d.). In fact, when we think of a health care center through body treatments, “spa” and “health resorts” quickly come to our mind. But spa and resorts are part of the tourism part. Are health care and preventive care out of the medical tourism picture? Why should it be so? Serge and me are now really willing to make an effort to understand what is the real meaning of medical tourism and to be able to make a real distinction between medical travel and medical tourism…