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A call for rational math: when irrational numbers = $439 Billion

A call for rational math: when irrational numbers = $439 Billion July 28, 2016

When you put it like thatIn the realm of business fiction, few hyperbolic sector boosters rival the Medical Tourism Association (MTA). Since 2004, the MTA medical tourism promotions machine has cranked out a staggering amount of misinformation, half-truths and self-serving boosterism. It was the MTA which continues to cite the now totally discredited 2007 Deloitte report, and other embarrassingly unsubstantiated guesses about the size of this market.

However, the most recent press release manages to take fact distortion in a new, even more creative direction.

Referencing another work of fiction (which the authors label a “report”) Mapping the Future of Global Travel and Tourism, produced by the unabashedly self -serving VISA organization, the MTA has managed to pile on still further fantasy. The (completely outrageous) claim that the market value of the medical tourism segment is $439 Billion. This is demographically and economically irrational and virtually impossible.  Were this phantasmagorical claim true, each medical tourism “episode” would have a value of $40,000.00. This is simply incompatible with any of the other real data in the segment.  Were this plausible, VISA might have offered some corroboration – but alas, there is none and it isn’t possible to arrive at any explanation based on the information presented, so here is my back-of-the-envelope math – and the reader can determine something closer to the truth.

The VISA document states that:

Households making $20,000 USD or more per year account for 90 percent of spending on international travel and about four out of every five international travel arrivals today. By this calculation, nearly half of all households globally will belong to the traveling class by 2025.

If you are the VISA organization, sending households earning $20,000.00 per year into debt for travel and tourism might make sense. However, households with $20,000 / annum income are not medical tourists and only under duress are they medical travelers. Especially considering the value of each medical travel episode, according to VISA (more below).

Further the VISA document states:

Visa estimates travelers from nearly one in three of these traveling class households will take at least one international trip per year. Households in emerging markets will fuel the growth in global travel, representing nearly half of all traveling households by 2025.

Fair enough, I guess, – but let’s back into some numbers.

If the hucksters at the MTA and at VISA are right, and they’re most certainly not, and the annual medical tourism market were $439 Billion, and there were 231.2 million medical travelers, this would mean that every age and income qualified household in the world would spend $720.00 per year on medical travel. This is roughly equal to 0.314% of the Gross Domestic Product of the OECD and E7 emerging economies. On the surface, out of the question, bordering on silly.

More erroneous innuendo from the VISA document:

Older travelers can afford bigger trips and are more focused on comfort and health than saving money. Long-term, the aging traveler will transform travel and one area that is already growing in response is the so-called “medical tourism” industry as more travelers opt to combine medical treatments with vacation.

Again – this is just not correct. The first statements – that older travelers have more money and therefore can afford “bigger trips” and are more focused on “comfort and health” – these are true as far as they go. But the inference that the 65+ demographic represents the vanguard or a change agent in medical tourism is wrong. Older consumers tend to consume medical services close to home. Older consumers are, and will continue utilizing health and wellness services within regions and nations, but they aren’t traveling across borders for elective surgery in the kind of numbers that the MTA or VISA fantasizes about.  People over 65 years of age are not now, nor are they likely to lead the way to a mainstream adoption of international medical travel.

How can we stem the flow of this profoundly misleading and self-serving fiction?

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