Pandemic-related travel restrictions (demand), and the redirection of hospitals and doctors to treat people with COVID-19 (supply) are having major impacts on medical tourism.[i]
The pandemic continues, and these demand & supply side shocks are changing the markets for both consumers and providers serving international patients. Also as a result of the pandemic, the accelerated adoption of telehealth applications is further changing the healthcare services market dynamics, including in the cross-border markets for medical services.
Medical tourism – cross-border trade in medical services
Medical tourism has historically focused on consumers (patients) travelling for medical care from one country to another country (Mode 2, Consumption Abroad) and hospitals establishing operations in another country (Mode 3, Commercial Presence). The COVID-19 pandemic has prevented or disrupted consumer travel and pushed providers to develop telehealth to reach patients abroad (Mode 1, Cross-Border Supply of Services). This swift, and necessary change to remote, telemedicine channels opened greater access to services among some consumer segments, and further highlights healthcare access inequities with others.
In the telehealth market channel, access to the Internet and / or smartphones become the barriers to care. Before the pandemic, there was a growing acceptance of mobile health devices and services, so-called mHealth or eHealth, through wearable devices such as Fitbit, Apple Watch and Aura rings. With the mobility restrictions attendant to the pandemic, there is now an even greater acceleration in, and rapid adoption of health & wellness-related wearable devices among the developed economies. These devices are agnostic of the relative positions of the consumer and provider; another form of Mode 1, Cross-Border Supply of Services.
Digitization of the channels (within one’s’ own country and internationally) is a dynamic shift, which is still being sorted. It is unlikely that the positive consumer experiences and systemic efficiencies realized by the burgeoning growth of telehealth and wearables will be scaled back after travel restrictions are relaxed. On the other hand, it is very uncertain how the data privacy, medical oversight, liability and / or compensation issues inherent in these markets will be addressed.
The commercial presence of hospitals abroad (Mode 3) will also be impacted by the pandemic. For example, Bumrungrad Hospital in Thailand was founded by a US company in 1991 (Mode 3, Commercial Presence) and has developed a large global patient base over the last 30 years (Mode 2, Consumption Abroad). Travel to Thailand due to the pandemic and recent political instability have severely interrupted the volume of consumers being treated at Bumrungrad. Other healthcare providers such as QuironSalud (Spain) with operations in South America, and Moorfields Eye Hospital (United Kingdom) with a Middle East presence have also been impacted by the demand and supply-side shocks of the pandemic. The financial challenges are prompting providers to reassess their method of engagement in cross-border trade.
Medical tourism market variables
The plummet of international travel had a dramatic negative impact on Mode 2 medical tourism. Globally, international travel decreased by 87%, comparing January 2021 to January 2020.[iv] The continued pattern of lockdown/release/lockdown/release has created, and continues to nurture uncertainty and fear of infection and “getting stuck somewhere” among would-be travelers, and this deters foreign consumers from planning cross-border medical travel.
Consumers’ attitudes toward traveling are influenced by media, and the international coverage of the pandemic has been extensive and – mostly – negative. Although recent vaccination distribution is being more favorably reviewed, the variability in travel guidelines, mask requirements and other issues has created confusion and nurtures uncertainty.
These disruptions of Mode 2 travel to foreign destinations to consume care are likely to continue until the travel and tourism market channels stabilize around the world. Meanwhile, both consumers and providers will continue to utilize telehealth (Mode 1) domestically and internationally, with Mode 1 presenting both opportunities and challenges to providers and intermediaries in both domestic and foreign markets.
In the post-pandemic period – price, perception and hybridization
Cross-border trade in medical services will continue to play a role in global healthcare service delivery in the post pandemic period (whenever that emerges). The drivers of these markets will be price, perception and hybridization.
Historically, medical tourism had been promoted as a form of economic arbitrage between countries, and to access superior medical services (perceived or actual) in foreign locations. Countries with relatively low purchase power parity (PPP) were seen as economical destinations, and those with higher PPP as source markets for consumers and organizations. In addition to the cost differentials as drivers, consumers convinced of the superiority of services in a foreign destination have been willing to travel to that location.
In the post-pandemic scenarios, price differentials (PPP) will continue to motivate price-sensitive consumers, or their intermediaries (employers and insurance providers), to seek lower cost alternatives in readily accessed cross-border locations. Price differentials have been, and will continue to be important in low acuity services such as dental/orthodontic treatments and cosmetic procedures.
With that said, there have always been and will continue to be important exceptions to the role of price as a driver in medical tourism. Consumers associate lower price for hospital and doctors’ services, in particular, with lower quality. Among governments and regulatory agencies, lowering healthcare costs will return to being a top priority, but it is unlikely that offshoring medical services will be seen as a viable or scalable option to lower costs.
In addition to price, the perceived superiority of services in a foreign destination or by a specific medical provider, will motivate some patients and their families to seek out and access services from a provider in a foreign location. Destinations, hospitals or clinics which are perceived as having superior health & medical services will be more favorably by consumers.
Telehealth and digitization of health-related data will expand the ways consumers access, and providers deliver medical care, including the cross-border trade in medical services. This hybridization will take many forms, and it’s very early in the emergence of these markets. Considering a prototype episode of care, is relatively easy to envision cross-border diagnosis, destination treatment and then cross-border monitoring and rehabilitation.
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doi: 10.1002/hpm.3259. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC8239577/
[ii] Mutchnick l, Stern DT, Moyer CA. Trading health services across borders: GATS, markets, and caveats. Health Aff (Millwood). 2005;Suppl Web Exclusives:W5-42-W5-51.
[iv] UNWTO. Tourist arrivals down 87% in January 2021 as UNWTO calls for stronger coordination to restart tourism. UN World Tourism Organization web site. https://www.unwto.org/news/tourist-arrivals-down-87-in-january-2021-as-unwto-calls-for-stronger-coordination-to-restart-tourism. Published March 31, 2021. Accessed April 8, 2021.