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Rise of medican Tourism in India.
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| Copyright © 2009 Grail Research, a division of Integreon — Confidential August, 2009 1
The Rise of Medical Tourism
August, 2009
| Copyright © 2009 Grail Research, a division of Integreon — Confidential August, 2009 2
The Rise of Medical Tourism
While only a small slice of total health care expenditure, medical tourism is growing rapidly
Countries around the world are investing to capture an increased share of global healthcare spend
Contrary to some perceptions, the services provided reach beyond cosmetic procedures performed at spa-like medical centers and include more complex, longer-term and costly care
With public perception becoming more positive, insurance companies are starting to embrace the trend
However, many important questions remain to be answered before mainstream market participants are likely to take action: • How large will this market be? • Are the savings to the patient and insurance companies real? • What countries / facilities will emerge as leaders? (both in
quality of care and spend)
Medical Tourism: Traveling to a destination in another country to receive medical, dental and surgical care because the destination enables better access to care, provides higher quality care or offers the same treatment at a more affordable pricea
Note: aSourced from the Medical Tourism Association
| Copyright © 2009 Grail Research, a division of Integreon — Confidential August, 2009 3
Global Medical Tourism Market Size, 2004–2012Ec
USD
Bn
100
60
40
0
30
60
90
120
2004 2006 2012E
3,100
2,1001,878
0
1,000
2,000
3,000
4,000
2004 2006 2012E
USD
Bn
US Healthcare Expenditure, 2004–2012Ed,e
In 2007, more than 750,000 Americans traveled abroad for medical procedures
The global medical tourism market is expected to grow at a CAGR of 9% from 2006 to 2012 (vs. 7% for US healthcare expenditure) driven primarily by lower cost of treatment and increased quality of care
The factors which help to reduce the cost of treatment in medical tourist destinations are:
• Lower cost of labor
• Lower costs associated with malpractice litigation and insurance
• Less stringent regulatory environments
• Limited involvement of third party payors
Meanwhile, factors such as an increase in investment and growth in the number of internationally-accredited facilities have improved quality of care and its perception among prospective patients
• Over 220 health care organizations in 33 countries have received JCI accreditationb
The medical tourism market is expected to show strong growth through 2012 driven by increasing healthcare costs in developed countriesa and improving quality of care in destinations
Medical Tourism Market Size and Growth
Notes: JCI, the international division of Joint Commission Resources, is a not-for -profit organization which provides accreditation for hospitals, ambulatory care facilities, clinical laboratories, care continuum services, medical transport organizations, and primary care services, as well as certification for disease or condition specific care in 36 countries around the world Sources: Grail Analysis; a ”Medical Tourism: Consumers in search of value”, Deloitte Center for Health Solutions, 2008; b Joint Commission International Resources; c "Medical Tourism: Global Competition in Health Care", National Center for Policy Analysis, Nov 2007; dCenter for Medicare and Medicaid Services; eKaiser Family Foundation;
| Copyright © 2009 Grail Research, a division of Integreon — Confidential August, 2009 4
Medical Travelers by Source and Destinationb
From Asia Europe Latin
America Middle East
North America
Africa 95% 4% 1%
Asia 93% 1% 6%
Europe 39% 10% 5% 13% 33%
Latin America 1% 12% 87%
Middle East 32% 8% 2% 58%
North America 45% 26% 2% 27%
Oceania 99% 1%
“Latin American countries have been in it for more than 15 years…in Southeast Asia, it is more recent… between
1997-2000 it all started here..in Thailand and India” – Hospital manager, JMI, Malaysia
To
USa,b,1
710,000 Number of procedures performed outside US
