How the Medical-Tourism Business Thrives
In the small Croatian town of Zabok, thousands of patients from Europe and the Middle East arrive each year seeking hip or knee replacements at St Catherine Hospital, a facility specializing in orthopedic treatments. Some come for procedures unavailable in their home countries, while others seek to avoid long wait times for public healthcare or high costs for private surgeries. Croatia is among several key destinations in the medical tourism industry. For example, Barbados is known for fertility treatments, Bangkok for gender reassignment surgeries, Hungary and Mexico for dental work, and Turkey for hair transplants.
Accurately measuring the scope of medical tourism is challenging due to differing national definitions, which can sometimes include spa visits or tourists who fall ill. Allied Market Research estimated the industry’s value at $61 billion in 2016, but Keith Pollard of LaingBuisson, a healthcare research firm specializing in medical-tourism data, believes it to be closer to $10 billion to $15 billion.
The growing middle class in Asia and Africa is contributing to the increase in patients willing to pay for treatments they cannot access at home. Significant price differences between countries also drive consumers to travel for medical care. For instance, a heart-valve replacement costs €30,000 ($35,000) in Germany but only €15,000 in neighboring Austria, with comparable quality. A hip operation can cost €12,000 in Britain, €10,000 in Turkey, and just €4,725 in Poland.
Governments are responding to this rising demand by investing in regional centers of medical expertise. South Korea, Malaysia, and Dubai have made significant investments to attract foreign patients. Dubai Healthcare City aims to draw patients from Gulf nations who previously sought treatment in Europe or America. Some niche areas, like in vitro fertilization (IVF), are experiencing rapid growth due to restrictions on free treatment in many wealthy countries. For example, Germany limits IVF access to those with medical conditions or younger women and only covers three rounds.
Despite the growth, medical tourism faces challenges, particularly the lack of reliable information on the quality of hospitals, clinics, and their medical staff. Valorie Crooks, a geography professor at Simon Fraser University in British Columbia, notes that patients often rely on reputation or intermediaries, some of whom may work exclusively with certain clinics and receive undisclosed commissions. This can leave patients with little recourse if complications arise from treatment abroad.
New online platforms like Qunomedical and Medigo, both based in Berlin, aim to improve transparency. They provide clear information about pricing and the quality of medical staff and services, allowing patients to search for treatments from a variety of providers. Both platforms disclose that they take fees from listed hospitals and clinics, with Medigo also earning from patient and corporate fees. Patient reviews and human advisors help guide treatment choices, making foreign medical options more appealing.
However, making a profit in medical tourism can be difficult. Exchange rate fluctuations can quickly make a destination less attractive. For example, the market for medical tourism in South Africa has been volatile due to currency changes. Sometimes, anticipated demand does not materialize. The Health City Cayman Islands, a 2,000-bed hospital project expected to attract over 17,000 foreign patients annually, saw fewer than 1,000 overseas patients in its first year, partly due to flawed customer projections and disinterest from health insurers in sending patients overseas.
In the future, healthcare providers may travel to serve patients instead. Vikram Kapur, a partner at Bain & Company, notes that while China has historically exported patients, American hospitals like Johns Hopkins, the Cleveland Clinic, and the University of Pittsburgh Medical Center are now partnering with local Chinese hospitals to deliver services closer to home. One way or another, healthcare is becoming increasingly mobile.
