Discovering Medical Tourism

The Web 2.0 has been on the back burner for quite a while now. Just quoting the 2.0 stuff is enough to see people advocating a new golden era. However, many econmists and web specialists have identified several hindrances to the web 2.0: the revenue model has not evolved, the bigs only can survive, the information is not homogenous, yet it is a great looking idea. Wikipedia among others is a great example of the potential success of such a trend.

Medtrotter: a new toddler in the Web 2.0 world

Medtrotter decided to be the first entrant in the Web 2.0 for medical tourism. The company has created a portal where people can give their opinion on a given surgeon or a given location. Unfortunately, we can hardly access to any data and it seems that this system is not efficient. In fact, there are little elements that push anyone to fill these questionnaires that  however are not long but is still demanding efforts. Nevertheless, there is a genuine community sustaining the system, namely people experiencing medical travel and that are willing to share their experience. Yet, is the simple assesment of a doctor a good tool to pass a judgement on medical tourism. This supposes that the concept itself is accepted, that medical tourism is well understood by everyone and that there is no need to make a clear statement on the side effects of the system (better service, better facilities…). Is grading a doctor better than reading a testimonial where a doctor and an hospital are involved?

I genuinely feel that this concept comes at a too early stage of medical tourism and testimonials are still a better tool than global benchmarking. Even though the idea is relevant, I don’t feel that this is people wan to say and want to read for the time being. Web 2.0 in medical tourism should better be developped for close knitting qualified testimonials…

I recently met Luc de Rancourt, a specialist in IT dedicated to medical services (Director of Koira) with whom we extensively discussed about online medical follow up and telemedicine. Though he is mostly an expert of the French medical system, Luc de Rancourt gave me extremely interesting insight on the current debate in the US about medical follow up and personal health dossier and opposed it to the current situation in France.

One of the major question marks ongoing is the possibility of transitioning from an inefficient paper system to a fully informatics system in the medical sector. In fact, informatics offers many advantages such as historical follow up of a person, easy transmission of files, coordination of prescriptions, adverse medicine listing… Even though it bears a high cost but poses little technological hindrances, the diffusion of a medical electronic dossier has been quaint mainly because of what Luc de Rancourt calls a psychosociological barrier

One of the 192 medical follow up softwares available in France: the market is atomised!

Coloc Singulier

The French example is a good epitome of this psychosociological barrier. In France, there are two kinds of practionners: doctors in hospitals and private doctors that work as “profession liberale” (which is a specific professional status that is common to lawyers, doctors and other specific professions). In fact private doctors are acting under the rule of “coloc singulier” that points at the fact that a doctor is master of his diagnostic and prescriptions and by any means has to be accountable for his decisions. A patient when entering the office of a doctor fully trusts the latter and empowers him with the right to diagnose and treat him. A doctor cannot doubt cannot show any signs of weakness. One of the major consequences of an onine dossier is that people can trace medical decisions and possibly sue a doctor if a diagnostic was wrong and had ripple effects on the patients. Online medical dossiers jeopardize the quality of the service given by doctors as they will be less likely to take any risks and will stick to minimalist diagnostics.

Paramedics vs doctors vs doctors

In France, paramedics have a limited scope of action as they must abide by the decisions of doctors. For instance, they cannot make deliberately an injection if not directly asked by a doctor. This lack of flexibility makes the doctor the real center of the follow up system. An electronic outsourcing of medical information will have a limited impact as it cannot lead to a quick paced and easy flowing decision. However, in the UK and in the US, paramedics have way more power so France appears as an outlier. Another significant fact is the lack of communication between doctors. Doctors are not that used to communicate between themselves and many people can just witness redundant procedures when switching from a doctor to another while seeking medical advice.

People love their doctors

Some people just feel at ease with their doctors (people don’t like to change often their doctors) and the latter give them perks to thank them for their fidelity. Each year in Corsica, a famed French Island because of its rebel attitude, the average number of medical leave days is 13,8 days per worker while it only reaches 4 days per worker in Paris. As we can see, disorganization is not playing only against people but can help to spur a French national sport: absenteeism!

The psychosociological barrier hence comes from both patients and doctors. This system is working for both parties so why mend it? Yet, just an historical medical approach will be of a big help for the industry, so why not considering it?

According to a nationwide survey of 1000 adults conducted by Opinion Research Corp, Americans spend twice as much time researching car and computer purchases than they do in selecting a doctor, and 6 in 10 say they probably wouldn’t change their ways even if price and quality information on healthcare providers was readily available. It looks that the convenience factor is predominant yet one can wonder if this convenience is not correlated with the implicit message sent by the word doctor.

I am a huge fan of some consumer behaviour theories one of these being the famous ELM model (Elaboration Likelihood model) by Richard E. Petty and John T. Cacioppo:

A simple chart done by one of my friends at HEC to explain the ELM model

According to the ELM model one can take two routes when facing a decision problem: the central one which is rationale and the peripheral one which is affective. The  most important underlying concpet is the involvement of an individual when making his decision.

The model defines the elaboration likelihood (EL) of the communication situation as the probability of message- or issue-relevant thought occuring in the consumer’s head. From the consumer’s point of view, it is about engaging or not in extensive issue-relevant thinking to evaluate an issue. According to the ELM model, the involvement or elaboration likelihood (EL) conditions choice in the following way:

+ When the EL is high, the central route should be particularly effective.

+ When the EL is low, the peripheral route should be better.