USD 15,000 Average savings per procedure
USD 35 Bn Total loss for US Hospitals
USD 10.7 Bn Total estimated savings for
payors, employers and patients
Medical Tourism Impact on the US
Notes: 1 These figures are derived from the McKinsey report published in 2008 and represent current data at that time (2008) Source: a “Medical Tourism Is Still Small - Getting Care Abroad May Be Less Usual Than Once “, Wall Street Journal; b Mapping the market for medical travel, The McKinsey Quarterly, Health care 2008
By recent estimates, $35Bn in healthcare spending was exported from the US last year; a majority went to regions such as Asia and Latin America
| Copyright © 2009 Grail Research, a division of Integreon — Confidential August, 2009 5
Medical Tourism Primary Destinations and Service Offerings
The primary destinations for Medical Tourism include countries such as Thailand, India, Singapore, and Malaysia
Comparison of Major Destinations
Note: aJCI stands for Joint Commission International, is a not-for-profit organization responsible for providing accreditation and certification services; bCost of treatment includes hospitals stay only; cAverage cost for treatment of Heart Bypass, Heart Valve Replacement, Angioplasty, Hip Replacement ,Hysterectomy, Knee Replacement and Spinal Fusion Source: 1Medical Tourism: Consumers in Search of Value”, Deloitte Center for Health Solutions, 2008; 2Joint Commission International Website; 3“Numbers of note”, Business Today, Dec 11, 2008; 4“Top 5 Medical Tourism Destinations”, Nuwire Investor, Mar 31, 2008; 5“5 Myths of Medical Tourism”, Singapore Medicine; 6“The Medical tourism industry in Thailand”, I-Shou University, Sep 2007
Popular Treatment Options # of Medical Tourists JCI Accredited Hospitals2,a
Range of Costs (% of US cost)1,b,c
6%-28%
6%-21%
8%-33%
6%-23%
Major Destinations
1.54 MM (in 2007)6
0.45 MM (in 2007)3
0.41 MM (in 2006)5
0.29 MM (in 2006)4
Alternative Medicine, Cosmetic Surgery, Dental Care, Gender Realignment, Heart Surgery, Obesity Surgery, Oncology and Orthopedics
Alternative Medicine, Bone-marrow Transplant, Cardiac Bypass, Eye Surgery and Hip Replacement
Organ Transplants, Stem Cell Transplants and other high end procedures
Cardiovascular Surgery, Cosmetic Surgery, Dental Care, Eye Surgery, General Surgery, Orthopedic and Transplant Surgery
5
11
15
2
India
Malaysia
Singapore
Thailand
| Copyright © 2009 Grail Research, a division of Integreon — Confidential August, 2009 6
Sources: aMedical Tourism: Taking off in a big way in India”, Indian Institute of Management, Kozhikode, India, May 2008; bDiscover Medical Tourism Website; c”A Profile of Older Americans: 2005”, Administration of Aging, Department of Health and Human Services, US Government, 2005; dIncome, Poverty, and Health Insurance Coverage in the United States: 2007, US Census Bureau; e"Medical Tourism: Global Competition in Health Care", National Center for Policy Analysis, Nov 2007; f“The economic cost of wait times in Canada”, Canadian Medical Association, Jan 2008
Singapore boasts state-of-the-art equipment, the finest surgeons and a high standard of medical care comparable with that of western countriesb
Better Quality Care
In the US, 45.7 MM people have no health insuranced
Even people with health insurance must pay out of pocket for elective surgery and “pre-existing conditions”d
Large Uninsured Population
Patients in the UK and Canada lack timely access to elective procedures and hence travel to other countriese
• The average waiting time for patients undergoing joint replacement surgery, cataract surgery, CABG surgery, and MRI examination in Canada is 253 days,128 days, 71 days, and 29 days, respectivelyf
Long Waiting Time
The aging population of the developed world is a growing burden on the healthcare infrastructurec
Aging Population
Medical tourism provides an opportunity to reduce costs by as much as 94% of the total US cost of the proceduresa
Affordability
India attracts medical tourists due to its offerings of ayurvedic and other alternative treatmentsb
Alternative / Innovative Therapy
Medical Tourism Market Drivers
Why Medical Tourism?
