Exploring the Growing Appeal of Medical TourismPublished: April 09, 2008 in Knowledge@Emory
One might say that in 2005 Dr. Michael Horowitz reached a crossroads—a provocative juncture in his career where two worlds that fed his professional development, medicine and business, intersected.
A cardiac surgeon, Horowitz had decided to close his successful medical practice in South Mississippi to move to Atlanta in 2004 and explore the business side of medicine as a student at Emory University’s Goizueta Business School. He soon came across a trend in his operations class that would quite literally change the course of his life. It was the concept of medical tourism, where citizens of highly developed countries choose to bypass care offered in their own communities and travel to less developed areas of the world to receive a variety of medical services from cosmetic surgery and dentistry to coronary artery bypass surgery. “I first heard of medical tourism when my professor showed a slide from a website offering medical care in Phuket Island, Thailand,” explains Horowitz. “I knew nothing about this and my initial response was to wonder why Americans would leave the United States or Europe, the ‘best healthcare’ to go to a less developed country for medical care. It piqued my interest.”
A few months later Horowitz, by then a student in Professor Jeffrey Rosensweig’s Global Macroeconomic Perspectives class, began research into the evolving medical tourism phenomenon, a fascination that would eventually take him around the world. He graduated from the Weekend Executive MBA Program at Goizueta in 2006 and around the same time began to collaborate with Rosensweig, an associate professor of finance and director of the Global Perspectives Program at Goizueta, on extensive research that coupled their talents—Horowitz’s clinical experience and Rosensweig’s aptitude as an economist. They have since produced several articles on medical tourism and the globalization of the healthcare marketplace, the most recent of which, published in February in the International Medical Travel Journal, is “Medical Tourism vs. Traditional International Medical Travel: A Tale of Two Models.”
“Our research is the only work I know of that is a collaboration between a physician and an economist,” says Horowitz, who now runs Medical Insights International, a medical tourism consulting firm in Lebanon, Georgia. “There is a minimal amount of medical peer review literature on this.”
Some 750,000 Americans sought offshore medical care in 2007, a number that is projected to rise to as many as 6 million in 2010. In addition, Horowitz says, it has been estimated that the global medical travel industry currently generates annual revenues up to $60 billion, with 20% annual growth. “However, another valuation suggests that the industry is somewhat smaller, with growth to $40 billion projected by 2010,” he adds.
Horowitz and Rosensweig’s latest research presents a comparative analysis of the medical tourism model vs. the more traditional form of international medical travel. The factor that most differentiates the two, notes Horowitz, is the availability of resources to patients. “Medical tourism is not the same phenomenon as when somebody in Bangalore, India chooses to go to Johns Hopkins Hospital in Baltimore, Maryland. Those are people with resources who choose to use their resources to buy what they want,” explains Horowitz. “But when a self-employed plumber with no health insurance from Baltimore chooses to drive past Johns Hopkins on his way to the airport for the purpose of going to Bangalore because his limited resources don’t allow him to go to Johns Hopkins comfortably, that is the medical tourism model. One is a group of patients traveling to certain places with the expectations of getting the best from the best because they have the resources to do so, and the other is a group who would love to go to Johns Hopkins but can’t afford it. So they choose to go someplace they can more comfortably afford.” While both types of treatment seekers have a need or desire to travel, the willingness to travel and the ability to travel, the similarities end there. The drivers—such as affordability, timeliness of care and availability of services—the nature of the people, and the nature of the places are dramatically different.
Medical, economic, political and social forces are shaping the emergence of medical tourism. The paper details the heterogeneous features of people who travel for medical care; they are traveling to different kinds of places with different resources and for different reasons. For instance, the authors write that while patients from highly industrialized nations like the U.S. are enticed by the low cost of overseas medical care, residents of Canada, Britain and other countries with national health systems are more likely to pursue medical tourism in order to avoid long waiting lists. What’s more, some patients seek offshore medical care to protect their privacy and confidentiality. Horowitz notes that quality of care is an issue of concern that generates much discussion. There is no doubt that excellent quality of care is available in many offshore medical facilities around the globe. The challenge for patients pursuing medical tourism is to correctly identify these desirable hospitals and practitioners.
Beyond the characteristics and motivators of the travelers, is the influence that medical tourism could have on the U.S. healthcare system, especially as the trend matures. When he first set out to study medical tourism, Horowitz measured a subdued interest on the part of the medical community. While that interest may be increasing, the very awareness of the choices patients are making is often elusive. “One of the key points of our research is that this is happening outside the view and control of the healthcare establishment and outside the traditional referral pattern within the healthcare system,” notes Horowitz. “Many American providers have no reason to see it. For example, consider a patient who comes to your office and you recommend a certain procedure and the patient says, ‘let me go home and think about it.’ You don’t spend much time thinking about the patient who never comes back to your office. You figure they decided not to have the surgery or they chose another doctor. It wouldn’t dawn on you that maybe they chose a doctor on the other side of the world.”
The trend toward people in the U.S. bypassing services offered in their own communities to travel to less-developed countries for medical care is critically linked to the U.S. insurance industry as well as the availability and delivery of healthcare services here and in developing countries. “Health insurance companies have realized that they have money on the table that they can be saving,” suggests Horowitz. “Companies like Blue Cross Blue Shield are trying to understand how they can provide offshore services to beneficiaries. If you have a policy with a certain insurance company, perhaps you could get a substantially lower premium if you were to agree to get certain services offshore.” This has potential implications for healthcare insurance premiums, as well as hospital profitability.
The most important implication, stresses Horowitz, is the message inherent in the rise of medical tourism regarding the nature of healthcare availability and affordability in the U.S. “The customers are not satisfied with the status of the health care system at the provider level and, importantly, at the insurance level,” he explains. “Frequently, health insurance is unaffordable and when individuals can afford it, it doesn’t pay adequately to make it worth their while. It may be cheaper for them to pay out of pocket and go abroad.”
As for the cost savings of medical tourism, Horowitz notes that while there are many variables involved, such as destination country and cost of travel, “in one analysis, the procedure-related cost of hip replacement in India and Costa Rica resulted in savings of approximately 85%, compared to the cost for a self-pay patient having the procedure within the U.S.,” writes Horowitz in the December 2007 issue of Medical Tourism Magazine. “When the cost of travel is included in the analysis, savings are approximately 75%.”
Horowitz is watching the U.S. presidential election race with particular interest as the conversation most often turns to a potential change in the country’s healthcare landscape. Future research with Goizueta’s Rosensweig may further explore implications for the insurance industry and for philanthropic organizations, which might be able to extend their purchasing power for charitable care by buying services abroad. With recent trips to Thailand, Malaysia and Singapore—and upcoming trips to other destinations— for site visits, meetings, interviews, conferences and speeches related to medical tourism, Horowitz is dedicated to staying on top of this evolving trend. Foreign healthcare destinations will surely impact healthcare in America.
Photo: Dr. Michael Horowitz 06WEMBA