Medical tourism to gain credibility and striking power should be able to take the central route hence rationalize the decision process by identifying (or creating) key factors to be evaluated by someone opting for the appropriate surgery practice. The involvement is in fact low when talking about surgery knowing that the final decision is normally handled by a professional and there is little need (besides cost) to jump from one specialist to another. The medical service is indeed a long term involvement on which there is only one element that pressures us to decide: trust. And trust is on the peripheral route… Plus the peripheral route is a bumpy one as changing doctor is a stress factor that is added to the primary and ultimate anxiogene factor: the surgery itself.

 Opting for another route thanks to medical tourism communicating through the tourism angle

Medical tourism revamp the central route by introducing new factors to be rationnaly evaluated such as: medical follow up through the trip, intrinsic quality of tourism services… Decision making will not only take into account the trust we have on a system but the rationale evaluation of the various benefits brought by medical tourism. Hospital accreditations, incentive programs proposed by companies or monospecialisation (best hospital for appendicetomy for instance…) can only help to opt for the central route… 

Tourism Quality has been a well documented matter for the last several years. However, before getting started we should ponder over the notion of quality. Tourism Quality has three components that must be sustained through:

(1) internal customer satisfaction

(2) external customer satisfaction

(3) the efficiency of processes

Satisfaction implies that we must translate subjectivity to objectivity. Expectations vary widely from one customer to another. Controlling these various factors should help extending the life time value of a customer that is calculated as follows (Christopher, 1998):

Life time value = average transaction value x yearly frequency of purchase x customer life expectancy

Hence, we should make sure that the purchasing act is repeated and that the level of satisfaction is sufficient and the level of disturbance low enough to arouse a long life expectancy per customer.This LTV should be factored in the Consumer Value Equation (CVE): 

Value = (Results produced for the customer + Process quality)/(Price to the customer + Costs of acquiring the services)

Quality ‘inn’ Medical Tourism: How to reach the stars?

Looking at medical tourism, how can this niche maximize value?

The results produced for the consumer are very important: it is a mix of preventive care that will trim down their risk of catching a decease for instance plus the opportunity to visit new and exotic places highly valued by tourism specialists and by collective imagination. The cachet of Thailand or of Bali by itself deems a psychological high price tag.

The process must flow: the value perceived of this flow will be conditioned by the quality of the incoming services provided by the medical tourism agency.

On the other side, medical tourism achieves an interesting benefit automatically: cost cutting! As we have seen it several times already, the expenses linked to the medical procedure are slashed, and easily covers additional costs generated by tourism activities.

All in all, getting a hedge on medical tourism Value will consist in providing the best incoming services possible.  We also have to take notice on the sustainability of these services and understand that the customer is part of the process and therefore that any improvement in the delivery service must be accepted by him.

The long tail has been a hot potato among internet theorists. This concept created by Chris Anderson was first designed to explain how the internet could help to increase profitability ob marginal products. For instance if we talk about books, an internet retailler such as Amazon is able to have millions of books in their catalogs while a few thousands of them are making 80 per cent of the sales for brick and mortar distribution channels.  The last 20% accounts for million of references that are hardly directly available directly in a classical book store. However, the little costs offered by the internet business model (huge storage facilities, JIT (Just in Time) supply management…) make it economically viable to sell these last 20%. (note: the long tail approach is indeed an inverted Pareto law, the 20 prevailling over the 80%!)

What is the long tail approach in terms of medical procedure?

We could take a close eye on rare medical needs. Looking at the US population we know that approximately 8% of the population suffers from rare health conditions representing a list of 6000 health conditions, all representing niches compared to mainstream activities. Hospitals on the other side are not able to store the medical competencies to tackle these rare health issues (medical technology, rare decease specialists…). An hospital if not able to answer demand will advise a patient to go to another hospital. However, the reactivity of this chain is long (themedian time for rare condition diagnosis is 6 months but the average time over 3 years!) and depends on information available. In fact not that many doctors are aware of all the rare conditions while on the other side getting to know the specialists that could cure this condition can be dificult.

There is perhaps also a double wrong side of the curve effect: rare condition specialists are difficult to find as information about these rare conditions are scattered and discrete. The internet despite increasing the information available is lacking plateforms that will structure the inofrmation flow for all (technical and non technical information seekers). Some initiatives for profesional exist though such as the website Mymedwork where specialists gather in communities to exchange medical information (a more qualified community website than Facebook in a word…)

On the wrong side of the curve: rare conditions…

Medical tourism by pooling a vast number of hospitals is also pooling a vast number of specialists able to tackle a series of rare disease. The catalog of medical procedures is directly available and the time of response only depends on the abaility of the medical tourism agency to tie up quickly with the appropriate medical specialists. Though 80% of the existing medical procedures are available in a brick and mortar hospital, a click and mortar hospital(namely an hospital selling its services through internet) is the only type of hospital able to cover the spectrum of the medical services.

An efficient medical tourism e tailler could be the appropriate click and mortar hospital solution because of its ability to pool a vast number of hospitals in different countries where the technology used are sometimes exclusive to one hospital (for instance some practices done at the Parkway hospital in Singapore)… Nevertheless the medical tourism websites only focus on basic medical procedures, on cosmetic surgery (mammaplasty, rhinoplasty etc etc)

As of now it remains to be seen if the market opportunity contained in these 20% ofrare medical procedures could generate an appropriate engine, namely a medical tourism website that will focus on offering the largest number of medical services possible.

It is a new paradigm: a qualitative approach and not cost based… We will try to further dig into this subject by doing a better market sizing…

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?