A number of factors are increasing the attractiveness of medical tourism…
| Copyright © 2009 Grail Research, a division of Integreon — Confidential August, 2009 7
Medical Tourism Growth Barriers
Source: a“Medical Tourism Industry Grows Rapidly”, Forbes, Oct 26, 2006; b“Medical Tourism: Consumers in Search of Value”, Deloitte Center for Health Solutions, 2008; Hospital Manager interview, Analysis of patient testimonials and doctors’ opinions; cThe Medical Tourism Association Survey Results, 2009
Other Problems Low training standards of doctors in
medical destination countries, language barriers and low payor
coverage
Legal Issues The consumer must abide by the medical tourism destination’s law in the event of bad outcomes/ complicationsb after treatment
Follow-up Care Patients face difficulty in getting follow-up treatment in their home
country after receiving medical treatment abroadb
…however, key barriers still exist that will continue to impede mass-appeal of medical tourism
Barriers to Growth
Image Problem Developing countries are believed to
be poor and lacking in quality facilities / physiciansa which leads
to skepticism amongst patients
| Copyright © 2009 Grail Research, a division of Integreon — Confidential August, 2009 8
Medical Tourism Recent Trends
Increasing investments by industry players … Providers in destination countries are seeking and receiving
accreditation from organizations such as JCI in order to alleviate concerns about quality of care. Consumer surveys suggest that accreditation plays an important role in selecting a hospital
Reputed medical institutions and providers in the US are collaborating with institutions abroad to create brand recognition for foreign organizations
Some private insurance providers in the US have recently launched plans that reimburse treatment costs in foreign locations, alleviating concerns about follow up care and coverage once back at home
…appears to be having an effect on consumer sentiment
Multiple surveys of patients’ experiences at facilities abroad suggest that most feel satisfied with the quality of care and would encourage friends and relatives to travel abroad for medical care
One survey even concludes that most of patients feel that the overall medical care experience at facilities abroad was better than it would have been at a US facility
| Copyright © 2009 Grail Research, a division of Integreon — Confidential August, 2009 9
Medical Tourism Ecosystem Medical travelers, intermediaries and provider groups are the primary source of momentum in the market while government and insurers are influencing the industry externally
Source: “Medical Tourism: Consumers in Search of Value”, Deloitte Center for Health Solutions, 2008; “IHG and the Medical Tourism Association Join to Facilitate Medical-Related Travel into Latin America”, InterContinental Hotels Group, Jun 5, 2008;
Medical Tourism Ecosystem
Internal Components
External Influencers
Government
Governments play an active role through legislation and by supporting the development of the industry in their region
Medical Travelers
Individuals seeking medical care either contact providers directly or work with intermediaries to identify providers and arrange care
Provider Groups
Hospitals, clinics, and specialty treatment centers provide care to patients who travel abroad for treatment Medical travel planners, travel
agencies or hotel groups help travelers identify destinations, select providers and make arrangements
Intermediaries
Insurance companies influence the industry as they make decisions about covered procedures and reimbursement for expenses incurred when seeking treatment abroad
Insurance Companies
| Copyright © 2009 Grail Research, a division of Integreon — Confidential August, 2009 10
Medical Tourism Destinations An increasing number of nations are vying to become significant players in medical tourism
How significant of an impact will this have on the US healthcare players (hospitals, devices, pharmaceutical / biotech, insurance, etc.)?
Which countries will emerge as the strongest players?
| Copyright © 2009 Grail Research, a division of Integreon — Confidential August, 2009 11
Medical Tourism Summary
The continued growth of medical tourism will impact players across the healthcare value chain as:
A
B
C
A
B
C
D
The key unknowns life sciences organizations need to monitor are:
What implications does the growth of medical tourism have on particular categories of products?
How large of an impact could this trend have on the industry and within what timeframe?
Which markets will emerge as leaders and therefore be important to prioritize?
How will behaviors, treatment preferences and processes differ in prioritized markets?
Hospitals risk the loss of revenues and talent (i.e. physicians) to foreign institutions
Device, pharmaceutical and biotech companies have an increasing number of markets to develop and manage
Insurance companies manage the benefits and risks of coverage for patients seeking treatment abroad
| Copyright © 2009 Grail Research, a division of Integreon — Confidential August, 2009 12
For More Information Contact:
Grail Research ([email protected])
Copyright © 2009 by Grail Research, a division of Integreon
No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means — electronic, mechanical, photocopying, recording, or otherwise — without the permission of Grail Research, a division of Integreon
This document provides an outline of a presentation and is incomplete without the accompanying oral commentary and discussion.
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